Notice2024-20460
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change Relating to ICC's Treasury Operations 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
September 11, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 176 (Wednesday, September 11, 2024)</title>
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[Federal Register Volume 89, Number 176 (Wednesday, September 11, 2024)]
[Notices]
[Pages 73734-73739]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-20460]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100935; File No. SR-ICC-2024-005]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change Relating to ICC's Treasury Operations
Policies and Procedures
September 5, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934,\1\ 15 U.S.C. 78s(b)(1) and Rule 19b-4,\2\ notice is hereby given
that on August 22, 2024, 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
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
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
ICE Clear Credit is proposing to amend its Treasury Policy. The
purpose of the Treasury Policy is to articulate the policies and
procedures used to support the ICC Treasury Department (the ``Treasury
Department''), which is responsible for daily cash and collateral
management of margin and guaranty fund assets. The purpose of the
proposed changes is to make various updates and clarifications,
including to further explain the goals and the responsibilities of the
ICC Treasury Department in performing treasury functions for cleared
contracts, as well as safeguarding securities and funds in custody. The
amendments also clarify the timing of the return of a withdrawing
Clearing Participant's (``CP'') guaranty fund (``GF'') deposit to be
consistent with the Rules, as discussed herein. The amendments would
clarify the ICC investment policy with respect to ICC's own operating
capital to provide greater flexibility to make direct investments, as
discussed below, and update various references to SWIFT messaging so as
not to become outdated. Various non-substantive drafting changes and
improvements would also be made throughout the Treasury Policy, such as
updating the use of defined terms, correcting typographical errors and
similar changes. The amendments do not represent a change in ICC's
practices relating to treasury management, but rather are intended to
improve and clarify the documentation and descriptions of such
practices.
ICC proposes to update the treasury department section of the
Treasury Policy.\3\ The amendments would update the statement of the
overall responsibilities of ICC, aided by the Treasury Department, to
specifically reference facilitating the prompt and accurate clearing
and settlement of securities transactions and derivatives, and
safeguarding securities and funds in ICC's custody or control for which
it is responsible. Additionally, the amendments would remove the
reference to the ICC Risk Management Framework when developing
investment and collateral management strategies. The amendments would
clarify certain references and terms throughout this section, such as
referencing the ``General Guaranty Fund'' as defined in ICC Rule 102,
as well as referencing cash and non-cash collateral (which was
previously phrased as ``cash and collateral'' or ``cash or
collateral'') throughout the Treasury Policy. With respect to the
Treasury Departments responsibilities to manage Guaranty Fund
requirements and ``posting'' by Clearing Participants, the amendments
would change the reference from ``posting'' to ``collateral postings''
to provide a clearer and more accurate description of Treasury's
responsibilities. Certain references to margin accounts, margin
payments and margin requirements or processes (and words of similar
effect) will be revised to refer more generally to accounts, payments
and related clearing or processes requirements (or requirements), in
order to more broadly reference overall payment requirements from the
clearing process (which include but are not limited to margin). The
amendments would highlight that ICE Clear Credit, rather than ICE Clear
Credit's Risk Department, generates daily requirements for all Clearing
Participants (including requirements for indirect participants i.e.,
Client-Related requirements) because such requirements are generated
automatically by ICE Clear Credit's clearing systems as opposed being
generated specifically by ICE Clear Credit's Risk Department. Further,
the amendments note that such daily requirements are based on the
Clearing Participants' cleared ``positions'' rather than their cleared
``trades'' as positions is a more accurate description of a Clearing
Participants cleared activity at ICE Clear Credit. The amendments also
clarify the Treasury Departments responsibility in ensuring that
payments are received from Clearing Participants by removing an
incorrect reference to ensuring that payments are honored by Clearing
Participants' banking relationships. Under ICC's existing direct
settlement model, as discussed below, Clearing Participants are
responsible to ensure that ICC timely receives all required payments;
completion of settlement is not based on whether a Clearing
Participant's bank honors a payment direction. Similarly, references to
settlement issues have been generalized to reference treasury
management related issues, and
[[Page 73735]]
references to substitution of collateral for cash have been replaced by
the more general description of performing collateral substitutions.
