```

[Federal Register Volume 89, Number 238 (Wednesday, December 11, 2024)]
[Notices]
[Pages 99949-99954]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29037]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101819; File No. SR-ICC-2024-011]

Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Granting Accelerated Approval of Proposed Rule Change Relating to the 
ICC Operational Risk Management Framework

December 5, 2024.

I. Introduction

    On November 13, 2024, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (the ``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 (hereafter, 
``Proposed Rule Change'') to revise the Operational Risk Management 
Framework (``ORMF''). The Proposed Rule Change was published for 
comment in the Federal Register on November 19, 2024.\3\ The Commission 
has not received comments regarding the Proposed Rule Change. For the 
reasons discussed below, the Commission is approving the Proposed Rule 
Change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice 
of Filing of Proposed Rule Change Relating to the ICC Operational 
Risk Management Framework; Securities Exchange Act Release No. 34-
101603 (Nov. 13, 2024), 89 FR 91443 (Nov. 19, 2024) (SR-ICC-2024-
011) (``Notice'').
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II. Description of the Proposed Rule Change

    ICC is registered with the Commission as a clearing agency for the 
purpose of clearing Credit Default Swap (``CDS'') contracts.\4\ In its 
role as a CDS clearing agency, ICC faces operational risks stemming 
from the breakdown of systems and processes that that would impair 
ICC's ability to complete settlements or ICC's internal business 
operations. The ORMF outlines ICC's risk assessment and oversight 
program, which aims to address such operational risks, including by 
reducing operational incidents, encouraging process and control 
improvement, bringing transparency to operational performance standard 
monitoring, and fulfilling regulatory obligations. The ORMF also 
explains how ICC vets and manages service agreements with providers 
covering various aspects of ICC's operations. According to ICC, one of 
the purposes of the Proposed Rule Change

[[Page 99950]]

is to align the ORMF with the requirements of Rule 17Ad-25(i) under the 
Act,\5\ primarily by adding to the ORMF details about ICC's 
relationships with service providers.\6\ Further changes in the ORMF 
would be included to more clearly describe ICC's risk mitigation 
process and technology control functions, among other revisions.
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    \4\ Capitalized terms not otherwise defined herein have the 
meanings assigned to them in ICC Rules and the ORMF, as applicable.
    \5\ See generally Securities Exchange Act Release No. 98959 
(Nov. 16, 2023), 88 FR 84454 (Dec. 5, 2023) (File No. S7-21-22) 
(``Clearing Agency Governance and Conflicts of Interest'').
    \6\ See Notice, 89 FR at 91443.
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A. Management of Risks From Service Providers for Core Services

    The Proposed Rule Change would amend the ORMF primarily by adding 
new Section II.B., titled ``Management of Risks from Relationships with 
Service Providers for Core Services,'' which would describe ICC's 
vetting and management processes regarding any service provider for 
critical services (``SPCS'').\7\ The new section would require ICC's 
senior management to:
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    \7\ A service provider for core services means any person that, 
through a written services provider agreement for services provided 
to or on behalf of the registered clearing agency, on an ongoing 
basis, directly supports the delivery of clearance or settlement 
functionality or any other purposes material to the business of the 
registered clearing agency. 17 CFR 240.17Ad-25(a). ICC's ORMF has 
adopted the same terminology and meaning of SPCS as Rule 17Ad-25(a).
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    (1) Evaluate and document the risks related to an agreement with a 
SPCS, including under changes to circumstances and potential 
disruptions, and whether the risks can be managed in a manner 
consistent with the ORMF;
    (2) Submit to the ICC Board of Managers (``Board'') for review and 
approval any agreement that would establish a relationship with a SPCS, 
along with the above-mentioned risk evaluation;
    (3) Be responsible for establishing the policies and procedures 
that govern relationships and manage risks related to such agreements 
with a SPCS (while the Board would be required to be responsible for 
reviewing and approving such policies and procedures); and
    (4) Perform ongoing monitoring of the relationship, and report to 
the Board for its evaluation of any action taken by senior management 
to remedy significant deterioration in performance or address changing 
risks or material issues identified through such monitoring; or if the 
risks or issues cannot be remedied, to assess and document weaknesses 
or deficiencies in the relationship with the service provider for 
submission to the Board.
