Notice2025-06417
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change Relating to ICC's Treasury Operations Policies & 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
April 16, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 72 (Wednesday, April 16, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 72 (Wednesday, April 16, 2025)]
[Notices]
[Pages 16015-16017]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-06417]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102814; File No. SR-ICC-2025-005]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change Relating to ICC's Treasury Operations
Policies & Procedures
April 10, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934,\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on
April 2, 2025, ICE Clear Credit LLC (``ICC'' or ``ICE Clear Credit'')
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 prepared primarily by ICC. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The principal purpose of the proposed rule change is to revise the
ICC Treasury Operations Policies & Procedures (the ``Treasury
Policy''). These revisions do not require any changes to the ICC
Clearing Rules (the ``Rules'').\3\
---------------------------------------------------------------------------
\3\ Capitalized terms used but not defined herein have the
meanings specified in the Treasury Policy or, if not defined
therein, the ICE Clear Credit 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 proposed changes
formalize ICC's intraday margin call procedures in the Treasury Policy
to formally document ICC's intraday margin call procedures consistent
with the requirements of Rule 17Ad-22(e)(6)(ii).\4\ Such changes would
not modify ICC's intraday margin call practices but instead promote
transparency by formally documenting a description of such intraday
margin call practices. 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.
---------------------------------------------------------------------------
\4\ 17 CFR 240.17-22ad(e)(6)(ii) [SIC].
---------------------------------------------------------------------------
ICC proposes to formalize its current intraday margin call
procedures by adding a description of such procedures as `Appendix 6:
Intraday Margin Call Procedures' (``Appendix 6'') to the Treasury
Policy. Appendix 6 contains a description of the three types of
intraday margins calls recognized by ICC,\5\ specifically Non-routine
Intraday Margin Calls, Selective Intraday Margin Call, and
Discretionary Margin Calls.
---------------------------------------------------------------------------
\5\ Appendix 6 also includes a description of a fourth category
of intraday margin calls--`Routine Margin Calls' which are not
utilized by ICC.
---------------------------------------------------------------------------
With respect to Non-routine Intraday Margin Calls, proposed
Appendix 6 contains a description of this category of intraday margin
calls and details procedures followed by the ICC Risk Department in the
event of a Non-routine Intraday Margin Call. Non-routine Margin Calls
are considered if the market suddenly becomes highly volatile and the
observed price/spread level changes increase the risk exposure of ICC
to certain Clearing Participants. Non-routine Intraday Margin Calls are
triggered if a certain percentage of the value of collateral on deposit
has eroded due to the observed intraday unrealized losses. Procedures
relevant to Non-routine Margin Calls included in Appendix 6 are
summarized below:
<bullet> ICC utilizes its intraday system to capture intraday
prices and re-value Clearing Participant portfolios to estimate the
unrealized profit/loss.
<bullet> Compare the unrealized profit/loss to collected Initial
Margin (``IM'') requirement, excluding funds attributed to the
concentration charges.
<bullet> If any Clearing Participant's IM erodes by a specified
early warning percentage, the ICC Risk Department will begin the
initial warning process to (i) notify the relevant ICC departments, and
(ii) notify the affected Clearing Participant(s) that their unrealized
losses are approaching the IM erosion threshold that could trigger an
intraday margin call (described below). In such initial warning to
affected Clearing Participant(s), the ICC Risk Department has the
option of communicating the current level of IM erosion to such
Clearing Participant(s).
<bullet> Following such initial warning process, the ICC Risk
Department will identify the risk factors associated with the affected
Clearing Participant's greatest unrealized losses and will confirm the
viability of all adverse price changes in such Clearing Participant
portfolios. Following confirmation of price viability, the ICC Risk
Department will begin/continue continuous intraday monitoring.
<bullet> If any Clearing Participant's IM erodes by a specified IM
erosion threshold and such erosion lasts for more than a specified
period of time, ICC will initiate the intraday margin call process
(subject to the qualification described below) which is described in
further detail below.
