33858 Federal Register / Vol. 87, No. 107 / Friday, June 3, 2022 / Notices 

29 15 U.S.C. 78s(b)(3)(A). 

30 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

31 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 Europe 

Limited; Notice of Filing of Proposed Rule Change 

Relating to Amendments to the ICE Clear Europe 

Operational Risk Management Policy and Risk 

Identification Framework, Exchange Act Release 

No. 34–94649 (Apr. 8, 2022); 87 FR 22273 (Apr. 14, 

2022) (SR–ICEEU–2022–008) (‘‘Notice’’). 

4This description is substantially excerpted from 

the Notice, 87 FR 22273. Capitalized terms not 

otherwise defined herein have the meanings 

assigned to them in the ORMP, the RIF, or ICE Clear 

Europe’s Rules, as applicable. 

of the Act 29 and Rule 19b–4(f)(6) 30

thereunder. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or 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– 

MIAX–2022–22 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–MIAX–2022–22. 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 the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. 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–MIAX–2022–22, and 

should be submitted on or before June 

24, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–11876 Filed 6–2–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95004; File No. SR–ICEEU– 

2022–008] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Order Approving 

Proposed Rule Change Relating to 

Amendments to the ICE Clear Europe 

Operational Risk Management Policy 

and Risk Identification Framework 

May 27, 2022. 

I. Introduction 

On March 31, 2022, ICE Clear Europe 

Limited (‘‘ICE Clear Europe’’) 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 thereunder,2 a proposed rule 

change to amend its Operational Risk 

Management Policy (the ‘‘ORMP’’) and 

add to ICE Clear Europe’s rule 

framework the Risk Identification 

Framework (the ‘‘RIF’’). The proposed 

rule change was published for comment 

in the Federal Register on April 14, 

2022.3 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 

i. ORMP 

The current ORMP describes ICE 

Clear Europe’s process for identifying, 

assessing, managing, monitoring, and 

reporting operational risks and requires 

that ICE Clear Europe assess its 

operational risks at least annually.4 The 

proposed rule change would maintain 

the overall process as found in the 

current ORMP but revise the description 

of the specific steps that makeup the 

overall process—generally by 

incorporating into the ORMP additional 

detail regarding current practices 

relating to those steps—and modify 

certain aspects of some of those steps. 

First, the proposed rule change would 

explicitly incorporate into the ORMP 

ICE Clear Europe’s Enterprise Risk 

Register, which ICE Clear Europe also 

refers to as the Risk Register Dashboard 

(referred to herein as the ‘‘Risk 

Dashboard’’). Currently, once ICE Clear 

Europe identifies operational risks 

pursuant to the existing ORMP, it 

documents those risks in the Risk 

Dashboard. The Risk Dashboard 

therefore serves as an inventory of the 

specific operational risks that ICE Clear 

Europe has identified as part of its 

existing risk identification process 

under the ORMP. The Risk Dashboard 

also includes information about, among 

other things, the ICE Clear Europe 

department that owns the risk (the ‘‘Risk 

Owner’’), the level of inherent risk, and 

the overall rating for the control that 

mitigates each risk. However, while the 

Risk Dashboard currently is used as part 

of ICE Clear Europe’s risk identification 

process under the ORMP, it is not 

actually referenced in the ORMP. The 

proposed rule change would formally 

incorporate the Risk Dashboard into the 

ORMP and include it as an appendix to 

the ORMP. The proposed rule change 

also would add to the ORMP a 

description of the process for reviewing 

and updating the Risk Register as part 

of ICE Clear Europe’s existing annual 

assessment of its operational risks, 

thereby formalizing that process as a 

requirement under the ORMP. 

