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[Federal Register Volume 89, Number 238 (Wednesday, December 11, 2024)]
[Notices]
[Pages 99917-99923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29038]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101820; File No. SR-ICC-2024-010)

Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing and Order Granting Accelerated Approval of Proposed Rule Change 
Relating to the Governance Playbook and Seventh Amended and Restated 
Operating Agreement

December 5, 2024
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on 
November 22, 2024, ICE Clear Credit LLC (``ICE Clear Credit'' or 
``ICC'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II 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 and to approve 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.
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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 
ICC's (i) Governance Playbook (the ``Playbook''), and (ii) Seventh 
Amended and Restated Operating Agreement (the ``Operating Agreement'').

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, Security-Based Swap Submission, or 
Advance Notice

(a) Purpose
    The amendments are intended principally to provide for the 
establishment of a Nominating Committee. 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. Operating Agreement

    ICC would amend and restate its Operating Agreement \3\ to add a 
Nominating Committee. As provided in revised Section 3.12 of the 
Operating Agreement, the Board will establish and maintain a Board 
level Nominating Committee which will be responsible for evaluating the 
independence and fitness of the persons proposed to be designated as 
Managers of the Board. In connection with this addition, the amendments 
would add a definition of `Nominating Committee' to Section 1.01 of the 
Operating Agreement. Furthermore, proposed Section 3.12(a) of the 
Operating Agreement provides that the Nominating Committee will be 
composed of at least three members, a majority of which are required to 
be independent (i.e., either a Parent Independent Manager \4\ or a Risk 
Committee Independent Manager \5\). Two of the members of the 
Nominating Committee will be required to be Managers nominated to the 
Board by the Risk Committee, and one of these Risk Committee nominees 
will be required to be a Risk Committee Independent Manager, and the 
other Risk Committee nominee is not required to be an independent 
(i.e., they may be a Risk Committee Non-Independent Manager \6\). The 
chairperson of the

[[Page 99918]]