    The Proposed Rule Change would introduce a two-pronged assessment 
approach when identifying and managing ICC's relationships with a SPCS, 
differentiating between internal and external service providers.
    Under the first prong, ICC would conduct an assessment of internal 
service providers. Currently, ICC engages only one internal service 
provider: ICC's parent company, Intercontinental Exchange, Inc. 
(``ICE'').\8\ ICE is a SPCS because, pursuant to written service 
agreements, it provides core services to ICC that directly support the 
delivery of clearance and settlement functionality or other purposes 
material to ICC's business as a registered clearing agency. ICE 
provides business services such as staffing, finance, and accounting 
pursuant to a Master Services Agreement between ICC and ICE, and 
provides clearing and settlement-specific services to ICC pursuant to a 
Clearing Settlement Services Agreement (``CSSA''). The CSSA specifies 
that ICE provides clearing and settlement services pursuant to certain 
of ICE's ``Key Policies.'' \9\ Each Key Policy sets forth its purpose 
and is applicable to all ICE and ICC employees impacted by such policy. 
Further, the CSSA provides for a governance structure (set forth in 
more detail in ICE's Technology Planning and Governance Policy) whereby 
the Key Policies may only be amended by ICE's Operational Oversight 
Committee (``OOC'') which includes representatives of both ICE and ICC. 
The OOC acts as the forum to discuss changes and improvements to the 
services provided to ICC by ICE. Further, changes to any Key Policy may 
not take effect until they have been approved by the OOC and any 
material proposed changes to the Key Policies are subject to a veto by 
ICC.
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    \8\ See Notice, 89 FR at 91444.
    \9\ ICE's Key Policies include the following, which may be 
updated from time to time: 1. Technology Planning and Governance 
Policy; 2. Capacity Planning Policy; 3. Change Management Policy; 4. 
Corporate Business Continuity Policy; 5. Corporate Information 
Security Policy; 6. Corporate Information Technology Policy; 7. 
Corporate Physical Security Policy; 8. Disaster Recovery Policy; 9. 
Enterprise Risk Management Policy; 10. Incident Management Policy; 
11. Information Technology Asset Management Policy; 12. 
Infrastructure Observability Policy; 13. Software Development 
Lifecycle Policy; 14. Third Party Risk Management Policy.
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    Under the second prong, ICC would conduct an assessment of external 
service providers, utilizing ICC's External Service Provider Assessment 
process. This process would be outlined in Section II.C. of the ORMF 
and in ICE's Third Party Risk Management (``TPRM'') program, which is 
applicable to ICC as a subsidiary of ICE. Further, with respect to 
ICC's Financial Service Providers \10\ that are identified as SPCSs, 
ICC utilizes its Counterparty Monitoring Procedures. ICC's External 
Service Provider Assessment process is supplemental to ICE's TPRM 
program, which applies to external vendors and suppliers, service 
providers, and contractors/consultants of ICE and its subsidiaries, 
including ICC. The TPRM program establishes a comprehensive and 
structured approach for assessing, managing, monitoring, and governance 
of third-party risks at ICE and its subsidiaries, including ICC. It 
requires an assessment of operations and resiliency through, among 
other things, completion of initial on-boarding assessments of the 
third party's viability and capability to meet expected deliverables, 
business objectives, and compliance with contractual obligations, 
followed by ongoing monitoring.
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    \10\ Financial service providers (``FSPs'') are not covered by 
the TPRM program. FSPs, as defined in ICC's Counterparty Monitoring 
Procedures, are the entities to which ICC has actual or potential 
credit exposure, e.g., settlement banks, custodians, depositories, 
reverse repurchase agreement (``repo'') counterparties, committed 
repo counterparties, and committed foreign exchange (``FX'') 
counterparties.
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    The Proposed Rule Change would update vocabulary around and clarify 
the description of ICC's external service provider assessments in newly 
renumbered Section II.C of the ORMF. As proposed, this section would no 
longer refer to ``critical vendors,'' \11\ but would instead use the 
term ``external SPCS'' to align the ORMF with Rule 17Ad-25 under the 
Exchange Act, which uses and defines the term ``service provider for 
core services.'' \12\ Currently, Section II.C provides that external 
service providers are reviewed and evaluated for re-approval based on 
ICC's current risk ranking system, which is based on ``tiers.'' Under 
the Proposed Rule Change, Section II.C. would no longer describe the 
re-approval process for such external service providers with a ``risk 
ranking'' system based on ``tiers'' but would instead use a system of 
``risk ratings.'' Despite the terminology change, the basic review 
methodology would not. Under the Proposed Rule Change, ICC would still 
assign the risk rating based on a schedule of risk assessments divided 
into low, moderate, and high risks, that considers the risk direction 
for strategic, reputational, compliance, legal and operational risk

[[Page 99951]]

presented by the external service provider, in the same way that ICC 
currently assigns risk rankings.