The current ORMP requires that Risk 

Owners complete the risk identification 

process at least once a year and specifies 

that this process shall not only allow the 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 107 / Friday, June 3, 2022 / Notices 33859 

5See ICE Clear Europe Limited, Compliance with 

Principles for Financial Market Infrastructures 

Disclosure Framework, available at https://

www.theice.com/publicdocs/clear_europe/ICE_

Clear_Europe_Disclosure_Framework.pdf. 

identification of new risks but also the 

discontinuation of those that no longer 

exist. It also specifies that if risks 

emerge or cease to exist in between the 

annual reviews, ad hoc assessments 

shall be triggered, which necessarily 

implies that risks must be identified 

more frequently than annually as 

needed to determine whether risks 

emerge or cease to exist in between 

annual reviews. The revised ORMP 

would continue to require that Risk 

Owners complete the risk identification 

process at least once a year, but 

explicitly require that the risk 

identification process be completed 

more frequently than annually as 

needed to reflect material risk changes, 

such as operational risk incidents. The 

revised ORMP also would explicitly 

acknowledge that this process would 

allow ICE Clear Europe to identify new 

risks and discontinue documenting risks 

that no longer exist. 

With respect to the assessment of 

risks, the current ORMP requires that 

Risk Owners measure the potential 

impact of identified risks and categorize 

this potential impact by severity and 

likelihood. Risk Owners also consider 

the effect of controls on reducing the 

potential impact of identified risks. The 

risk remaining after considering the 

reduction caused by a control is the 

residual risk. The current ORMP treats 

residual risk as an assessment of the 

effectiveness of a control in reducing the 

potential impact of a risk. The revised 

ORMP would maintain the same general 

framework for risk assessment as 

currently used, but would provide 

additional detail with respect to 

controls and the assessment of their 

effectiveness. Under the current ORMP, 

Risk Owners musts assess risks on a 

controlled and uncontrolled basis and 

must consider whether existing control 

mechanisms should be enhanced, 

substituted, or abandoned. ICE Clear 

Europe proposes to continue requiring 

such assessments, but to elaborate on 

the process by focusing discussion in 

the ORMP on inherent risk versus 

residual risk. Under the revised ORMP, 

Risk Owners would consider each risk 

on an inherent basis (without taking 

into account the reduction caused by 

mitigating controls) and on a residual 

basis (taking into account the reduction 

caused by mitigating controls). Risk 

Owners would rate each inherent and 

residual risk on a five-point scale—very 

low, low, medium, high, or very high. 

As part of this process, Risk Owners 

also would rate the mitigation that each 

control is expected to provide as high/ 

medium/low and the effectiveness of 

each control as satisfactory/needs 

improvement/unsatisfactory. Risk 

Owners would derive the effectiveness 

of a control from a number of measures, 

such as control testing, metrics, and 

governance. The revised ORMP would 

require Risk Owners to perform the risk 

assessment and related control 

assessment at least once a year or more 

frequently as needed to reflect material 

risk changes, such as operational risk 

incidents. 

The current ORMP makes Risk 

Owners responsible for proposing and 

implementing remedial actions to 

manage risks, subject to the approval of 

the Executive Risk Committee. Further, 

the type of remedial action depends on 

the potential expected impact of the 

operational risk and is implemented 

following the risk assessments or 

control assessments. The revised ORMP 

would similarly require Risk Owners to 

propose and implement remedial 

actions, but they also would be required 

to take into account the expected impact 

of mitigating controls and further 

remediating actions would be explicitly 

required for any residual risks assessed 

as high or very high. In addition, rather 

than being subject solely to the approval 

of the Executive Risk Committee, the 

revised ORMP would require any 

proposed remedial actions to be 

immediately escalated to Senior 

Management and applicable Risk 

Committees or the ICE Clear Europe 

Board. 

The monitoring of risks under the 

revised ORMP would be generally the 

same as under the current ORMP. The 

current ORMP requires that Risk 

Owners and the Risk Oversight 

Department continuously monitor risks, 

including daily monitoring through the 

use of certain indicators. The revised 

ORMP similarly would require that Risk 

Owners and the Risk Oversight 

Department continuously monitor risks, 

but would specify that such monitoring 

should be ongoing monitoring (not just 

daily), in order to clarify that 

monitoring should be continuous and 

not just once a day. This particular 

change could be beneficial if, for 

example, under the current daily 

monitoring ICE Clear Europe conducts 

monitoring at a single specific time 

during the day and the risk emerges 

after that time. Moreover, the current 

ORMP requires that the Risk Oversight 

Department monitor risks daily through 

the Risk Appetite Metrics and the 

Management Thresholds. The revised 

ORMP would likewise require the Risk 

Oversight Department to conduct such 

monitoring, but it would specify that the 

monitoring would be either daily or 

monthly given that some metrics and 

thresholds are considered monthly and 

others are considered daily. ICE Clear 

Europe calculates some existing risk 

metrics on a monthly basis, so 

specifying monthly monitoring here 

would take into account these metrics 

while maintaining daily monitoring for 

the existing daily metrics. 