These changes do not reflect a substantive change in practice, but
rather are intended to provide a more comprehensive overall description
of relevant payment practices. In the statement of the Treasury
Departments role in developing of investment and collateral management
strategies, the amendments would remove an outdated reference to such
activities being done within the ICC Risk Management Framework, as the
relevant investment and collateral management policies are now set out
in the Treasury Policy rather than in the framework. The amendment
would also generalize a reference to cash management to the broader
term collateral management to more fully describe the scope of this
activity and for consistency throughout the Treasury Policy. The
amendments also clarify the organizational structure of the Treasury
Department function, as overseen by the ICC Treasury Director who
reports to the ICC Chief Operating Officer (``COO'') (and clarifies
that the ICC Treasury Department is not and has never been a part of
the operations department).
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\3\ Treasury Policy Section ``II. The Treasury Department.''
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ICC also proposes to update the funds management section of the
Treasury Policy.\4\ The amendments would add conforming references to
``requirements'' in certain places for consistency in referring to
margin and Guaranty Fund requirements. In addition, the amendments
would clarify or add various defined terms relating to margin,
including a defined term for ``Margin'' covering both initial and mark-
to-market margin. A definitional footnote relating to the Guaranty Fund
would be removed as unnecessary in light of prior references to that
term in the Treasury Policy. Additionally, the amendments would clarify
that the funds would include both cash and non-cash collateral. For
completeness and consistency with the existing Rules and other
procedures of ICC, the amendments would state that ICC maintains and
manages ``House Margin'' and ``Client Margin'' separately. The
amendments also clarify that required initial margin and GF
contributions are held in a manner that minimizes the risk of loss or
delay in access, consistent with regulatory requirements (which
reflects the standard under applicable regulations), rather than
referring only to highly liquid and short-term investments. Under
Section III.B., Investment Strategy, various conforming and non-
substantive drafting changes would be made, including to the use of
appropriate defined terms and consistent references to cash collateral
(instead of cash). References in the existing Treasury Policy to
certain investments to be made by the Director of Treasury would be
revised to simply refer to the Treasury Department as a whole,
reflecting actual practice that investments are made by Treasury
Department personnel subject to the supervision of the Director of
Treasury. In the discussion of investment of US dollar cash, additional
clarifying language would be added to this section such as describing
the role of the Federal Reserve Bank of Chicago (``FRB'') as a
depository and noting that US dollar cash may be invested in US
Treasury/Agency reverse repurchase agreements rather than just
Treasury/Agency reverse repurchase agreements. The amendments would
also reflect that ICC currently maintains multiple accounts (rather
than a single account) at the FRB, as discussed below. For reverse repo
transactions, the amendments would also remove an unnecessary
description of certain settlement arrangements and unnecessary
statements regarding steps ICC would take to ensure replacement
securities are eligible and valued correctly when a substitution of
securities becomes necessary (as ICC does not believe such matters are
relevant to the level of detail of the description contained in the
Treasury Policy). The amendments would revise the description of the
calculation of the minimum cash required to be invested in bilateral
reverse repos to reflect 45% of the top two Clearing Participants'
Margin requirements (taking into account specifically both initial and
mark-to-market margin requirements, as opposed to referencing the
generalized phrase ``risk margin''), as ICC believes that this is the
more detailed and accurate description of ICC's current practices.
Additionally, the amendments would acknowledge that bilateral reverse
repo transactions may be settled through alternative counterparties
that may be added in the future to account for the possibility that ICE
Clear Credit's financial service provider relationships may change in
the future. The amendments would also clarify that ICC in practice uses
more than one outside investment manager to facilitate its investment
of Guaranty Fund and margin cash.
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\4\ Treasury Policy Section ``III. Funds Management.''
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ICC also proposes revisions to the Tables of collateral liquidity
requirements contained in Section III of the Treasury Policy \5\ to
update various defined terms and references (both in the text of the
Tables and the titles of the Tables) to be consistent with the other
amendments being made to the Treasury Policy, such as to use the
defined term Margin and to conform the terminology for the currencies
and collateral (US Dollar Cash, EUR Cash, and US Treasury Securities).
