[Federal Register Volume 87, Number 72 (Thursday, April 14, 2022)]
[Notices]
[Pages 22276-22280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-07951]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94650; File No. SR-ICC-2022-004]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change Relating to the ICC Recovery Plan and 
the ICC Wind-Down Plan

April 8, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4,\2\ notice is hereby given that on 
April 1, 2022, ICE Clear Credit LLC (``ICC'') filed with the Securities 
and Exchange Commission (the ``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 revise the 
ICC Recovery Plan and the ICC Wind-Down Plan (collectively, the 
``Plans''). These revisions do not require any changes to the ICC 
Clearing Rules (the ``Rules'').

[[Page 22277]]

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 revising the ICC Recovery Plan and the ICC Wind-Down 
Plan, which serve as plans for the recovery and orderly wind-down of 
ICC necessitated by credit losses, liquidity shortfalls, losses from 
general business risk, or any other losses, consistent with Rule 17Ad-
22(e)(3)(ii).\3\ ICC proposes to make such changes effective following 
Commission approval of the proposed rule change. The proposed rule 
change is described in detail as follows.
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    \3\ 17 CFR 240.17Ad-22(e)(3)(ii).
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ICC Recovery Plan
    Consistent with the regulations applicable to ICC, the Recovery 
Plan is designed to establish ICC's actions to maintain its viability 
as a going concern to address any uncovered credit loss, liquidity 
shortfall, capital inadequacy, or business, operational or other 
structural weakness that threatens ICC's viability. ICC proposes 
general updates and edits to promote clarity and to ensure that the 
information provided is current. The proposed amendments reflect and 
relate to changes that impacted ICC in the past year, including changes 
to the composition of the ICC Board of Managers (collectively, the 
``Board'' and each, a ``Manager'') and the responsibilities and 
membership composition of internal committees.
    ICC proposes general updates to ensure that the information in the 
Recovery Plan is current. In Section I and throughout the document, the 
proposed changes specify that the information provided is current as of 
December 31, 2021, unless otherwise stated. Namely, the proposed 
changes ensure that relevant information regarding ICC for recovery 
planning, such as information about ICC's ownership and operation, is 
current with respect to:
     Activities of Intercontinental Exchange, Inc. (``ICE'' or 
collectively, the ``ICE Group'' of affiliated companies with ICE as the 
ultimate parent) in Section II.A;
     clearing Index Swaptions by ICC in Section IV.A;
     data regarding ICC revenues, volumes, and expenses in 
Section IV.D;
     ICC personnel and facilities in Section VI.A;
     financial resources for recovery in Section X;
     ICC and ICE Group financial information in Section XI; and
     Financial service providers (``FSPs'') that hold Clearing 
Participant (``CP'') cash and collateral in Appendix C in Section XIII.
    Additionally, ICC proposes to amend the composition of the Board 
and the descriptions of internal committees to reflect changes that 
impacted ICC in 2021. In Section IV.C.1, ICC proposes to change the 
Board size from eleven to nine managers, consistent with the adoption 
of the Sixth Amended and Restated Operating Agreement of ICC in 2021 
(the ``Sixth A&R Operating Agreement''), and to revise Manager titles 
as necessary.\4\ In Section IV.C.3, the proposed changes update the 
responsibilities and membership composition of the Participant Review 