The current ORMP requires 

assessments and operational incidents 

to be reported to senior management, 

the Audit Committee, and the Board 

Risk Committee, and further provides 

that the Board Risk Committee and 

Board shall be informed of material 

incidents. The review and assessment of 

operational incidents is part of ICE Clear 

Europe’s second line risk function, 

therefore the revised ORMP would 

require that assessments and operational 

incidents be reported to senior 

management and the Board Risk 

Committee, but it would replace the 

Audit Committee, which is part of ICE 

Clear Europe’s third line of risk defense 

with the Executive Risk Committee, 

which is part of its second line of 

defense, thereby aligning the risk 

function with its appropriate line of 

defense. The Commission further notes 

that given at least one member of the 

Audit Committee is also a member of 

the Board Risk Committee, this member 

could share information related to 

operational risk with the Audit 

Committee as needed.5

The requirement that the Board Risk 

Committee and Board be informed of 

material incidents would not change. 

The current ORMP also specifies that 

the Product Risk Committees and the 

Executive Risk Committees will receive 

information related to operational risk. 

The revised ORMP would require that 

the Risk Oversight Department report 

operational risks daily and monthly to 

senior management and the Executive 

Risk Committee. Thus, the revised 

ORMP would specify that the Risk 

Oversight Department would report this 

information, and would not include any 

role for Product Risk Committees. The 

Commission notes that although the 

revised ORMP would remove the 

Product Risk Committees, the CDS 

Product Risk Committee includes as a 

member either the ICE Clear Europe 

President or the Head of First Line 

Clearing Risk, and that the President 

and the Head of First Line Clearing Risk 

are both voting members of the 

Executive Risk Committee. Given that, 

the Commission believes that the 

President or Head of First Line Clearing 

Risk could share information related to 


khammond on DSKJM1Z7X2PROD with NOTICES
33860 Federal Register / Vol. 87, No. 107 / Friday, June 3, 2022 / Notices 

6See ICE Clear Europe Limited, Compliance with 

Principles for Financial Market Infrastructures 

Disclosure Framework, available at https://

www.theice.com/publicdocs/clear_europe/ICE_

Clear_Europe_Disclosure_Framework.pdf. 

7 15 U.S.C. 78s(b)(2)(C). 

8 15 U.S.C. 78q–1(b)(3)(F). 

9 17 CFR 240.17Ad–22(e)(2)(v) and (e)(17). 

10 15 U.S.C. 78q–1(b)(3)(F). 

operational risk with the CDS Product 

Risk Committee as needed.6

The revised ORMP would require that 

the Executive Risk Committee approve 

changes in the Risk Dashboard at each 

monthly meeting and report those 

changes to Board Risk Committee and 

Board. Although the proposed rule 

change would add this language to the 

ORMP (it is not stated in the current 

ORMP), this requirement is currently 

found in the Risk Identification 

Framework, as discussed below. 

With respect to the oversight of the 

ORMP itself, currently the policy 

provides that it is subject to the 

oversight of the Audit Committee and 

Risk Oversight Department. The 

proposed rule change would remove the 

Audit Committee, such that the revised 

ORMP would only be subject to the 

oversight of the Risk Oversight 

Department, thereby aligning the risk 

function with its appropriate line of 

defense, as discussed above. 

Finally, the proposed rule change 

would correct typographical errors 

throughout the ORMP. The proposed 

rule change also would update the 

appendices to the ORMP by adding 

descriptive titles to the appendices. For 

example, the proposed rule change 

would specify that Appendix A is the 

Risk Dashboard. The proposed rule 

change also would explain the 

numerical scores attached to the 

assessment guidelines in Appendix C. 

ii. Risk Identification Framework 

ICE Clear Europe has had its current 

Risk Identification Framework in place 

since 2016 but has not yet adopted it 

through the Commission’s proposed 

rule change process. The proposed rule 

change would formally adopt the RIF as 

a Rule of ICE Clear Europe without 

change to the current document. 