Nominating Committee will be a Parent Independent Manager. Proposed 
Section 3.12(b) of the Operating Agreement provides that the Nominating 
Committee will have access to the records of ICC, as well as access to 
Managers of the Board, and ICC officers and employees. The Nominating 
Committee will meet as needed to fulfill its duties, but in no event 
less than annually. Proposed Section 3.12(c) of the Operating Agreement 
provides for the limitation of the fiduciary duties on the members of 
the Nominating Committee. Such proposed limitation of fiduciary duties 
on members of the Nominating Committee is analogous to the current 
limitation of fiduciary duties provided in the Operating Agreement for 
members of the ICC Audit Committee and Managers of the Board. 
Specifically, proposed Section 3.12(c) provides that notwithstanding 
any provision of, any duty otherwise existing under, or anything to the 
contrary at applicable law (whether common or statutory), in equity or 
otherwise, the Operating Agreement is not intended to, and does not, 
create or impose any fiduciary duties on the members of the Nominating 
Committee. Further, each of the Parent and the other parties to or 
bound under the Operating Agreement waives any and all fiduciary duties 
that, absent such waiver or otherwise, may be implied or may otherwise 
apply under applicable law (whether common or statutory), in equity or 
otherwise to the members of the Nominating Committee. In addition, the 
parties to the Operating Agreement agree that the only duties and 
obligations of the members of the Nominating Committee to ICC, the 
Parent, ICC Clearing Participants, or any other person under applicable 
law (whether common or statutory), in equity or otherwise, are limited 
solely to performing those contractual duties expressly set forth in 
the Operating Agreement. Proposed Section 3.12(c) further provides that 
that none of the foregoing waivers or limitations shall be construed as 
eliminating the implied covenant of good faith and fair dealing.
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    \3\ Following Commission approval, ICC proposes to implement the 
collective changes to the Operating Agreement proposed herein and 
the changes to the Operating Agreement described in ICC rule filing 
SR-ICC-2024-009 (approved by the Commission and available here: 
https://www.federalregister.gov/documents/2024/10/24/2024-24638/self-regulatory-organizations-ice-clear-credit-llc-order-approving-proposed-rule-change-as-modified) in the same version of the amended 
and restated Operating Agreement.
    \4\ As defined in the Operating Agreement, `Parent Independent 
Manager' means a Manager of the Board elected by the Parent that 
meets the independence requirements of each of the New York Stock 
Exchange listing standards, the Securities Exchange Act of 1934, and 
Intercontinental Exchange, Inc. Board of Director Governance 
Principles (collectively, the ``Independence Standards'').
    \5\ As defined in the Operating Agreement, `Risk Committee 
Independent Manager' means a Manager of the Board nominated by the 
Risk Committee that meets the Independence Standards.
    \6\ As defined in the Operating Agreement, `Risk Committee Non-
Independent Manager' means a Manager of the Board nominated by the 
Risk Committee that is not required to meet the Independence 
Standards.
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    Furthermore, the amendments would modify Section 3.02 of the 
Operating Agreement to add the Nominating Committee's role in the 
evaluation of potential members of the Board. Specifically, Section 
3.02(a) of the Operating Agreement would be revised to indicate that 
the Parent shall not elect any person as a Manager of the Board until 
the Nominating Committee provides their evaluation of such person to 
the Parent. In addition, the amendments add the related definitions of 
`Nominating Committee Evaluation' and `Nominating Committee Charter' 
\7\ to Section 1.01 of the Operating Agreement.
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    \7\ `Nominating Committee Evaluation' means, in respect of any 
person, the Nominating Committee's written evaluation of such 
person's independence and fitness for election as a Manager, based 
on the standards and pursuant to the process set forth in the 
Nominating Committee Charter. `Nominating Committee Charter' means 
the Charter of the Nominating Committee.