An amendment will also change a reference from ``assets'' to
``collateral'', to more precisely describe the collateral being
described. A statement relating to additional margin that may be called
where a clearing participant does not meet the required liquidity
requirements has been clarified to refer more precisely to initial
margin. In addition, ICC proposes revising the participant withdrawals'
sub-section of Section III of the Treasury Policy \6\ to reflect that
the requirements described are based on the ICC Rules and to add a
statement that Guaranty Fund deposits will not be returned until after
all positions of the withdrawing participant have been closed out and
all liabilities of the participant to ICC have been satisfied, in order
to be consistent with the requirements of existing Rule 807. The
amendments would also remove a statement that if a participant provides
notice of withdrawal less than 60 days from the end of the calendar
quarter, its withdrawal will not be effective until the end of the
following quarter, as this requirement is not set forth in the Rules.
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\5\ Table 1 Collateral Liquidation Assumptions (US Dollar
denominated requirements); Table 2 Collateral Liquidation
Assumptions (Euro denominated requirements); Table 3 House Initial
Margin & Guaranty Fund Liquidity Requirements (Non-Client US Dollar
denominated requirements); and Table 4 House Initial Margin &
Guaranty Fund Liquidity Requirements (Non-Client Euro denominated
requirements) (collectively, the ``Tables'').
\6\ Treasury Policy Section III, Sub-Section ``D. Participants'
Withdrawal.''
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The discussion of ICC's use of committed repo facilities would
clarify that any expenses (including but not limited to interest
expenses) incurred through such facilities following a Clearing
Participant default will be attributed to the account of that CP,
consistent with the general approach for allocation of close-out costs
to a defaulter under the Rules.
ICC proposes revising the cash settlement section of the Treasury
Policy.\7\ Under the cash settlement section, the examples of types of
transaction payments have been expanded to include options premia and
interest on Mark-to-Market Margin, reflecting current practice. The
amendments would also add further
[[Page 73736]]
explanation of the existing ICC direct settlement model used to manage
cash movements, for consistency and to provide greater clarity as to
settlement operations. As described, the direct settlement requires the
Clearing Participants to establish settlement bank arrangements and
make requested payments to ICC in the required timeframe. ICC maintains
direct debit authority over the settlement bank accounts of Clearing
Participants.
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\7\ Treasury Policy Section ``IV. Cash Settlement.''
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In addition, the amendments to Section IV would add to the current
criteria for ICE Clear Credit's settlement banks (which include
requirements as to regulation and supervision, capital requirements for
non-US institution, absence of majority sovereign ownership, internal
ICC credit requirements and operational capability) a requirement that
the bank provide specific liquidity information, in order to facilitate
management by ICC of liquidity risk from settlement arrangements. This
would include providing information as to the bank's liquidity coverage
ratio, and if that is not reported by the bank, ICC would use other
criteria (e.g., requesting a description of the bank's liquidity risk
management policy and/or requesting the liquidity coverage ratio of the
bank's affiliated reporting entity within the bank's group) based on
ICC's discretion, to assess the liquidity risks arising from settlement
banks. In addition, as revised, the Treasury Policy would no longer
specify particular backup settlement banks for ICC but reference a
general requirement for ICC to maintain appropriate backup
relationships. ICC believes this approach is preferable and avoids the
need to amend the Treasury Policy if backup arrangements change.
