[Federal Register Volume 89, Number 120 (Friday, June 21, 2024)]
[Notices]
[Pages 52138-52141]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13538]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100335; File No. SR-ICC-2024-004]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change, as Modified by Amendment No. 1, 
Relating to the ICC Recovery Plan and the ICC Wind-Down Plan

June 14, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ and Rule 19b-4,\2\ notice is hereby given that on June 4, 
2024, ICE Clear Credit LLC (``ICC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change, as 
described in Items I, II and III below, which Items have been prepared 
primarily by ICC. On June 6, 2024, ICE Clear Credit filed Amendment No. 
1 to the proposed rule change to make certain changes to the narrative 
description of the proposed changes.\3\ The Commission is publishing 
this notice to solicit comments on the proposed rule change, as 
modified by Amendment No. 1 (hereafter ``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.
    \3\ Amendment No. 1 inserts a bullet point to the ``ICC Recovery 
Plan'' paragraph of the Form 19b-4 and the Exhibit 1A with the 
following text, ``description of Guaranty Fund Replenishment in 
Section VIII.B;''. Amendment No. 1 also removes the same bullet 
point from the ``ICC Wind-Down Plan'' paragraph of the Form 19b-4 
and Exhibit 1A.
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    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).\4\ ICC proposes to make such changes effective following 
Commission approval of the proposed

[[Page 52139]]

rule change. The proposed rule change is described in detail as 
follows.
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    \4\ 17 CFR 240.17Ad-22(e)(3)(ii).
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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 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).\5\ 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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    \5\ 17 CFR 240.17Ad-22(e)(3)(ii).
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ICC Recovery Plan
    Consistent with the regulations applicable to ICC, the ICC 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 the 
addition of new ICC clearing participants (``CP'') (Intesa Sanpaolo 
S.p.A. and Royal Bank of Canada), the addition of British Pounds 
Sterling cash (``GBP'') as acceptable client-related initial margin, 
the removal of references to ICE Clear Europe (``ICEU'') Credit Default 
Swap (``CDS'') clearing as that service has closed, and a change to the 
Managers of the ICC Board of Managers (the ``Board'').
    ICC proposes general updates to ensure that the information in the 
ICC 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, 2023, 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:
     description of an ICC Independent Director in Section 
IV.C.;
     data regarding ICC revenues, volumes, and expenses in 
Section IV.D.;
     MLE Interconnections in Section VI.;
     ICC Third-Party Systems in Section VI.A.;
     description of services provided to ICC by 
Intercontinental Exchange, Inc. in Section VI.;
     ICC personnel and facilities in Section VI.A.;
     addition of Jacksonville Facilities in Section VI.A.;
     description of ICC in-house systems in Section VI.A.;
     identification of ICC's counterparties in the Counterparty 
Chart in Section VI.B.;
     description of monitoring mechanisms for CP default in 
Section VII.A.;
     description of initial default auction in Section VIII.A.;
     direct infusion of cash to ICC from ICE Group in Section 
VIII.B.;
     reduce or eliminate dividend payment to ICE Holding in 
Section VIII.B.;
     renegotiation of fee cap on transaction and clearing fees 
in Section VIII.B.;
     amend outsourcing agreements in Section VIII.B.;
     reduce ICC headcount in Section VIII.B.;
     elimination of bonuses in Section VIII.B.;
     waiver/suspension of ICC lease payments in Section 
VIII.B.;
     change in Management contact regarding capital infusion 
from ICE Group to ICC in Section VIII.B;
     description of Guaranty Fund Replenishment in Section 
VIII.B; description of financial resources for recovery in Section X.;
     ICC and ICE Group financial information in Section XI.;
     key ICC reports and descriptions, Exhibit 35, in Section 
XII.B.; \6\ and
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    \6\ Several decommissioned reports have been removed from the 
list: `DTCC Vendor Credit Terminations' (information no longer 
relevant to ICC); `Other Firms Trades Report' (report replaced with 
FIX protocol messages); `Index Participant Missed Quotes 
Surveillance Report' (information available in another key report) 
and `Index Participant Submission Detail Report' (information 
available in another key report). In addition, the title of two 
reports was revised to better reflect in the information contained 
therein. Finally, two new reports were added to the list, both 
related to exercised/assigned index swaptions.
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     Financial service providers that hold CP cash and 
collateral in Appendix C in Section XIII.
    ICC proposes the addition of two new CP's in Section IV.B. 
Specifically, ICC proposes to add new CP Intesa Sanpaolo S.p.A, which 
became effective on May 3, 2023. Also, ICC proposes to add new CP Royal 
Bank of Canada, which became effective on April 15, 2024.
    Also, ICC proposes the addition of GBP as acceptable client-related 
initial margin in Section IV.B and Section IV.E. In response to the 
addition of GBP, ICC proposes to revise Section IV.E., to clarify the 
description of ICC's collateral valuation process to all collateral 
types.
    Also, ICC proposes the removal of references to ICEU CDS clearing 
in Section V.C. as ICEU closed its CDS clearing services on or about 
October 21, 2023.
    Additionally, ICC proposes modifications to reflect the change in 
the Non-Independent Managers to the Board, in Section IV.C. 
Specifically, ICE US Holding Company L.P. (``ICE US Holding'') replaced 
former Non-Independent Manager Christopher Edmonds with Elizabeth King, 
Chief Regulatory Officer, and President of ICE's Sustainable Finance 
business. Also, ICC proposes minor updates to Section VIII.B. to 
reflect the change of the Managers as described above.
    ICC proposes minor updates to promote clarity and consistency in 
the ICC Recovery Plan. In Section VII.A., ICC proposes the addition of 
a Securities and Exchange Commission regulation cite (17 CFR 240.17Ad-
22(e)(4)) to reflect and reference the applicable regulations more 
accurately.
    Finally, ICC proposes minor typographical fixes in the ICC Recovery 
Plan including grammatical and formatting changes.
ICC Wind-Down Plan
    The ICC Wind-Down Plan is designed to establish how ICC could be 
wound-down in an orderly manner. 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 the addition of new CP's 
(Intesa Sanpaolo S.p.A. and Royal Bank of Canada), and the removal of 
references to ICEU CDS clearing as that service has closed, and a 
change to the Managers of the Board.

