[Federal Register Volume 84, Number 225 (Thursday, November 21, 2019)]
[Notices]
[Pages 64379-64381]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25206]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87549; File No. SR-ICC-2019-012]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change Relating to ICC's Treasury Operations 
Policies and Procedures

November 15, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934, 15 U.S.C. 78s(b)(1) and Rule 19b-4, 17 CFR 240.19b-4, notice is 
hereby given that on November 1, 2019, ICE Clear Credit LLC (``ICC'') 
filed with the Securities and Exchange Commission the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared primarily by ICC. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.

I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    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 
(the ``Rules'').

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    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

(a) Purpose
    ICC proposes to revise its Treasury Policy. Specifically, ICC 
proposes clarification updates related to its use of a committed 
repurchase (``repo'') facility, acceptable forms of United States 
(``US'') Treasury collateral, and its collateral valuation process. 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. 
ICC proposes to make such changes effective following Commission 
approval of the proposed rule change. The proposed revisions are 
described in detail as follows.
    ICC proposes amendments to the `Funds Management' section with 
respect to its use of a committed repo facility. Namely, ICC proposes 
to clarify that the committed repo facility can be used to generate 
temporary liquidity through the sale and agreement to repurchase 
securities pledged by ICC Clearing Participants (``CPs'') to satisfy 
their Initial Margin (``IM'') and Guaranty Fund (``GF'') requirements. 
ICC proposes to include that, when applicable, the facility can be used 
to rehypothecate sovereign debt from overnight repo investments in the 
event of a counterparty default. ICC also proposes to note that the 
facility can be used to sell, with the agreement to repurchase, 
sovereign debt securities that are held by ICC pursuant to direct 
investments in such securities.
    ICC proposes to update the `Custodial Assets' section regarding 
acceptable forms of US Treasury collateral and ICC's collateral 
valuation process. Under the Treasury Policy, acceptable forms of non-
cash collateral for IM and GF are limited to US Treasury securities. 
ICC proposes to specify that Floating Rate Notes and STRIPS are not 
acceptable forms of US Treasury collateral for IM and GF. ICC also 
proposes to add language stating that, with respect to its collateral 
valuation process, Euros that are used to cover a US Dollar denominated 
product requirement will be subject to a haircut.
(b) Statutory Basis
    Section 17A(b)(3)(F) of the Act \1\ requires, among other things, 
that the rules of a clearing agency be designed to

[[Page 64380]]

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),\2\ because ICC believes that the proposed 
rule change will promote the prompt 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 provide additional clarity regarding its 
use of the committed repo facility, acceptable forms of US Treasury 
collateral, and its collateral valuation process. The proposed updates 
ensure that the documentation of ICC's Treasury Policy remains up-to-
date, transparent, and focused on clearly articulating the policies and 
procedures used to support ICC's treasury functions, which promotes the 
prompt and accurate clearance and settlement of securities 
transactions, derivatives agreements, contracts, and transactions and 
contributes to the safeguarding of securities and funds which are in 
the custody or control of ICC or for which it is responsible. As such, 
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.\3\
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    \1\ 15 U.S.C. 78q-1(b)(3)(F).
    \2\ Id.
    \3\ Id.
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    In addition, the proposed rule change is consistent with the 
relevant requirements of Rule 17Ad-22.\4\ Rule 17Ad-22(b)(3) \5\ 
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. ICC believes that the proposed changes enhance its 
ability to manage its financial resources, including by more clearly 
articulating details related to the use of the committed repo facility, 
acceptable forms of US Treasury collateral, and the collateral 
valuation process. Specifically, the additional details relating to 
ICC's use of a committed repo facility clarify, among other things, 
that when applicable, the facility can be used to rehypothecate 
sovereign debt from overnight repo investments in the event of a 
counterparty default. The proposed changes also identify Floating Rate 
Notes and STRIPS as unacceptable forms of US Treasury collateral for IM 
and GF and, with respect to the collateral valuation process, specify 
that Euros that are used to cover a US Dollar denominated product 
requirement will be subject to a haircut. Such proposed changes 
strengthen the documentation of ICC's treasury operations, which 
supports ICC's ability 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).\6\
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    \4\ 17 CFR 240.17Ad-22.
    \5\ 17 CFR 240.17Ad-22(b)(3).
    \6\ Id.
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    Rule 17Ad-22(d)(3) \7\ 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 proposed changes 
strengthen ICC's ability to safeguard assets and limit the potential 
for loss or delay in access to such assets by ensuring that ICC has 
clear and comprehensive procedures for the use of the committed repo 
facility, transparent and well-documented policies regarding acceptable 
types of US Treasury collateral, and clear and effective procedures for 
collateral valuation. Moreover, ICC believes that having policies and 
procedures that clearly and accurately document ICC's treasury 
functions are an important component to the effectiveness of ICC's 
treasury operations, which promote 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).\8\
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    \7\ 17 CFR 240.17Ad-22(d)(3).
    \8\ Id.
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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 
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 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 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-2019-012 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 64381]]


All submissions should refer to File Number SR-ICC-2019-012. 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 that are filed with 
the Commission, and all written communications relating to the proposed 
rule change 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-2019-012 and should be 
submitted on or before December 12, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-25206 Filed 11-20-19; 8:45 am]
BILLING CODE 8011-01-P