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    \11\ Currently the ORMF defines a ``critical vendor'' as any 
third party service which is deemed essential to complete ICC's core 
processes. Core processes means acceptance of new trades, management 
of positions, production of risk and banking reports, and the 
movement of funds.
    \12\ See 17 CFR 240.17Ad-25(a).
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    Thus, when assessing an external SPCS, ICC would continue to 
analyze and manage risks posed by such external service providers, 
including strategic, reputational, compliance, legal, and operational 
risk, in the same manner as under the current ORMF. Similarly, ICC 
would use existing concepts when performing assessments of an external 
SPCS. As noted above, ICC is replacing the term ``critical vendor'' 
with the term ``external SPCS.'' ICC also is replacing the term ``core 
processes'' with the term ``CDS core clearing services.'' Currently, a 
critical vendor is any third party service provider which is deemed 
essential to complete ICC's core processes, which include acceptance of 
new trades, management of positions, production of risk and banking 
reports, and the movement of funds. The definition of external SPCS 
would include external service providers for core services, including 
CDS core clearing services, which would continue to include acceptance 
of new trades, management of positions, production of risk and banking 
reports, and the movement of funds.
    Similarly, risk assessments are and would continue to be completed 
as part of the initial onboarding process, as well as periodically. 
Section II.C. would clarify that ICC's assessment of an external SPCS 
would be in addition to ICE's TPRM program, which applies to any 
external vendor or supplier, service provider, and contractors and 
consultants utilized by ICE or its subsidiaries, including ICC. 
Although ICC's Business Continuity Planning and Disaster Recovery 
programs Oversight Committee (``BDOC'') will continue to be the body 
performing these assessments, proposed Section II.C. would eliminate 
the current bullet point list of items that may be included in the risk 
assessments \13\ and replace it with the requirement to ``evaluate and 
document the risks related to an agreement with the external SPCS, 
including under changes to circumstances and potential disruptions, and 
whether the risks can be managed in a manner consistent with the 
ORMF,'' thus mirroring the language found in Rule 17Ad-25(i)(1) under 
the Act.\14\ Although the BDOC will continue to review and recommend 
approval of the inventory of ICC external SPCSs and to assign risk 
ratings to the risk assessments in order to determine the frequency of 
ongoing risk assessment reviews, Section II.C. would be updated to 
state that the risk ratings will take into consideration ICC's plan to 
complete core processing if the service is unavailable. Additionally, 
Section II.C. would state explicitly that the BDOC reviews and 
recommends that the ICC Compliance Committee (``Compliance Committee'') 
approve the inventory of ICC external SPCS.\15\
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    \13\ Currently, the BDOC is responsible for conducting a service 
provider risk assessment for each critical vendor, which includes:
     Profiling critical vendor and services performed;
     Reviewing performance activity to date, if applicable;
     Validating or enhancing the contingency plan in the 
event that a critical vendor cannot perform as expected;
     Ensuring an ongoing oversight program of the critical 
vendor;
     Assessing the varying risks posed by the critical 
vendor.
    \14\ 17 CFR 240.17Ad-25(i)(1); see also Notice, 89 at 91444.
    \15\ The ICC Compliance Committee is an internal ICC committee 
that oversees and manages ICC's compliance program that establishes 
the framework for identifying, assessing, measuring, monitoring, 
mitigating, and reporting on compliance risks for ICC.
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B. Further Changes to the ORMF

    In addition to the above-described changes, which primarily address 
consistency with Rule 17Ad-25(i) under the Act,\16\ the Proposed Rule 
Change would:
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    \16\ 17 CFR 240.17Ad-25(i).
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     amend the `Introduction' section of the ORMF to provide 
uniform abbreviations to existing defined terms, which ICC believes 
will enhance the clarity and readability of the ORMF; \17\
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    \17\ See Notice, 89 at 91444.