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    In addition, the amendments would add a definition of `SEC' to 
Section 1.01 of the Operating Agreement. Furthermore, the amendments 
would modify the current definition of `Governmental Authority' 
contained in Section 1.01 of the Operating Agreement to include 
reference to the SEC to reflect the list of governmental authorities 
more accurately with jurisdiction over ICC. Lastly, the amendments 
would add a reference to members of the Nominating Committee to the 
definition of `Covered Persons' contained in Section 1.01 of the 
Operating Agreement. Such change properly adds members of the new 
Nominating Committee to the list of persons to which the liability and 
indemnification provisions (contained in Article VI of the Operating 
Agreement) apply.

II. Governance Playbook

    ICE Clear Credit would also amend the Playbook to conform to the 
amendments to the Operating Agreement discussed above. Section I and 
Section III of the Playbook would be revised to add reference to 
Commission Rule 17Ad-25 \8\ to the list of applicable regulations 
covering the governance structure of ICC. Such change properly adds 
reference to new Commission Rule 17Ad-25 \9\ as such rule applies to 
the governance structure of Commission registered clearing agencies, 
including ICC. Section II of the Playbook would be amended to add the 
new Nominating Committee to the existing chart summarizing ICC's 
governance structure. Section III of the Playbook would be amended to 
add the defined term `Manager' to reference any individual member of 
the Board. Furthermore, ICC's definition of the independence standards 
it applies to independent Managers of the Board would be revised to 
include a reference to Commission Rule 17Ad-25 \10\ which provides for 
independence requirements for Commission registered clearing agencies, 
including ICC. The amendments would also formalize the defined term 
`Independence Standards.' Section III.A. of the Playbook would also be 
amended to remove the fitness standards for serving as a Manager on 
ICC's Board and, as a result, the related definition of `Qualified 
Manager' would also be removed. As a replacement for these specified 
fitness standards, the amendments would add a reference that the 
fitness standards for serving as a Manager, and the criteria for 
selecting new Managers will be specified by the new Nominating 
Committee and thereafter approved by the Board. Such process for having 
Manager fitness standards specified by the Nominating Committee is 
intended to comply with new Commission Rule 17Ad-25(c)(3) \11\ which 
requires this process. The amendments would add the defined term 
`Manager Fitness Standards' to refer to these Nominating Committee 
specified and Board approved fitness standards for Managers. The 
Nominating Committee will be formed, and their process of specifying 
the Manager Fitness Standards will occur, following Commission 
approval, and ICC implementation, of these proposed rule changes. Once 
such Manager Fitness Standards are specified by the new Nominating 
Committee and are approved by the Board, they will be included as new 
Appendix 1 to the Playbook. Due to the addition of Appendix 1, 
subsequent appendices would be renumbered and references to such 
appendices would be updated as well.
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    \8\ 17 CFR 240.17ad-25.
    \9\ Id.
    \10\ Id.
    \11\ 17 CFR 240.17ad-25(c)(3).
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    Section III.B. of the Playbook would be revised to add the 
Nominating Committee's role in the evaluation of potential members of 
the Board. Specifically, the Nominating Committee shall provide their 
evaluation and recommendation of an individual they believe to be 
qualified to become a Manager of the Board to the Parent, consistent 
with the Manager Fitness Standards. Furthermore, such section would be 
amended to reference that the Nominating Committee may consult with the 
Board, the Parent, the Risk Committee and ICC management regarding the 
skills, experience, and incentives of the potential new Manager. As a 
result of the addition of the Nominating Committee and its role in 
evaluating potential new Managers, the provisions in Section III.B. of 
the Playbook regarding the Parent's consultation and information 
sharing related to potential new Managers is proposed to be removed as 
this role will be assumed by the Nominating Committee. In addition, the

