Subject: Petition - File No. 4-842
From: Peyten G. Frakes

I am writing to respectfully petition the Securities and Exchange Commission (SEC) to amend the rules governing the National Securities Clearing Corporation (NSCC), specifically Rules 4, 18, and 22. The proposed amendments aim to enhance market stability and integrity by addressing key concerns in the current clearing processes.

**Background:**
The existing NSCC rules grant significant discretion in the execution of close-outs, which can lead to inconsistent practices and potential market distortions. Additionally, the current loss allocation mechanisms lack clarity, posing risks to fair risk management. Furthermore, there is an absence of clawback provisions for executives, which could lead to misaligned incentives and financial instability.

**Proposed Changes:**
1. **Eliminate Discretion in Close-Outs:** Amend Rule 4 to establish standardized procedures for close-outs, ensuring consistent application and reducing market distortions.
2. **Clarify Loss Allocation:** Revise Rule 18 to provide clear guidelines on loss allocation, promoting transparency and fairness in risk management.
3. **Include Clawback Provisions:** Modify Rule 22 to incorporate clawback provisions for executives, aligning incentives with long-term financial stability.

These changes are crucial for maintaining a stable and fair financial system. I appreciate your consideration of this petition and look forward to the Commission's action to enhance market stability.

Sincerely,
Peyten G. Frakes