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     amend terms within the `Operational Risk Lifecycle' chart 
of Section I of the ORMF to ensure that it accurately reflects the 
description of the operational life cycle narrative and correct 
typographical errors; and
     revise Section II., `Operational Risk Focus Areas,' to 
update ICC's reference to certain functions performed by ICE, remove 
references to such functions being ``outsourced,'' and instead note 
that the functions are described in the ORMF and performed pursuant to 
services agreements between ICC and ICE.
    The Proposed Rule Change would amend Section II.A., `Business 
Continuity Planning and Disaster Recovery,' to more clearly describe 
the steps in the collaboration process with respect to the business 
impact analysis (``BIA'') process. The proposed changes would reorder 
and restate the steps for completing BIA surveys used in creating test 
plans. Currently, the ORMF states that ICC ensures that it can recover 
from a wide-scale disruption and collaborates with each department to 
complete BIA surveys--specifically to ensure that each critical 
business unit:
     Defines the Mission Critical Tasks (``MCT'') to be 
performed;
     Creates test plans to ensure recovery staff are properly 
trained;
     Performs periodic tests to validate recovery staff's 
ability to perform MCT; and
     Reports the results of testing to document successes, and 
detail corrective actions.
    As proposed, the first two bullet points would be deleted and 
replaced with:
     Identifies ICC business processes, as well as the 
associated criticality of these business process, by performing the 
BIA; [and]
     Creates Business Continuity Plans (BCPs) for those 
processes identified in the BIA.
    The third and fourth bullet points would remain the same, except 
the third bullet point would specify that the periodic tests would be 
those of BCPs and that, since the MCT acronym would no longer apply, a 
reference would be made to mission critical tests.\18\
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    \18\ Id.
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    The Proposed Rule Change also would revise Section II.F. of the 
ORMF (previously Section II.E.), `Technology Control Functions,' 
specifically to more accurately reflect the ICC Technology Department's 
responsibilities. Section II.F would be updated to specify that the ICC 
Technology Department is responsible for end-to-end design, 
development, testing, deployment, maintenance and day-to-day operations 
of all enterprise software systems needed for ICC core functions. 
Currently, the ORMF describes the Technology Department's 
responsibilities as risk analysis and oversight of systems operations, 
systems development/quality assurance and capacity/performance 
planning. The ORMF would be revised to state that ICC's Technology 
Department is responsible for end-to-end design, development, testing, 
deployment, maintenance, and day-to-day operations of enterprise 
software systems needed for ICC core functions of CDS clearing. In 
addition, the Proposed Rule Change would update an outdated reference 
to ICC's Credit Technology Delivery Method (``CTDM''), which is a 
separate policy from the ORMF. Currently the ORMF references the ICC 
Project Delivery Policy, which is the former title of the CTDM. Those 
references would be updated to refer to the CTDM instead. Similarly, in 
connection with a

[[Page 99952]]

discussion of how technology releases are assessed, the Proposed Rule 
Change would replace a current reference to the ICC technology director 
with a reference to the ICC Technology leadership team. This change 
would more accurately reflect that technology releases are assessed by 
the entire ICC Technology leadership team, not just the ICC technology 
director.
    Next, the Proposed Rule Change would amend Appendix 1 of the ORMF 
to include the titles of the relevant regulatory requirements while 
removing the existing summaries of such regulations. ICC indicated that 
the purpose of this change is to streamline the reference process to 
provide the reader with a more direct reference to all the applicable 
regulations and avoid the need to review and update summaries of 
applicable regulations as they are amended from time to time.\19\
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    \19\ Id.
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    Lastly, the Proposed Rule Change would update the `Revision 
History' section of the ORMF to reflect the proposed changes described 
above, as well as to formalize a series of non-material updates 
previously made to the ORMF that were the output of the annual review 
of the ORMF conducted by the Compliance Committee, and that were 
reviewed and approved by the Board in 2021, 2022, and 2023.\20\
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    \20\ For example, updates approved by the Board in 2021 included 
language in Section I.A. `Risk Assessment,' clarifying that the 
Compliance Committee reviews risk assessments during their quarterly 
meetings. The 2021 updates also included minor clarifications to 
Section I.B. to clarify that one of the current responsibilities of 
the ICE Enterprise Risk Management (``ERM'') function is to observe 
and review the incident management mitigation process and, if 
necessary, challenge corrective action plan decisions and priority 
levels. See Notice, 89 at 91444-45. ICC indicated that these changes 
were intended to clarify the description of current practices and 
the readability of the ORMF, and as such, do not change current 
practices. Id. For further examples, see Notice, 89 at 91444-45.