The amendments would add further description of the daily
settlement process (including as to cases where no net settlement is
owed and bank holidays), as set forth below. Consistent with the added
description of the direct settlement model as noted above, the
amendments would state the responsibility of Clearing Participants to
ensure that ICC timely receives all requested payments and note that
failure to make timely payments may be a default. This proposed change
provides greater clarity as to ICC's current practices. In the
discussion of routine settlement procedures, an erroneous reference to
contacting an agent bank in the event of a late payment would be
removed (as the Clearing Participant would be contacted directly). The
amendments would also add statements describing the daily settlement
process as being conducted every business day and regarding the timing
of settlement finality under the direct settlement model. Consistent
with current practice, settlement would be deemed final and irrevocable
at the earlier of the time when ICC received the relevant payment, or a
financial institution used by ICC sends a confirmation message that
payment has been made. As noted above, the amendments would also remove
references to various specific types of SWIFT messages (in light of the
possibility that specific SWIFT message types may be modified, renamed
or changed from time to time by SWIFT), and describe such messages more
generally. In the case of non-routine settlement, the amendments would
remove an unnecessary reference to a specific SWIFT settlement
instruction, since ICC and the Clearing Participant in question would
be expected to separately confirm the particulars of the settlement.
In the discussion of a SWIFT outage, the amendments would clarify
that the relevant scenario arises where ICC is unable to send SWIFT
messages to the Clearing Participants' settlement banks (correcting an
erroneous reference to ICC's direct settlement banks). The amendments
would revise certain procedures for communicating directly with CP's in
the event of a SWIFT outage (removing an incorrect reference to
communicating with ICC's direct settlement banks as above). The
amendments would also address correcting or re-issuing a SWIFT message
in the event of a non-payment for certain technical reasons and remove
certain references to specific types of SWIFT messages or reports that
ICC believes are unnecessary, and such specific message types may be
modified, renamed or changed from time to time (as noted above). The
amendment would also remove a requirement that certain emails be
password protected (as ICC does not believe email security measures
need to be set out in the Treasury Policy). With respect to the
discussion of bank-to-bank messages, the amendments would remove
references to specific settlement banks and instead refer to the
applicable ICC settlement bank generally (to avoid the need to amend
the Treasury Policy in the event of any change in settlement banks).
With respect to the scenario where a bank rejects a SWIFT debt message
because of a technical defect, the amendments will remove a specific
requirement to manually update the transaction summary report and
manually initiate a specific reversal or correction message and add
instead a general obligation to correct the prior message or reissue a
corrected message.
ICC proposes revisions to settlement bank failure sub-section of
Section IV of the Treasury Policy.\8\ In the event that a settlement
bank fails to perform, ICE Clear Credit would instruct the CP to wire
the funds to the ICE Clear Credit accounts at an alternate settlement
bank. The amendments broaden the list of such alternate settlement
banks that may be designated by ICC.
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\8\ Treasury Policy Section IV. Sub-Section ``A.7. Failure of
Settlement Bank to Perform.''
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In the discussion of ICC's use of the FRB Accounts for depository
purposes, the amendments would update the Treasury Policy to reflect
that ICC currently maintains separate FRB Accounts for house and client
margin in light of applicable segregation requirements (removing and
updating certain outdated language that contemplated a scenario where
ICC might only have one FRB account). Other amendments in this section
make non-substantive changes to the use of defined terms (including new
terms House Account and Client Account as well as replacing FRB
customer cash account and FRB House cash account with FRB House Account
and replacing FRB Client cash account with FRB Client Account). Certain
conforming changes would also be made to consistently refer to Guaranty
Fund and House Accounts in this section.
Further, ICC proposes revisions to the custodial assets section of
the Treasury Policy.\9\ The amendments would reference ongoing
monitoring according to ICE Clear Credit's Counterparty Monitoring
Procedures (rather than identifying only a specific annual report that
is no longer required to be submitted as ICC Counterparty Monitoring
Procedures contain detailed procedures regarding the monitoring of the
operational capabilities of the custodial banks). Outdated language
that contemplated a scenario where ICC might have only one FRB
securities account has also been removed. Amendments would identify
market risk management as well as liquidity risk management as goals of
ICC's policies relating to acceptable forms of collateral and
associated haircuts. Certain typographical and other non-substantive
drafting changes would be made in the discussion of collateral
valuation.
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\9\ Treasury Policy Section ``V. Custodial Assets.''
