November 27, 2021
It is peculiar that the NSCC would be given the ability to determine whether closing out some or all of the defaulted members notated SFT positions would create a disorderly market in the relevant SFT securities. Firstly I find it concerning the NSCC would be given the unilateral decision making capabilities to decide whether or not the parameters for a disorderly market have been achieved. This could lead to unethical and undue influence on the members of the NSCC responsible for this decision. This leads me to my next point which is the terminology used here is too vague and subjective. The term disorderly market should have an explicit definition so that, if the unilateral ability of the NSCC to delay settlement obligations is granted, it is uniformly applied to all NSCC members and securities. Using this same logic, the term relevant as it is used on page 5 (In case of an SFT Member default, NSCC would be able to delay its satisfaction if final settlement obligations to non-defaulting SFT Members beyond the normal settlement cycle for the purchase or sale of securities to the extent NSCC determines that taking market action to close-out some or all of the defaulted SFT Members novated SFT Positions would create a disorderly market in the relevant SFT Securities.) is also vague and open to excessive interpretation. Relevant could refer to securities held by that SFT Member, it could mean securities held by all (or some) of the other participating Members, it could refer to securities within the same or related industries or even securities in unrelated market sectors/indicies/industries that would indirectly benefit or be adversely affected by compelling the defaulting SFT Member from satisfying its obligations.