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III. Discussion

    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 
the Proposed Rule Change is consistent with the requirements of the Act 
and the rules and regulations thereunder applicable to such 
organization.\21\ Under the Commission's Rules of Practice, the 
``burden to demonstrate that a proposed rule change is consistent with 
the Act and the rules and regulations issued thereunder . . . is on the 
self-regulatory organization [`SRO'] that proposed the rule change.'' 
\22\
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    \21\ 15 U.S.C. 78s(b)(2)(C).
    \22\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR 
201.700(b)(3).
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    The description of a proposed rule change, its purpose and 
operation, its effect, and a legal analysis of its consistency with 
applicable requirements must all be sufficiently detailed and specific 
to support an affirmative Commission finding,\23\ and any failure of an 
SRO to provide this information may result in the Commission not having 
a sufficient basis to make an affirmative finding that a proposed rule 
change is consistent with the Act and the applicable rules and 
regulations.\24\ Moreover, ``unquestioning reliance'' on an SRO's 
representations in a proposed rule change is not sufficient to justify 
Commission approval of a proposed rule change.\25\
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    \23\ Id.
    \24\ Id.
    \25\ Susquehanna Int'l Group, LLP v. Securities and Exchange 
Commission, 866 F.3d 442, 447 (D.C. Cir. 2017) (``Susquehanna'').
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    After carefully considering the Proposed Rule Change, the 
Commission finds that the Proposed Rule Change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to ICC. More specifically, for the reasons discussed below, 
the proposed rule change is consistent with Section 17A(b)(3)(F) of the 
Act \26\ and Rules 17Ad-25(i),\27\ 17Ad-22(e)(17)(i),\28\ and 17Ad-
22(e)(2)(i) and (v) \29\ thereunder.
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    \26\ 15 U.S.C. 78q-1(b)(3)(F).
    \27\ 17 CFR 240.17Ad-25(i).
    \28\ 17 CFR 240.17Ad-22(e)(17)(i).
    \29\ 17 CFR 240.17Ad-22(e)(2)(i), (v).
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A. Consistency With Section 17A(b)(3)(F) of the Act

    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.\30\ 
Based on a review of the record, and for the reasons discussed below, 
the proposed changes to the ORMF are consistent with the promotion of 
the prompt and accurate clearance and settlement of transactions at 
ICC.
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    \30\ 15 U.S.C. 78q-1(b)(3)(F).
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    Newly added Section II.B. of the ORMF--addressing ICC's management 
of risks from relationships with SPCS--and updated and renumbered 
Section II.C. of the ORMF--titled `External Service Provider 
Assessments'--help facilitate ICC's ability to manage its relationships 
with SPCS and the inherent risks these relationships encompass. For 
instance, as discussed above, the Proposed Rule Change would add 
Section II.B. to the ORMF, which would specify the requirements and 
procedures for ICC to manage the risks arising from ICC's relationships 
with SPCS. Such requirements and procedures would include, among other 
things, evaluating and documenting risks associated with a SPCS, 
submitting a risk evaluation to the ICC Board related to a relationship 
with a SPCS, establishing policies and procedures governing the 
relationship and risk-management of a SPCS relationship, and performing 
ongoing monitoring of a SPCS relationship for purposes of identifying 
and remediating changing risks.\31\ Together, Sections II.B. and II.C. 
of the ORMF also would provide greater clarity around the approval and 
maintenance of ICC's relationships with SPCS that are contractually 
obligated not only to supply services material to running ICC's 
business, such as staffing, finance, and accounting, but also to 
support ICC's clearance and settlement functionality. By promoting 
ICC's ability to manage relationships with SPCS, both internal and 
external, the Proposed Rule Change is thereby designed to promote ICC's 
capabilities in promptly and accurately clearing and settling 
securities transactions, and, to the extent applicable, derivative 
agreements, contracts, and transactions.
