[Federal Register Volume 86, Number 136 (Tuesday, July 20, 2021)]
[Notices]
[Pages 38370-38372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15337]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92402; File No. SR-ICC-2021-015]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change Relating to the ICC Governance Playbook, 
ICC Risk Management Framework, and ICC Treasury Operations Policies and 
Procedures

July 14, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934, (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on June 30, 2021, 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.
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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

    The principal purpose of the proposed rule change is to make 
changes to the Governance Playbook, Risk Management Framework, and 
Treasury Operations Policies and Procedures (``Treasury Policy'') 
(together, the ``Documents''). 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 amendments to its Governance Playbook, Risk Management 
Framework, and Treasury Policy to update descriptions of certain 
internal committees and make other clarification or clean-up changes. 
ICC maintains the Participant Review Committee (``PRC'') and the Credit 
Review Subcommittee of the PRC (``CRS'') (together, the 
``Committees''), which are internal committees that assist in 
fulfilling counterparty review responsibilities with respect to ICC's 
Clearing Participants (``CPs'') and financial service providers 
(``FSPs''). The proposed changes amend descriptions related to 
membership composition, meeting frequency, and responsibilities of the 
Committees in the Documents to reflect recent changes to the 
Committees' charters. 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.
I. Governance Playbook
    The Governance Playbook contains information regarding the roles 
and responsibilities of the Board and various committees at ICC. ICC 
proposes amendments in respect of the Committees in Section IV 
(Committees) to reflect recent changes to their charters. ICC proposes 
a grammatical edit to refer to ``financial services providers'' as 
``financial service providers'' in the description of the PRC and 
throughout the document. ICC proposes updated language on the 
membership composition of the PRC, including to add the ICC Risk 
Oversight Officer as a member. With respect to the CRS, the proposed 
changes remove the authority to approve FSPs and specify that the CRS 
has an advisory role. In this role, the CRS may make recommendations to 
the PRC with respect to matters of creditworthiness of CPs and 
creditworthiness and performance of FSPs. The proposed changes also 
update the membership composition of the CRS to include the Risk 
Oversight Officer and remove the ICC Risk Management representative as 
a voting member. Risk Management representatives will participate as 
non-voting members and continue to present materials to allow the CRS 
to perform its responsibilities and duties.
II. Risk Management Framework
    ICC proposes conforming revisions to the Risk Management Framework 
to update descriptions of the Committees and to make other 
clarification or clean-up changes. ICC proposes to amend Section II 
(Governance and Organization) to update a chart that details the 
governance and committee structure at ICC. The updated chart indicates 
that the Intercontinental Exchange, Inc. (``ICE, Inc.'') Enterprise 
Risk Management Department (``ERM'') reports to the Board and corrects 
a typographical error to replace the ``BCP Oversight Committee'' with 
the ``BCP & DR Oversight Committee.'' \3\ In Section II.A (Committees), 
the proposed changes further clarify the review and approval process of 
the policies and procedures that comprise ICC's overall risk management 
framework, which consists of review by the Risk Committee and review 
and approval by the Board at least annually.
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    \3\ ERM provides the oversight and framework for identifying, 
assessing, managing, monitoring and reporting on risk across the 
ICE, Inc. organization and has dedicated resources focused on 
various ICE, Inc. business units, including ICC. The ICC BCP & DR 
Oversight Committee assists in fulfilling oversight responsibilities 
with respect to business continuity planning (``BCP'') and disaster 
recovery (``DR'') for ICC.
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    In Section II.A (Committees), ICC also proposes to update 
descriptions of the Committees to align with their amended charters. 
ICC proposes a grammatical edit to refer to ``financial services 
providers'' as ``financial service providers'' and a footnote to 
further define the entities included as FSPs. The proposed changes 
specify that the PRC meets at least quarterly and more frequently as 
needed. Additionally, the proposed changes further distinguish PRC and 
CRS responsibilities with respect to FSPs, noting that the PRC is 
responsible for overseeing the due diligence and approval of FSPs and 
the CRS is responsible for overseeing initial due diligence and 
monitoring ongoing credit due diligence for FSPs. ICC also proposes 
language describing the advisory role of the CRS to the PRC for matters 
regarding the creditworthiness of CPs and the creditworthiness and 
performance of FSPs. ICC further proposes to amend Appendix 1 to the 
document to update language related to the membership composition of 
the PRC, including to add the Risk

