(Reuters) — The U.S. Securities and Exchange Commission on Monday proposed new rules aimed at preventing conflicts of interest in the management and governance of clearing houses.
Clearing houses provide essential plumbing for the financial markets, ensuring that trades in securities or derivatives are completed, even if one side of a transaction goes bankrupt.
Under the SEC’s proposal, registered clearing houses would be required to disclose more details about board composition, independent directors and nominating and risk management committees, among other things, the agency said.
“I believe these rules would help build more transparent and reliable clearinghouses,”
; SEC Chairman Gary Gensler said in a statement.“This, in turn, would help ensure our markets are more resilient, protect investors and build confidence in our markets,” Gensler said.
The plan would replace two related measures proposed after the 2009-2010 global financial crisis, but never enacted.
Specifically, the SEC’s plan would require clearing organizations to identify, mitigate, or eliminate conflicts of interest involving directors or senior executives, and also to document such actions.
It would also require such companies to implement policies and procedures requiring directors to report conflicts of interest, among other things.
The SEC’s move comes as part of efforts by the Biden administration to see all aspects of the financial industry increase environmental, social and governance disclosures.
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