On September 1, ISDA and FIA submitted a joint response to the US Securities and Exchange Commission (SEC), supporting the Fixed Income Clearing Corporation’s (FICC) proposal to establish a dedicated guaranty fund at its government securities division (GSD).
FICC had filed a rule change on August 6 that would introduce a dedicated default fund for the GSD segment, which clears US Treasuries. ISDA and FIA support FICC’s proposal, which would strengthen the resilience of US Treasury clearing, improve the bankruptcy-remote treatment of margin assets and align FICC’s framework more closely with international central counterparty (CCP) standards.
The joint response also recommends that non-default losses should remain the responsibility of the CCP rather than being mutualized among members and calls for the retention of the current 10 business day event period, together with a cooling-off mechanism to better contain members’ exposure during periods of market stress.
Documents (1) for ISDA, FIA Respond to SEC on FICC Proposal to Implement a Dedicated Guaranty Fund
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