[[Page 99919]]

amendments will include a reference that the Parent will document their 
election of a new Manager, typically through a unanimous written 
consent of the directors of the Parent's general partner, to provide 
additional transparency on current practices. Section III of the 
Playbook would also be amended to add the Nominating Committee to the 
list of parties that will be notified regarding the removal or 
resignation of a current Manager. With respect to the election of 
Managers designated by the Risk Committee, the amendments would add the 
Nominating Committee to the list of parties that would receive the 
biographical information of potential Managers designated by the Risk 
Committee. The amendments would also indicate that the Nominating 
Committees shall provide their evaluation and recommendation of 
individuals designated by the Risk Committee for a Manager position.
    Section III of the Playbook would also be revised with respect to 
the annual election process of Managers by the Parent, noting that in 
connection with this process, the Nominating Committee will provide the 
Parent with their evaluation of any proposed new Manager which will be 
based on the Board approved Manager Fitness Standards. With respect to 
any re-designated Manager, the Nominating Committee will be added to 
the list of parties that will receive details from ICC management 
regarding each re-designated Manager's performance/attendance from the 
previous year, including information specific to Nominating Committee 
performance such as results from the Nominating Committee evaluation 
process.
    Section III.E. of the Playbook would be revised to add clarifying 
information to ICC's conflicts of interest process regarding potential 
Manager conflicts. Specifically, Section III.E. would be amended to 
clarify that ICC's Code of Business Conduct and Ethics policy 
applicable to Managers provides for the disclosure and resolution of 
conflicts of interest, and further clarifies that resolution of Manager 
conflicts of interest means mitigation or elimination.\12\ Such section 
will also be amended to indicate that the ICC legal department will 
maintain documentation of any conflicts of interest disclosed by 
Managers and the mitigation or elimination thereof.
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    \12\ Please note that the identification and resolution of 
conflicts of interest covered in the Playbook relate to conflicts of 
interest involving Managers. With respect to potential conflicts of 
interest involving ICC staff (including senior managers), such 
employee conflicts of interest are covered in other ICC policies and 
procedures outside of the Playbook.
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    Section III.F. of the Playbook would be revised to add the 
Nominating Committee's role in evaluating and recommending to the Board 
if each Manager, and any nominee for Manager, qualifies as independent 
under the Independence Standards. Such evaluation by the Nominating 
Committee shall be provided to the Board to aid in the Board's 
independence determination with respect to each Manager. In addition, 
ICC proposes amendments to clarify that (i) Nominating Committee 
members shall recuse themselves from evaluating their own independence 
and (ii) Managers shall recuse themselves from the determination of 
their own independence. Such section would also be modified to use the 
defined term Independence Standards. Furthermore, the independence 
qualifications described in Section III.F. of the Playbook would be 
modified to incorporate additional independence qualification 
definitions provided in new Commission Rule 17Ad-25(a), for example the 
definition of `family member.' To ensure compliance with the 
independence qualification requirement of new Commission Rule 17Ad-
25(a),\13\ Section III.F. of the Playbook would be augmented with the 
following additional relationships that would disqualify an individual 
from being deemed independent:
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    \13\ 17 CFR 240.17ad-25(a).
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     In addition to an individual that is employee of an ICE 
Group company, an individual that otherwise receives compensation from 
an ICE Group company.
     An individual with a family member that is (or has been in 
the year prior to the determination date) an employee or otherwise 
receives compensation from any ICE Group company.
     An individual, or a family member of such individual, that 
is or has been in the year prior to the determination date, receiving 
payments from ICE Group companies that could reasonably affect the 
independent judgement or decision-making of the individual (other than 
director and committee fees of pension or other forms of deferred 
compensation for prior services not contingent on continued service).
     In addition to an individual that is an employee of a firm 
that is the ICE Group's internal or external auditor, an individual 
that has a family member who is either a partner of such auditing firm 
or a current employee of such auditing firm, or the individual has a 
family member that was within the prior year from the determination 
date an employee or such auditing firm and personally worked on the ICE 
Group audit within that time.
     An individual with a family member that is, or has been 
within the prior year from the determination date, employed as an 
executive officer of another company where any of ICC's executive 
officers at the same time serves or served on that company's 
compensation committee.
     An individual, or a family member of such individual, that 
is or has been within the prior year from the determination date, a 
partner or controlling shareholder on any organization to or from which 
an ICE Group company is making or receiving payments for property or 
services other than: (i) payments arising solely from investments in 
the ICE Group company securities; or (ii) payments under non-
discretionary charitable contribution matching programs.
    Further amendments would be made to the description of the ICC 
annual independence questionnaire process to add the Nominating 
Committee's role with respect to evaluating and recommending to the 
Board if each Manager qualifies as independent under the Independence 
Standards. Specifically, the section would be amended to indicate that 
the completed independence questionnaires will be provided to the 
Nominating Committee to aid in their evaluation/recommendation process. 
In addition, ICC proposes amendments to describe the process followed 
should the circumstances regarding an existing Manager's independence 
change. Specifically, in such event, the Nominating Committee shall re-
evaluate and recommend to the Board whether such Manager continues to 
qualify as independent under the Independence Standards. Following such 
re-evaluation and recommendation by the Nominating Committee, the Board 
shall determine if such Manager continues to be independent.
    With respect to the Board performance review process described in 
Section III.G. of the Playbook, such section would be revised to 
indicate that the ICC General Counsel will provide a summary of all 
Board performance survey results (including survey results related to 
individual Board member performance) to the Nominating Committee.
    In addition, Section IV of the Playbook would be revised to add the 
Nominating Committee to the list of ICC's primary governance 
committees. Furthermore, Section IV.B. would be

[[Page 99920]]

