Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change Relating to the ICC Governance Playbook, ICC Risk Management Framework, and ICC Treasury Operations Policies and Procedures

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July 20, 2021

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Securities and Exchange Commission

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<title>Federal Register, Volume 86 Issue 136 (Tuesday, July 20, 2021)</title>
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[Federal Register Volume 86, Number 136 (Tuesday, July 20, 2021)]
[Notices]
[Pages 38370-38372]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-15337]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92402; File No. SR-ICC-2021-015]

Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change Relating to the ICC Governance Playbook,
ICC Risk Management Framework, and ICC Treasury Operations Policies and
Procedures

July 14, 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 June 30, 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. 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

The principal purpose of the proposed rule change is to make
changes to the Governance Playbook, Risk Management Framework, and
Treasury Operations Policies and Procedures (``Treasury Policy'')
(together, the ``Documents''). 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

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
ICC proposes amendments to its Governance Playbook, Risk Management
Framework, and Treasury Policy to update descriptions of certain
internal committees and make other clarification or clean-up changes.
ICC maintains the Participant Review Committee (``PRC'') and the Credit
Review Subcommittee of the PRC (``CRS'') (together, the
``Committees''), which are internal committees that assist in
fulfilling counterparty review responsibilities with respect to ICC's
Clearing Participants (``CPs'') and financial service providers
(``FSPs''). The proposed changes amend descriptions related to
membership composition, meeting frequency, and responsibilities of the
Committees in the Documents to reflect recent changes to the
Committees' charters. 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.
I. Governance Playbook
The Governance Playbook contains information regarding the roles
and responsibilities of the Board and various committees at ICC. ICC
proposes amendments in respect of the Committees in Section IV
(Committees) to reflect recent changes to their charters. ICC proposes
a grammatical edit to refer to ``financial services providers'' as
``financial service providers'' in the description of the PRC and
throughout the document. ICC proposes updated language on the
membership composition of the PRC, including to add the ICC Risk
Oversight Officer as a member. With respect to the CRS, the proposed
changes remove the authority to approve FSPs and specify that the CRS
has an advisory role. In this role, the CRS may make recommendations to
the PRC with respect to matters of creditworthiness of CPs and
creditworthiness and performance of FSPs. The proposed changes also
update the membership composition of the CRS to include the Risk
Oversight Officer and remove the ICC Risk Management representative as
a voting member. Risk Management representatives will participate as
non-voting members and continue to present materials to allow the CRS
to perform its responsibilities and duties.
II. Risk Management Framework
ICC proposes conforming revisions to the Risk Management Framework
to update descriptions of the Committees and to make other
clarification or clean-up changes. ICC proposes to amend Section II
(Governance and Organization) to update a chart that details the
governance and committee structure at ICC. The updated chart indicates
that the Intercontinental Exchange, Inc. (``ICE, Inc.'') Enterprise
Risk Management Department (``ERM'') reports to the Board and corrects
a typographical error to replace the ``BCP Oversight Committee'' with
the ``BCP & DR Oversight Committee.'' \3\ In Section II.A (Committees),
the proposed changes further clarify the review and approval process of
the policies and procedures that comprise ICC's overall risk management
framework, which consists of review by the Risk Committee and review
and approval by the Board at least annually.
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\3\ ERM provides the oversight and framework for identifying,
assessing, managing, monitoring and reporting on risk across the
ICE, Inc. organization and has dedicated resources focused on
various ICE, Inc. business units, including ICC. The ICC BCP & DR
Oversight Committee assists in fulfilling oversight responsibilities
with respect to business continuity planning (``BCP'') and disaster
recovery (``DR'') for ICC.
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In Section II.A (Committees), ICC also proposes to update
descriptions of the Committees to align with their amended charters.
ICC proposes a grammatical edit to refer to ``financial services
providers'' as ``financial service providers'' and a footnote to
further define the entities included as FSPs. The proposed changes
specify that the PRC meets at least quarterly and more frequently as
needed. Additionally, the proposed changes further distinguish PRC and
CRS responsibilities with respect to FSPs, noting that the PRC is
responsible for overseeing the due diligence and approval of FSPs and
the CRS is responsible for overseeing initial due diligence and
monitoring ongoing credit due diligence for FSPs. ICC also proposes
language describing the advisory role of the CRS to the PRC for matters
regarding the creditworthiness of CPs and the creditworthiness and
performance of FSPs. ICC further proposes to amend Appendix 1 to the
document to update language related to the membership composition of
the PRC, including to add the Risk

