The U.S. Securities and Exchange Commission (SEC) has proposed a plan to strengthen the resiliency of clearing houses during times of market stress. The proposal builds on rules passed in 2016 and would require clearing houses to monitor margin exposures on an ongoing basis and make intraday margin calls as needed.
The plan would also require clearing houses to establish specific requirements in their recovery and wind-down plans, including how the plans would be reviewed and tested. This would enhance the resiliency and continuity of the market plumbing.
The proposal comes in response to the 2021 “meme stock” trading frenzy and heightened Treasury volatility in March of this year. Intraday margin calls have been important in these events, allowing clearing houses to manage intraday risk and provide greater transparency.
The SEC vote on the proposal is expected to take place in the coming weeks.