added to the Playbook to describe the Nominating Committee's purpose, 
its membership composition, the new Nominating Committee member 
administration procedures, the Nominating Committee meeting frequency, 
the Nominating Committee performance review process, and the documents 
relevant to the Nominating Committee. The additional sections 
describing the Nominating Committee's purpose, its composition and its 
meeting frequency reflect the same changes made to the Operating 
Agreement described above. The section describing the new Nominating 
Committee member administrative procedures provides an overview of the 
steps that will be taken by the ICC legal department to onboard a new 
member of the Nominating Committee (e.g., updating distribution lists 
and updating the permissions of such individual on the Diligent 
platform which is used to distribute materials to the Board and other 
committees, including the Nominating Committee). The proposed revisions 
also add a description of the Nominating Committee performance review 
process and procedures. Such performance review process is conducted on 
an annual basis and includes each member of the Nominating Committee 
completing a self-evaluation survey. The annual review process is 
designed to gather feedback on the operation of the Nominating 
Committee and solicit suggestions for improvements, as well as provide 
a forum for the identification of problems with respect to the 
performance of the Nominating Committee. Such process includes the 
compilation of a summary of the survey responses received from the 
Nominating Committee by the ICC legal department, which are presented 
to the entire Nominating Committee. Such summary shall include 
disclosure of the minimum, maximum, and average score for each survey 
item, as well as a summary of relevant comments received throughout the 
process. The proposed process and procedures for the Nominating 
Committee annual performance review process are fully analogous to the 
performance review processes currently in place for both the Board and 
the ICC Audit Committee. Lastly the revisions add information related 
to relevant documents of the Nominating Committee (e.g., meeting 
agendas, minutes and meeting materials), noting that such relevant 
documents will be maintained by the ICC legal department on their 
shared network drive.
    ICC also proposes a number of other drafting clarifications and 
conforming changes, such as updating use of relevant defined terms, 
rule references and other non-substantive drafting improvements, would 
also be made throughout the Playbook. Various provisions would also be 
relabeled or renumbered in the Playbook. The amendments would also 
update the revision history section to the Playbook.
(b) Statutory Basis
    ICE Clear Credit believes that the proposed amendments to the 
Operating Agreement and the Playbook are consistent with the 
requirements of Section 17A of the Securities Exchange Act of 1934 (the 
``Act'') \14\ and the regulations thereunder applicable to it. In 
particular, Section 17A(b)(3)(F) of the Act \15\ requires, among other 
things, that the rules of a clearing agency be designed to promote the 
prompt and accurate clearance and settlement of securities transactions 
and, to the extent applicable, derivative agreements, contracts, and 
transactions, the safeguarding of securities and funds in the custody 
or control of the clearing agency or for which it is responsible, and 
the protection of investors and the public interest.
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    \14\ 15 U.S.C. 78q-1.
    \15\ 15 U.S.C. 78q-1(b)(3)(F).
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    The proposed amendments are designed to reflect the addition of the 
Nominating Committee to ICC's governance structure, consistent with 
requirements of new Commission Rule 17Ad-25. The amendments provide 
details on the purpose of the Nominating Committee and its composition. 
In ICC's view, the amendments will improve ICC's governance structure 
by reducing the likelihood that conflicts of interest may influence the 
Board. Thus, the proposed amendments enhance the overall risk 
management of ICC and are consistent with the prompt and accurate 
clearance and settlement of securities transactions and derivatives 
agreements, contracts and transactions, the safeguarding of securities 
and funds which are in the custody or control of ICC or for which it is 
responsible, and the protection of investors and the public interest in 
the operation of clearing services, within the meaning of Section 
17A(b)(3)(F) of the Act.\16\
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    \16\ 15 U.S.C. 78q-1(b)(3)(F).
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    The proposed amendments are also consistent with relevant 
provisions of Rule 17Ad-22(e)(2) which provides that the ``covered 
clearing agency shall establish, implement, maintain and enforce 
written policies and procedures reasonably designed to, as applicable 
[. . .] [p]rovide for governance arrangements that are [c]lear and 
transparent'' \17\ and ``[c]onsider the interests of participants' 
customers . . . and other relevant stakeholders of the covered clearing 
agency.'' \18\ The proposed amendments are intended to add a Nominating 
Committee to ICC's governance structure with the role of evaluating the 
independence and fitness of the persons proposed to be designated as 
Managers of the Board. As such, the Nominating Committee is intended to 
improve ICC's governance structure by reducing the likelihood that 
conflicts of interest my influence the Board. In ICC's view, the 
amendments to the Operating Agreement and the Playbook are therefore 
consistent with the requirements of Rule 17Ad-22(e)(2).\19\
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    \17\ 17 CFR 240.17ad-22(e)(2)(i).
    \18\ 17 CFR 240.17ad-22(e)(2)(vi).
    \19\ 17 CFR 240.17ad-22(e)(2).
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    The proposed amendments also are consistent with the relevant 
provisions of Rule 17Ad-25(c) which provides that ``Each registered 
clearing agency must establish a nominating committee and a written 
evaluation process whereby such nominating committee shall evaluate 
nominees for serving as directors and evaluate the independence of 
nominees and directors.'' \20\ The proposed amendments add a new 
Nominating Committee to ICC's governance structure with the role of 
evaluating the independence and fitness of the persons proposed to be 
designated as Managers of the Board. In ICC's view, the amendments to 
the Operating Agreement and Playbook are therefore consistent with the 
requirements of Rule 17Ad-25(c).\21\
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    \20\ 17 CFR 240.17ad-25(c).
    \21\ Id.
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    The proposed amendments also are consistent with the relevant 
provisions of Rule 17Ad-25(f) which provides for circumstances which 
would ``preclude a director from being an independent director . . . 
.'' \22\ The proposed amendments would add circumstances that would 
disqualify individuals from being deemed independent consistent with 
the requirements of Rule 17Ad-25(f).\23\ In ICC's view, the amendments 
to the Operating Agreement and Playbook are therefore consistent with 
the requirements of Rule 17Ad-25(f).\24\
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    \22\ 17 CFR 240.17ad-25(f).
    \23\ Id.
    \24\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