Committee (``PRC'') and Credit Review Subcommittee of the PRC 
(``CRS''), which are internal committees that assist in fulfilling 
counterparty review responsibilities, consistent with changes to their 
charters in 2021.\5\ ICC proposes corresponding changes in Section 
VI.B.1 to describe the advisory role of the CRS in making 
recommendations to the PRC and the role of the PRC in approving FSPs.
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    \4\ See SR-ICC-2021-017 for additional information on the 
adoption of the Sixth A&R Operating Agreement.
    \5\ See SR-ICC-2021-015 for additional information on the roles 
and responsibilities of the PRC and CRS.
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    ICC proposes additional updates to promote clarity and consistency 
in the Recovery Plan. Amended Section IV.E.4 notes that ICC monitors 
FSPs daily, intraday, and monthly, consistent with the processes 
described in the ICC Counterparty Monitoring Procedures.\6\ In Section 
VII.B, ICC proposes to remove a metric that is no longer utilized to 
measure ICC performance and to update a reference to a policy section. 
Amended Section VII.C specifies that ICC will make required disclosures 
pursuant to applicable regulations once the Recovery Plan is initiated 
and includes updated regulatory contacts. In Section VIII.B.2, ICC 
proposes minor language clarifications in describing the purpose of its 
Liquidity Risk Management Framework. In Section VIII.B.3, ICC proposes 
updates regarding the insurance coverage maintained at the ICE Group 
level, which may be used as a recovery tool in a non-CP default 
scenario.
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    \6\ See SR-ICC-2021-021 for additional information on ICC's 
counterparty monitoring processes and procedures.
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    ICC proposes changes related to seeking additional capital from the 
ICE Group in Section VIII.B.3, which is another recovery tool that may 
be used in a non-CP default scenario. The proposed changes include 
updated financial information, which is intended to establish that the 
ICE Group is capable of making such infusion. Given the changes in 
Board composition, ICC proposes revised procedures for seeking such 
additional capital, including the individual within the ICE Group with 
whom such discussions would begin. The proposed changes identify the 
role of this individual within the ICE Group and update the composition 
of certain ICE Group boards. Additionally, ICC proposes to include 
updated financial information that is relevant to the execution of 
other recovery tools that may be utilized in a non-CP default scenario.
    ICC proposes additional minor edits for clarity and consistency. In 
Section IX, ICC proposes to clarify that the Recovery Plan is made 
available to regulators in accordance with relevant regulations and to 
incorporate a reference to the ICC Default Management Procedures for 
details on ICC's default management testing. In Section XIV, the 
proposed changes update the index of exhibits with the current versions 
of policies and procedures, consistent with updated footnote 
references. Finally, ICC proposes minor typographical fixes in the 
Recovery Plan as well as conforming changes in in the Wind-Down Plan, 
including updates to entity names, and grammatical and formatting 
changes.
ICC Wind-Down Plan
    The Wind-Down Plan is designed to establish how ICC could be wound-
down in an orderly manner. ICC proposes corresponding changes to the 
Wind-Down Plan. ICC proposes general updates and edits to promote 
clarity and to ensure that the information provided is current. The 
proposed amendments reflect and relate to changes that have impacted 
ICC in the past year, including changes to the composition of the 
Board.

