Document ID: SEC-2021-0753-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Credit LLC
Posted Date: 2021-05-24T04:00Z

[Federal Register Volume 86, Number 98 (Monday, May 24, 2021)]
[Notices]
[Pages 27938-27940]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-10843]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91922; File No. SR-ICC-2021-014]

Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
ICC's Fee Schedules

May 18, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on May 7, 2021, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission the proposed rule change as 
described in Items I, II and III below, which Items have been prepared 
primarily by ICC. ICC filed the proposed rule change pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
such that the

[[Page 27939]]

proposed rule change was immediately effective upon filing with the 
Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 modify 
ICC's fee schedules to introduce credit default index swaption (``Index 
Option'') incentive programs for the second half of 2021. These 
revisions do not require any changes to the ICC Clearing Rules.

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

(a) Purpose
    The proposed changes are intended to modify ICC's fee schedules to 
introduce Index Option incentive programs for the second half of 
2021.\5\ ICC maintains a Clearing Participant (``CP'') fee schedule \6\ 
and client fee schedule \7\ (collectively, the ``fee schedules'') that 
are publicly available on its website, which ICC proposes to update in 
connection with the proposed incentive programs. Currently, clearing 
fees are due by CPs and clients in accordance with the product, amount 
and currency set out in the fee schedules and subject to any incentive 
programs described in the fee schedules. ICC proposes to amend the fee 
schedules to include details on the proposed incentive programs for the 
second half of 2021, subject to any regulatory review or approval 
process. The proposed changes are described in detail as follows.
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    \5\ Pursuant to an Index Option, one party (the ``Swaption 
Buyer'') has the right (but not the obligation) to cause the other 
party (the ``Swaption Seller'') to enter into an index credit 
default swap transaction at a pre-determined strike price on a 
specified expiration date on specified terms. In the case of Index 
Options that may be cleared by ICC, the underlying index credit 
default swap is limited to certain CDX and iTraxx index credit 
default swaps that are accepted for clearing by ICC, and which would 
be automatically cleared by ICC upon exercise of the Index Option by 
the Swaption Buyer in accordance with its terms.
    \6\ CP fee details available at: https://www.theice.com/publicdocs/clear_credit/ICE_Clear_Credit_Fees_Clearing_Participant.pdf.
    \7\ Client fee details available at: https://www.theice.com/publicdocs/clear_credit/ICE_Clear_Credit_Fees.pdf. As specified, all 
fees are charged directly to a client's CP.
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    Under the amended CP fee schedule, the proposed 2H 2021 Standard 
Program automatically, and without further action by CPs, applies to 
CPs and provides a 25% discount, such that Index Option fees are $2.25/
million or [euro]2.25/million, from June 1 through December 31, 2021. 
As an alternative, CPs may elect to participate in the 2H 2021 Prepaid 
Program from June 1 through December 31, 2021. Participation requires a 
non-refundable upfront payment of $300,000 by June 25, 2021. Index 
Option fees are $1.5/million or [euro]1.5/million and the upfront 
payment is applied toward the first $300,000 of option clearing fees 
due in the second half of 2021.
    The amended client fee schedule offers the 2H 2021 Index Option 
Incentive Program, which is similar to the 2H 2021 Standard Program 
described above. This program automatically, and without further action 
by CPs or clients, applies to clients and provides a 25% discount, such 
that Index Option fees are $3/million or [euro]3/million, from June 1 
through December 31, 2021. The discount or prepaid fee schedule would 
be applied at the time of invoice under both amended fee schedules.
(b) Statutory Basis
    ICC believes that the proposed rule change is consistent with the 
requirements of the Act, including Section 17A of the Act \8\ and the 
regulations thereunder applicable to it. More specifically, the 
proposed rule change establishes or changes a member due, fee or other 
charge imposed by ICC under Section 19(b)(3)(A)(ii) of the Act \9\ and 
Rule 19b-4(f)(2) \10\ thereunder. ICC believes 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 
17A(b)(3)(D),\11\ which requires that the rules of the clearing agency 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its participants.
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    \8\ 15 U.S.C. 78q-1.
    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
    \11\ 15 U.S.C. 78q-1(b)(3)(D).
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    ICC believes that the proposed discounts in the fee schedules have 
been set at an appropriate level. In determining the appropriate 
discount level and program structure, ICC took into account factors 
such as volume, revenue, costs and expenses, and market participation 
in the clearing service, including based on different fee levels. In 
ICC's view, the fees are reasonable under each proposed incentive 
program as the discounts correspond with anticipated volumes, costs and 
expenses, and revenues under each program, and they consider current 
and past market activity as well as anticipated market activity with 
respect to clearing Index Options at ICC.\12\ Client fees remain higher 
than CP fees for Index Options under the proposed programs, which is in 
line with the current fee schedules for single names, indexes, and 
Index Options, given the responsibilities and obligations of CPs to ICC 
as opposed to clients. Furthermore, the discount for the proposed 2H 
2021 Prepaid Program in the CP fee schedule is associated with the non-
refundable upfront payment applied toward clearing fees. These 
incentive programs are designed to encourage the clearing of Index 
Options by CPs and clients while properly compensating ICC for the 
risks, costs and expenses of clearing Index Options.
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    \12\ Supporting detail and additional data, including clearing 
statistics for Index Options and a presentation provided to the 
Board in respect of the proposed incentive programs is included in 
confidential Exhibit 3.
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    Moreover, the proposed fee changes will apply equally to all market 
participants clearing Index Options. The 2H 2021 Standard Program under 
the amended CP fee schedule automatically, and without further action 
by CPs, applies to all CPs. As an alternative, any CP may elect to 
participate in the 2H 2021 Prepaid Program, which requires an upfront 
payment by a specified date. The 2H 2021 Index Option Incentive Program 
under the amended client fee schedule automatically, and without 
further action by CPs or clients, applies to all clients. ICC's fee 
schedules, including the proposed incentive programs, will continue to 
be transparent and to apply equally to market participants clearing 
indexes, single names, and Index Options at ICC. Therefore, the 
proposed rule change provides for the equitable allocation of 
reasonable dues, fees and other charges among participants, within the 
meaning of Section 17A(b)(3)(D) of the Act.\13\ ICC

[[Page 27940]]

therefore believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \14\ and the regulations 
thereunder applicable to it and is appropriately filed pursuant to 
Section 19(b)(3)(A) of the Act \15\ and paragraph (f)(2) of Rule 19b-4 
\16\ thereunder.
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    \13\ 15 U.S.C. 78q-1(b)(3)(D).
    \14\ 15 U.S.C. 78q-1.
    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(2).
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(B) Clearing Agency's Statement on Burden on Competition

    ICC does not believe the proposed rule change would have any 
impact, or impose any burden, on competition not necessary or 
appropriate in furtherance of the purpose of the Act. As discussed 
above, the proposed changes modify ICC's CP and client fee schedules to 
introduce incentive programs for Index Options for the second half of 
2021 and will apply uniformly across all market participants. The 
implementation of such changes does not preclude other market 
participants from offering similar incentive programs. Moreover, ICC 
does not believe that the amendments would adversely affect the ability 
of market participants to access clearing services. Accordingly, ICC 
does not believe the amendments impose any burden on competition not 
necessary or appropriate in furtherance of the purpose 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. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \17\ and paragraph (f) of Rule 19b-4 \18\ 
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.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(2).
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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-2021-014 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-2021-014. 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-2021-014 and should be 
submitted on or before June 14, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-10843 Filed 5-21-21; 8:45 am]
BILLING CODE 8011-01-P