[[Page 38371]]

Oversight Officer as a member, and the meeting frequency of the PRC.
III. Treasury Policy
ICC proposes corresponding changes to Section IV (Cash Settlement)
of the Treasury Policy to update responsibilities of the Committees
based on their amended charters. Currently, a bank's capitalization,
creditworthiness, access to liquidity, operational reliability and
supervision are reviewed prior to accepting services, and approval of
the CRS is required before ICC may begin using the bank's services.
Under the amended policy, approval of the PRC is required before ICC
may begin using the bank's services and the CRS may make
recommendations to the PRC regarding approval.
(b) Statutory Basis
ICC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act \4\ and the regulations
thereunder applicable to it, including the applicable standards under
Rule 17Ad-22.\5\ In particular, Section 17A(b)(3)(F) of the Act \6\
requires that the rule change be consistent with the prompt and
accurate clearance and settlement of securities transactions and
derivative agreements, contracts and transactions cleared by ICC, the
safeguarding of securities and funds in the custody or control of ICC
or for which it is responsible, and the protection of investors and the
public interest. The proposed rule change updates descriptions of the
PRC and CRS related to membership composition, meeting frequency, and
responsibilities in the Documents to reflect recent changes to the PRC
and CRS charters. Such changes ensure that the Documents clearly and
accurately set out the functions of the Committees to remain effective
and to ensure that the Committees carry out their required functions.
The proposed clarification and clean-up changes would further ensure
readability and transparency across the Documents and should enhance
the implementation of such policies and procedures. The proposed rule
change is therefore consistent with the prompt and accurate clearing
and settlement of the contracts cleared by ICC, the safeguarding of
securities and funds in the custody or control of ICC or for which it
is responsible, and the protection of investors and the public
interest, within the meaning of Section 17A(b)(3)(F) of the Act.\7\
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\4\ 15 U.S.C. 78q-1.
\5\ 17 CFR 240.17Ad-22.
\6\ 15 U.S.C. 78q-1(b)(3)(F).
\7\ Id.
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The amendments would also satisfy relevant requirements of Rule
17Ad-22.\8\ Rule 17Ad-22(e)(2)(i), (ii) and (v) \9\ requires each
covered clearing agency to establish, implement, maintain, and enforce
written policies and procedures reasonably designed to provide for
governance arrangements that are clear and transparent, clearly
prioritize the safety and efficiency of the covered clearing agency,
and specify clear and direct lines of responsibility. The proposed
changes update governance arrangements in the Documents to align with
the amended PRC and CRS charters. These revisions clarify the
responsibilities and interaction of the Committees by specifying the
advisory role of the CRS to the PRC for matters regarding the
creditworthiness of CPs and the creditworthiness and performance of
FSPs. The proposed changes update membership composition and meeting
frequency to clearly set out the responsibilities and duties of ICC
personnel in respect of the Committees, including the Risk Oversight
Officer and Risk Management representatives. Moreover, the amended Risk
Management Framework memorializes the reporting line of ICE, Inc. ERM
to the Board and corrects a typographical error in respect of the BCP &
DR Oversight Committee to promote clear and transparent governance
arrangements that specify clear and direct lines of responsibility. As
such, in ICC's view, the proposed rule change continues to ensure that
ICC maintains policies and procedures that are reasonably designed to
provide for clear and transparent governance arrangements that clearly
prioritize the safety and efficiency of ICC and specify clear and
direct lines of responsibility, consistent with Rule 17Ad-22(e)(2)(i),
(ii), and (v).\10\
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\8\ 17 CFR 240.17Ad-22.
\9\ 17 CFR 240.17Ad-22(e)(2)(i), (ii) and (v).
\10\ Id.
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Rule 17Ad-22(e)(3)(i) \11\ requires each covered clearing agency to
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to maintain a sound risk management
framework for comprehensively managing legal, credit, liquidity,
operational, general business, investment, custody, and other risks
that arise in or are borne by the covered clearing agency, which
includes risk management policies, procedures, and systems designed to
identify, measure, monitor, and manage the range of risks that arise in
or are borne by the covered clearing agency, that are subject to review
on a specified periodic basis and approved by the Board annually. ICC
maintains a sound risk management framework that identifies, measures,
monitors, and manages the range of risks that it faces. The amended
Risk Management Framework further clarifies that the review and
approval process of the policies and procedures that comprise ICC's
overall risk management framework includes review and approval by the
Board at least annually. As such, the amendments would satisfy the
requirements of Rule 17Ad-22(e)(3)(i).\12\
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\11\ 17 CFR 240.17Ad-22(e)(3)(i).
\12\ Id.
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Rule 17Ad-22(e)(4)(ii) \13\ requires each covered clearing agency
to establish, implement, maintain, and enforce written policies and
procedures reasonably designed to effectively identify, measure,
monitor, and manage its credit exposures to participants and those
arising from its payment, clearing, and settlement processes, including
by maintaining additional financial resources at the minimum to enable
it to cover a wide range of foreseeable stress scenarios that include,
but are not limited to, the default of the two participant families
that would potentially cause the largest aggregate credit exposure for
the covered clearing agency in extreme but plausible market conditions.
The proposed changes enhance ICC's ability to manage its financial
resources, including by clearly articulating its review, approval, and
monitoring process for CPs and FSPs by the Committees across the
Documents to ensure that such policies and procedures remain
transparent and up-to-date. The proposed changes further define the
entities included as FSPs to ensure that ICC appropriately identifies
and monitors its counterparty relationships. Such amendments ensure
financial health and the ability to fulfill obligations by ICC's
counterparties, which promotes and strengthens ICC's own financial
condition and supports ICC's ability to maintain its financial
resources and withstand the pressures of defaults, consistent with the
requirements of Rule 17Ad-22(e)(4)(ii).\14\
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\13\ 17 CFR 240.17Ad-22(e)(4)(ii).
\14\ Id.
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Rule 17Ad-22(e)(18) \15\ requires each covered clearing agency to
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to establish objective, risk-based, and
publicly disclosed criteria for participation, which permit fair and
open access by direct and, where relevant, indirect participants and
other financial market

