NSCC Wins SEC Approval for New SFT Clearing Model, Allowing Client Margin Netting
Updated
Updated · Markets Media · May 14
NSCC Wins SEC Approval for New SFT Clearing Model, Allowing Client Margin Netting
4 articles · Updated · Markets Media · May 14
Effective immediately, NSCC can offer a new client access model for its Securities Financing Transaction Clearing Service after winning SEC approval.
The model creates an Agent Clearing Member Customer Net Margin Account, letting stock-loan agents net margin and clearing fund requirements across clients instead of calculating them on a gross, client-by-client basis.
That change is designed to improve capital efficiency while preserving NSCC’s existing risk controls and aligning treatment more closely with proprietary SFT activity and other cleared agency markets.
NSCC said the structure should widen participation in centrally cleared securities financing transactions, extending benefits such as lower counterparty credit risk, better operational efficiency and greater market stability during stress.
Will capital freed by the new SFT model lower market costs or just boost agent lender profits?
After the last SFT model failed, what ensures this complex new version will actually be adopted by the market?
Will this capital-saving netting model inadvertently hide systemic risks until it is too late?