On Aug. 8, 2022, the SEC issued proposed rules under the Securities Exchange Act of 1934, as amended (Exchange Act) to help improve governance arrangements across all registered clearing agencies by reducing the likelihood that conflicts of interest may influence the board of directors or equivalent governing body of a registered clearing agency. The SEC also issued a related fact sheet on clearing agency governance and conflicts of interest.

The proposed rules would:

To the extent that the proposed rules relate to clearing agencies that clear security-based swaps (SBS), a new proposed Rule 17Ad-25 would establish new requirements for policies and procedures that require such clearing agencies to mitigate conflicts of interest, promote the fair representation of owners and participants in the governance of a clearing agency, identify responsibilities of the board, and increase transparency into clearing agency governance.

The proposed rules observe that the SEC previously proposed, but did not adopt, rules regarding clearing agency governance in two separate releases between 2010 and 2011 (see Legal Updates, SEC Proposes Rules on Security-based Swap Facility Ownership and Governance Under Dodd-Frank and SEC Proposes Standards for Clearing Agency Operation and Governance). The SEC is withdrawing those previously proposed rules and replacing them with the new proposed Rule 17Ad-25.

Public comment on the proposed rules must be received no later than 30 days after publication in the Federal Register or October 7, 2022.