Document ID: SEC-2020-0602-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Credit, LLC
Posted Date: 2020-04-20T04:00Z

[Federal Register Volume 85, Number 76 (Monday, April 20, 2020)]
[Notices]
[Pages 21911-21913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08211]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88633; File No. SR-ICC-2020-006]

Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change, Security-Based Swap Submission, or 
Advance Notice Relating to ICC's Treasury Operations Policies and 
Procedures

April 14, 2020.
    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 April 8, 2020, 
ICE Clear Credit LLC (``ICC'') filed with the Securities and Exchange 
Commission the proposed rule change, security-based swap submission, or 
advance notice as described in Items I, II and III below, which Items 
have been prepared by ICC. The Commission is publishing this notice to 
solicit comments on the proposed rule change, security-based swap 
submission, or advance notice from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change, Security-Based Swap Submission, or Advance Notice

    The principal purpose of the proposed rule change is to revise the 
ICC Treasury Operations Policies and Procedures (``Treasury Policy''). 
These revisions do not require any changes to the ICC Clearing Rules 
(the ``Rules'').

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change, Security-Based Swap Submission, or 
Advance Notice

    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, Security-Based Swap Submission, or 
Advance Notice

(a) Purpose
    ICC proposes to revise its Treasury Policy. Specifically, ICC 
proposes clarification changes related to ICC's approval process for 
new banking relationships, ICC's minimum criteria applicable to 
settlement banks, and ICC's backup settlement banks. ICC believes that 
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. ICC proposes 
to make such changes effective following Commission approval of the 
proposed rule change. The proposed revisions are described in detail as 
follows.
    ICC proposes amendments to the ``Direct Settlement'' section of the 
ICC Treasury Policy. With respect to banking relationships, ICC 
proposes to clarify that approval of the Credit Review Subcommittee of 
the Participant Review Committee (``CRS'') is required before ICC may 
begin using the bank's services. The CRS is comprised of ICC staff, 
including the ICC President, ICC Chief Operating Officer, and 
representatives from various departments, and is tasked with 
counterparty review responsibilities. Further, ICC proposes to set 
forth the minimum criteria applicable to ICC's settlement banks in the 
Treasury Policy, which includes criteria related to regulation and 
supervision, completion of required documentation to allow ICC to 
assess financial stability and credit/counterparty risk, and 
operational capability, among others. With respect to settlement banks, 
ICC maintains one primary banking relationship and two backup banking 
relationships. Currently, the Treasury Policy notes ICC's primary 
banking relationship and one backup banking relationship. The proposed 
changes incorporate reference to the second backup banking 
relationship, which was inadvertently excluded and does not represent a 
new banking relationship.
(b) Statutory Basis
    Section 17A(b)(3)(F) of the Act \3\ 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; 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),\4\ 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, and 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. The proposed changes 
clarify ICC's approval process for new banking relationships, ICC's 
minimum criteria for its settlement banks, and ICC's backup settlement 
banks. The clarifications related to the approval process for new 
banking relationships and the minimum criteria for ICC's settlement 
banks ensure that ICC has clear and comprehensive procedures for 
approving new banking relationships and is following its process for 
review and approval of new banking relationships. The incorporation of 
the second backup banking relationship corrects an omission to ensure 
that ICC's policies and procedures clearly and accurately document 
ICC's banking relationships. The proposed updates thus ensure that the 
documentation of ICC's Treasury Policy remains up-to-date, transparent, 
and focused on clearly articulating the policies and procedures used to 
support ICC's treasury functions, which promotes the prompt and 
accurate clearance and settlement of securities transactions, 
derivatives agreements, contracts, and transactions and

[[Page 21912]]

contributes to the safeguarding of securities and funds which are in 
the custody or control of ICC or for which it is responsible. 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 and 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 within the meaning of Section 17A(b)(3)(F) of the Act.\5\
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78q-1(b)(3)(F).
    \4\ Id.
    \5\ Id.
---------------------------------------------------------------------------

    In addition, the proposed rule change is consistent with the 
relevant requirements of Rule 17Ad-22.\6\ Rule 17Ad-22(b)(3) \7\ 
requires ICC to establish, implement, maintain and enforce written 
policies and procedures reasonably designed to maintain sufficient 
financial resources to withstand, at a minimum, a default by the two CP 
families to which it has the largest exposures in extreme but plausible 
market conditions. The proposed changes enhance ICC's ability to manage 
its financial resources, including by clearly articulating its approval 
process for new banking relationships and the minimum criteria 
applicable to ICC's settlement banks. Such changes ensure financial 
health and the ability to fulfill obligations by ICC's banking 
relationships, which promotes and strengthens ICC's own financial 
condition and supports ICC's ability to maintain sufficient financial 
resources to withstand, at a minimum, a default by the two CP families 
to which it has the largest exposures in extreme but plausible market 
conditions, consistent with the requirements of Rule 17Ad-22(b)(3).\8\
---------------------------------------------------------------------------