<bullet> Notwithstanding the erosion of a Clearing Participant's IM
beyond the IM erosion threshold, should such triggering event occur
later in the day, the ICC chief risk officer (``CRO'') (or his or her
designee) has the discretion on
[[Page 16016]]
whether or not such intraday margin call will be made, based on various
market condition considerations. Should the CRO forgo initiating an
intraday margin call in such circumstances, the decision will be
communicated to ICC senior management and documented in writing that
describes the reasons for not proceeding with the intraday margin call.
With respect to Selective Intraday Margin Calls, proposed Appendix
6 describes this category as intraday margin calls driven by intraday
changes in Clearing Participant position sizes that can lead to an
insufficient level of collateralization. If such a case is observed,
the ICC Risk Department will determine the increased IM amount by
estimating the IM requirements for the new positions using the intraday
system to capture intraday prices and re-value Clearing Participant
portfolios to estimate unrealized profit/loss and compare such
unrealized profit/loss to the collected IM requirements (excluding
concentration charges).
With respect to Discretionary Margin Calls, proposed Appendix 6
describes this category as intraday margin calls to Clearing
Participants who's [sic] previously posted margin, in the CRO's
judgement, does not provide proper risk protection. Such Discretionary
Margin Calls are expected to be executed in the event there is a fast
deterioration of the credit worthiness of a Clearing Participant and/or
by adverse market conditions that could lead to significant losses that
may result in the default of a Clearing Participant.
In the event an intraday margin call is made for any of the three
categories of intraday margin calls described above, such process will
be initiated by the CRO (or his or her designee) who will direct the
Treasury Department to execute an intraday margin call.
<bullet> Such instruction will include the applicable Clearing
Participant names and the amount of the intraday margin call. ICC
senior management, as well as the ICC Compliance Department and the ICC
Client Services Department will be copied on the instruction.
<bullet> With respect to Non-routine Intraday Margin Calls, the
amount of the call will be consistent with the level of IM erosion and
the remaining time until the end-of-day price discovery process.
<bullet> The Treasury Department will enter the amount of the
intraday margin call in its system which may result (depending on
current funds on deposit for the affected Clearing Participant(s)) in
the issuance of a direct debit message instructing the Clearing
Participants' designated bank to direct debit any margin payable.
Clearing Participants will have up to one hour to pay the intraday
margin call after the issuance of the direct debit message.
In connection with the addition of proposed Appendix 6 to the
Treasury Policy, ICC also proposes to add language to Section IV.A.4.
of the Treasury Policy to generally reference ICC's process for
monitoring the adequacy of collected IM on an intraday basis, and to
note that ICC may issue intraday margin calls to Clearing
Participant(s) whose margin on deposit does not provide prior risk
protection. Such additional language also provides a cross-reference to
the intraday margin call procedures set forth in new Appendix 6.
Lastly, ICC proposes to update Section X. `Revision History' to
include the proposed changes.
(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'') \6\ and the
regulations thereunder applicable to it. In particular, Section
17A(b)(3)(F) of the Act \7\ 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.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78q-1.
\7\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
As discussed herein, the proposed amendments are designed to
formalize ICC's intraday margin call procedures. The changes will not
modify ICC's current intraday margin call practices but instead promote
transparency by formally documenting a description of such intraday
margin call practices. In ICC's view, formalization of such intraday
margin call procedures, which include details on the categories of
intraday margin calls utilized by ICC and describe the procedures
following by ICC in the event of intraday margin calls, increase
transparency and clarity on important ICC processes. ICC therefore
believes the proposed amendments is consistent with 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.\8\
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
The amendments also comply with relevant provisions of Rule 17Ad-
22.\9\ In particular, Rule 17Ad-22(e)(6)(ii) provides, in part, that
``[e]ach covered clearing agency shall establish, implement, maintain
and enforce written policies and procedures reasonably designed to, as
applicable [. . .] [c]over, if the covered clearing agency provides
central counterparty services, its credit exposures to its participants
by establishing a risk-based margin system that, at a minimum:[. . .]
