Document ID: SEC-2022-1112-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Credit, LLC
Posted Date: 2022-08-17T04:00Z

[Federal Register Volume 87, Number 158 (Wednesday, August 17, 2022)]
[Notices]
[Pages 50672-50673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-17662]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95472; File No. SR-ICC-2022-007]

Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change Relating to the Clearance of Additional 
Credit Default Swap Contracts

August 11, 2022.

I. Introduction

    On June 16, 2022, ICE Clear Credit LLC (``ICC'') 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 
revise the ICC Rulebook (the ``Rules'') \3\ to provide for the 
clearance of additional Standard Emerging Market Sovereign \4\ CDS 
contracts (collectively, the ``EM Contracts''). The proposed rule 
change was published for comment in the Federal Register on June 22, 
2022.\5\ The Commission did not receive comments regarding the proposed 
rule change. For the reasons discussed below, the Commission is 
approving the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Capitalized terms used but not defined herein have the 
meanings specified in the Rules.
    \4\ The term ``Standard Emerging Market Sovereign'' is 
abbreviated in the Rules as ``SES,'' as used below.
    \5\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice 
of Filing of Proposed Rule Change Relating to the Clearance of 
Additional Credit Default Swap Contracts; Exchange Act Release No. 
95139 (June 22, 2022); 87 FR 38435 (June 28, 2022) (File No. SR-ICC-
2022-007) (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The proposed rule change would amend Subchapter 26D of the Rules to 
provide for the clearance of the following EM Contracts: the Arab 
Republic of Egypt, Kingdom of Bahrain, and Sultanate of Oman.\6\ The 
proposed rule change would do so by amending the term ``Eligible SES 
Reference Entities'' in Rule 26D-102 (Definitions) to include the Arab 
Republic of Egypt, Kingdom of Bahrain, and Sultanate of Oman in the 
list of specific Eligible SES Reference Entities to be cleared by ICC. 
ICC represents that these additional EM Contracts have terms consistent 
with the other EM Contracts approved for clearing at ICC and governed 
by Subchapter 26D of the Rules, and that clearance of these additional 
EM contracts would not require any changes to ICC's Risk Management 
Framework.\7\
---------------------------------------------------------------------------

    \6\ The description that follows is excerpted from the Notice, 
87 FR at 38435.
    \7\ See Notice, 87 FR at 38435.
---------------------------------------------------------------------------

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.\8\ Section 17A(b)(3)(F) of the Act requires, among other 
things, that the rules of ICC be designed to promote the prompt and 
accurate clearance and settlement of securities transactions and, to 
the extent applicable, derivative agreements, contracts, and 
transactions, as well as to assure the safeguarding of securities and 
funds which are in the custody or control of ICC or for which it is 
responsible.\9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(2)(C).
    \9\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The Commission finds that the proposed rule change is consistent 
with Section 17A(b)(3)(F) of the Act.\10\ The Commission has reviewed 
the terms and conditions of the additional EM Contracts proposed for 
clearing and has determined that those terms and conditions are 
substantially similar to the terms and conditions of the other 
contracts listed in Subchapter 26D of the ICC Rules, all of which ICC 
currently clears, with the key difference being that the underlying 
reference obligations will be issuances by the Arab Republic of Egypt, 
Kingdom of Bahrain, and Sultanate of Oman. Moreover, after reviewing 
the Notice and ICC's Rules, policies and procedures, the Commission 
finds that ICC would clear the additional EM Contracts pursuant to its 
existing clearing arrangements and related financial safeguards, 
protections and risk management procedures.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    In addition, based on its own experience and expertise, including a 
review of data on volume, open interest, and the number of ICC Clearing 
Participants (``CPs'') that currently trade in the additional EM 
Contracts as well as certain model parameters for the additional EM 
Contracts, the Commission finds that ICC's rules, policies, and 
procedures are reasonably designed to price and measure the potential 
risk presented by the additional EM Contracts, collect financial 
resources in proportion to such risk, and liquidate this product in the 
event of a CP default. This should

[[Page 50673]]

help ensure ICC's ability to maintain the financial resources it needs 
to provide its critical services and function as a central 
counterparty, thereby promoting the prompt and accurate settlement of 
the additional EM Contracts and other credit default swap transactions. 
For the same reasons, the Commission believes that the proposed rule 
change should help assure the safeguarding of securities or funds in 
the custody or control of ICC.
    Therefore, the Commission finds that clearance of the additional EM 
Contracts would promote the prompt and accurate clearance and 
settlement of securities transactions and would help assure 
safeguarding of securities and funds in the custody or control of ICC, 
consistent with Section 17A(b)(3)(F) of the Act.\11\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

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.\12\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
\13\ that the proposed rule change (SR-ICC-2022-007), be, and hereby 
is, approved.\14\
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(2).
    \14\ 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).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17662 Filed 8-16-22; 8:45 am]
BILLING CODE 8011-01-P