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ICC proposes revisions to the collateral ``haircut'' sub-section of
Section V of the Treasury Policy.\10\ The
[[Page 73737]]
discussion of the collateral haircut methodology would be revised to
refer to cash and non-cash collateral generally, rather than just US
Treasuries and non-USD currencies (as the current list of eligible
collateral is not limited to those specific assets). Other conforming
non-substantive changes will be made consistent with the rest of the
Treasury Policy. Amendments would also require that the Treasury
Department provide a report of current haircuts to the ICC Risk
Department at a minimum once a month (as opposed to only once a month)
and require that the report be provided whether or not changes were
made during the month. This approach reflects ICC's current practices.
The amendments would also reflect current practice that haircuts are
made publicly available, and any haircut changes are notified to CP's
(and not only on a monthly basis). In the excess collateral sub-
section, ICC proposes noting that requests by Clearing Participants to
transfer excess collateral must be completed prior to 9:00 a.m. ET for
both EUR and British pound sterling (``GBP'') denominated collateral
rather than only for EUR denominated collateral as this sub-section did
not contain the applicable GBP deadline for the transfer of excess GBP
denominated collateral.
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\10\ Treasury Policy Section V, Sub-Section ``B.3. Collateral
``Haircut'' Methodology.''
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In the section of the Treasury Policy relating to treasury
management of client business,\11\ various non-substantive drafting
changes would be made, including to use the defined terms House
Account, Client Account and Client Positions and Margin and conform
references to various types of cash and non-cash collateral. An
unnecessary reference to daily payment processes would also be removed.
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\11\ Treasury Policy Section ``VI. Treasury Management for
Client Business.''
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ICC also proposes revisions to the treasury reconciliations section
of the Treasury Policy.\12\ As amended, the Treasury Policy will
clarify that the Treasury Department conducts a daily reconciliation
process for its cash and non-cash collateral accounts in accordance
with its internal procedures, which include cite checks for validating
status of margin payments, a check of prior-day cash balances,
withdrawals, and/or deposits, and a comparison of current and expected
balances. With respect to the cite checks description, ICC proposes to
replace the vague and undefined phrase ``ISG requests'' with the
generalized and descriptive phrase ``transaction activity'' to improve
clarity.
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\12\ Treasury Policy Section ``VII. Treasury Reconciliations.''
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Other amendments would correct the identification of ICC's SWIFT
BIC code and update cross-references to ICC's Counterparty Monitoring
Procedures (which was formerly referred to as the CDS Clearing
Counterparty Monitoring Procedures).
ICC also proposes changes to Appendix 1: ICE Clear Credit Operating
Capital Investment Policy. The amendments provide that the use of
direct investments in US Treasury securities is not limited to cases
where other investments (e.g., reverse repo investments) are
unavailable; rather, the revised guidelines would contemplate the use
of direct investments primarily for stable balances (such as amounts
held for regulatory capital purposes). ICC believes the change provides
greater flexibility for investment of such balances while preserving
the credit quality of investments. Revisions to the guidelines for
reverse repo investments in Appendix 2 would reflect that the value of
collateral must be 102% of the invested amount (rather than within a
range of 100.5% to 102%). This change reflects current market practice
and provides greater protection to ICC. References to certain specific
banks in key contacts in Appendix 2 also will be removed as
unnecessary; ICC does not believe such contacts need to be maintained
in the Treasury Policy, given the likelihood of changes in contact
details.
ICC proposes a number of other drafting clarifications and
conforming changes, such as updating names and uses of relevant defined
terms, deleting outdated references and other non-substantive drafting
improvements, would also be made throughout the Treasury Policy
document. Various provisions and footnotes would also be relabeled or
renumbered in the Treasury Policy.