As described in Section 1, the RIF 

provides ICE Clear Europe’s Board with 

a structure to explore, identify, and 

monitor risks as well as ensure that risk 

tolerance is articulated and 

documented. It does this by providing a 

description of the components of ICE 

Clear Europe’s operational risk 

management process. 

Section 2 of the RIF describes four 

components of this structure: the risk 

taxonomy, the Risk Dashboard, risk 

assessment, and emerging risk 

assessment. The Risk Taxonomy, which 

is a single universal risk structure, 

terminology, and hierarchy, is 

incorporated into the Risk Dashboard, 

which, as noted above, inventories ICE 

Clear Europe’s risks and assigns an 

owner for each risk. The RIF requires 

that the Enterprise Risk Committee 

approve changes to the Risk Dashboard 

monthly and report them to the Board 

Risk Committee. With respect to the risk 

assessment, the RIF refers to the details 

provided in the ORMP, as described 

above. Finally, with the respect to the 

emerging risk assessment, the RIF also 

describes how ICE Clear Europe assesses 

emerging risks, which are potential, 

undefined, or unfamiliar one-off risk 

events that may have a detrimental 

impact on ICE Clear Europe. ICE Clear 

Europe does so through a special 

emerging risk assessment and a register 

of emerging risk, which is presented to 

the Board and certain board committees. 

Section 3 of the RIF describes the 

documentation ownership and 

governance processes in respect of the 

RIF itself. The Chief Risk Officer owns 

the RIF, and the Executive Risk 

Committee and Board must approve any 

material changes. The Executive Risk 

Committee and Board review the Risk 

Identification Framework annually. 

Finally, the RIF contains appendices 

like those found in the ORMP, including 

the Risk Dashboard and impact 

assessment guidelines. 

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.7 For the 

reasons discussed below, the 

Commission finds that the proposed 

rule change is consistent with Section 

17A(b)(3)(F) of the Act 8 and Rules 

17Ad–22(e)(2)(v) and 17Ad–22(e)(17) 

thereunder.9

i. 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 ICE Clear Europe be designed to 

promote the prompt and accurate 

clearance and settlement of securities 

transactions and, to the extent 

applicable, derivative agreements, 

contracts, and transactions.10 Based on 

its review of the record, and for the 

reasons discussed below, the 

Commission believes the proposed 

changes to the ORMP and the 

formalization of the RIF are consistent 

with the promotion of the prompt and 

accurate clearance and settlement of 

securities transactions. 

The Commission believes that the 

proposed rule change would improve 

ICE Clear Europe’s process for 

identifying, assessing, managing, 

monitoring, and reporting operational 

risks. It would do so, for example, by 

revising the description of the risk 

identification process in the ORMP to 

include the Risk Dashboard and by 

including the Risk Dashboard itself as 

an appendix to the ORMP and to the 

RIF. Because the Risk Dashboard 

documents all of ICE Clear Europe’s 

identified operational risks, the 

Commission believes that adding Risk 

Dashboard as appendix to the ORMP 

and RIF would help to ensure that Risk 

Owners focus on identifying new, 

undocumented operational risks by 

delineating ICE Clear Europe’s existing, 

known risks. 

Similarly, the Commission believes 

that the revisions to the ORMP could 

improve ICE Clear Europe’s overall 

ability to assess the potential impact of 

operational risks. For example, the 

requirement that Risk Owners consider 

and rate each risk on an inherent and a 

residual basis should help identify the 

impact of a risk with and without a 

mitigating control. The Commission 

believes such an assessment could 

highlight the impact that could result 

from the failure of a mitigating control. 

