[Federal Register Volume 84, Number 167 (Wednesday, August 28, 2019)]
[Notices]
[Pages 45182-45184]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-18482]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86728; File No. SR-ICC-2019-009]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change, Security-
Based Swap Submission, or Advance Notice Relating to ICC's Treasury 
Operations Policies and Procedures

August 22, 2019.
    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 
August 8, 2019, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange 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. ICC filed the 
proposed rule change pursuant Section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(6) thereunder,\4\ such that the proposed rule change was 
immediately effective upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 revise the 
ICC Treasury Operations Policies and Procedures (``Treasury Policy''). 
These revisions do not require any changes to the ICC Clearing Rules 
(``Rules'').

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, 
security-based swap submission, or advance notice and discussed any 
comments it received on the proposed rule change, security-based swap 
submission, or advance notice. 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

(a) Purpose
    ICC proposes to revise its Treasury Policy. Specifically, ICC 
proposes minor changes to the Treasury Policy to more generally refer 
to a data provider for the purposes of collateral valuation and to 
promote uniform investment guidelines that are applicable to Euro-
denominated cash posted by Clearing Participants (``CPs'') for their 
margin requirements related to client positions (``customer origin 
cash'') and Euro-denominated Guaranty Fund and margin cash posted by 
CPs (``house origin cash''). ICC believes that 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 changes are 
described in detail as follows.
    ICC proposes to more generally refer to a data provider for the 
purposes of collateral valuation in the `Collateral Valuation' sub-
section. Currently, the Treasury Policy references, by name, a data 
provider that ICC uses as a source for collateral valuation 
information. ICC proposes to remove references to the specific data 
provider and to more generally require ICC to use a reliable data 
provider as a source for collateral valuation information. ICC does not 
intend that the Treasury Policy list ICC service providers or control 
the on-boarding or review of such data provider. Service providers are 
subject to contractual arrangements entered into by authorized ICC 
officers and, if deemed a critical vendor under the Operational Risk 
Management Framework, governed by the Operational Risk Management 
Framework that describes their review and approval.\5\
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    \5\ See SR-ICC-2018-003 for more information regarding the 
review and approval of critical vendors under the ICC Operational 
Risk Management Framework.
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    ICC proposes updates to the Euro investment guidelines appendix, 
which is applicable to Euro-denominated customer origin and house 
origin cash. The current Euro investment guidelines allow direct 
investments in French and German sovereign debt securities having a 
final maturity of no greater than 198 days but require that all such 
investments with customer origin cash comply with any applicable 
conditions and restrictions in Commodity Futures Trading Commission 
(``CFTC'') Regulation 1.25,\6\ including any applicable exemptive 
orders. As such, direct investments with customer origin cash are 
limited to French and German sovereign debt securities having a final 
maturity of no greater than 180 days in accordance with the exemptive 
order that was issued by the CFTC (the ``Order'').\7\ ICC proposes to 
update the Euro investment guidelines to restrict direct investments 
with both customer origin and house origin cash to French and German 
sovereign debt securities having a final maturity of no greater than 
180 days in order to promote uniform Euro investment guidelines that 
are applicable to customer origin and house origin cash.
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    \6\ 17 CFR 1.25.
    \7\ 83 FR 35241 (July 25, 2018).
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    ICC has filed the proposed rule change for immediate effectiveness 
and proposes that it will be operative on or about, but no sooner than, 
September 10, 2019.
(b) Statutory Basis
    Section 17A(b)(3)(F) of the Act \8\ requires, among other things, 
that the rules of a clearing agency be designed to promote the prompt 
and accurate clearance and settlement of securities transactions, and 
to the extent applicable, derivative agreements, contracts and 
transactions; to assure the safeguarding of securities and funds which 
are in the custody or control of the clearing agency or for which it is 
responsible; and to comply with the provisions of the Act and the rules 
and regulations thereunder. ICC believes that the proposed rule change 
is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to ICC, in particular, to Section 
17(A)(b)(3)(F),\9\ because ICC believes that the proposed rule change 
will promote the prompt