    ICE Clear Credit does not believe the proposed amendments would 
have any

[[Page 99921]]

impact, or impose any burden, on competition not necessary or 
appropriate in furtherance of the purposes of the Act. The amendments 
are being adopted to add a Nominating Committee. The amendments do not 
otherwise change the rights and responsibilities of ICC or its market 
participants. Accordingly, ICE Clear Credit does not believe the 
amendments would affect the costs of clearing, the ability of market 
participants to access clearing, or the market for clearing services 
generally. Therefore, ICE Clear Credit 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. 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 (https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking); 
or
     Send an email to [email protected]. Please include 
File Number SR-ICC-2024-010 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-2024-010. 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-2024-010 and should 
be submitted on or before December 31, 2024.

IV. Discussion and Commission's Findings

    Section 19(b)(2)(C) of the Act requires 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 the 
organization.\25\ Under the Commission's Rules of Practice, the 
``burden to demonstrate that a proposed rule change is consistent with 
the Exchange Act and the rules and regulations issued thereunder . . . 
is on the self-regulatory organization [`SRO'] that proposed the rule 
change.'' \26\
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    \25\ 15 U.S.C. 78s(b)(2)(C).
    \26\ 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,\27\ 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.\28\ 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.\29\
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    \27\ Id.
    \28\ Id.
    \29\ 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 given below, the 
Commission finds that the proposed rule change is consistent with 
Section 17A(b)(3)(A) and (F) of the Act \30\ and Rules 17Ad-22(e)(2) 
and 17Ad-25 thereunder.\31\
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    \30\ 15 U.S.C. 78q-1(b)(3)(F) and 15 U.S.C. 78q-1(b)(3)(F).
    \31\ 17 CFR 240.17Ad-22(e)(2) and 17 CFR 240.17ad-25.
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A. Consistency With Section 17A(b)(3) of the Act

    Section 17A(b)(3) of the Act requires, among other things, that ICC 
be so organized and has the capacity to be able to comply with the 
provisions of the Act and the rules and regulations thereunder,\32\ and 
that ICC's rules be designed to foster cooperation and coordination 
with persons engaged in the clearance and settlement of securities 
transactions.\33\ Based on review of the record, and for the reasons 
discussed below,\34\ ICC's changes are consistent with ICC being so 
organized and having the capacity to comply with the provisions of the 
Act and the rules and regulations thereunder and with fostering 
cooperation and coordination with persons engaged in the clearance and 
settlement of securities transactions. Accordingly, the proposed rule 
change is consistent with the requirements of Sections 17A(b)(3)(A) and 
(F) of the Act.\35\
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    \32\ 15 U.S.C. 78q-1(b)(3)(A).
    \33\ 15 U.S.C. 78q-1(b)(3)(F).
    \34\ See infra Section IV. B. (Consistency with Rule 17Ad-
22(e)(2) under the Act).
    \35\ 15 U.S.C. 78q-1(b)(3)(A) and 15 U.S.C. 78q-1(b)(3)(F).
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B. Consistency With Rule 17Ad-22(e)(2) Under the Act

