Section 40.10 - Special certification procedures for submission of rules by systemically important derivatives clearing organizations(a)Advance notice. A systemically important derivatives clearing organization, as defined in § 39.2 of this chapter, shall provide notice to the Commission not less than 60 days in advance of any proposed change to its rules, procedures, or operations that could materially affect the nature or level of risks presented by the systemically important derivatives clearing organization. A notice submitted under this section shall be subject to the filing requirements of § 40.6(a)(1) and the website publication requirements of § 40.6(a)(2) . (1) The notice of a proposed change shall provide the information required to be submitted under § 40.6(a)(7) and shall specifically describe:(i) The nature of the change and expected effects on risks to the systemically important derivatives clearing organization, its clearing members, or the market; and(ii) How the systemically important derivatives clearing organization plans to manage any identified risks.(2) Concurrent with providing the Commission with the advance notice or any request or other information related to the advance notice, the systemically important derivatives clearing organization shall provide the Board of Governors of the Federal Reserve System with a copy of such notice, request or other information in the same format and manner as required by the Board of Governors for those designated financial market utilities for which it is the Supervisory Agency pursuant to section 803(8) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.(3) The systemically important derivatives clearing organization may request that the Commission expedite the review on the grounds that the change would materially decrease risk. The Commission, in its discretion, may expedite the review and, pursuant to paragraph (g) of this section, notify the systemically important derivatives clearing organization in less than 60 days from the date the Commission receives the notice of proposed change in writing that it does not object to the proposed change and authorizes implementation of the change on an earlier date.(b)Changes requiring advance notice. Changes to a systemically important derivatives clearing organization's rules, procedures, or operations that could materially affect the nature or level of risks presented by the systemically important derivatives clearing organization may include, but are not limited to: material changes to its default management plan or default rules or procedures required under § 39.16 or 39.35 of this chapter, program of risk analysis and oversight required under § 39.18 of this chapter, or recovery and wind down plans required under § 39.39 of this chapter; the adoption of a new or materially revised margin methodology; the establishment of a cross-margining program or similar arrangement with another clearing organization; and material changes to its approach to the stress testing required under § 39.13(h)(3) or 39.36(a) or (c) of this chapter. If a systemically important derivatives clearing organization determines that a proposed change could not materially affect the nature or level of risks it presents and therefore does not file an advance notice, the Commission may determine otherwise and require the systemically important derivatives clearing organization to withdraw the proposed change and provide notice pursuant to this section.(c)Further information. The Commission may require the systemically important derivatives clearing organization to provide any further information necessary to assess the effect the proposed change would have on the nature or level of risks associated with the systemically important derivatives clearing organization's payment, clearing, or settlement activities and the sufficiency of any proposed risk management techniques.(d)Notice of objection. A systemically important derivatives clearing organization shall not implement a change to which the Commission has an objection on the grounds that the proposed change is not consistent with the Act or 17 CFR chapter I, or any applicable rules, orders, or standards prescribed under section 805(a) of the Dodd-Frank Act. The Commission will notify the systemically important derivatives clearing organization in writing of any objection regarding the proposed change within 60 days from the later of: (1) The date that the notice of the proposed change was received; or(2) The date the Commission received any further information it had requested for consideration of the notice.(e)Implementation of change absent Commission objection. A systemically important derivatives clearing organization may implement a change if it has not received an objection to the proposed change within 60 days from the later of: (1) The date that the Commission received the notice of proposed change; or(2) The date the Commission received any further information it had requested for consideration of the notice.(f)Extended review. The Commission may, during the 60-day review period, extend the review period if the proposed change raises novel or complex issues. A notification by the Commission pursuant to this paragraph will extend the review for an additional 60 days. Any extension under this paragraph will extend the time periods under paragraphs (d) and (e) of this section for an additional 60 days.(g)Change allowed earlier if notified of no objection. A systemically important derivatives clearing organization may implement a change in less than 60 days from the date the Commission receives the notice of proposed change or the date the Commission receives any further information it has requested, if the Commission notifies the systemically important derivatives clearing organization in writing that it does not object to the proposed change and authorizes implementation of the change on an earlier date, subject to any conditions imposed by the Commission.(h)Emergency changes. A systemically important derivatives clearing organization may implement a change that would otherwise require advance notice under this section if it determines that an emergency exists and immediate implementation of the change is necessary for the systemically important derivatives clearing organization to continue to provide its services in a safe and sound manner.(1) The systemically important derivatives clearing organization shall provide notice of any such emergency change to the Commission as soon as practicable, which shall be no later than 24 hours after implementation of the change.(2) The notice of an emergency change shall: (i) Provide the information required for advance notice as set forth in paragraph (a) of this section;(ii) Describe the nature of the emergency; and(iii) Describe the reason the change was necessary for the systemically important derivatives clearing organization to continue to provide its services in a safe and sound manner.(3) The Commission may require modification or rescission of the emergency change if it finds that the change is not consistent with the Act or 17 CFR chapter I, or any applicable rules, orders, or standards prescribed under section 805(a) of the Dodd-Frank Act.(i) Where in §§ 39.3(g) , 39.4(f) , 39.13(i) , and 39.15(b)(2) of this chapter a derivatives clearing organization is required to submit rules for approval pursuant to § 40.5 , a systemically important derivatives clearing organization instead shall submit such rules pursuant to this section if the rules could materially affect the nature or level of risks presented by the systemically important derivatives clearing organization.