[Federal Register Volume 86, Number 47 (Friday, March 12, 2021)]
[Notices]
[Pages 14165-14166]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05132]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91278; File No. SR-ICC-2021-002]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change Relating to the Clearance of an 
Additional Credit Default Swap Contract

March 8, 2021.

I. Introduction

    On January 15, 2021, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (the 
``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
revise the ICC Rulebook (the ``Rules'') \3\ to provide for the 
clearance of an additional Standard Emerging Market Sovereign CDS 
contract (the ``EM Contract''). The proposed rule change was published 
for comment in the Federal Register on February 1, 2021.\4\ The 
Commission did not receive comments regarding the proposed rule change. 
For the reasons discussed below, the Commission is approving the 
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Capitalized terms used but not defined herein have the 
meanings specified in the Rules.
    \4\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice 
of Filing of Proposed Rule Change, Security-Based Swap Submission, 
or Advance Notice Relating to the Clearance of an Additional Credit 
Default Swap Contract; Exchange Act Release No. 90989 (Jan. 26, 
2021); 86 FR 7751 (Feb. 1, 2021) (``Notice'').
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II. Description of the Proposed Rule Change

    The principal purpose of the proposed rule change is to revise the 
Rules to provide for the clearance of an additional EM Contract.\5\ 
Specifically, the proposed rule change would amend Subchapter 26D of 
the Rules to provide for the clearance of the additional EM Contract, 
Ukraine. The proposed rule change would make a minor revision to 
Subchapter 26D (Standard Emerging Market Sovereign Single Name) of the 
Rules to provide for clearing the additional EM Contract. Specifically, 
the proposed rule change would amend the term ``Eligible SES Reference 
Entities'' in Rule 26D-102 (Definitions) to include Ukraine in the list 
of specific Eligible SES Reference Entities to be cleared by ICC. ICC 
represents that this additional EM Contract has terms consistent with 
the other EM Contracts approved for clearing at ICC and governed by 
Subchapter 26D of the Rules, and that clearance of this additional EM 
contract would not require any changes to ICC's Risk Management 
Framework.\6\
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    \5\ The description that follows is excerpted from the Notice, 
86 FR at 7751.
    \6\ See Notice, 86 FR at 7751.
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III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act directs the Commission to approve a 
proposed rule change of a self-regulatory organization if it finds that 
such proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to such 
organization.\7\ Section 17A(b)(3)(F) of the Act requires, among other 
things, that the rules of ICC be designed to promote the prompt and 
accurate clearance and settlement of securities transactions and, to 
the extent applicable, derivative agreements, contracts, and 
transactions, as well as to assure the safeguarding of securities and 
funds which are in the custody or control of ICC or for which it is 
responsible.\8\
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    \7\ 15 U.S.C. 78s(b)(2)(C).
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds that the proposed rule change is consistent 
with Section 17A(b)(3)(F) of the Act.\9\ The Commission has reviewed 
the terms and conditions of the additional EM Contract proposed for 
clearing and has determined that those terms and conditions are 
substantially similar to the terms and conditions of the other 
contracts listed in Subchapter 26D of the ICC Rules, all of which ICC 
currently clears, with the key difference being that the underlying 
reference obligations will be issuances by Ukraine. Moreover, after 
reviewing the Notice and ICC's Rules, policies and procedures, the 
Commission finds that ICC would clear the additional EM Contract 
pursuant to its existing clearing arrangements and related financial 
safeguards, protections and risk management procedures.
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    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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    In addition, based on its own experience and expertise, including a 
review of data on volume, open interest, and the number of ICC Clearing

[[Page 14166]]

Participants (``CPs'') that currently trade in the additional EM 
Contract as well as certain model parameters for the additional EM 
Contract, the Commission finds that ICC's rules, policies, and 
procedures are reasonably designed to price and measure the potential 
risk presented by the additional EM Contract, collect financial 
resources in proportion to such risk, and liquidate this product in the 
event of a CP default. This should help ensure ICC's ability to 
maintain the financial resources it needs to provide its critical 
services and function as a central counterparty, thereby promoting the 
prompt and accurate settlement of the additional EM Contract and other 
credit default swap transactions. For the same reasons, the Commission 
believes that the proposed rule change should help assure the 
safeguarding of securities or funds in the custody or control of ICC.
    Therefore, the Commission finds that clearance of the additional EM 
Contract would promote the prompt and accurate clearance and settlement 
of securities transactions and would help assure safeguarding of 
securities and funds in the custody or control of ICC, consistent with 
Section 17A(b)(3)(F) of the Act.\10\
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    \10\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act, 
and in particular, with the requirements of Section 17A(b)(3)(F) of the 
Act.\11\
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    \11\ 15 U.S.C. 78q-1(b)(3)(F).
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    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
\12\ that the proposed rule change (SR-ICC-2021-002), be, and hereby 
is, approved.\13\
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    \12\ 15 U.S.C. 78s(b)(2).
    \13\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-05132 Filed 3-11-21; 8:45 am]
BILLING CODE 8011-01-P