SEC institutes proceedings on FICC Guaranty Fund rule change
The proposed Guaranty Fund would apply to Fixed Income Clearing Corporation's Government Securities Division members pending SEC approval.
On September 15, 2026, the Securities and Exchange Commission instituted proceedings under Section 19(b)(2)(B) of the Exchange Act to determine whether to approve or disapprove Fixed Income Clearing Corporation's (FICC) proposed rule change, File No. SR-FICC-2026-008, as modified by Partial Amendment No. 1. The proposal, originally filed on July 24, 2026 and amended on August 4, 2026, was published for comment on August 11, 2026.
The amendment creates a Guaranty Fund for the Government Securities Division (GSD) under a new GSD Rule 4A. The Fund must be sized to cover any deficiency revealed by daily stress tests that model the default of the two Netting Member Affiliated Families under a "Cover 2 Standard." All contributions to the Fund must be in cash, and FICC may resize the Fund intramonthly if stress-test deficiencies exceed set thresholds. Additional changes modify GSD Rule 4 and the Margin Component Schedule to make Clearing Fund deposits bankruptcy-remote, eliminate borrowing authority, and allow cash-for-Treasury-security exchanges.
The rule change also relocates loss-allocation provisions to a new Rule 4C, introduces a five-day cooling-off period for default and non-default loss events, and caps assessments at two times (200 percent of) each member's Guaranty Fund requirement. The Commission has identified potential inconsistency with Section 17A(b)(3)(F) of the Exchange Act as a ground for disapproval and is seeking public comment, which may be submitted at https://www.sec.gov/rules-regulations/public-comments/sr-ficc-2026-008.
If approved, the Guaranty Fund would become the primary source for covering losses arising from member defaults or non-default loss events, shifting loss allocation away from the existing Clearing Fund and altering the risk-management framework for all GSD members.
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