(B) Monitors intraday exposures on an ongoing basis; (C) Includes the
authority and operational capacity to make intraday margin calls, as
frequently as circumstances warrant, including the following
circumstances: (1) When risk thresholds specified by the covered
clearing agency are breached; or (2) When the products cleared or
markets served display elevated volatility; and (D) Documents when the
covered clearing agency determines not to make an intraday call
pursuant to its written policies and procedures. . . .'' \10\ The
proposed amendments formalize ICC's intraday margin call processes, and
details the categories of intraday margin calls recognized by ICC. Such
intraday margin categories recognized by ICC include, without
limitation, when risk thresholds specified by ICC are breached and when
markets cleared by ICC experience elevated volatility. In addition, the
amendments describing ICC's intraday margin call processes include a
description of the procedures followed by ICC in the event it
determines not to make an intraday margin call when specified risk
thresholds are breached. ICC believes that formalizing its intraday
margin call processes in its Treasury Policy is consistent with the
requirements under Rule 17Ad-22(e)(6)(ii).\11\
---------------------------------------------------------------------------
\9\ 17 CFR 240.17ad-22.
\10\ 17 CFR 240.17-22ad(e)(6)(ii) [SIC].
\11\ Id.
---------------------------------------------------------------------------
Rule 17Ad-22(e)(4)(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 its credit exposures to
participants and those arising from its payment, clearing, and
settlement processes, including by: (i)
[[Page 16017]]
[m]aintaining sufficient financial resources to cover its credit
exposure to each participant fully with a high degree of confidence . .
.''.\12\ The proposed amendments describe ICC's intraday margin call
processes which will be implemented with respect to Clearing
Participants whose margin on deposit does not provide proper risk
protection. Therefore, such proposed amendments to ICC's Treasury
Policy help ensure that it maintains sufficient financial resources to
cover its credit exposure to its Clearing Participants, consistent with
the requirements of Rule 17Ad-22(e)(4)(i).\13\
---------------------------------------------------------------------------
\12\ 17 CFR 240.17ad-22(e)(4)(i).
\13\ 17 CFR 240.17ad-22(e)(4)(i).
---------------------------------------------------------------------------
Rule 17Ad-22(e)(2)(i) and (v) \14\ requires ICC to 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 proposed changes strengthen the governance
procedures related to ICC's intraday margin call processes by
memorializing associated governance procedures in the Treasury Policy.
Proposed Appendix 6 to the Treasury Policy details governance
procedures associated with monitoring intraday margin call risk
triggers, initial warning procedures, and the issuance and collection
of intraday margin calls. Furthermore, the proposed amendments document
ICC's governance followed when an intraday margin call is triggered but
ICC determines not to issue such intraday margin call. In addition,
such proposed amendments specify lines of responsibility within ICC for
the decision making for the issuance of intraday margin calls, the
communication related to such intraday margin calls, and the execution
of such intraday margin calls. 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 and specify clear and direct lines
of responsibility, consistent with Rule 17Ad-22(e)(2)(i) and (v).\15\
---------------------------------------------------------------------------
\14\ 17 CFR 240.17ad-22(e)(2)(i) and (v).
\15\ Id.
---------------------------------------------------------------------------
(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 proposed
amendments formalize ICC's current intraday margin call practices in
the Treasury Policy. These changes do not amend ICC's methodology and
would apply uniformly across all Clearing Participants. Accordingly,
ICC does not believe the amendments would affect the rights and
obligations of Clearing Participants 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/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#91e3e4fdf4bcf2fefcfcf4ffe5e2d1e2f4f2bff6fee7"><span class="__cf_email__" data-cfemail="bccec9d0d991dfd3d1d1d9d2c8cffccfd9df92dbd3ca">[email protected]</span></a>. Please include
file number SR-ICC-2025-005 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities and
Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to file number SR-ICC-2025-005. 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/sro.shtml">https://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
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.ice.com/clear-credit/regulation">https://www.ice.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 materials that is obscene or subject to copyright protection.
All submissions should refer to file number SR-ICC-2025-005 and should
be submitted on or before May 7, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------
\16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-06417 Filed 4-15-25; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on April 16, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.