Eric Nield

General Counsel March 31, 2023

Re: Changes to ICC Rules and ICC Treasury 

Policy to add cash British pounds sterling 

as eligible margin to meet Client-Related 

Initial Margin Requirements Pursuant to 

Section 5c(c)(1) of the Commodity 

Exchange Act and Commission Regulation 

40.6

VIA ELECTRONIC PORTAL

Mr. Christopher Kirkpatrick

Secretary

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, NW

Washington, D.C. 20581

Dear Mr. Kirkpatrick:

ICE Clear Credit LLC (“ICC”) hereby submits, pursuant to Section 5c(c)(1) of the Commodity Exchange Act 

and Commodity Futures Trading Commission (“Commission”) Regulation 40.6, a self-certification of 

changes to the ICC Rulebook (the “Rules”) and ICC Treasury Operations Policies and Procedures (“ICC 

Treasury Policy”) to add cash British pounds sterling (“GBP”) as eligible margin to meet Client-Related 

Initial Margin requirements. ICC is registered with the Commission as a derivatives clearing organization 

(“DCO”). ICC intends to make the amended Rules effective no sooner than the tenth business day following 

the filing of this submission with the Commission at its Washington, D.C. headquarters and with its Chicago 

regional office.

This submission includes the amended Rules and amended Treasury Policy. A description of the principal 

changes contained in the amended Rules and amended Treasury Policy follows. Certification of the 

amended Rules and amended Treasury Policy pursuant to Section 5c(c)(1) of the Act and Commission 

Regulation 40.6 is also provided below.

The purpose of the proposed changes is to modify certain provisions to the ICC Rules and ICC Treasury 

Policy to add cash British pounds sterling (“GBP”) as eligible margin to meet Client-Related Initial Margin 

requirements. ICC Clearing Participants are required to post Client-Related Initial Margin to collateralize 

their individual credit exposure to ICC. Such Client-Related Initial Margin is intended to collateralize the risk 

arising from the client related positions cleared at ICC by ICC Clearing Participants. ICC limits the assets 

it accepts as collateral to those with low credit, liquidity and market risks. Currently, an ICC Clearing 

Participant may meet their Client-Related Initial Margin requirements with US dollar cash, Euro cash or US 

Treasuries. ICC has received verbal feedback from several market participants requesting that ICC Clearing 

Participants have the ability to post GBP in addition to the asset types currently accepted by ICC, specifically 

to support United Kingdom (UK) and European Union (EU) based customer clearing activity. Several UK 

and EU market participants have requested the addition of GBP as an ICC acceptable collateral type in 

connection with their exploration of migrating their credit default swap (CDS) clearing activity to ICC from 

ICE Clear Europe Limited (ICEU) following the recent ICEU announcement that it plans to cease its CDS 

clearing services1. ICC previously accepted GBP to meet Client-Related Initial Margin, Non-Client Initial 

1 See ICE Clear Europe public circular dated September 26, 2022, and available here: 

https://www.ice.com/publicdocs/clear_europe/circulars/C22109.pdf.
2

Margin and Guaranty Fund requirements, but that option was revoked in 20172. ICC chose to cease 

accepting GBP cash in 2017 because no ICC Clearing Participants posted GBP cash while it was an 

acceptable collateral type; and ICC considered GBP cash a less liquid resource due to the potential need 

to convert it to either US dollar cash or Euro cash.3

Recently, ICC has received customer feedback that there is a renewed interest in posting GBP, as many 

UK and EU based customers maintain GBP balances; and if ICC Clearing Participants were permitted to 

pass on customer GBP assets to ICC to meet Client-Related Initial Margin requirements, customers could 

decrease their overall cost of capital and reduce foreign exchange risk by posting GBP instead of converting 

GBP into another form of eligible collateral. Furthermore, ICC desires to structure its collateral acceptance 

policy to better serve UK and EU based market participants who may be seeking alternative CDS clearing 

services given the impending cessation of ICEU’s current CDS clearing services. Therefore, allowing ICC 

Clearing Participants to post GBP to meet Client-Related Initial Margin requirements will facilitate a more 

effective and efficient transition from alternative CDS clearing services that generally accept GBP as 

collateral. 

