Document ID: SEC-2023-0576-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Credit, LLC
Posted Date: 2023-06-01T04:00Z

[Federal Register Volume 88, Number 105 (Thursday, June 1, 2023)]
[Notices]
[Pages 35934-35937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-11612]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97586; File No. SR-ICC-2023-006]

Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change Relating to ICC's New Initiatives 
Approval Policy and Procedural Framework

May 25, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ and Rule 19b-4,\2\ notice is hereby given that on May 12, 
2023, 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 primarily 
prepared 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. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    ICE Clear Credit LLC (``ICC'') proposes a rule change to update the 
ICC New Initiatives Approval Policy and Procedural Framework (``NIA 
Policy''). This change does not require any revisions to the ICC 
Clearing Rules (``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 NIA Policy sets forth ICC's policies and procedures for the 
review and approval of certain new initiatives to be offered or 
implemented by ICC (``New Initiatives''). New Initiatives are any new 
project approved by the Steering Committee (i.e., an ICC management 
committee responsible for prioritizing the implementation of 
initiatives and monitoring and guiding delivery) and identified by the 
New Initiative Approval Committee (the ``NIAC'') as requiring its 
approval prior to launch. The intention of the NIA Policy is to notify 
all relevant departments of the introduction of the New Initiative, 
provide for information sharing between departments, ensure prior to 
the launch of a New Initiative that all required governance and 
regulatory filings have been completed and New Initiative risks are 
considered, and establish requirements for the pre-launch verification 
and testing of the New Initiative.
    ICC proposes to update its NIA Policy with the addition of Exhibit 
B, Approvals Matrix Review and Approval Process. ICC believes that such 
a change 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 
rule change is described in detail as follows.
    The addition of the procedures set forth in Exhibit B, Approvals 
Matrix Review and Approval Process to Section IV Procedural Framework--
Activity Steps is designed to formalize ICC's current New Initiatives 
review and approval process. Specifically, Exhibit B formalizes and 
describes ICC's procedures regarding the use of an ``Approvals Matrix'' 
in its review and approval of a given New Initiative. The lifecycle of 
an Approvals Matrix for a given New Initiative is set forth in Exhibit 
B and, in general, consists of three activity steps described below.
    The first step is ``Creation'' of the Approvals Matrix. Upon the 
request of the NIAC Chair, the ICC Legal Department prepares an initial 
draft Approvals Matrix related to the particular New Initiative. An 
initial draft may be requested prior to the completion of the New 
Initiative, and in any case prior to ICC being granted all required 
approvals. Should the initial draft be requested prior to being granted 
all required approvals, a complete list of requires approvals (both 
granted and to be granted) will be incorporated in the Approvals 
Matrix. Furthermore, the Approvals Matrix will include the following 
information: (i) items requiring approval (e.g., ICC Clearing Rules, 
ICC procedures), (ii) required filings/approvals related to each item 
(e.g., ICC Risk Committee recommendation to the ICC Board of Managers, 
ICC Board of Managers, Commodity Futures Trading Commission (``CFTC''), 
Securities Exchange Commission (``SEC'')), and

[[Page 35935]]

