Notice2023-11612
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
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
June 1, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 105 (Thursday, June 1, 2023)</title>
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[Federal Register Volume 88, Number 105 (Thursday, June 1, 2023)]
[Notices]
[Pages 35934-35937]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[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
<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#b0c2c5dcd59dd3dfddddd5dec4c3f0c3d5d39ed7dfc6"><span class="__cf_email__" data-cfemail="7f0d0a131a521c1012121a110b0c3f0c1a1c51181009">[email protected]</span></a>. 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 (<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>.
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
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