    Rule 17Ad-22(e)(2) requires covered clearing agencies to, among 
other things, provide for governance arrangements that are clear and 
transparent,\36\ establish that the board of directors and senior 
management have appropriate experience and skills to discharge their 
duties and responsibilities,\37\ and specify clear and direct lines of 
responsibility.\38\ In adopting Rule

[[Page 99922]]

17Ad-22(e)(2), the Commission provided guidance that a covered clearing 
agency generally should consider in establishing and maintaining 
policies and procedures, including, in part, whether the board of 
directors contains suitable members with the appropriate skills and 
incentives to fulfill the board's multiple roles, and whether the board 
of directors should include non-executive board members.\39\
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    \36\ 17 CFR 240.17Ad-22(e)(2)(i).
    \37\ 17 CFR 240.17Ad-22(e)(2)(iv).
    \38\ 17 CFR 240.17Ad-22(e)(2)(v).
    \39\ Securities Exchange Act Release No. 78961 (Sept. 28, 2016), 
81 FR 70786, 70806 (Oct. 13, 2016) (File No. S7-03-14) (``Standards 
for Covered Clearing Agencies'').
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    ICC's proposed changes would strengthen ICC's written independence 
qualifications for current and potential Board members and establish a 
Nominating Committee to evaluate Board members against these 
independence qualifications. As discussed above, the proposed rule 
change would update the Playbook to augment the list of relationships 
that disqualify a person from being an independent member of the Board 
by adding to the list new, additional relationships as specified in 
Rule 17Ad-25 under the Exchange Act.\40\ For example, pursuant to the 
current Playbook, an individual that is an employee of an ICE Group 
company is not considered independent. Under the proposed rule change, 
the Playbook would be updated to specify that an individual that 
otherwise receives compensation from an ICE Group company also would 
not be considered independent.
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    \40\ 17 CFR 240.17ad-25.
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    Strengthening the criteria by which ICC evaluates both current 
Managers and nominees would help ICC review each individual nominee 
within the broader context of the Board's overall makeup and the 
specific skills, knowledge, experience, and perspectives represented by 
each Manager and nominee. An increased focus on director independence 
would help ensure that Managers have the appropriate incentives to 
perform the Board's functions and fulfill its responsibilities. 
Moreover, the addition of a Nominating Committee to ICC's governance 
structure will help ensure that ICC evaluates the independence and 
fitness of the persons proposed to be designated as Managers of the 
Board as required by Rule 17Ad-25 under the Exchange Act.\41\ 
Accordingly, the proposed changes are consistent with ensuring that 
ICC's board of directors contains members with the appropriate skills 
and incentives to discharge their duties.
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    \41\ 17 CFR 240.17ad-25.
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    In addition to establishing the Nominating Committee, the proposed 
changes also would establish the Nominating Committee's role, 
responsibilities, and composition. Pursuant to ICC's revised Operating 
Agreement, the Nominating Committee would have at least three members, 
a majority of which would be independent. The Nominating Committee 
would be responsible for evaluating and recommending individuals to be 
members of the Board. For each potential member of the Board, the 
Nominating Committee would produce a written evaluation of such 
person's independence and fitness for election as a Manager, based on 
the standards and pursuant to the process set forth in the Nominating 
Committee Charter. These changes would establish clear and direct lines 
of responsibility for the Nominating Committee.
    Based on the foregoing, the proposed rule change is consistent with 
the requirements of Rule 17Ad-22(e)(2) under the Act.\42\
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    \42\ 17 CFR 240.17Ad-22(e)(2).
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C. Consistency With Rule 17Ad-25 Under the Act