[[Page 22278]]

    ICC proposes general updates to ensure that the information in the 
Wind-Down Plan is current. In Section I and throughout the document, 
the proposed changes specify that the information provided is current 
as of December 31, 2021, unless otherwise stated. The proposed 
revisions ensure that relevant information regarding ICC for wind-down 
planning, such as information about ICC's ownership and operation, is 
current with respect to:
     Activities of ICE in Section II.A;
     ICC personnel and facilities in Section VII.C;
     financial resources to support wind-down in Section IX; 
and
     FSPs that hold CP cash and collateral in Appendix C in 
Section XI.

ICC also proposes amendments with respect to the composition of the 
Board to reflect changes that impacted ICC in 2021. In Section IV.B.1, 
ICC proposes to change the Board size from eleven to nine managers, 
consistent with the adoption of the Sixth A&R Operating Agreement in 
2021, and revise manager titles as needed.
    ICC proposes additional updates and edits to promote clarity and 
consistency in the Wind-Down Plan. Amended Section VI.A specifies that 
ICC will make required disclosures pursuant to applicable regulations 
once the decision to wind-down is made and includes updated regulatory 
contacts. Furthermore, given the changes in Board composition, ICC 
proposes revised procedures for seeking certain required consultations 
or approvals identified in the Wind-Down Plan, including the individual 
within the ICE Group with whom such discussions would begin. The 
proposed changes identify the role of this individual within the ICE 
Group and include information on the composition of a relevant ICE 
Group board. In Section X, ICC proposes to note that the Wind-Down Plan 
is made available to regulators in accordance with relevant regulations 
and to clarify the testing of the Wind-Down Plan. In Section XII, the 
proposed changes update the index of exhibits with the current versions 
of policies and procedures, consistent with updated footnote 
references.
(b) Statutory Basis
    ICC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \7\ and the regulations 
thereunder applicable to it, including the applicable standards under 
Rule 17Ad-22.\8\ In particular, Section 17A(b)(3)(F) of the Act \9\ 
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.
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    \7\ 15 U.S.C. 78q-1.
    \8\ 17 CFR 240.17Ad-22.
    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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    ICC believes the proposed changes would enhance its ability to 
effectuate a successful recovery as well as to execute an orderly wind-
down by providing updates and additional clarity with respect to ICC's 
recovery and wind-down processes and procedures. As discussed herein, 
the proposed revisions ensure that relevant information regarding ICC 
for recovery and wind-down planning is current, including updated 
information regarding personnel and facilities, finances and 
operations, and financial resources for recovery and wind-down. The 
proposed amendments also reflect and relate to changes that impacted 
ICC in the past year, including changes to the Board composition from 
the adoption of the Sixth A&R Operating Agreement and the 
responsibilities and membership composition of internal committees 
based on their amended charters. Such changes ensure that the Plans 
clearly and accurately set out the functions of the Board and 
committees to remain effective and to ensure that these groups carry 
out their required functions. To support and enhance the implementation 
of the Plans, additional language clarifications or edits are included 
so that the Plans remain up-to-date, transparent, and focused on 
clearly articulating the policies and procedures used to support ICC's 
recovery and wind-down efforts. Such revisions include additional 
details regarding required disclosures, references to relevant 
policies, updated information regarding recovery tools, and amended 
language that is intended to be more precise. The Plans would thus 
promote ICC's ability to continue providing clearing services with as 
little disruption as possible, and should continuation not be feasible, 
promote ICC's ability to discontinue clearing services in an orderly 
manner with minimum negative impact to the marketplace and 
stakeholders. Accordingly, in ICC's view, the proposed rule change is 
consistent with the prompt and accurate clearance and settlement of 
securities transactions, derivatives agreements, contracts, and 
transactions, 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.\10\
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    \10\ Id.
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    The proposed rule change would also satisfy the relevant 
requirements of Rule 17Ad-22.\11\ Rule 17Ad-22(e)(2) \12\ requires ICC 
to establish, implement, maintain, and enforce written policies and 
procedures reasonably designed to provide for governance arrangements 
that are (i) clear and transparent; (iii) support the public interest 
requirements of Section 17A of the Act \13\ applicable to clearing 
agencies, and the objectives of owners and participants; and (v) 
specify clear and direct lines of responsibility. The Plans clearly and 
transparently set forth the governance arrangements that are relevant 
to recovery and wind-down, including the roles and responsibilities of 
the Board, applicable committees, and management. The Plans assign and 
document responsibility and accountability for key recovery and wind-
down decisions, such as activating the Recovery Plan and deciding to 
wind-down the business, and require consultation or approval from 
relevant parties. Given the change in Board composition, the proposed 
changes update procedures for seeking additional capital in a recovery 
scenario and update procedures for seeking required consultations or 
approvals in a wind-down scenario from the ICE Group. The amendments 
ensure that the procedures for implementing these actions in a recovery 
or wind-down scenario are up-to-date, transparent, and effective such 
that responsible parties can act promptly without unnecessary delay. 
Moreover, the governance arrangements in the Plans promote the safety 
and efficiency of ICC and support the public interest requirements in 
Section 17A of the Act \14\ applicable to clearing agencies, and the 
objectives of owners and participants, by describing the roles and 
responsibilities of relevant stakeholders to ensure that such groups or 
individuals are able to discharge their responsibilities. As such, ICC 
believes that the proposed rule change is consistent with the 
requirements of Rule 17Ad-22(e)(2).\15\
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    \11\ 17 CFR 240.17Ad-22.
    \12\ 17 CFR 240.17Ad-22(e)(2).
    \13\ 15 U.S.C. 78q-1.
    \14\ Id.
    \15\ 17 CFR 240.17Ad-22(e)(2).
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    Rule 17Ad-22(e)(3)(ii) \16\ requires ICC to establish, implement, 
maintain, and enforce written policies and procedures

