Notice2021-25348
Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change Relating to the ICC CDS Instrument On-Boarding Policies and Procedures
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 22, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 222 (Monday, November 22, 2021)</title>
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[Federal Register Volume 86, Number 222 (Monday, November 22, 2021)]
[Notices]
[Pages 66382-66383]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-25348]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93581; File No. SR-ICC-2021-019]
Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change Relating to the ICC CDS Instrument On-
Boarding Policies and Procedures
November 16, 2021.
I. Introduction
On September 22, 2021, 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,\2\ a proposed rule change to revise the
ICC CDS Instrument On-boarding Policies and Procedures (``Instrument
On-boarding Policy''). The proposed rule change was published for
comment in the Federal Register on October 5, 2021.\3\ The Commission
did not receive comments regarding the proposed rule change. For the
reasons discussed below, the Commission is approving the proposed rule
change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice
of Filing of Proposed Rule Change Relating to the ICC CDS Instrument
On-boarding Policies and Procedures; Exchange Act Release No. 93177
(Sept. 29, 2021); 86 FR 55037 (Oct. 5, 2021) (SR-ICC-2021-019)
(``Notice'').
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II. Description of the Proposed Rule Change
The proposed rule change would revise Subsection III.A of the
Instrument On-boarding Policy.\4\ Subsection III.A discusses the
guiding principles that ICC maintains for considering instruments for
clearing. Such principles are designed to ensure that ICC proceeds in a
prudent manner with respect to instrument selection while also
providing the best opportunity for Clearing Participants to minimize
their risk.
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\4\ Capitalized terms not otherwise defined herein have the
meanings assigned to them in the Instrument On-boarding Policy or
the ICC Rules, as applicable.
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The proposed rule change would incorporate an additional guiding
principle--ICC should consider selecting for clearing instruments that
are constituents of the currently clearable On-The-Run (``OTR'')
indices in order to provide additional instruments for Clearing
Participants to hedge and mitigate indirect risk exposure from the OTR
indices. For other instruments that are not constituents of currently
clearable OTR indices, the proposed rule change would not alter the
current guiding principles, which direct ICC to consider instrument
open interest and volume when selecting instruments for clearing.
Moreover, the proposed rule change would not alter the overall current
guiding principles for all instruments, which direct ICC to consider
selecting for clearing instruments that can be cleared through ICC's
systems and processes and that support industry-wide initiatives and
protocols.
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.\5\ For the reasons given below, the Commission finds that
the proposed rule change is consistent with Section 17A(b)(3)(F) of the
Act and Rule 17Ad-22(e)(21).\6\
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\5\ 15 U.S.C. 78s(b)(2)(C).
\6\ 15 U.S.C. 78q-1(b)(3)(F) and 17 CFR 240.17Ad-22(e)(21).
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A. Consistency With Section 17A(b)(3)(F) of the Act
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.\7\ As
discussed above, the proposed rule change would add to the Instrument
On-boarding Policy, as a further guiding principle, that ICC should
consider selecting for clearing instruments that are constituents of
the currently clearable OTR indices in order to provide Clearing
Participants additional instruments to hedge and mitigate indirect risk
exposure from the OTR indices. The Commission believes that this
additional guiding principle should encourage ICC to select for
clearing instruments that, as constituents of the currently clearable
OTR indices, could help ICC's Clearing Participants mitigate indirect
risk exposure from the OTR indices. The Commission believes that such
potential risk mitigation would encourage Clearing Participants to
centrally clear additional transactions, which, in turn, should promote
the prompt and accurate clearance and settlement of those instruments.
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\7\ 15 U.S.C. 78q-1(b)(3)(F).
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Moreover, as set forth in the new guiding principle, the Commission
believes that clearing instruments that are constituents of the
currently clearable OTR indices could allow ICC's Clearing Participants
to hedge and mitigate indirect risk exposure from the OTR indices.
Thus, assuming that ICC selects such instruments for clearing, the
Commission believes that the new guiding principle could result in
ICC's Clearing Participants mitigating their overall indirect risk
exposure to OTR indices, and thereby could reduce the overall risks to
ICC in clearing and settling transactions in OTR indices. The
Commission further believes that
[[Page 66383]]
these risks, if not adequately managed, could disrupt ICC's ability to
clear and settle transactions in other products and safeguard
securities and funds in its custody and control. Thus the Commission
believes that, in directing ICC to select for clearing instruments that
could allow Clearing Participants to hedge and mitigate their overall
risk exposure, the proposed rule change could, in turn, result in a
reduction of risk to ICC and thereby could help promote the prompt and
accurate clearance and settlement of securities transactions and help
assure the safeguarding of securities and funds in ICC's custody and
control.
Therefore, the Commission finds that the proposed rule change would
promote the prompt and accurate clearance and settlement of securities
transactions and assure the safeguarding of securities and funds in
ICC's custody and control, consistent with the Section 17A(b)(3)(F) of
the Act.\8\
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\8\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Consistency With Rule 17Ad-22(e)(21)
Rule 17Ad-22(e)(21) requires that ICC establish, implement,
maintain and enforce written policies and procedures reasonably
designed to, among other things, be efficient and effective in meeting
the requirements of its participants and the markets it serves.\9\ As
discussed above, the proposed rule change would add to the Instrument
On-boarding Policy, as a further guiding principle, that ICC should
consider selecting for clearing instruments that are constituents of
the currently clearable OTR indices in order to provide Clearing
Participants additional instruments to hedge and mitigate indirect risk
exposure from the OTR indices. The Commission believes that this
additional guiding principle should encourage ICC to select for
clearing additional instruments that would serve the needs of its
Clearing Participants in hedging and mitigating indirect risk exposure
from the OTR indices. The Commission therefore believes this new
guiding principle could help ICC to be effective in meeting the
requirements of its participants, consistent with Rule 17Ad-
22(e)(21).\10\
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\9\ 17 CFR 240.17Ad-22(e)(21).
\10\ 17 CFR 240.17Ad-22(e)(21).
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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 \11\ and Rule 17Ad-22(e)(21).\12\
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\11\ 15 U.S.C. 78q-1(b)(3)(F).
\12\ 17 CFR 240.17Ad-22(e)(21).
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It is therefore ordered pursuant to Section 19(b)(2) of the Act
\13\ that the proposed rule change (SR-ICC-2021-019) be, and hereby is,
approved.\14\
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\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).
\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25348 Filed 11-19-21; 8:45 am]
BILLING CODE 8011-01-P
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