[Federal Register Volume 83, Number 45 (Wednesday, March 7, 2018)]
[Notices]
[Pages 9786-9788]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04558]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82798; File No. SR-ICC-2018-003]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change, Security-Based Swap Submission, or 
Advance Notice Relating to the ICC Operational Risk Management 
Framework

March 1, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on 
February 23, 2018, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change, security-based swap submission, or advance notice as described 
in Items I, II and III below, which Items have been prepared by ICC. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change, security-based swap submission, or advance notice 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change, Security-Based Swap Submission, or Advance Notice

    The principal purpose of the proposed rule change is to update 
ICC's Operational Risk Management Framework. These revisions do not 
require any changes to the ICC Clearing Rules.

[[Page 9787]]

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change, Security-Based Swap Submission, or 
Advance Notice

    In its filing with the Commission, ICC included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. ICC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of these 
statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change, Security-Based Swap Submission, or 
Advance Notice

    ICC proposes updates to the ICC Operational Risk Management 
Framework. ICC believes such revisions will facilitate the prompt and 
accurate clearance and settlement of securities transactions and 
derivative agreements, contracts, and transactions for which it is 
responsible. The proposed revisions are described in detail as follows.
(a) Summary of Proposed Changes
    The ICC Operational Risk Management Framework details ICC's dynamic 
and independent program of operational risk assessment and oversight, 
which aims to reduce operational incidents, encourage process and 
control improvement, bring transparency to operational performance 
standard monitoring, and fulfill regulatory obligations. ICC proposes 
changes to its Operational Risk Management Framework to incorporate the 
Intercontinental Exchange, Inc. (``ICE, Inc.'') Enterprise Risk 
Management Department into its operational risk management program.
    ICC proposes to revise the Operational Risk Management Framework to 
reflect the role of the ICE, Inc. Enterprise Risk Management Department 
with respect to ICC's operational risk management processes. The ICE, 
Inc. Enterprise Risk Management Department provides the oversight and 
framework for identifying, assessing, managing, monitoring and 
reporting on risk across the ICE, Inc. organization. This department 
has dedicated resources focused on the various ICE, Inc. business 
units. Specifically, the ICE, Inc. Enterprise Risk Management Chief 
Risk Officer for North American Clearing Houses (``ERM'') is assigned 
responsibility for the ICE, Inc. Enterprise Risk Management 
Department's coverage of ICC. The ERM in conjunction with the ICC 
Compliance Committee is responsible for overseeing the management of 
the Operational Risk Management Framework. Under the revised framework, 
ICC proposes removing all references to the role of the Operational 
Risk Manager (``ORM''), who was previously responsible for managing the 
Operational Risk Management Framework, since the role of the ORM was 
incorporated into the ICE, Inc. Enterprise Risk Management Department 
and the ORM is no longer a position at ICC.
    ICC proposes removing all references to the ORM from the risk 
assessment process and assigning several of the ORM's responsibilities 
to the ERM, including the ORM's responsibilities under the operational 
risk lifecycle components. Under the ``identify'' component, the ERM 
will identify clearing processes and risk scenarios for evaluation. 
Under the ``monitor'' component, the ERM will track control 
enhancements resulting from the risk assessment process. Under the 
``mitigate'' component, the ERM will recommend increasing control 
effectiveness where residual risk could be further mitigated. Under the 
``report'' component, the ERM will present operational risk reporting 
to senior management, committees, and the ICC Board.
    ICC similarly proposes removing all references to the ORM from the 
performance objective setting and monitoring process and assigning 
several of the ORM's responsibilities under the operational risk 
lifecycle components to ICC Systems Operations and the ERM. Under the 
``mitigate'' component, ICC proposes removing reference to the ORM's 
monitoring process and adding language to describe ICC Systems 
Operations' incident management and mitigation process and the ERM's 
role within it. Under the ``report'' component, ICC proposes assigning 
the ORM's reporting obligations to ICC Systems Operations and the ERM.
    ICC proposes enhancements within the operational risk focus areas 
to reflect the removal of the ORM position and make clarifying edits to 
reflect current practices. ICC, not the ORM, will consider operational 
risk focus areas which address business concerns, regulation and 
industry best practices. Under the revised framework, certain functions 
remain outsourced to ICE, Inc. Further, the proposed enhancements to 
the ``Business Continuity Planning and Disaster Recovery'' risk focus 
area eliminate the ORM's responsibilities related to business 
continuity planning (``BCP'') and disaster recovery (``DR''), including 
serving as the chair of the ICC BCP and DR Oversight Committee 
(``BDOC'') and ensuring completion of BCP and DR documentation and 
testing. ICC also proposes adding language to note that BDOC assists 
the ICC Compliance Committee with the approval of ICC BCP and DR 
program documentation. In addition, ICC, not the ORM, will ensure that 
ICC can recover from a disruption and will collaborate with departments 
to complete applicable surveys.
    ICC also proposes revisions to the ``Vendor Assessment'' risk focus 
area. As the annual review and approval of the critical vendor 
inventory was re-assigned from the ICC Compliance Committee to BDOC and 
incorporated into BDOC governance documentation, ICC proposes removing 
reference to it from the framework. ICC also proposes to note that 
BDOC, not the ORM, reviews and recommends that the ICC Compliance 
Committee approve the critical vendor inventory and conducts a service 
provider risk assessment for each critical vendor. Further, ICC 
proposes adding procedures with respect to its assessment process for 
critical vendors. The revised framework describes how critical vendors 
receive risk rankings that determine the extent of oversight required 
and lists how often risk assessments for critical vendors are 
completed.
    ICC proposes enhancements to the remaining three operational risk 
focus areas to reflect the removal of the ORM role. The proposed 
changes to the ``New Products, Processes and Initiatives'' risk focus 
area remove reference to the ORM's role on the ICC New Initiative 
Approval Committee, given that the ORM is no longer a position at ICC, 
and note that the ERM conducts post-implementation reviews of new 
initiatives. ICC proposes enhancing the ``ICE Information Security'' 
risk focus area to provide specific reference to the ICE Information 
Security Department's (``InfoSec Department'') overall governing 
document and to reflect changes to the membership of the InfoSec 
Department's governance committee. The proposed changes to the 
``Technology Control Functions'' risk focus area note that the ERM, not 
the ORM, has access to incident management systems and reviews and 
escalates incidents.
    ICC also proposes other non-material changes to the framework. ICC 
updated the appendix to the document to more clearly summarize and 
appropriately describe the regulatory requirements and industry 
guidance to which ICC is subject, including U.S. Commodity Futures 
Trading Commission Regulation 17 CFR 39.18. Minor grammatical and