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    \31\ The requirements outlined in Section II.B. directly reflect 
language in Rule 17Ad-25(i), which was approved by the Commission in 
2023. See n. 5, supra.
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    For the reasons stated above, the Commission finds that the 
Proposed Rule Change is consistent with Section 17A(b)(3)(F) of the 
Act.\32\
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    \32\ Id.
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B. Consistency With Rule 17Ad-25(i) Under the Act

    Rule 17Ad-25(i) requires each covered clearing agency to establish, 
implement, maintain, and enforce written policies and procedures 
reasonably designed to (1) require senior management to evaluate and 
document the risks related to an agreement with a service provider for 
core services, including under changes to circumstances and potential 
disruptions, and whether the risks can be managed in a manner 
consistent with the clearing agency's risk management framework; (2) 
require senior management to submit to the board of directors for 
review and approval any agreement that would establish a relationship 
with a service provider for core services, along with such risk 
evaluation; (3) require senior management to be responsible for 
establishing the policies and procedures that govern relationships and 
manage

[[Page 99953]]

risks related to such agreements with service providers for core 
services and require the board of directors to be responsible for 
reviewing and approving such policies and procedures; and (4) require 
senior management to perform ongoing monitoring of the relationship, 
and report to the board of directors for its evaluation of any action 
taken by senior management to remedy significant deterioration in 
performance or address changing risks or material issues identified 
through such monitoring; or if the risks or issues cannot be remedied, 
require senior management to assess and document weaknesses or 
deficiencies in the relationship with the service provider for 
submission to the board of directors.\33\ In adopting Rule 17Ad-25(i), 
the Commission stated that the final rule would more clearly delineate 
the roles of senior management and the board so as not to require the 
board to undertake responsibilities reserved for senior management.\34\
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    \33\ 17 CFR 240.17Ad-25(i).
    \34\ See Clearing Agency Governance and Conflicts of Interest, 
88 FR at 84477.
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    As described above, the Proposed Rule Change would help ensure that 
the ORMF codifies and implements policies and procedures designed to 
ensure that ICC appropriately manages relevant risks that arise from 
ICC's relationships with SPCS, including by increasing ORMF users' 
awareness of those risks, and ensuring that ICC identifies, assesses, 
measures, monitors, mitigates, and reports those risks. The ORMF also 
delineates the responsibilities between senior management and the Board 
regarding these risks. Specifically, the ORMF specifies that senior 
management provides the Board with information pertaining to 
relationships with SPCS, any relevant risk evaluations, and 
management's efforts to monitor, assess, document, and remedy risks 
associated with these relationships.
    For these reasons, the Commission finds the Proposed Rule Change is 
consistent with Rule 17Ad-25(i).\35\
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    \35\ Id.
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C. Consistency With Rule 17Ad-22(e)(17)(i) Under the Act

    Rule 17Ad-22(e)(17)(i) requires each covered clearing agency to 
establish, implement, maintain and enforce written policies and 
procedures reasonably designed to manage its operational risks by 
identifying the plausible sources of operational risk, both internal 
and external, and mitigating their impact through the use of 
appropriate systems, policies, procedures, and controls.\36\
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    \36\ 17 CFR 240.17Ad-22(e)(17)(i).
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    As described above, the Proposed Rule Change would update the ORMF 
to provide additional and current details regarding ICC's management of 
SPCS and assure that both ICC's relationships with SPCS and the risks 
associated with those relationships are continuously being monitored. 
The processes specified in the ORMF are intended to enhance ICC's 
ability to identify relevant internal and external sources of 
operational risk. As such, the Proposed Rule Change will define 
processes and controls that will facilitate ICC's ability to mitigate 
the impact of such risks through the use of appropriate systems, 
policies, procedures, and controls, consistent with the requirements of 
Rule 17Ad-22(e)(17)(i).\37\
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    \37\ Id.
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    For the reasons stated above, the Commission finds the Proposed 
Rule Change is consistent with Rule 17Ad-22(e)(17)(i).\38\
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    \38\ Id.
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D. Consistency With Rule 17Ad-22(e)(2)(i) and (v) Under the Act

    Rule 17Ad-22(e)(2)(i) and (v) 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, and specify clear and direct lines of 
responsibility.\39\
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    \39\ 17 CFR 240.17Ad-22(e)(2)(i), (v).
