51206 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Notices 

13 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Self-Regulatory Organizations; ICE Clear Credit 

LLC; Notice of Filing of Proposed Rule Change 

Relating to the ICC Exercise Procedures; Exchange 

Act Release No. 92468 (July 28, 2021); 86 FR 40665 

(July 28, 2021) (SR–ICC–2021–016) (‘‘Notice’’). 

4Capitalized terms not otherwise defined herein 

have the meanings assigned to them in the ICC 

Rules, as applicable. 5The description of the proposed rule change is 

excerpted substantially from the Notice. 

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 rule-comments@

sec.gov. Please include File Number SR– 

ICC–2021–018 on the subject line. 

Paper Comments: 

Send paper comments in triplicate to 

Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–ICC–2021–018. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filings will also be available for 

inspection and copying at the principal 

office of ICE Clear Credit and on ICE 

Clear Credit’s website at https://

www.theice.com/clear-credit/regulation. 

All comments received will be posted 

without change. Persons submitting 

comments are cautioned that we do not 

redact or edit personal identifying 

information from comment submissions. 

You should submit only information 

that you wish to make available 

publicly. All submissions should refer 

to File Number SR–ICC–2021–018 and 

should be submitted on or before 

October 5, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–19725 Filed 9–13–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92895; File No. SR–ICC– 

2021–016] 

Self-Regulatory Organizations; ICE 

Clear Credit LLC; Order Approving 

Proposed Rule Change Relating to the 

ICC Exercise Procedures 

September 8, 2021. 

I. Introduction 

On July 8, 2021, ICE Clear Credit LLC 

(‘‘ICC’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934, (the 

‘‘Act’’),1 and Rule 19b–4,2 a proposed 

rule change to revise the Exercise 

Procedures in connection with the 

clearing of credit default index 

swaptions (‘‘Index Swaptions’’). The 

proposed rule change was published for 

comment in the Federal Register on July 

28, 2021.3 The Commission did not 

receive comments regarding the 

proposed rule change. For the reasons 

discussed below, the Commission is 

approving the proposed rule change. 

II. Description of the Proposed Rule 

Change 

The Exercise Procedures supplement 

the provisions of Subchapter 26R of the 

ICC Clearing Rules (the ‘‘Rules’’) with 

respect to Index Swaptions and provide 

further detail as to the manner in which 

Index Swaptions may be exercised by 

Swaption Buyers, the manner in which 

ICC will assign such exercises to 

Swaption Sellers, and certain actions 

that ICC may take in the event of 

technical issues.4 The proposed rule 

change would amend two sections of 

the Exercise Procedures: Paragraph 2.6 

Exercise System Failure and Paragraph 

2.8 Automatic Exercise for Exercise 

System Failure.5

A. Paragraph 2.6 Exercise System 

Failure 

Currently, in the event that ICC’s 

electronic system for the submission 

and assignment of Swaption Exercise 

Notices (ICC’s ‘‘Exercise System’’) fails 

to be in operation under certain 

circumstances, the Exercise Procedures 

provide ICC with the following options: 

(i) Cancel and reschedule the Exercise 

Period (i.e., the period on the expiration 

date of an Index Swaption during which 

the Swaption Buyer may deliver an 

exercise notice to ICC to exercise all or 

part of such Index Swaption); (ii) 

determine that automatic exercise will 

apply; and/or (iii) take such other action 

as ICC determines to be appropriate to 

permit exercising parties to submit 

exercise notices and to permit ICC to 

assign such notices. The proposed rule 

change would remove ICC’s ability to 

cancel and reschedule the Exercise 

Period under such circumstances and 

renumber the paragraph. This would 

facilitate exercise when there is a 

system’s failure and avoid uncertainty 

that could arise if an Exercise Period is 

rescheduled. 

B. Paragraph 2.8 Automatic Exercise for 

Exercise System Failure 

Currently, if automatic exercise 

applies pursuant to Paragraph 2.6, 

Paragraph 2.8 specifies the parameters 

under which such automatic exercise 

will apply. Under Paragraph 2.8, ICC 

maintains the ability to effect an 

automatic exercise on the expiration 

date on each open position (of all 

exercising parties) in an Index Swaption 

that is determined by ICC to be ‘‘in the 

money’’ on such date. Currently, 

whether an Index Swaption is ‘‘in the 

money’’ is based on the average of the 

end-of-day (‘‘EOD’’) price of the 

underlying CDS contract on the 

preceding business day and on the 

expiration date, and where relevant, 

also based on the average of the EOD 

price on the preceding business day and 


tkelley on DSK125TN23PROD with NOTICES
Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Notices 51207 

6 15 U.S.C. 78s(b)(2)(C). 

7 15 U.S.C. 78q–1(b)(3)(F). 

8 17 CFR 240.17Ad–22(e)(17)(i). 

9 15 U.S.C. 78q–1(b)(3)(F). 

10 15 U.S.C. 78q–1(b)(3)(F). 