(iii) the applicable dates such requests were made, regulatory filings 
were filed and/or approvals were granted. The ICC Compliance Department 
and ICC Risk Oversight Officer (``ROO'') both review the initial draft 
Approvals Matrix and provide their feedback and confirmation that the 
information captured in the Approvals Matrix is accurate.
    The purposed second step is ``Review/Maintenance'' of the Approvals 
Matrix. With respect to a particular New Initiative, the NIAC Chair may 
include a review of the applicable Approvals Matrix at NIAC meetings 
and must include a review of the Approvals Matrix in the relevant Pre-
Launch Verification meeting.\3\ Should either type of review result in 
modifications to the applicable Approvals Matrix, the ICC Legal 
Department will update the applicable Approvals Matrix with the 
modifications.
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    \3\ The purpose of the Pre-Launch Verification meeting, with 
respect to a particular New Initiative, is to review the applicable 
Approvals Matrix, the risk assessments and any post-launch 
stipulations in advance of the approval of the New Initiative.
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    The purposed third step is ``Finalization'' of the Approvals 
Matrix. Prior to Pre-Launch Verification of the given New Initiative by 
the NIAC, the NIAC Chair will confirm with the ICC Legal Department 
that all required approvals have been received, including by the ICC 
Compliance Department and the ROO.
    Furthermore, ICC proposes to update its NIA Policy with the 
addition of Exhibit C, Risk Assessment Review and Approval Process to 
Section IV Procedural Framework--Activity Steps. Exhibit C is designed 
to formalize ICC's current New Initiatives risk review and approval 
process. Proposed Exhibit C provides that a ``Risk Assessment'' 
associated with a given New Initiative must be created, maintained and 
updated in accordance with procedures include in Exhibit C.\4\
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    \4\ A Risk Assessment is a document (in the form of the template 
attached as Attachment B to the NIA Policy) reviewed by the NIAC 
that describes key risks identified by the ICC Functional Area Heads 
and includes mitigation plans, residual impact ratings and other 
comments.
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    The purposed first step is ``Creation'' which describes the initial 
risk assessments performed by the ICC President and ICC Functional Area 
Heads,\5\ which is documented on the Risk Assessment of the applicable 
New Initiative. The draft Risk Assessment document is then reviewed/
edited by all Functional Area Heads. Each Functional Area Head 
considers the universe of key risks for their functional area when 
completing the Risk Assessment, and documents in the Risk Assessment 
their view on the main risks and any related mitigations. For each of 
the main risks identified, the following information is provided; a 
description of the risk, a description of any expected/implemented risk 
mitigations and a High/Medium/Low rating of the residual risk after 
considering the expected/implemented risk mitigations. Each Functional 
Area Head includes references to any work logs or other supporting 
materials used by the Functional Area Head when performing the Risk 
Assessment. All Functional Area Heads return their section of the 
initial draft Risk Assessment to the NIAC Chair. The NIAC Chair 
compiles all returned sections of the initial draft Risk Assessment 
into a single document. The NIAC Chair circulates the compiled initial 
draft Risk Assessment to all Functional Area Heads. Each Functional 
Area Head reviews all the risks identified in the initial draft Risk 
Assessment by the other Functional Area Heads, provides any revisions/
additions to the document, and provides a residual risk rating for each 
identified risk. At the discretion of the NIAC Chair, the review and 
residual risk rating of each Functional Area Head's identified risks by 
the other Functional Area Heads can be performed collaboratively during 
a NIAC meeting. The NIAC Chair circulates to the Functional Area Heads 
the finalized initial draft of the Risk Assessment.
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    \5\ ICC Functional Area Heads include the General Counsel, Chief 
Compliance Officer, Chief Operating Officer, Chief Risk Officer and 
Head of ICC Technology.
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    The purposed second step is ``Review/Maintenance'' of the Risk 
Assessment. In NIAC meetings pertaining to the relevant New Initiative, 
the NIAC Chair may include a review of the Risk Assessment and must 
include a review of the Risk Assessment in the Pre-Launch Verification 
meeting. Functional Area Heads may adjust their risk ratings as 
mitigation plans evolve to eliminate or reduce risk. Following any 
review of the Risk Assessment (whether in NIAC meetings or otherwise), 
the NIAC Chair coordinates the update and re-circulation of the Risk 
Assessment to the Functional Area Heads. The NIAC Chair will date or 
mark the Risk Assessment accordingly to indicate what is the most 
current version of the Risk Assessment as it moves through the new 
initiatives process.
    The purposed third step is ``Finalization'' of the Risk Assessment. 
During the Pre-Launch Verification NIAC meeting for the given New 
Initiative, the NIAC reviews and discusses the latest Risk Assessment 
and residual risk ratings; any further revisions are noted to the NIAC 
Chair prior to the NIAC voting to approve the New Initiative. After the 
Pre-Launch Verification NIAC meeting for the given New Initiative, the 
NIAC Chair circulates to the NIAC the final Risk Assessment and the 
Functional Area Heads provide their sign-off via email to the NIAC 
Chair.
    Furthermore, ICC proposes to update Section IV.A. of the NIA Policy 
by changing the name of Step 1 from ``Submission'' to ``Creation''. The 
purpose of this minor change is to better describe ICC's actual 
process, which is first the creation of a new project proposal by the 
ICC Steering Committee, which is subsequently submitted to the NIAC for 
review pursuant to the NIA Policy.
    In addition to the forgoing proposed modifications to the NIA 
Policy, ICC also proposes to formalize a series of non-material updates 
to the NIA Policy which were reviewed and approved by the NIAC in 2019 
and 2020. Such proposed changes, which are described below, concern the 
administration of ICC and were made to update the NIA Policy to reflect 
changes in ICC's officer positions and titles which were made within 
the organization.
    In 2019 the NIAC approved changes to the NIA Policy \6\ to update 
the composition of the NIAC in response to changes to officer positions 
and titles made within ICC. Specifically, revisions were made to 
Section II.G., ``New Initiative Approval Committee'', to remove 
references of two out-of-date ICC officer titles (``Senior Director, 
Products and Services'' and ``Head of Special Projects'') from the list 
of individuals comprising the NIAC. In addition, as the Head of Special 
Projects at ICC use to serve as the Chairman of the NIAC, Section II.G. 
also was revised to indicate that the Chairman of the NIAC will no 
longer automatically be the Head of Special Projects as such position 
no longer exists within ICC. Rather, Section II.G. was modified to 
indicate that the Chair of the NIAC will be the individual so 
designated. In addition, Section II.H., which defines the ``New 
Initiative Approval Committee Chair,'' was modified to delete the 
identification of the ``Head of Special Projects'' as that officer 
title no longer exists at ICC, and to insert the new definition of 
``the individual designated to serve as the Chair of the New Initiative 
Approval Committee by ICE Clear Credit management.''

