Responsibility for shared financial infrastructure is not discharged by announcing stronger rules. The SEC final rule published October 13, 2016 establishes enhanced operational and governance standards for covered clearing agencies. For people evaluating the institutions behind financial transactions, that is a change in stated obligations, not evidence that every institution has fulfilled them or that disruption has become impossible. [clearing-standards]

The final rule’s coverage is selective. It includes systemically important agencies supervised by the SEC, and agencies providing central counterparty services for security-based swaps or activities the SEC determines have a more complex risk profile, with a qualification for CFTC supervision. Ethical accountability therefore starts with an accurate account of who is subject to this framework, rather than an assurance about the entire financial system. [clearing-standards]

The SEC’s separate proposal would extend coverage to registered agencies providing central counterparty, central securities depository or securities settlement system services, and widen the scope of sensitivity-analysis requirements. That proposal raises a different responsibility: deciding how broadly obligations should reach. It remains a proposal, with comments due December 12, 2016, rather than an accomplished expansion. [clearing-definition]

Our ethical reading is that honest communication should distinguish a safeguard’s purpose from proof of its performance. Institutions also face the practical work of implementation; neither dismissing that work nor promising complete safety helps those affected. These two SEC documents establish policy choices and a process for considering broader coverage. They do not independently corroborate each other or settle whether the resulting arrangements will meet people’s needs. [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