This assessment in turn could inform 

Risk Owners’ ratings of the effectiveness 

of mitigating controls and efforts to 

improve ineffective controls. Overall, 

the Commission believes that the focus 

on mitigating controls and their 

effectiveness would help to ensure that 

ICE Clear Europe maintains controls 

that are effective at mitigating 

operational risk. Finally, requiring Risk 

Owners to perform the risk assessment 

and related control assessment at least 

once a year or more frequently as 

needed to reflect material risk changes, 

instead of ad hoc assessments if risks 

emerge or cease to exist in-between the 

annual reviews, should help to ensure 

that ICE Clear Europe timely identifies 

any issues with respect to the 

effectiveness of its controls. 

The Commission further believes that 

revising the ORMP to focus on the 

management of residual risks would 

improve ICE Clear Europe’s ability to 

manage its operational risks. Because 

ICE Clear Europe has controls in place 

to mitigate the potential impact of its 

operational risks, the Commission 

considers it appropriate to focus ICE 

Clear Europe’s efforts on maintaining 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 107 / Friday, June 3, 2022 / Notices 33861 

11 15 U.S.C. 78q–1(b)(3)(F). 

12 17 CFR 240.17Ad–22(e)(2)(v). 

13See ICE Clear Europe Limited, Compliance 

with Principles for Financial Market Infrastructures 

Disclosure Framework, available at https://

www.theice.com/publicdocs/clear_europe/ICE_

Clear_Europe_Disclosure_Framework.pdf. 

14See ICE Clear Europe Limited, Compliance 

with Principles for Financial Market Infrastructures 

Disclosure Framework, available at https://

www.theice.com/publicdocs/clear_europe/ICE_

Clear_Europe_Disclosure_Framework.pdf. 

the effectiveness of those controls (as 

discussed above) and the management 

of the residual risk remaining after 

accounting for the mitigating controls. 

The Commission believes that requiring 

remediating actions for any residual 

risks assessed as high or very high 

should help to ensure that ICE Clear 

Europe manages those residual risks 

that have a significant impact on ICE 

Clear Europe’s operations. The 

Commission further believes that 

requiring that any proposed remedial 

actions be escalated to Senior 

Management and applicable Risk 

Committees or the ICE Clear Europe 

Board, as opposed to just being 

approved by the Executive Risk 

Committee, would help to ensure that 

appropriate ICE Clear Europe personnel, 

including Board-level committees, are 

informed and involved in the 

management of residual risks. 

Finally, the Commission believes that 

the proposed monitoring and reporting 

of risks under the revised ORMP would 

help to ensure that ICE Clear Europe 

appropriately monitors its operational 

risks. For example, requiring ongoing 

monitoring (not just daily) should help 

to ensure that such monitoring is 

conducted on an ongoing basis, and not 

just once a day. As discussed above, this 

particular change could be beneficial if, 

for example, under the current daily 

monitoring ICE Clear Europe conducts 

monitoring at a single specific time 

during the day and the risk emerges 

after that time. 

Similarly, requiring monitoring daily 

or monthly (not just daily) through the 

Risk Appetite Metrics and the 

Management Thresholds should help to 

ensure the inclusion of those metrics 

and thresholds that are only considered 

monthly. As discussed above, ICE Clear 

Europe calculates some existing risk 

metrics on a monthly basis, so 

specifying monthly monitoring would 

take into account these metrics while 

maintaining daily monitoring for the 

existing daily metrics. The Commission 

believes this change would make the 

ORMP more specific in this regard, 

thereby making its application by ICE 

Clear Europe more consistent and clear. 

As discussed above, the current 

ORMP requires assessments and 

operational incidents to be reported to 

senior management, the Audit 

Committee, and the Board Risk 

Committee, and further provides that 

the Board Risk Committee and Board 

shall be informed of material incidents. 

The revised ORMP similarly would 

require regular reporting to senior 

management, the Board Risk Committee, 

and the Executive Risk Committee. The 

Commission believes that such 

reporting should help to ensure that 

appropriate decision-makers are 

involved in management of operational 

risk and able to respond as need to any 

incidents involving operational risk. 

As discussed above, the RIF helps to 

provide ICE Clear Europe’s Board with 

information on ICE Clear Europe’s 

operational risk management process. 

The Commission believes that codifying 

the RIF as part of ICE Clear Europe’s 

rule requirements should help to ensure 

that the Board has a permanent 

framework for providing input on the 

operational risk management process. 