[[Page 22279]]

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 ICC, which includes plans for the recovery and orderly wind-
down of ICC necessitated by credit losses, liquidity shortfalls, losses 
from general business risk, or any other losses. The Recovery Plan 
continues to establish ICC's actions to maintain its viability as a 
going concern to address any uncovered credit loss, liquidity 
shortfall, capital inadequacy, or business, operational or other 
structural weakness that threatens ICC's viability. The Wind-Down Plan 
continues to establish how ICC could be wound-down in an orderly manner 
should its recovery efforts fail. As described above, the proposed 
changes include updates and edits to promote clarity and to ensure that 
the information in the Plans is current, such as updated information 
regarding financial resources for recovery and wind-down, updated 
information regarding recovery tools, including updated procedures for 
seeking additional capital from the ICE Group, and updated procedures 
for seeking required consultations or approvals in a wind-down 
scenario. In ICC's view, such changes would ensure that the Plans 
remain useful and effective in a recovery and wind-down scenario. The 
proposed rule change would thus promote ICC's ability to carry out a 
successful recovery or orderly wind-down, consistent with the 
requirements of Rule 17Ad-22(e)(3)(ii).\17\
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    \16\ 17 CFR 240.17Ad-22(e)(3)(ii).
    \17\ Id.
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    Rule 17Ad-22(e)(15) \18\ requires ICC to establish, implement, 
maintain, and enforce written policies and procedures reasonably 
designed to identify monitor, and manage ICC's general business risk 
and hold sufficient liquid net assets funded by equity to cover 
potential general business losses so that ICC can continue operations 
and services as a going concern if those losses materialize, including 
by (i) determining the amount of liquid net assets funded by equity 
based upon its general business risk profile and the length of time 
required to achieve a recovery or orderly wind-down, as appropriate, of 
its critical operations and services if such action is taken; (ii) 
holding liquid net assets funded by equity equal to the greater of 
either (x) six months of ICC's current operating expenses, or (y) the 
amount determined by the Board to be sufficient to ensure a recovery or 
orderly wind-down of critical operations and services of ICC, as 
contemplated by the plans established under Rule 17Ad-22(e)(3)(ii); 
\19\ and (iii) maintain a viable plan, approved by the Board and 
updated at least annually, for raising additional equity should its 
equity fall close to or below the amount required under Rule 17Ad-
22(e)(15)(ii).\20\ The Plans continue to analyze ICC's particular 
circumstances and risks to ensure that ICC maintains financial 
resources necessary to implement both Plans and that ICC remains in 
compliance with all regulatory capital requirements. The Plans include 
updated information on the financial resources maintained by ICC for 
recovery and to support wind-down in compliance with relevant 
regulations and include procedures to follow in case of any shortfall. 
Such changes continue to ensure that the Plans remain accurate and 
useful and that ICC holds sufficient liquid net assets to achieve 
recovery or orderly wind-down. As such, ICC believes that the proposed 
rule change is consistent with the requirements of Rule 17Ad-
22(e)(15).\21\
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    \18\ 17 CFR 240.17Ad-22(e)(15).
    \19\ 17 CFR 240.17Ad-22(e)(3)(ii).
    \20\ 17 CFR 240.17Ad-22(e)(15)(ii).
    \21\ 17 CFR 240.17Ad-22(e)(15).
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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 
the Plans will apply uniformly across all market participants. The 
changes are being proposed to promote clarity and ensure that the 
information provided is current in the Plans. ICC does not believe the 
amendments would affect the costs of clearing or the ability of market 
participants to access clearing. Therefore, ICC does not believe the 
proposed rule change would 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 
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-2022-004 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-2022-004. 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

[[Page 22280]]

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-
2022-004 and should be submitted on or before May 5, 2022.
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    \22\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-07951 Filed 4-13-22; 8:45 am]
BILLING CODE 8011-01-P