SEC

Securities and Exchange Commission (US)

High Impact

SEC publishes FICC advance notice to establish a GSD Guaranty Fund and revise Clearing Fund, margin and loss-allocation rules

Published

Aug 6, 2026

Topics

Central clearing, U.S. Treasury securities, FICC GSD, Guaranty fund, Clearing fund, Initial margin, Loss allocation, Liquidity risk, Stress testing, Default management

Executive Summary

The SEC has published FICC’s advance notice SR-FICC-2026-802, as modified by Partial Amendment No. 1, for a major restructuring of the Government Securities Division’s financial resources and loss-allocation framework. FICC proposes to create a separate cash-funded Guaranty Fund that would operate as GSD’s default fund and be sized to a Cover 2 standard using daily stress testing. The Clearing Fund would be treated as initial margin, designed to support bankruptcy-remote treatment and excluded from mutualized loss allocation. FICC also proposes a new loss allocation Rule 4C, a five-business-day Event Period, a 200% assessment cap based on each Netting Member’s Guaranty Fund Requirement, new Stress Test Deficiency Charges, and removal or reset of several fixed minimum margin charges. The filing is a notice and review-period extension, not an approval. GSD Netting Members should assess potential funding, liquidity, capital, treasury, legal and operational impacts now, while tracking SEC action and any FICC implementation notices.

What Changed

newSeparate GSD Guaranty Fund under proposed Rule 4A

The GSD Clearing Fund functioned collectively as GSD’s default fund and was sized to a Cover 1 standard while individual deposits operated as Member initial margin.

New

The Guaranty Fund would serve as GSD’s separate default fund, sized to Cover 2; Clearing Fund deposits would be treated as initial margin rather than the mutualized default fund.

modifiedClearing Fund bankruptcy-remote and liquidity treatment

GSD rules allowed broader use of Clearing Fund resources, including borrowing Clearing Fund deposits of non-defaulting Members to provide settlement liquidity, and the Clearing Fund was included in the mutualized loss framework.

New

Clearing Fund deposits would be excluded from loss mutualization and treated as initial margin; liquidity use would shift toward the Guaranty Fund and a proposed cash-for-Treasury exchange mechanism.

modifiedLoss allocation moved to proposed Rule 4C with revised caps

Loss allocation used a ten-business-day Event Period, Tier One and Tier Two Member categories, successive loss-allocation rounds, caps based on Required Fund Deposit concepts, and a specific Inter-Dealer Broker Broker Account cap.

New

Loss allocation would use a five-business-day Event Period and an assessment cap equal to 200% of each Netting Member’s Guaranty Fund Requirement for the Event Period.

newStress Test Deficiency Charge

The existing GSD margin framework included components such as portfolio, backtesting and related margin charges, but did not include the proposed Stress Test Deficiency Charge tied to Guaranty Fund sizing thresholds.

New

FICC could collect an additional initial margin charge from Members driving significant stress exposures, including Registered Investment Company Netting Members where applicable.

modifiedMinimum margin charges and cash-composition requirements

Rules included fixed minimum Required Fund Deposit amounts, including $1 million generally, $5 million for certain Broker Accounts, and $1 million minimums for specified indirect and cross-margining customer accounts.

New

FICC would have discretion to impose Minimum RFD, SIP or Customer Margin Charges up to $1 million, initially at $0, and revised cash requirements would apply to the first $1 million and specified percentages or caps for relevant accounts.

Business Impact

Who is affected

Directly affected

FICC-GSD Netting Members, including Inter-Dealer Broker Netting Members, Sponsoring Members, Agent Clearing Members and Members maintaining relevant GSD accounts, with Registered Investment Company Netting Members excluded from Guaranty Fund and loss-allocation requirements but potentially subject to Stress Test Deficiency Charges.

Indirectly affected

Sponsored Members, Segregated Indirect Participants, Cross-Margining Customers, CCIT Members, treasury clearing clients, and internal treasury, liquidity, capital, legal, operations and risk teams supporting GSD clearing activity.