11 17 CFR 240.17Ad–22(e)(17)(i). 

12 Id. 

13 15 U.S.C. 78q–1(b)(3)(F). 

14 17 CFR 240.17Ad–22(e)(17)(i). 

15 15 U.S.C. 78s(b)(2). 

16 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). 

17 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4 . 

on the expiration date of each single 

name constituent contract with respect 

to which an Existing Restructuring has 

occurred. In practice, this could result 

in an exercise not occurring during a 

systems failure if the EOD reference 

prices are not in the money even if they 

would have been in the money based on 

intra-day pricing. Under the proposed 

rule change, whether an Index Swaption 

is ‘‘in the money’’ would be based on 

the relevant market-observed prices for 

the underlying CDS contract determined 

by ICC using the intraday market data 

available to it at the time of the 

Expiration Period, or the EOD price of 

the underlying CDS contract on the 

expiration date established at any 

Intercontinental Exchange, Inc. (‘‘ICE’’) 

clearinghouse, and where relevant, also 

based on the last available ICE EOD 

price of each single name constituent 

contract with respect to which an 

Existing Restructuring has occurred. 

This approach provides ICC more 

flexibility to ensure exercise is based on 

various reference prices. 

III. Discussion and Commission 

Findings 

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 such 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to such organization.6 For the 

reasons given below, the Commission 

finds that the proposed rule change is 

consistent with Section 17A(b)(3)(F) of 

the Act 7 and Rule 17Ad–22(e)(17)(i).8

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, 

as well as to assure the safeguarding of 

securities and funds which are in the 

custody or control of ICC or for which 

it is responsible.9

As noted above, ICC is proposing to 

make changes to certain exercise 

procedures related to systems failures. 

The Commission believes that by 

removing the option to cancel and 

reschedule the Exercise Period under 

Paragraph 2.6, the proposed rule change 

would help to streamline and simplify 

the Exercise Procedures in the case of an 

Exercise System Failure and thereby 

clarify that cancellations and 

rescheduling will not occur and that 

exercises will take place during systems 

failures. The Commission believes that 

this in turn will enhance ICC’s ability to 

promptly and accurately clear and settle 

transactions during systems failures. 

Additionally, automatic exercise 

applies to an Index Swaption that is 

determined by ICC to be in the money. 

As noted above, under the proposed 

rule change, whether an Index Swaption 

is ‘‘in the money’’ will be based on the 

relevant market-observed prices for the 

underlying CDS contract determined by 

ICC using the intraday market data 

available to it at the time or the EOD 

price of the underlying CDS contract on 

the expiration date established at any 

ICE clearinghouse, and where relevant, 

also based on the last available ICE EOD 

price of each single name constituent 

contract with respect to which an 

Existing Restructuring has occurred. 

This will allow ICC additional 

flexibility for determining whether an 

Index Swaption is in the money and 

facilitate exercise based on various 

reference prices, which the Commission 

believes provides the ability to reflect 

accurate prices thereby enhancing ICC’s 

ability to promptly and accurately settle 

and clear transactions during systems 

failures. 

For the reasons stated above, the 

Commission finds that the proposed 

rule changes are consistent with Section 

17A(b)(3)(F) of the Act.10

B. Consistency With Rule 17Ad– 

22(e)(17)(i) 

Rule 17Ad–22(e)(17) requires, in 

relevant part, each covered clearing 

agency to establish, implement, 

maintain, and enforce written policies 

and procedures reasonably designed to, 

as applicable, 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.11

The Commission believes that by 

revising its Index Swaption Exercise 

Procedures, as noted above, to remove 

the ability to cancel or reschedule 

exercises and to add flexibility to use 

various reference prices for determining 

if an Index Swaption is in the money 

during systems failures, the proposal 

allows ICC to manage the risks posed by 

a systems failure by (i) increasing 

certainty around the timing of the 

Exercise Period and (ii) increasing the 

likelihood that an Index Swaption 

would be categorized as being in-themoney, and therefore automatically 

exercised, as expected. The Commission 

believes that this in turn supports ICC’s 

ability to mitigate the consequences of 

a systems failure and promote systems 

that have a high degree of resiliency and 

operational reliability. 

For these reasons, the Commission 

believes the proposed rule change is 

consistent with Rule 17Ad– 

22(e)(17)(i).12

IV. 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 13 and 

Rules 17Ad–22(e)(17)(i).14

It is therefore ordered pursuant to 

Section 19(b)(2) of the Act 15 that the 

proposed rule change (SR–ICC–2021– 

016), be, and hereby is, approved.16

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–19727 Filed 9–13–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92897; File No. SR–FINRA– 

2021–022] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Extend the 

Implementation Date of Certain 

Amendments to FINRA Rule 4210 

Approved Pursuant to SR–FINRA– 

2015–036 

September 8, 2021. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on August 

26, 2021, the Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 


tkelley on DSK125TN23PROD with NOTICES