[[Page 35936]]

Furthermore, Section III.B. of the NIA Policy which identified the 
``Head of Special Projects'' as serving at the NIAC Chair was deleted 
and the remainder of Section III was re-lettered to reflect the 
deletion of Section III.B. Similarly, the outdated title ``Head of 
Special Projects'' was removed from Attachment C and Attachment F to 
the NIA Policy, as the title is no longer in use at ICC.
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    \6\ Version 2.1 of the NIA Policy was reviewed and approved by 
the NIAC on December 12, 2019.
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    In 2020 the NIAC approved additional changes to the NIA Policy \7\ 
to correct Attachment D which contains the NIAC Charter. Specifically, 
Section III, ``Membership'' of Attachment D was modified to indicate 
that the Chair of the NIAC will be designated by ICC management. 
Similarly, Exhibit A to Attachment D which lists the member of the NIAC 
was modified to delete the ``Head of Special Projects'' as the NIAC 
Chair and modify the definition of the ``Committee Secretary'' to 
indicate that such position will be designated by the NIAC Chair rather 
than the outdated ``Head of Special Projects.''
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    \7\ Version 2.1.1. of the NIA Policy was reviewed and approved 
by the NIAC on March 04, 2020.
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(b) Statutory Basis
    Section 17A(b)(3)(F) of the Act \8\ 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; to assure the safeguarding of securities and funds which 
are in the custody or control of the clearing agency or for which it is 
responsible; in general, to protect investors and the public interest; 
and to comply with the provisions of the Act and the rules and 
regulations thereunder. ICC believes that the proposed additional 
procedural details to ICC's NIA Policy included in the proposed rule 
change are 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),\9\ because ICC believes that the proposed additional 
procedural details to ICC's NIA Policy enhances policies, practices, 
and procedures with respect to the New Initiatives. Such sound 
policies, practices, and procedures are an important component of ICC's 
ability to comply with these requirements because disruptions to 
operations resulting from a new offering or implementation can impair 
the prompt and accurate clearance and settlement of securities 
transactions, derivatives agreements, contracts, and transactions; 
safeguarding of securities and funds which are in the custody or 
control of ICC or for which it is responsible; and protection of 
investors and the public interest. 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; to contribute to the safeguarding of securities and funds 
associated with security-based swap transactions in ICC's custody or 
control, or for which ICC is responsible; and, in general, to protect 
investors and the public interest within the meaning of Section 
17A(b)(3)(F) of the Act.\10\ In addition, the proposed rule change is 
consistent with the relevant requirements of Rule 17Ad-22.\11\ Rule 
17Ad-22(e)(17)(i) \12\ requires ICC to establish, implement, maintain 
and enforce written policies and procedures reasonably designed to, in 
relevant part, 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. The proposed rule change provides 
additional procedural details to ICC's NIA Policy regarding the 
Approvals Matrix review and approval process, and the Risk Assessment 
review and approval process. Such changes will enhance ICC's 
implementation of New Initiatives and ICC believes such procedures will 
reduce the likelihood of a disruption in its operations from a New 
Initiative. Moreover, the documentation of ICC's procedural process 
will improve ICC's ability to identify sources of operational risk and 
minimize them through the development of appropriate systems, policies, 
procedures, and controls consistent with the requirements of Rule 17Ad-
22(e)(17)(i).\13\
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    \8\ 15 U.S.C. 78q-1(b)(3)(F).
    \9\ Id.
    \10\ Id.
    \11\ 17 CFR 240.17Ad-22.
    \12\ 17 CFR 240.17Ad-22(e)(17)(i).
    \13\ Id.
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    Furthermore, the proposed rule is consistent with the requirements 
of Rule 17Ad-22(e)(2)(i) and (v) \14\ which requires, in part, that a 
covered clearing agency establish, implement, maintain and enforce 
written policies and procedures reasonably designed to provide for 
governance arrangements that are clear and transparent and specify 
clear and direct lines of responsibility. The non-material changes 
approved by the NIAC in 2019 and 2020 to update the NIA Policy to 
reflect changes to ICC's officer positions and titles that were made 
within the organization are consistent with the requirement to maintain 
clear and transparent governance arrangements, and with the requirement 
to specify clear and direct lines of responsibility. Such changes 
improve the accuracy and transparency of ICC's governance arrangements 
and improve the clarity of the lines of responsibility. In ICC's view, 
the proposed changes are therefore consistent with the requirements of 
Rule 17Ad-22(e)(2)(i) and (v).\15\
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    \14\ 17 CFR 270.17Ad-22(e)(2)(i) and (v).
    \15\ Id.
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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. The proposed change to 
update ICC's NIA Policy will apply 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) 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

    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:

[[Page 35937]]

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-ICC-2023-006 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-2023-006. 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.
    Do not include personal identifiable information in submissions; 
you should submit only information that you wish to make available 
publicly. We may redact in part or withhold entirely from publication 
submitted material that is obscene or subject to copyright protection. 
All submissions should refer to File Number SR-ICC-2023-006 and should 
be submitted on or before June 22, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-11612 Filed 5-31-23; 8:45 am]
BILLING CODE 8011-01-P