[[Page 45183]]

and accurate clearance and settlement of securities transactions, 
derivatives agreements, contracts, and transactions, and contribute to 
the safeguarding of securities and funds associated with security-based 
swap transactions in ICC's custody or control, or for which ICC is 
responsible. The proposed changes allow ICC to more generally refer to 
a reliable data provider for the purposes of collateral valuation and 
to maintain uniformity across the Euro investment guidelines. Removing 
reference to a specific data provider ensures that the documentation of 
ICC's Treasury Policy remains up-to-date, clear, transparent, and 
focused on articulating the policies and procedures used to support 
ICC's treasury functions. ICC does not intend that the Treasury Policy 
list specific ICC service providers. Additionally, restricting direct 
investments with both customer origin and house origin cash to French 
and German sovereign debt securities having a final maturity of no 
greater than 180 days promotes uniform Euro investment guidelines in 
the Treasury Policy and enhances compliance with the CFTC's Order.\10\ 
The CFTC's Order determined that 180 days or less was an appropriate 
final maturity for direct investments in French and German sovereign 
debt securities and, as such, ICC proposes that its Treasury Policy 
conform with respect to both house origin and customer origin cash. 
Thus, the proposed rule change is designed to promote the prompt and 
accurate clearance and settlement of securities transactions, 
derivatives agreements, contracts, and transactions and to contribute 
to the safeguarding of securities and funds associated with security-
based swap transactions in ICC's custody or control, or for which ICC 
is responsible within the meaning of Section 17A(b)(3)(F) of the 
Act.\11\
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    \8\ 15 U.S.C. 78q-1(b)(3)(F).
    \9\ Id.
    \10\ 83 FR 35241 (July 25, 2018).
    \11\ 15 U.S.C. 78q-1(b)(3)(F).
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    In addition, the proposed revisions to the ICC Treasury Policy are 
consistent with the relevant requirements of Rule 17Ad-22.\12\ Rule 
17Ad-22(b)(3) \13\ requires ICC to establish, implement, maintain and 
enforce written policies and procedures reasonably designed to maintain 
sufficient financial resources to withstand, at a minimum, a default by 
the two CP families to which it has the largest exposures in extreme 
but plausible market conditions. The proposed changes promote the 
reliable investment of assets in ICC's control with minimal risk, 
including by generally requiring ICC to use a reliable data provider 
for the purposes of collateral valuation and conforming ICC's Euro 
investment guidelines with the CFTC's Order \14\ by limiting direct 
investments to French and German sovereign debt securities having a 
final maturity of 180 days or less with both house origin and customer 
origin cash, thereby ensuring that ICC continues to maintain sufficient 
financial resources to withstand, at a minimum, a default by the two CP 
families to which it has the largest exposures in extreme but plausible 
market conditions, consistent with the requirements of Rule 17Ad-
22(b)(3).\15\
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    \12\ 17 CFR 240.17Ad-22.
    \13\ 17 CFR 240.17Ad-22(b)(3).
    \14\ 83 FR 35241 (July 25, 2018).
    \15\ 17 CFR 240.17Ad-22(b)(3).
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    Rule 17Ad-22(d)(3) \16\ requires ICC to establish, implement, 
maintain and enforce written policies and procedures reasonably 
designed to hold assets in a manner that minimizes risk of loss or of 
delay in its access to them and to invest assets in instruments with 
minimal credit, market, and liquidity risks. The CFTC's Order \17\ 
determined that 180 days or less was an appropriate final maturity for 
direct investments in French and German sovereign debt securities and 
ICC proposes that its Treasury Policy conform with respect to both 
house origin and customer origin cash. Such change does not expand the 
universe of permitted investments under the Treasury Policy since the 
current Euro investment guidelines already allow direct investments in 
French and German sovereign debt securities having a final maturity of 
180 days or less. As such, ICC believes that the proposed changes 
enhance compliance with the CFTC's Order \18\ by promoting uniform Euro 
investment guidelines and limiting direct investments with both 
customer origin and house origin cash to French and German sovereign 
debt securities having a final maturity of no greater than 180 days, 
which will enhance ICC's ability to hold assets in a manner that 
minimizes risk of loss or of delay in its access to them and to invest 
assets in instruments with minimal credit, market, and liquidity risks. 
Such changes are therefore reasonably designed to meet the requirements 
of Rule 17Ad-22(d)(3).\19\
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    \16\ 17 CFR 240.17Ad-22(d)(3).
    \17\ 83 FR 35241 (July 25, 2018).
    \18\ Id.
    \19\ 17 CFR 240.17Ad-22(d)(3).
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(B) Clearing Agency's Statement on Burden on Competition

    ICC does not believe the proposed rule change would have any 
impact, or impose any burden, on competition. The proposed changes to 
ICC's Treasury Policy will apply uniformly across all market 
participants. Therefore, ICC does not believe the proposed rule change 
imposes 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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 
19b-4(f)(6) thereunder.
    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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-2019-009 on the subject line.

Paper Comments

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


[[Page 45184]]


All submissions should refer to File Number SR-ICC-2019-009. 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 a.m. and 3 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-2019-009 and should be 
submitted on or before September 18, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-18482 Filed 8-27-19; 8:45 am]
 BILLING CODE 8011-01-P