EDIT: Thank you u/pragmatic-guy, I copied the wrong SRO title for this one. Would delete and resubmit but don't want to kill the discussion. If Mods wish to kill and repost, completely understand. I apologize for the mixup!!! Will stop trying to read these two at a time :(
FICC: Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, to Add the Sponsored GC Service and Make Other Changes (Release No.34-92808 ; File No. SR-FICC-2021-003)
Liquidity Risk Management
Currently, trades between a Sponsoring Member and its Sponsored Member do not independently create liquidity risk for FICC. Under its Rules, if a Sponsoring Member defaults, FICC may close out (that is, cash settle) the Sponsored Member trades of the defaulting Sponsoring Member. Similarly, if a Sponsored Member defaults, FICC may offset its settlement obligations to the Sponsoring Member against the Sponsoring Member’s obligations under the Sponsoring Member Guaranty to perform on behalf of its defaulting Sponsored Member. Thus, in both default scenarios, FICC bears no liquidity risk.