For the aforementioned reasons, ICC proposes revising the ICC Rules and ICC Treasury Policy to add 

GBP to the list of eligible collateral to satisfy Client-Related Initial Margin requirements. With the addition 

of GBP, the list of eligible collateral to satisfy ICC Client-Related Initial Margin requirements shall be: US 

dollar cash, Euro cash, US Treasuries and GBP cash. It should be noted that with respect to liquidity, ICC’s 

Liquidity Risk Management Framework does not consider any collateral posted for Client-Related Initial 

Margin to be counted as an available liquidity resource, therefore the addition of GBP as an acceptable 

form of Client-Related Initial Margin collateral will not impact the amount of ICC’s liquidity resources or its 

liquidity stress testing processes. The proposed revisions to the ICC Rules and ICC Treasury Policy are 

described in detail as follows. Only in the event of an ICC Clearing Participant default would ICC potentially 

need to convert posted GBP Client-Related Margin to either US dollar cash or Euro cash. The FX risk 

stemming from the acceptance of GBP as Client-Related Initial Margin is addressed by applying a set of 

conservative currency haircuts.

Amended Rules:

ICC proposes updates to Schedule 401 of the ICC Rules. Specifically, ICC proposes adding GBP to the list 

of “all eligible collateral” to meet Client-Related Initial Margin requirements identified in Schedule 401 of the 

ICC Rules. In addition, ICC proposes to modify the Client-Related Initial Margin liquidity requirements set 

forth in Schedule 401 of the ICC Rules as follows: For US dollar denominated products, ICC proposes 

changing the (i) minimum percentage of the overall Initial Margin requirement to be met in US dollar 

denominated assets (i.e., US dollar cash and US Treasuries) from 65% to 45% and; (ii) percentage of the 

overall Initial Margin requirement that may be met in any eligible collateral (US dollar cash, Euro cash, GBP 

cash and US Treasuries) from 35% to 55%. For Client-Related Initial Margin requirements for Euro 

denominated products, ICC proposes changing (i) the minimum percentage of the overall Initial Margin 

requirement to be met in US dollar cash, Euro cash or US Treasuries from 100% to 45% and; (ii) adding a 

new category that permits the remaining 55% of the overall Initial Margin requirement to be met in any 

eligible collateral (US dollar cash, Euro cash, GBP cash and US Treasuries). Such proposed changes to 

the Client-Related Initial Margin thresholds are intended to modify the current conservative thresholds which 

are very restrictive as Client-Related Initial Margin is not part of ICC’s Liquidity Risk Management 

Framework. The proposed modified thresholds reflect the fact that only the first-day liquidity needs 

(measured as 45% of Initial Margin requirements) must be met in a form of collateral for which ICC 

maintains committed repurchase agreements and committed FX facilities. The remaining 55% can be met 

2 See Submission Number 1706-2914-4022-98, dated June 29, 2017, for additional information on the 

revocation of GBP collateral. 

3 Id.
3

in any type of accepted collateral. With the proposed modified thresholds, ICC continues to maintain a 

conservative approach by directly requiring that Client-Related first-day liquidity needs (i.e., 45% of Initial 

Margin requirements) are met in the forms of permitted collateral for which either collateral transformations 

are not necessary or committed agreement are in place to provide all necessary immediate liquidity. 

Amended Treasury Policy:

ICC also proposes updates to the ICC Treasury Policy to add GBP cash as eligible margin to meet ClientRelated Initial Margin requirements. The purpose of the ICC Treasury Policy is to articulate the policies and 

procedures used to support the ICC Treasury Department, which is responsible for daily cash and collateral 

management of margin and guaranty fund assets, including Client-Related Initial Margin assets. ICC 

proposes adding a ‘British Pound Sterling’ sub-section to the ‘Investment Strategy’ section of the ICC 

Treasury Policy to indicate that GBP cash posted to meet Client-Related Initial Margin will not be invested, 

rather, such GBP cash will be held in bank deposits. 

Also, ICC proposes updating the ‘Cash Settlement’ section of the ICC Treasury Policy to add GBP to the 

existing 9:00 a.m. eastern time deadline for ICC Clearing Participants to notify ICC of its desire for EUR 

margin withdrawals or substitutions for EUR cash. With this change GBP Client-Related Initial Margin 

withdrawals and GBP substitutions will have the same 9:00 a.m. eastern time deadline as EUR for ICC 

Clearing Participants to notify ICC of their desire to withdraw available excess GBP Client-Related Initial 

Margin or to substitute for GBP cash. Further, ICC proposes to update the ‘Acceptable Collateral’ section 

of the ICC Treasury Policy to add GBP cash to ICC’s list of acceptable forms of collateral for Initial Margin, 

noting that GBP cash is only acceptable for Client-Related Initial Margin. 

In addition, ICC proposes to update the ‘Collateral Valuation’ section of the ICC Treasury Policy to describe 

the valuation processes for GBP cash collateral as follows: (i) for GBP used to cover a US dollar 

denominated product requirement it is first converted to the US dollar value and then such US dollar value 

is haircut at the GBP currency haircut and (ii) for GBP used to cover a EUR denominated product 

requirement it is first converted to the US dollar value and then such US dollar value is haircut at the GBP 

currency haircut. In addition, the EUR denominated product requirement is converted to the US dollar value 

which is then grossed up by the EUR currency haircut. Furthermore, ICC proposes language clean up 

changes to this same section of the ICC Treasury Policy. 