The Commission believes that the 

Board’s input could, in turn, improve 

ICE Clear Europe’s operational risk 

management. For example, given the 

experience of Board members and their 

vantage point overseeing all of ICE Clear 

Europe, Board members may be able to 

offer improvements to mitigating 

controls. 

For these reasons, the Commission 

believes the proposed rule change 

would improve the ORMP and the RIF. 

As discussed above, ICE Clear Europe 

uses the ORMP and the RIF to manage 

its operational risk. The Commission 

therefore believes that these 

improvements to the ORMP and the RIF 

should in turn improve ICE Clear 

Europe’s overall management of its 

operational risks. Improved 

management of operational risks should, 

in turn, decrease the likelihood that 

operational incidents disrupt ICE Clear 

Europe’s ability to promptly and 

accurately clear and settle securities 

transactions. The Commission believes 

therefore the proposed rule change 

should enhance ICE Clear Europe’s 

ability to promptly and accurately clear 

and settle securities transactions, 

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

the Act.11

ii. Consistency With Rule 17Ad– 

22(e)(2)(v) 

Rule 17Ad–22(e)(2)(v) requires that 

ICE Clear Europe establish, implement, 

maintain and enforce written policies 

and procedures reasonably designed to 

provide for governance arrangements 

that, among other things, specify clear 

and direct lines of responsibility.12

As discussed above, the current 

ORMP requires assessments and 

operational incidents to be reported to 

senior management, the Audit 

Committee, and the Board Risk 

Committee, and further provides that 

the Board Risk Committee and Board 

shall be informed of material incidents. 

The revised ORMP would require that 

assessments and operational incidents 

be reported to senior management and 

the Board Risk Committee, but it would 

replace the Audit Committee with the 

Executive Risk Committee. The 

requirement that the Board Risk 

Committee and Board be informed of 

material incidents would not change. 

The Commission believes replacing the 

Audit Committee with the Executive 

Risk Committee would specify a clear 

and direct line of responsibility for the 

Executive Risk Committee. The 

Commission further notes that although 

the revised ORMP would remove the 

Audit Committee, given that at least one 

member of the Audit Committee is also 

a member of the Board Risk Committee, 

the Commission believes that this 

member could share information related 

to operational risk with the Audit 

Committee as needed.13

Moreover, as discussed above, the 

current ORMP also specifies that the 

Product Risk Committees and the 

Executive Risk Committees will receive 

information related to operational risk. 

The revised ORMP would require that 

the Risk Oversight Department report 

operational risks daily and monthly to 

senior management and the Executive 

Risk Committee. Thus, the revised 

ORMP would specify that the Risk 

Oversight Department would report this 

information, and the revised ORMP 

would not include any role for Product 

Risk Committees. The Commission 

believes this change would specify a 

clear and direct line of responsibility for 

the Risk Oversight Department. The 

Commission further notes that although 

the revised ORMP would remove the 

Product Risk Committees, the CDS 

Product Risk Committee includes as a 

member either the ICE Clear Europe 

President or the Head of First Line 

Clearing Risk, and that the President 

and the Head of First Line Clearing Risk 

are both voting members of the 

Executive Risk Committee. Given that, 

the Commission believes that the 

President or Head of First Line Clearing 

Risk could share information related to 

operational risk with the CDS Product 

Risk Committee as needed.14

The revised ORMP also would require 

that the Executive Risk Committee 

approve changes in the Risk Dashboard 

at each monthly meeting and report 


khammond on DSKJM1Z7X2PROD with NOTICES
33862 Federal Register / Vol. 87, No. 107 / Friday, June 3, 2022 / Notices 

15 17 CFR 240.17Ad–22(e)(2)(v). 

16 17 CFR 240.17Ad–22(e)(17). 

17 17 CFR 240.17Ad–22(e)(17). 

18 15 U.S.C. 78q–1(b)(3)(F). 

19 17 CFR 240.17Ad–22(e)(2)(v) and (e)(17). 

20 15 U.S.C. 78s(b)(2). 

21 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). 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A market order is an order to buy or sell a stated 

number of option contracts at the best price 

available at the time of execution. See Exchange 

Rule 516(a). 