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    As described above, by adding new Section II.B. to the ORMF, the 
Proposed Rule Change would codify the responsibilities of ICC's 
management and the Board when managing risks arising from ICC's 
relationships with SPCS. The proposed changes also would update the 
ORMF to clarify the description of the Compliance Committee and ERM 
responsibilities, and the general updates described in Section II.B. 
above, would help ensure that the ORMF is accurate and current. Taken 
together, these revisions to the ORMF will help ICC maintain clear and 
transparent governance arrangements and specify clear and direct lines 
of responsibility, which in turn will help improve the accuracy and 
transparency of ICC's governance arrangements and improve the clarity 
of the lines of responsibility.
    For these reasons, the Commission finds the Proposed Rule Change is 
consistent with Rule 17Ad-22(e)(2)(i) and (v).\40\
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    \40\ Id.
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IV. Accelerated Approval of the Proposed Rule Change

    Under Section 19(b)(2) of the Act,\41\ the Commission may approve a 
proposed rule change prior to the 30th day after the date of 
publication of notice of filing of the proposed rule change in the 
Federal Register if the Commission finds good cause for doing so.
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    \41\ 15 U.S.C. 78s(b)(2).
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    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Exchange Act,\42\ to approve the Proposed Rule Change prior to the 
30th day after the date of publication of notice of filing of the 
Proposed Rule Change in the Federal Register. Rule 17Ad-25(i) requires, 
among other things, that covered clearing agencies establish, 
implement, maintain, and enforce written policies and procedures 
reasonably designed to require that senior management (i) evaluate and 
document the risks related to an agreement with a SPCS; (ii) submit to 
the board of directors for review and approval any agreement that would 
establish a relationship with a SPCS (iii) be responsible for 
establishing the policies and procedures that govern relationships and 
manage risks related to such agreements with SPCS; and (iv) perform 
ongoing monitoring of the relationship, and report to the board of 
directors for its evaluation of any action taken by senior management 
to remedy significant deterioration in performance or address changing 
risks or material issues identified through such monitoring.\43\ The 
proposed rule change would establish ICC's process for vetting and 
managing its relationships with SPCS, with specific processes for 
internal and external SPCS, consistent with Rule 17Ad-25(i).\44\ Based 
on the foregoing, and as discussed above, the Proposed Rule Change is 
consistent with the requirements of Rule 17Ad-25(i) under the Act.\45\
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    \42\ 15 U.S.C. 78s(b)(2).
    \43\ 17 CFR 240.17Ad-25(i).
    \44\ 17 CFR 240.17Ad-25(i).
    \45\ Id.
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    The compliance date for Rule 17Ad-25(i) generally is December 5, 
2024.\46\ Approving the Proposed Rule Change on an accelerated basis 
will allow ICC to establish its process for vetting and managing its 
relationships with SPCS by this compliance date. Accordingly, the 
Commission finds good cause to

[[Page 99954]]

approve the Proposed Rule Change on an accelerated basis prior to the 
30th day after the date of publication of notice of filing of the 
Proposed Rule Change in the Federal Register, pursuant to Section 
19(b)(2) of the Exchange Act.\47\
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    \46\ Clearing Agency Governance and Conflicts of Interest, 88 FR 
at 84454 (explaining that the compliance date for Rule 17Ad-25 is 
December 5, 2024, except that the compliance date for the 
independence requirements of the board and board committees in Rules 
17Ad-25(b)(1), (c)(2), and (e) is December 5, 2025).
    \47\ 15 U.S.C. 78s(b)(2).
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V. 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 \48\ and Rules 17Ad-25(i),\49\ 17Ad-22(e)(17)(i),\50\ and 17Ad-
22(e)(2)(i) and (v) \51\ thereunder.
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    \48\ 15 U.S.C. 78q-1(b)(3)(F).
    \49\ 17 CFR 240.17Ad-25(i).
    \50\ 17 CFR 240.17Ad-22(e)(17)(i).
    \51\ 17 CFR 240.17Ad-22(e)(2)(i), (v).
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    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
\52\ that the Proposed Rule Change (SR-ICC-2024-011), be, and hereby 
is, approved, on an accelerated basis.\53\
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    \52\ 15 U.S.C. 78s(b)(2).
    \53\ 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.\54\
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    \54\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-29037 Filed 12-10-24; 8:45 am]
BILLING CODE 8011-01-P
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