(b) Statutory Basis
ICE Clear Credit believes that the proposed amendments to the
Treasury Policy are consistent with the requirements of Section 17A of
the Securities Exchange Act of 1934 (the ``Act'') \13\ and the
regulations thereunder applicable to it. In particular, Section
17A(b)(3)(F) of the Act \14\ 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, the safeguarding of securities and funds in the custody
or control of the clearing agency or for which it is responsible, and
the protection of investors and the public interest. The proposed
amendments are designed to generally improve the clarity of the
Treasury Policy and make certain related enhancements, including
clarifying the investment guidelines for investment of ICC's own
capital, clarifications to the roles and responsibilities of the ICC
Treasury Department function and clarifications concerning SWIFT
messaging procedures. ICC believes the changes to the investment
guidelines will facilitate stable investment of ICC's own capital and
provide useful flexibility for the clearing house. The changes will not
result in a change to current ICC Treasury Department practices. ICC
therefore believes the amendments will help ensure that the Treasury
Policy remain up-to-date and clearly articulate ICC's Treasury
Department practices, and as such will promote the prompt and accurate
clearance and settlement of securities transactions and derivatives
agreements, contracts and transactions, contribute to the safeguarding
of securities and funds which are in the custody or control of ICC or
for which it is responsible, and generally promote the protection of
investors and the public interest in the operation of clearing
services, within the meaning of Section 17A(b)(3)(F) of the Act.\15\
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\13\ 15 U.S.C. 78q-1.
\14\ 15 U.S.C. 78q-1(b)(3)(F).
\15\ 15 U.S.C. 78q-1(b)(3)(F).
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The amendments also comply with relevant provisions of Rule 17Ad-
22.\16\ In particular, Rule 17Ad-22(e)(5) provides that ``[e]ach
covered clearing agency shall establish, implement, maintain and
enforce written policies and procedures reasonably designed to, as
applicable . . . [l]imit the assets it accepts as collateral to those
with low credit, liquidity and market risks, and set and enforce
appropriately conservative haircuts and concentration limits if [it]
requires collateral to manage its or its participants' credit exposure,
and require a review of the sufficiency of its collateral haircuts and
concentration limits to be performed not less than annually.'' \17\ As
set forth above, the amendments to the Treasury Policy would make
clarifying changes to the responsibilities of the Treasury Department
and procedures relating to the management of funds constituting
operating capital as well as GF contributions and margin, banking
relationships, and acceptable collateral and haircuts, among other
matters. As such, the amendments would facilitate the ability of ICC to
limit the assets it
[[Page 73738]]
accepts as collateral to those with low credit, market and liquidity
risks, consistent with the requirements of Rule 17Ad-22(e)(5).\18\
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\16\ 17 CFR 240.17Ad-22.
\17\ 17 CFR 240.17Ad-22(e)(5).
\18\ 17 CFR 240.17Ad-22(e)(5).
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Rule 17Ad-22(e)(8) provides that ``[e]ach covered clearing agency
shall establish, implement, maintain and enforce written policies and
procedures reasonably designed to, as applicable [. . .] define the
point at which settlement is final to be no later than the end of the
day on which the payment or obligation is due and, where necessary or
appropriate, intraday or in real time.'' \19\ The amendments would
state clearly the time at which settlement of daily payments is deemed
final, as the earlier of (i) when ICC receives the payment or (ii) when
a financial institution used by ICC sends a relevant confirmation
message that the payment has been made, which is consistent with ICC
practice and is within the timeframe required under Rule 17Ad-
22(e)(8).\20\
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\19\ 17 CFR 240.17Ad-22(e)(8).
\20\ 17 CFR 240.17Ad-22(e)(8).
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Rule 17Ad-22(e)(9) requires that ``[e]ach covered clearing agency
shall establish, implement, maintain and enforce written policies and
procedures reasonably designed to, as applicable [. . .] conduct its
money settlements in central bank money, where available and determined
to be practical . . . and minimize and manage credit and liquidity risk
arising from conducting its monetary settlements in commercial bank
money if central bank money is not used by the covered clearing
agency''.\21\ As set forth above, the amendments make certain
clarifications to the descriptions ICC's settlement banking
arrangements (through FRB accounts and with settlement banks) to more
clearly reflect current practice by the clearing house. As such, in
ICC's view, the amendments are consistent with the requirements of Rule
17Ad-22(e)(9).\22\
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\21\ 17 CFR 240.17Ad-22(e)(9).
\22\ 17 CFR 240.17Ad-22(e)(9).