[[Page 38372]]

utilities, require participants to have sufficient financial resources
and robust operational capacity to meet obligations arising from
participation in the clearing agency, and monitor compliance with such
participation requirements on an ongoing basis. ICC believes that the
proposed rule change will ensure that the Committees carry out the
functions required in their charters to ensure proper review and
ongoing monitoring of CPs and FSPs, including by clarifying the
responsibilities and interaction of the Committees and further defining
the entities included as FSPs. As such, the proposed rule change will
strengthen ICC's ability to manage and mitigate the potential risks
associated with its CPs and FSPs, thereby continuing to ensure that CPs
and FSPs have sufficient financial resources and robust operational
capacity to meet obligations and promoting ICC's ability to monitor
compliance with such requirements on an ongoing basis, consistent with
Rule 17Ad-22(e)(18).\16\
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\15\ 17 CFR 240.17Ad-22(e)(18).
\16\ 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 changes to
ICC's Governance Playbook, Risk Management Framework, and 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.

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 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:

Electronic Comments

<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#83f1f6efe6aee0eceeeee6edf7f0c3f0e6e0ade4ecf5"><span class="__cf_email__" data-cfemail="ccbeb9a0a9e1afa3a1a1a9a2b8bf8cbfa9afe2aba3ba">[email&#160;protected]</span></a>. Please include
File Number SR-ICC-2021-015 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-2021-015. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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 <a href="https://www.theice.com/clear-credit/regulation">https://www.theice.com/clear-credit/regulation</a>.
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-2021-015 and should be
submitted on or before August 10, 2021.
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\17\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-15337 Filed 7-19-21; 8:45 am]
BILLING CODE 8011-01-P

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