ICC further proposes to update the ‘Eligible Client Collateral’ section of the Treasury Policy to add GBP 

cash to ICC’s list of eligible collateral for Client-Related Initial Margin, which currently includes US dollar 

cash, Euro cash, and US Treasuries. ICC proposes updates to the ‘Client-Related Initial Margin Liquidity 

Requirements’ section of the Treasury Policy to reflect the proposed liquidity requirement changes, namely, 

for US dollar denominated products, ICC proposes changing the (i) minimum percentage of the overall 

Initial Margin requirement to be met in US dollar denominated assets (i.e., US dollar cash and US 

Treasuries) from 65% to 45% and (ii) percentage of the overall Initial Margin requirement that may be met 

in any eligible collateral (US dollar cash, Euro cash, GBP cash and US Treasuries) from 35% to 55%. For 

Client-Related Initial Margin requirements for Euro denominated products, ICC proposes changing (i) the 

minimum percentage of the overall Initial Margin requirement to be met in US dollar cash, Euro cash or US 

Treasuries from 100% to 45% and (ii) adding a new category that permits the remaining 55% of the overall 

Initial Margin requirement to be met in any eligible collateral (US dollar cash, Euro cash, GBP cash and US 

Treasuries). 

Such proposed changes to the Client-Related Initial Margin thresholds are intended to modify the current 

conservative thresholds which are very restrictive as Client-Related Initial Margin is not part of ICC’s 

Liquidity Risk Management Framework. The proposed modified thresholds reflect the fact that only the firstday liquidity needs (measured as 45% of Initial Margin requirements) must be met in a form of collateral for 

which ICC maintains committed repurchase agreements and committed FX facilities. The remaining 55% 

can be met in any type of accepted collateral. With the proposed modified thresholds, ICC continues to 
4

maintain a conservative approach by directly requiring that Client-Related first-day liquidity needs (i.e., 45% 

of Initial Margin requirements) are met in the forms of permitted collateral for which either collateral 

transformations are not necessary or committed agreement are in place to provide all necessary immediate 

liquidity.

Core Principle Review:

ICC reviewed the DCO core principles (“Core Principles”) as set forth in the Commodity Exchange Act. 

During this review, ICC identified the following Core Principles as being impacted:

Financial Resources: The proposed changes are consistent with the financial resources requirements of 

Principle B and Commission Regulation 39.33. The proposed changes will provide cost of capital benefits 

and a reduction in foreign exchange risk for market participants while maintaining adequate liquidity 

resources at ICC. Further, the proposed changes will not impact ICC’s liquidity resources, as the ClientRelated Initial Margin collateral posted does not count as an available liquidity resource, therefore the 

addition of GBP cash as an acceptable form of Client-Related Initial Margin collateral will not impact the 

amount of ICC’s liquidity resources or its liquidity stress testing processes. ICC will continue to accept US 

cash, Euro cash, and US Treasuries and proposes to add GBP cash as eligible collateral, in accordance 

with Schedule 401 of the ICC Rules. Such collateral will continue to be held in a manner whereby risk of 

loss or of delay in access to them is minimized.

Treatment of Funds: The proposed changes are consistent with the treatment of funds requirements of 

Principle F and Commission Regulation 39.15. The GBP cash posted to meet Client-Related Initial Margin 

will be held in a consistent manner as the other forms of collateral accepted by ICC. ICC will continue to 

use safe and secure banking arrangements for Clearing Participants collateral deposits, and such collateral 

will continue to be held in a manner whereby risk of loss or of delay in access to them is minimized.

Amended Rules:

The proposed change consists of revisions to the ICC Rules, and the ICC Treasury Policy, which were 

submitted concurrently with this submission.

Annexed as an Exhibit hereto is the following:

A. Proposed amendments to the ICC Rules

Certifications:

ICC hereby certifies that the amended Rules and amended Treasury Policy comply with the Act and the 

regulations thereunder. There were no substantive opposing views to the rules.

ICC certifies that, concurrent with this filing, a copy of the submission was posted on ICC’s website, which 

may be accessed at: https://www.theice.com/clear-credit/regulation.

ICC would be pleased to respond to any questions the Commission or the staff may have regarding this 

submission. Please direct any questions or requests for information to the attention of the undersigned at 

eric.nield@ice.com or 312-836-6742.

Sincerely,

Eric Nield

General Counsel