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Rule 17Ad-22(e)(16) provides that ``[e]ach covered clearing agency
shall establish, implement, maintain and enforce written policies and
procedures reasonably designed to, as applicable [. . .] safeguard the
covered clearing agency's own and its participants' assets, minimize
the risk of loss and delay in access to these assets, and invest such
assets in instruments with minimal credit, market and liquidity
risks.'' \23\ As noted above, the amendments would provide greater
flexibility for ICC to invest its own capital through direct
investments in US treasury securities, particularly in the case where
it is investing stable balances. In that context, and given the
maturity limitations that will nonetheless apply, ICC believes that
such investments would have minimal credit, market and liquidity risks
for ICC, and accordingly would be consistent with Rule 17Ad-
22(e)(16).\24\
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\23\ 17 CFR 240.17Ad-22(e)(16).
\24\ 17 CFR 240.17Ad-22(e)(16).
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Rule 17Ad-22(e)(3)(i) provides that ``[e]ach covered clearing
agency shall establish, implement, maintain and enforce written
policies and procedures reasonably designed to, as applicable [. . .]
identify, measure, monitor, and manage the range of risks that arise in
or are borne by the covered clearing agency''.\25\ The Treasury Policy
is intended to assist ICC, among other matters, in accurately assessing
and managing certain of its investment risks, collateral risks and
liquidity risks relating to margin, GF and other assets held by ICC. As
set forth above, the amendments are generally intended to update the
Treasury Policy and make various drafting improvements for purposes of
clarifications. In keeping the relevant policies up-to-date, ICC
believes the amendments are consistent with the risk management
requirements of Rule 17Ad-22(e)(3)(i).\26\
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\25\ 17 CFR 240.17 Ad-22(e)(3)(i).
\26\ 17 CFR 240.17 Ad-22(e)(3)(i).
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Rule 17Ad-22(e)(2) provides that ``[e]ach covered clearing agency
shall establish, implement, maintain and enforce written policies and
procedures reasonably designed to, as applicable [. . .] [p]rovide for
governance arrangements that are [c]lear and transparent'' \27\ and
``[s]pecify clear and direct lines of responsibility.'' \28\ As
proposed to be revised, the Treasury Policy would clearly state certain
responsibilities of the Treasury Department, among other parts of ICC,
in relation to oversight of its practices regarding treasury functions
and collateral management. The amendments would make certain
clarifications and drafting improvements that will keep these aspects
of the Treasury Policy up-to-date and effective for their purposes. In
ICE Clear Credit's view, the amendments to the Treasury Policy are
therefore consistent with the requirements of Rule 17Ad-22(e)(2).\29\
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\27\ 17 CFR 240.17 Ad-22(e)(2)(i).
\28\ 17 CFR 240.17 Ad-22(e)(2)(v).
\29\ 17 CFR 240.17 Ad-22(e)(2).
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(B) Clearing Agency's Statement on Burden on Competition
ICE Clear Credit does not believe the proposed amendments would
have any impact, or impose any burden, on competition not necessary or
appropriate in furtherance of the purposes of the Act. The amendments
are being adopted to update and clarify the Treasury Policy. As set
forth above, the proposed amendments are not expected to materially
change the treasury operations of ICC but rather update general
language to more clearly describe existing practices. Accordingly, ICE
Clear Credit does not believe the amendments would affect the rights
and obligations of CP's or the costs of clearing, the ability of market
participants to access clearing, or the market for clearing services
generally. Therefore, ICE Clear Credit 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:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking">https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking</a>);
or
[[Page 73739]]
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#a4d6d1c8c189c7cbc9c9c1cad0d7e4d7c1c78ac3cbd2"><span class="__cf_email__" data-cfemail="3341465f561e505c5e5e565d4740734056501d545c45">[email protected]</span></a>. Please include
file number SR-ICC-2024-005 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities and
Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-ICC-2024-005. 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="https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking">https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking</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 a.m. and 3
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-2024-005 and should
be submitted on or before October 2, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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\30\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-20460 Filed 9-10-24; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on September 11, 2024.
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