    Rule 17Ad-25 requires, among other things, that covered clearing 
agencies establish a nominating committee, written evaluation process, 
fitness standards, and evaluation of the independence of nominees and 
directors.\43\
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    \43\ 17 CFR 240.17ad-25.
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    The amendments and revisions discussed above are consistent with 
the relevant provisions of Rule 17Ad-25(c), which provides that 
``[e]ach registered clearing agency must establish a nominating 
committee and a written evaluation process whereby such nominating 
committee shall evaluate nominees for serving as directors and evaluate 
the independence of nominees and directors.'' \44\ As stated, ICC's 
proposed changes would add a new Nominating Committee to ICC's Board, 
with the role of evaluating the independence and fitness of the persons 
proposed to be designated as members of the Board. The proposed changes 
would establish the Nominating Committee's purpose, composition, 
authority, and responsibilities. As discussed above, ICC's proposed 
changes also would amend the Playbook to establish specific additional 
relationships, as enumerated in Rule 17Ad-25,\45\ that would disqualify 
a person from being an independent member of the Board.
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    \44\ 17 CFR 240.17ad-25(c).
    \45\ 17 CFR 240.17ad-25.
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    Accordingly, based on the foregoing, the proposed rule change is 
consistent with the requirements of Rule 17Ad-25 under the Act.\46\
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    \46\ 17 CFR 240.17ad-25.
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V. Accelerated Approval of Proposed Rule Change

    Under Section 19(b)(2) of the Act,\47\ 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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    \47\ 15 U.S.C. 78s(b)(2).
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    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\48\ 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. As discussed above, the proposed rule 
change would establish a Nominating Committee. The Nominating Committee 
would have at least three members, a majority of which would be 
independent. As further discussed above, the Nominating Committee would 
be responsible for evaluating and recommending individuals to be 
members of the Board. For each potential member of the Board, the 
Nominating Committee would produce a written evaluation of such 
person's independence and fitness for election as a Manager, based on 
the standards and pursuant to the process set forth in the Nominating 
Committee Charter.
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    \48\ 15 U.S.C. 78s(b)(2).
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    Moreover, as discussed above, the proposed rule change would add to 
the list of relationships that disqualify a person from being an 
independent member of the Board. ICC currently has a list of 
relationships that disqualify a person from being considered 
independent, and the proposed rule change would add new, additional 
relationships to this list, based on the specific relationships 
enumerated in Rule 17Ad-25 under the Exchange Act.\49\ For example, 
currently an individual that is employee of an ICE Group company is not 
considered independent. Under the proposed rule change, an individual 
that otherwise receives compensation from an ICE Group company would 
also not be considered independent.
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    \49\ 17 CFR 240.17ad-25.
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    Rule 17Ad-25 requires, among other things, that covered clearing 
agencies establish: a nominating committee;

[[Page 99923]]

written evaluation process; fitness standards; and standards for the 
evaluation of the independence of nominees and directors.\50\ The 
proposed rule change would establish a Nominating Committee, make the 
Nominating Committee responsible for evaluating and recommending 
individuals to be potential members of the Board, and augment ICC's 
existing independence standards to be consistent with Rule 17Ad-25.\51\ 
Based on the foregoing, and as discussed above, the proposed rule 
change is consistent with the requirements of Rule 17Ad-25 under the 
Act.\52\
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    \50\ 17 CFR 240.17ad-25.
    \51\ 17 CFR 240.17ad-25.
    \52\ 17 CFR 240.17ad-25.
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    The compliance date for Rule 17Ad-25 generally is December 5, 
2024.\53\ Approving the proposed rule change on an accelerated basis 
will allow ICC to establish, among other things, a nominating committee 
and additional independence standards, by this compliance date. 
Accordingly, the Commission finds good cause to 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 Act.\54\
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    \53\ Securities Exchange Act Release No. 98959 (Nov. 16, 2023), 
88 FR 84454 (Dec. 5, 2023) (File No. S7-21-22) (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).
    \54\ 15 U.S.C. 78s(b)(2).
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VI. 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, Sections 17A(b)(3)(A) and (F) of the Act \55\ and 
Rules 17Ad-22(e)(2) and 17Ad-25.\56\
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    \55\ 15 U.S.C. 78q-1(b)(3)(F).
    \56\ 17 CFR 240.17Ad-22(e)(2) and 17 CFR 240.17ad-25.
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    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
that the proposed rule change (SR-ICC-2024-010) be, and hereby is, 
approved on an accelerated basis.\57\
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    \57\ In approving the proposed rule change, the Commission 
considered the proposal's impacts 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.\58\
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    \58\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-29038 Filed 12-10-24; 8:45 am]
BILLING CODE 8011-01-P
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