Which services bring a clearing agency inside enhanced standards is a market-structure question as well as a regulatory one. In a proposal published October 13, 2016, the SEC would define covered clearing agencies as registered agencies providing central counterparty, central securities depository or securities settlement system services. The proposed boundary follows specified functions rather than merely the fact of registration. [clearing-definition]

The final standards published in the same Federal Register issue use a different scope. They include systemically important agencies for which the SEC is the supervisor, along with agencies providing central counterparty services for security-based swaps or activities the SEC determines have a more complex risk profile, subject to the CFTC-supervision qualification. The proposal cannot be substituted for that final definition. [clearing-standards]

The proposed amendments also address definitions of securities settlement systems and depository services, and would expand the scope of sensitivity-analysis requirements. For competition analysis, this raises a useful question: how would firms performing the specified services compare under a broader common framework? The existence of the proposal supplies a reason to examine that question, not evidence that costs or competitive conditions have already converged. [clearing-definition]

A wider regulatory boundary could matter to comparisons between providers, but these passages do not establish lower fees, easier entry or an advantage for incumbents. Those outcomes require separate evidence. Comments are due December 12, 2016. The final rule and proposed amendments are parts of one SEC policy process; counting them as independent confirmation of a competitive benefit would overstate what has been shown. [clearing-standards][clearing-definition]

Source documents

  1. Standards for Covered Clearing Agencieshttps://www.govinfo.gov/content/pkg/FR-2016-10-13/html/2016-23891.htm
  2. Definition of Covered Clearing Agencyhttps://www.govinfo.gov/content/pkg/FR-2016-10-13/html/2016-23892.htm