[Federal Register Volume 79, Number 231 (Tuesday, December 2, 2014)]
[Notices]
[Pages 71495-71497]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28317]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73684; File No. SR-ICC-2014-19]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change to Formalize the ICC Operational Risk 
Management Framework

November 25, 2014.
    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 November 18, 2014, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II, and III 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The principal purpose of the proposed rule change is to update and 
formalize ICC's Operational Risk Management Framework. These revisions 
do not require any changes to the ICC Clearing Rules (``Rules'').

II. Self-Regulatory Organization'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 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. ICC has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of these statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    ICC proposes to update and formalize the ICC Operational Risk 
Management Framework.
    ICC believes 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. 
The proposed revisions are described in detail as follows.
    The ICC Operational Risk Management Framework is one of several 
documents that establish the ICC Risk Management Framework. As a 
central counterparty, ICC occupies an important place in the clearing 
of credit default swaps and faces operational risks related to the 
functioning of both personnel and systems. The ICC Operational Risk 
Management Framework creates a program of risk assessment and oversight 
designed to identify, monitor and manage plausible sources of 
operational risk.\3\ The operational risk program established by the 
Operational Risk Management Framework includes pro-active risk 
identification and mitigation, along with timely management and 
reporting of operational performance measures. The program applies to 
all ICC activities, groups, functions and locations and is also 
designed to evaluate and mitigate operations risk presented to ICC by 
its partners, related entities, and vendors.
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    \3\ ``Operational risk'' is defined in the ICC Operational Risk 
Management Framework as the risk that deficiencies in information 
systems, internal processes, personnel, or disruptions from external 
events will result in the reduction, deterioration, or breakdown of 
services.
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    The Operational Risk Framework provides the Operational Risk 
Manager with the full responsibility and authority to develop and 
enforce, in consultation with the ICC Board and appropriate members of 
senior management, the operational risk program. The ICC Board retains 
responsibility for oversight of ICC's operational risk management 
program. The Operational Risk Manager is the owner of the Operational 
Risk Management Framework document, and the initial document and any 
material amendments require review and approval by the appropriate 
members of senior management and the ICC Board. The Operational Risk 
Manager reports to the Chief Compliance Officer who reports directly to 
the ICC Board.

[[Page 71496]]

    There are several components to the ICC Operational Risk Management 
Framework. The Operational Risk Management Framework establishes 
clearly defined operational performance objectives that serve as 
benchmarks to evaluate efficiency and effectiveness, promote confidence 
among management and participants, and evaluate operational performance 
against expectations. Further, the Operational Risk Management 
Framework sets forth goals for risk identification, assessment, and 
mitigation, which include the identification, monitoring, and 
management of all plausible sources of operational risk and the 
establishment of clear policies and procedures to address presented 
risk scenarios. The Operational Risk Management Framework also contains 
information regarding how ICC leverages certain shared infrastructures 
within the Intercontinental Exchange, Inc. family as part of its 
operational risk management program.
    Additionally, the Operational Risk Management Framework details the 
Operational Risk Manager's responsibilities in terms of business 
continuity planning, vendor risk management, and the release of new 
products, processes, and initiatives. The Operational Risk Manager is 
also responsible for operational risk reporting, which includes 
reporting and addressing significant operational risk weaknesses or 
failures timely and appropriately (including escalation to the 
appropriate members of senior management and the ICC Audit Committee 
and the Board when necessary), and providing ongoing reporting to 
appropriate members of senior management and periodic reporting to the 
ICC Board and the ICC Audit Committee on the operational risk program 
and significant control matters.
    The operational risk management framework is overseen by the ICC 
Board, ICC department heads and the Chief Compliance Officer. Internal 
audit performs reviews of the operational risk management processes.
    Section 17A(b)(3)(F) of the Act \4\ 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 and to comply with the provisions of the Act and the rules 
and regulations thereunder. ICC believes that the proposed rule change 
is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to ICC, in particular, to Section 
17(A)(b)(3)(F),\5\ because ICC believes that the proposed rule change 
will promote the prompt and accurate clearance and settlement of 
securities transactions, derivatives agreements, contracts, and 
transactions, as the ICC Operational Risk Management Framework is 
designed to identify and minimize operational risk presented to the 
clearing house by identifying all plausible sources of operational risk 
presented to ICC and developing appropriate controls and procedures to 
effectively monitor and manage operational risk. As such, the ICC 
Operational Risk Management Framework facilitates ICC's ability to 
promptly and accurately clear and settle its cleared CDS contracts. In 
addition, the proposed revisions are consistent with the relevant 
requirements of Rule 17Ad-22.\6\ The ICC Operational Risk Management 
Framework is designed to identify and minimize sources of operational 
risk through the development and implementation of appropriate systems, 
controls, and procedures, as the Operational Risk Management Framework 
provides for the creation and maintenance of a comprehensive 
operational risk management program and is therefore reasonably 
designed to meet the operational risk requirements of Rule 17Ad-
22(d)(4).\7\ As such, the proposed rule change is designed to promote 
the prompt and accurate clearance and settlement of securities 
transactions, derivatives agreements, contracts, and transactions 
within the meaning of Section 17A(b)(3)(F) \8\ of the Act.
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    \4\ 15 U.S.C. 78q-1(b)(3)(F).
    \5\ Id.
    \6\ 17 CFR 240.17Ad-22.
    \7\ 17 CFR 240.17Ad-22(d)(4).
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    ICC does not believe the proposed rule change would have any 
impact, or impose any burden, on competition. The ICC Operational Risk 
Management Framework applies uniformly across all market participants. 
Therefore, ICC does not believe the proposed rule change imposes any 
burden on competition that is inappropriate in furtherance of the 
purposes of the Act.

C. Self-Regulatory Organization'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. 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 the 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

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml) or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#186a6d747d357b7775757d766c6b586b7d7b367f776e"><span class="__cf_email__" data-cfemail="0b797e676e26686466666e657f784b786e68256c647d">[email protected]</span></a>. Please include 
File Number SR-ICC-2014-19 on the subject line.

Paper Comments

    <bullet> 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-ICC-2014-19. 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 Web site (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 Web site 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

[[Page 71497]]

10:00 a.m. and 3:00 p.m. Copies of such filings also will be available 
for inspection and copying at the principal office of ICE Clear Credit 
and on ICE Clear Credit's Web site at https://www.theice.com/clear-credit/regulation.
    All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-ICC-2014-19 
and should be submitted on or before December 23, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-28317 Filed 12-1-14; 8:45 am]
BILLING CODE 8011-01-P


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