4The term ‘‘Electronic Exchange Member’’ or 

‘‘EEM’’ means the holder of a Trading Permit who 

is a Member representing as agent Public Customer 

Orders or Non-Customer Orders on the Exchange 

and those non-Market Maker Members conducting 

proprietary trading. Electronic Exchange Members 

are deemed ‘‘members’’ under the Exchange Act. 

See Exchange Rule 100. 

those changes to the Board Risk 

Committee and Board. The Commission 

believes that adding this language to the 

ORMP (it is not stated in the current 

ORMP but is part of the RIF), would 

specify a clear and direct line of 

responsibility for the Executive Risk 

Committee. 

Finally, with respect to the oversight 

of the ORMP itself, currently the policy 

provides that it is subject to the 

oversight of the Audit Committee and 

Risk Oversight Department. The 

proposed rule change would remove the 

Audit Committee, such that the revised 

ORMP would only be subject to the 

oversight of the Risk Oversight 

Department. The Commission believes 

this change would specify a clear and 

direct line of responsibility for the Risk 

Oversight Department, in accordance 

with the appropriate line of risk 

defense, as discussed above. 

Therefore, the Commission finds that 

the proposed rule change is consistent 

with Rule 17Ad–22(e)(2)(v).15

iii. Consistency With Rule 17Ad– 

22(e)(17) 

Rule 17Ad–22(e)(17) requires that ICE 

Clear Europe establish, implement, 

maintain and enforce written policies 

and procedures reasonably designed to 

manage its operational risks by, among 

other things, 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.16 The Commission believes 

that the revised ORMP should improve 

ICE Clear Europe’s ability to manage 

operational risk by identifying the 

plausible sources of operational risk at 

ICE Clear Europe. For example, the 

revised ORMP would include the Risk 

Dashboard as an appendix, and 

similarly the RIF includes the Risk 

Dashboard as an appendix. Because the 

Risk Dashboard documents all of ICE 

Clear Europe’s identified operational 

risks, the Commission believes that 

adding it formally as an appendix to the 

ORMP would help to ensure that Risk 

Owners focus on identifying new, 

undocumented operational risks by 

delineating those risks that ICE Clear 

Europe already knows of and has 

identified. 

Similarly, the Commission believes 

that the revised ORMP should improve 

ICE Clear Europe’s ability to manage 

operational risk by mitigating the 

impact of operational risk through the 

use of appropriate controls. For 

example, the revised ORMP would 

provide additional detail with respect to 

controls and the assessment of their 

effectiveness, including how Risk 

Owners would rate the effectiveness of 

controls. The Commission believes that 

doing so could help identify and 

improve controls that could mitigate the 

impact of operational risks. 

Therefore, the Commission finds that 

the proposed rule change is consistent 

with Rule 17Ad–22(e)(17).17

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 18 and 

Rules 17Ad–22(e)(2)(v) and 17Ad– 

22(e)(17) thereunder.19

It is therefore ordered pursuant to 

Section 19(b)(2) of the Act 20 that the 

proposed rule change (SR–ICEEU–2022– 

008) be, and hereby is, approved.21

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–11879 Filed 6–2–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95000; File No. SR– 

PEARL–2022–22] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Exchange 

Rule 519, MIAX Pearl Order Monitor 

(‘‘MOM’’) 

May 27, 2022. 

Pursuant to the provisions of 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 May 13, 2022, MIAX PEARL, LLC 

(‘‘MIAX Pearl’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Exchange 519, MIAX Pearl Order 

Monitor (‘‘MOM’’). 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal 

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Exchange Rule 519, MIAX Pearl Order 

Monitor (‘‘MOM’’) to (i) establish an 

Exchange default Threshold Setting for 

market orders 3 to sell an option when 

the national best bid is zero; (ii) provide 

that an Electronic Exchange Member 

(‘‘EEM’’) 4 may supply their own pre-set 

value to be used as the Threshold 

Setting; (iii) reorganize the rule text for 

ease of reference; and (iv) adopt new 

rule text to add additional detail 

regarding the Exchange’s process for 

evaluating and reevaluating market 

orders to sell. 


khammond on DSKJM1Z7X2PROD with NOTICES