[[Page 38371]]

Oversight Officer as a member, and the meeting frequency of the PRC.
III. Treasury Policy
    ICC proposes corresponding changes to Section IV (Cash Settlement) 
of the Treasury Policy to update responsibilities of the Committees 
based on their amended charters. Currently, a bank's capitalization, 
creditworthiness, access to liquidity, operational reliability and 
supervision are reviewed prior to accepting services, and approval of 
the CRS is required before ICC may begin using the bank's services. 
Under the amended policy, approval of the PRC is required before ICC 
may begin using the bank's services and the CRS may make 
recommendations to the PRC regarding approval.
(b) Statutory Basis
    ICC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \4\ and the regulations 
thereunder applicable to it, including the applicable standards under 
Rule 17Ad-22.\5\ In particular, Section 17A(b)(3)(F) of the Act \6\ 
requires that the rule change be consistent with the prompt and 
accurate clearance and settlement of securities transactions and 
derivative agreements, contracts and transactions cleared by ICC, the 
safeguarding of securities and funds in the custody or control of ICC 
or for which it is responsible, and the protection of investors and the 
public interest. The proposed rule change updates descriptions of the 
PRC and CRS related to membership composition, meeting frequency, and 
responsibilities in the Documents to reflect recent changes to the PRC 
and CRS charters. Such changes ensure that the Documents clearly and 
accurately set out the functions of the Committees to remain effective 
and to ensure that the Committees carry out their required functions. 
The proposed clarification and clean-up changes would further ensure 
readability and transparency across the Documents and should enhance 
the implementation of such policies and procedures. The proposed rule 
change is therefore consistent with the prompt and accurate clearing 
and settlement of the contracts cleared by ICC, the safeguarding of 
securities and funds in the custody or control of ICC or for which it 
is responsible, and the protection of investors and the public 
interest, within the meaning of Section 17A(b)(3)(F) of the Act.\7\
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    \4\ 15 U.S.C. 78q-1.
    \5\ 17 CFR 240.17Ad-22.
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
    \7\ Id.
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    The amendments would also satisfy relevant requirements of Rule 
17Ad-22.\8\ Rule 17Ad-22(e)(2)(i), (ii) and (v) \9\ requires each 
covered clearing agency to establish, implement, maintain, and enforce 
written policies and procedures reasonably designed to provide for 
governance arrangements that are clear and transparent, clearly 
prioritize the safety and efficiency of the covered clearing agency, 
and specify clear and direct lines of responsibility. The proposed 
changes update governance arrangements in the Documents to align with 
the amended PRC and CRS charters. These revisions clarify the 
responsibilities and interaction of the Committees by specifying the 
advisory role of the CRS to the PRC for matters regarding the 
creditworthiness of CPs and the creditworthiness and performance of 
FSPs. The proposed changes update membership composition and meeting 
frequency to clearly set out the responsibilities and duties of ICC 
personnel in respect of the Committees, including the Risk Oversight 
Officer and Risk Management representatives. Moreover, the amended Risk 
Management Framework memorializes the reporting line of ICE, Inc. ERM 
to the Board and corrects a typographical error in respect of the BCP & 
DR Oversight Committee to promote clear and transparent governance 
arrangements that specify clear and direct lines of responsibility. As 
such, in ICC's view, the proposed rule change continues to ensure that 
ICC maintains policies and procedures that are reasonably designed to 
provide for clear and transparent governance arrangements that clearly 
prioritize the safety and efficiency of ICC and specify clear and 
direct lines of responsibility, consistent with Rule 17Ad-22(e)(2)(i), 
(ii), and (v).\10\
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    \8\ 17 CFR 240.17Ad-22.
    \9\ 17 CFR 240.17Ad-22(e)(2)(i), (ii) and (v).
    \10\ Id.
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    Rule 17Ad-22(e)(3)(i) \11\ requires each covered clearing agency to 
establish, implement, maintain, and enforce written policies and 
procedures reasonably designed to maintain a sound risk management 
framework for comprehensively managing legal, credit, liquidity, 