[[Page 52140]]

    ICC proposes general updates to ensure that the information in the 
ICC 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, 2023, 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.;
     description of an ICC Independent Director in Section 
IV.B.;
     MLE Interconnections in Section VII.;
     Material legal entity chart in Section VII.;
     ICC personnel and facilities in Section VII.C.;
     description of ICC in-house systems in Section VII.C.;
     identification of ICC's counterparties in the ICC 
Counterparty Chart VII.D.;
     financial resources to support wind-down in Section IX.; 
and
     Banking Institutions and Example Proportion of Holdings 
charts in Section XI.C.
    Additionally, ICC proposes the addition of two new CP's in Section 
IV. A. Specifically, ICC proposes to add new CP Intesa Sanpaolo S.p.A, 
which became effective on May 3, 2023. Also, ICC proposes to add new CP 
Royal Bank of Canada, which became effective on April 15, 2024.
    Also, ICC proposes the removal of references to ICEU CDS clearing 
in Section VII.C. as ICEU successfully completed the close-out process 
on or about October 21, 2023.
    Additionally, ICC proposes modifications to the non-independent 
Board of Managers and the titles of such Managers, in Section IV.B. 
Specifically, ICE US Holding Company L.P. (``ICE US Holding'') did not 
re-appoint Christopher Edmonds as an ICC non-independent manager 
because Mr. Edmonds has expanded his role within ICE to include leading 
ICE's Fixed Income and Data services business segment. ICE US Holding 
appointed Elizabeth King, Chief Regulatory Officer, and President of 
ICE's Sustainable Finance business as the new ICC non-independent 
Manager.
    ICC proposes additional updates and edits to promote clarity and 
consistency in the ICC 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, updating new CP's, removing ICEU references, for recovery 
and wind-down. 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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    Rule 17Ad-22(e)(3)(ii) \11\ requires ICC 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 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 ICC 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 ICC 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. 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).\12\
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    \11\ 17 CFR 240.17Ad-22(e)(3)(ii).
    \12\ Id.
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    Rule 17Ad-22(e)(15) \13\ 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

[[Page 52141]]

plans established under Rule 17ad-22(e)(3)(ii); \14\ 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).\15\
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    \13\ 17 CFR 240.17Ad-22(e)(15).
    \14\ 17 CFR 240.17Ad-22(e)(3)(ii).
    \15\ 17 CFR 240.17Ad-22(e)(15)(ii).
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    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 includes 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. As such, ICC believes that the 
proposed rule change is consistent with the requirements of Rule 17Ad-
22(e)(15).\16\
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    \16\ 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-2024-004 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-2024-004. 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 (https://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 
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.ice.com/clear-credit/regulation.
    Do not include personal identifiable information in submissions; 
you should submit only information that you wish to make available 
publicly. We may redact in part or withhold entirely from publication 
submitted material that is obscene or subject to copyright protection. 
All submissions should refer to file number SR-ICC-2023-014 and should 
be submitted on or before July 12, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-13538 Filed 6-20-24; 8:45 am]
BILLING CODE 8011-01-P