[[Page 9788]]

structural changes were also made to the document to enhance 
readability.
(b) Statutory Basis
    Section 17A(b)(3)(F) of the Act \3\ requires, among other things, 
that the rules of a clearing agency be designed to protect investors 
and the public interest and to comply with the provisions of the Act 
and the rules and regulations thereunder. ICC believes that the 
proposed rule changes are consistent with the requirements of the Act 
and the rules and regulations thereunder applicable to ICC, in 
particular, to Section 17A(b)(3)(F),\4\ because ICC believes that the 
proposed rule changes will protect investors and the public interest, 
as the updates more accurately reflect ICC's operational risk program 
given the incorporation of the ICE, Inc. Enterprise Risk Management 
Department into ICC's existing operational risk management processes. 
In addition, the proposed revisions are consistent with the relevant 
requirements of Rule 17Ad-22.\5\ The changes to the ICC Operational 
Risk Management Framework further ensure that ICC, through its 
operational risk program, is able to identify sources of operational 
risk and minimize them through the development of appropriate systems, 
control, and procedures. Thus, the changes are reasonably designed to 
meet the operational risk requirements of Rule 17Ad-22(d)(4).\6\ As 
such, the proposed changes are designed to promote the prompt and 
accurate clearance and settlement of securities transactions, 
derivatives agreements, contracts, and transactions within the meaning 
of Section 17A(b)(3)(F) \7\ of the Act.
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    \3\ 15 U.S.C. 78q-1(b)(3)(F).
    \4\ Id.
    \5\ 17 CFR 240.17Ad-22.
    \6\ 17 CFR 240.17Ad-22(d)(4).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Clearing Agency's Statement on Burden on Competition

    ICC does not believe the proposed rule changes would have any 
impact, or impose any burden, on competition. The ICC Operational Risk 
Management Framework applies uniformly across all market participants. 
Therefore, ICC does not believe the proposed rule changes impose any 
burden on competition that is inappropriate in furtherance of the 
purposes of the Act.

(C) Clearing Agency's Statement on Comments on the Proposed Rule 
Change, Security-Based Swap Submission, or Advance Notice Received From 
Members, Participants or Others

    Written comments relating to the proposed rule change have not been 
solicited or received. ICC will notify the Commission of any written 
comments received by ICC.

III. Date of Effectiveness of the Proposed Rule Change, Security-Based 
Swap Submission, or Advance Notice and Timing for Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, security-based swap submission, or advance notice is consistent 
with the Act. Comments may be submitted by any of the following 
methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-ICC-2018-003 on the subject line.

Paper Comments

    Send paper comments in triplicate to Secretary, Securities and 
Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-ICC-2018-003. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change, security-based 
swap submission, or advance notice that are filed with the Commission, 
and all written communications relating to the proposed rule change, 
security-based swap submission, or advance notice between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for website viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE, Washington, DC 20549, on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
such filings will also be available for inspection and copying at the 
principal office of ICE Clear Credit and on ICE Clear Credit's website 
at https://www.theice.com/clear-credit/regulation.
    All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-ICC-2018-003 and should be 
submitted on or before March 28, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-04558 Filed 3-6-18; 8:45 am]
 BILLING CODE 8011-01-P