operational, general business, investment, custody, and other risks 
that arise in or are borne by the covered clearing agency, which 
includes risk management policies, procedures, and systems designed to 
identify, measure, monitor, and manage the range of risks that arise in 
or are borne by the covered clearing agency, that are subject to review 
on a specified periodic basis and approved by the Board annually. ICC 
maintains a sound risk management framework that identifies, measures, 
monitors, and manages the range of risks that it faces. The amended 
Risk Management Framework further clarifies that the review and 
approval process of the policies and procedures that comprise ICC's 
overall risk management framework includes review and approval by the 
Board at least annually. As such, the amendments would satisfy the 
requirements of Rule 17Ad-22(e)(3)(i).\12\
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    \11\ 17 CFR 240.17Ad-22(e)(3)(i).
    \12\ Id.
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    Rule 17Ad-22(e)(4)(ii) \13\ requires each covered clearing agency 
to establish, implement, maintain, and enforce written policies and 
procedures reasonably designed to effectively identify, measure, 
monitor, and manage its credit exposures to participants and those 
arising from its payment, clearing, and settlement processes, including 
by maintaining additional financial resources at the minimum to enable 
it to cover a wide range of foreseeable stress scenarios that include, 
but are not limited to, the default of the two participant families 
that would potentially cause the largest aggregate credit exposure for 
the covered clearing agency in extreme but plausible market conditions. 
The proposed changes enhance ICC's ability to manage its financial 
resources, including by clearly articulating its review, approval, and 
monitoring process for CPs and FSPs by the Committees across the 
Documents to ensure that such policies and procedures remain 
transparent and up-to-date. The proposed changes further define the 
entities included as FSPs to ensure that ICC appropriately identifies 
and monitors its counterparty relationships. Such amendments ensure 
financial health and the ability to fulfill obligations by ICC's 
counterparties, which promotes and strengthens ICC's own financial 
condition and supports ICC's ability to maintain its financial 
resources and withstand the pressures of defaults, consistent with the 
requirements of Rule 17Ad-22(e)(4)(ii).\14\
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    \13\ 17 CFR 240.17Ad-22(e)(4)(ii).
    \14\ Id.
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    Rule 17Ad-22(e)(18) \15\ requires each covered clearing agency to 
establish, implement, maintain, and enforce written policies and 
procedures reasonably designed to establish objective, risk-based, and 
publicly disclosed criteria for participation, which permit fair and 
open access by direct and, where relevant, indirect participants and 
other financial market

[[Page 38372]]

utilities, require participants to have sufficient financial resources 
and robust operational capacity to meet obligations arising from 
participation in the clearing agency, and monitor compliance with such 
participation requirements on an ongoing basis. ICC believes that the 
proposed rule change will ensure that the Committees carry out the 
functions required in their charters to ensure proper review and 
ongoing monitoring of CPs and FSPs, including by clarifying the 
responsibilities and interaction of the Committees and further defining 
the entities included as FSPs. As such, the proposed rule change will 
strengthen ICC's ability to manage and mitigate the potential risks 
associated with its CPs and FSPs, thereby continuing to ensure that CPs 
and FSPs have sufficient financial resources and robust operational 
capacity to meet obligations and promoting ICC's ability to monitor 
compliance with such requirements on an ongoing basis, consistent with 
Rule 17Ad-22(e)(18).\16\
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    \15\ 17 CFR 240.17Ad-22(e)(18).
    \16\ 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 Governance Playbook, Risk Management Framework, and 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 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-2021-015 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ICC-2021-015. 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-2021-015 and should be 
submitted on or before August 10, 2021.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-15337 Filed 7-19-21; 8:45 am]
BILLING CODE 8011-01-P