Jurisdictions

United States

Business processes

FICC-GSD margin and collateral funding, Default fund and loss-allocation exposure management, Daily stress testing and backtesting governance, Treasury liquidity forecasting and intraday funding, Regulatory capital and bankruptcy-remoteness legal analysis, Client clearing pricing, account onboarding and indirect participant access, Rulebook change management and SEC/FICC filing monitoring

Estimated effort

High

Compliance risk

High

Affected Reports

GSD Guaranty Fund Requirement monitoring and funding controlClearing Fund custody, segregation and bankruptcy-remoteness legal-control fileLoss allocation exposure and assessment-cap calculation controlStress Test Deficiency Charge monitoring and escalation processMinimum margin charge and cash-composition parameter control for GSD accounts

Field	Validation rule
Guaranty Fund Requirement	Proposed GSD Rule 4A and GSD Rule 1 definition; used to determine each Netting Member’s required Guaranty Fund contribution.
Guaranty Fund Deposit	Proposed GSD Rule 4A and GSD Rule 1 definition; deposits must be made in cash in immediately available funds.
Cover 2 Requirement	Proposed GSD Rule 4A and GSD Rule 1 definition; Guaranty Fund sized to cover the two Netting Member Affiliated Families creating the largest aggregate credit exposure under extreme but plausible conditions.
Stress Test Deficiency and Stress Test Deficiency Charge	Proposed GSD Rule 1 and Margin Component Schedule; deficiency means stress losses above applicable Required Fund Deposits, with a proposed margin add-on for threshold breaches.
Loss Allocation Cap and Allocated Loss	Proposed GSD Rule 4C; Loss Allocation Cap would equal 200% of the Member’s Guaranty Fund Requirement for the relevant Event Period.
Event Period	Proposed GSD Rule 4C; Defaulting Member Events and Declared Non-Default Loss Events would be grouped into a five-business-day Event Period.
Minimum RFD Charge, Minimum SIP Margin Charge and Minimum Customer Margin Charge	Proposed Margin Component Schedule and GSD Rule 1 definitions; fixed minimums would be replaced with FICC-set minimum charges capped at $1 million and initially set at $0.
Netting Member Clearing Fund Custody Account	Proposed GSD Rule 1 and Rule 4; Clearing Fund would be credited to securities accounts for the benefit of Netting Members.

Recommended Actions

7 suggested next steps· derived from source analysis

1
AI generatedStep 1 of 7
Quantify projected Guaranty Fund contributions, 200% loss-allocation caps, and Stress Test Deficiency Charge sensitivity using current and stressed GSD portfolio data.
2
AI generatedStep 2 of 7
Update liquidity forecasts to model monthly first-business-day Guaranty Fund funding and potential same-day intramonth resizing calls, using the times FICC expects to specify in procedures where applicable.
3
AI generatedStep 3 of 7
Review regulatory capital and legal-opinion assumptions for Clearing Fund bankruptcy remoteness, including proposed custody account, NYUCC, segregation, lien and permitted-use provisions.
4
AI generatedStep 4 of 7
Re-map default management controls to the proposed Rule 4C waterfall, including exclusion of Clearing Fund from mutualization and the new five-business-day Event Period.
5
AI generatedStep 5 of 7
Assess client-clearing and sponsored-access pricing for removal of fixed minimum charges, the new Guaranty Fund economics, and possible Stress Test Deficiency Charges.
6
AI generatedStep 6 of 7
Prepare a governance briefing and, if appropriate, a comment submission addressing funding, capital, liquidity, client impact and operational readiness concerns once the SEC comment window is confirmed.
7
AI generatedStep 7 of 7
Monitor SEC, DTCC/FICC rule filings, Important Notices and rulebook updates for approval, implementation date, procedures, public stress-test parameters and related framework amendments.

Timeline

other

Jul 24, 2026

FICC filed advance notice SR-FICC-2026-802 with the SEC to establish a Guaranty Fund at GSD.

other

Aug 4, 2026

FICC filed Partial Amendment No. 1 to the advance notice and the parallel proposed rule change SR-FICC-2026-008 to make clarifications and corrections.

publication

Aug 6, 2026

The SEC issued Release No. 34-106054 publishing the notice of filing and extending the review period for the advance notice.

Sources

AI-generated analysis is based on the following primary sources. Always verify against the official publication.

SEC release / advance noticeU.S. Securities and Exchange CommissionAug 6, 2026
Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Extension of the Review Period of an Advance Notice, as Modified by Partial Amendment No. 1, to Establish a Guaranty Fund at the Government Securities Division ↗
https://www.sec.gov/files/rules/sro/ficc/2026/34-106054.pdf
SRO rule filing repositoryDepository Trust & Clearing CorporationDate not specified
DTCC Legal: SEC Rule Filings ↗
https://www.dtcc.com/legal/sec-rule-filings
RulebookDepository Trust & Clearing CorporationDate not specified
FICC Government Securities Division Rules ↗
https://www.dtcc.com/legal/rules-and-procedures
Final ruleU.S. Securities and Exchange CommissionDec 13, 2023
Standards for Covered Clearing Agencies for U.S. Treasury Securities and Application of the Broker-Dealer Customer Protection Rule With Respect to U.S. Treasury Securities ↗
https://www.sec.gov/files/rules/final/2023/34-99149.pdf

Related Evidence

Verified source support for this analysis

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