    \6\ 17 CFR 240.17Ad-22.
    \7\ 17 CFR 240.17Ad-22(b)(3).
    \8\ Id.
---------------------------------------------------------------------------

    Rule 17Ad-22(d)(3) \9\ requires ICC to establish, implement, 
maintain and enforce written policies and procedures reasonably 
designed to hold assets in a manner that minimizes risk of loss or of 
delay in its access to them and to invest assets in instruments with 
minimal credit, market, and liquidity risks. The proposed changes 
strengthen ICC's ability to safeguard assets and limit the potential 
for loss or delay in access to such assets by ensuring that ICC has 
clear and comprehensive procedures that describe the minimum criteria 
applicable to ICC's settlement banks and the approval process for new 
banking relationships. ICC believes that having policies and procedures 
that clearly and accurately document ICC's treasury functions are an 
important component to the effectiveness of ICC's treasury operations, 
which promote ICC's ability to hold assets in a manner that minimizes 
risk of loss or of delay in its access to them and to invest assets in 
instruments with minimal credit, market, and liquidity risks. Such 
changes are therefore reasonably designed to meet the requirements of 
Rule 17Ad-22(d)(3).\10\
---------------------------------------------------------------------------

    \9\ 17 CFR 240.17Ad-22(d)(3).
    \10\ Id.
---------------------------------------------------------------------------

    Rule 17Ad-22(d)(5) \11\ requires ICC to establish, implement, 
maintain and enforce written policies and procedures reasonably 
designed to employ money settlement arrangements that eliminate or 
strictly limit ICC's settlement bank risks and require funds transfers 
to ICC to be final when effected. The proposed changes enhance ICC's 
ability to manage and limit its credit and liquidity risk arising from 
its settlement banks, including by establishing the minimum criteria 
applicable to ICC's settlement banks, including criteria related to 
regulation and supervision, completion of required documentation to 
allow ICC to assess financial stability and credit/counterparty risk, 
and operational capability, among others, and by clarifying that 
approval of the CRS is required before ICC may begin using the bank's 
services, consistent with the requirements of Rule 17Ad-22(d)(5).\12\
---------------------------------------------------------------------------

    \11\ 17 CFR 240.17Ad-22(d)(5).
    \12\ Id.
---------------------------------------------------------------------------

    Rule 17Ad-22(d)(8) \13\ requires ICC to establish, implement, 
maintain and enforce written policies and procedures reasonably 
designed to have governance arrangements that are clear and transparent 
to fulfill the public interest requirements in Section 17A of the Act 
\14\ applicable to clearing agencies, to support the objectives of 
owners and participants, and to promote the effectiveness of ICC's risk 
management procedures. The proposed revisions allow for feedback from, 
and notification to, the CRS, which is comprised of ICC staff, 
including the ICC President, ICC Chief Operating Officer, and 
representatives from various departments, prior to using the bank's 
services. These governance arrangements are clear and transparent, such 
that information relating to the assignment of responsibilities and the 
requisite involvement of ICC personnel is clearly documented, and also 
promote the effectiveness of ICC's risk management procedures by 
detailing the responsibilities of relevant stakeholders in the review 
and approval of new banking relationships, consistent with the 
requirements of Rule 17Ad-22(d)(8).\15\
---------------------------------------------------------------------------

    \13\ 17 CFR 240.17Ad-22(d)(8).
    \14\ 15 U.S.C. 78q-1.
    \15\ 17 CFR 240.17Ad-22(d)(8).
---------------------------------------------------------------------------

(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 changes to 
ICC's Treasury 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, Security-Based Swap Submission, or Advance Notice 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, Security-Based 
Swap Submission, or Advance Notice 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, security-based swap submission, or advance notice 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-2020-006 on the subject line.

[[Page 21913]]

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-2020-006. 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, security-based 
swap submission, or advance notice that are filed with the Commission, 
and all written communications relating to the proposed rule change, 
security-based swap submission, or advance notice 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-2020-006 and should be 
submitted on or before May 11, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-08211 Filed 4-17-20; 8:45 am]
BILLING CODE 8011-01-P