Notice2025-12214
Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change Relating to Clearance of Additional Credit Default Swap Contracts
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
July 1, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 124 (Tuesday, July 1, 2025)</title>
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[Federal Register Volume 90, Number 124 (Tuesday, July 1, 2025)]
[Notices]
[Pages 28844-28845]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-12214]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103328; File No. SR-ICC-2025-008]
Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change Relating to Clearance of Additional
Credit Default Swap Contracts
June 26, 2025.
I. Introduction
On April 30, 2025, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (the ``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act'')
\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to clear an
additional credit default swap (``CDS'') contract. The proposed rule
change was published for comment in the Federal Register on May 14,
2025.\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\ Securities Exchange Act Release No. 103003 (May 8, 2025), 90
FR 20536 (May 14, 2025) (File No. SR-ICC-2025-008) (``Notice'').
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II. Description of the Proposed Rule Change
ICC is registered with the Commission as a clearing agency for the
purpose of clearing CDS contracts. Chapter 26 of ICC's Rulebook covers
the CDS contracts that ICC clears, with each subchapter of Chapter 26
defining the characteristics and additional Rules applicable to the
[[Page 28845]]
various specific categories of CDS contracts that ICC clears. Among
other CDS contracts, ICC currently clears Standard Emerging Market
Sovereign Single Name CDS (``SES'') contracts. The purpose of the
proposed rule change is to amend ICC's rules to permit ICC to clear an
additional SES contract, specifically, SES contracts on the Republic of
C[ocirc]te d'Ivoire.
To carry out this change, the proposed rule change would amend
Subchapter 26D of Chapter 26. In Rule 26D-102 (``Definitions''), under
the ``Eligible SES Reference Entities'' definition, the proposed rule
change would add the Republic of C[ocirc]te d'Ivoire to the list of
specific Eligible SES Reference Entities to be cleared by ICC.
As discussed below, this additional SES contract has terms
consistent with the other SES contracts that ICC is already clearing.
Likewise, to clear this additional contract, ICC will be able to rely
on its existing Risk Management Framework and other policies and
procedures without making any changes.
III. Discussion and Commission Findings
Section 19(b)(2)(C) of the Act requires the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
the proposed rule change is consistent with the requirements of the Act
and the rules and regulations thereunder applicable to the
organization.\4\ Under the Commission's Rules of Practice, the ``burden
to demonstrate that a proposed rule change is consistent with the
Exchange Act and the rules and regulations issued thereunder . . . is
on the self-regulatory organization [`SRO'] that proposed the rule
change.'' \5\
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\4\ 15 U.S.C. 78s(b)(2)(C).
\5\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR
201.700(b)(3).
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The description of a proposed rule change, its purpose and
operation, its effect, and a legal analysis of its consistency with
applicable requirements must all be sufficiently detailed and specific
to support an affirmative Commission finding,\6\ and any failure of an
SRO to provide this information may result in the Commission not having
a sufficient basis to make an affirmative finding that a proposed rule
change is consistent with the Exchange Act and the applicable rules and
regulations.\7\ Moreover, ``unquestioning reliance'' on an SRO's
representations in a proposed rule change is not sufficient to justify
Commission approval of a proposed rule change.\8\
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\6\ Id.
\7\ Id.
\8\ Susquehanna Int'l Group, LLP v. Securities and Exchange
Commission, 866 F.3d 442, 447 (D.C. Cir. 2017).
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After carefully considering the proposed rule change, the
Commission finds that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to ICC. More specifically, for the reasons given below, the
Commission finds that the proposed rule change is consistent with
Section 17A(b)(3)(F) of the Act \9\ and Rule 17Ad-22(e)(1)
thereunder.\10\
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\9\ 15 U.S.C. 78q-1(b)(3)(F).
\10\ 17 CFR 240.17Ad-22(e)(1).
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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.\11\
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\11\ 15 U.S.C. 78q-1(b)(3)(F).
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The proposed rule change is consistent with Section 17A(b)(3)(F) of
the Act.\12\ The terms and conditions of the additional SES contract
proposed for clearing are substantially similar to the terms and
conditions of the other contracts listed in Subchapter 26D of ICC's
Rules, all of which ICC currently clears, with the key difference being
the underlying reference obligations. The underlying reference
obligations will be issuances by the Republic of C[ocirc]te d'Ivoire.
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\12\ 15 U.S.C. 78q-1(b)(3)(F).
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A review of the Notice and ICC's Rules, policies, and procedures
shows that ICC would be able to clear the additional SES contract
pursuant to its existing clearing arrangements and related financial
safeguards, protections, and risk management procedures. Furthermore, a
review of data on volume, open interest, and the number of ICC Clearing
Participants (``CPs'') that currently trade in the SES contracts, as
well as certain model parameters for the additional contracts, show
that ICC's rules, policies, and procedures are reasonably designed to
price and measure the potential risk presented by the additional SES
contract, collect financial resources in proportion to such risk, and
liquidate the additional contracts in the event of a CP default. This
should help ensure ICC's ability to maintain the financial resources it
needs to provide its critical services and function as a central
counterparty, thereby promoting the prompt and accurate settlement of
the additional SES contracts and other credit default swap
transactions.
Therefore, clearance of the additional SES contract would promote
the prompt and accurate clearance and settlement of securities
transactions, consistent with Section 17A(b)(3)(F) of the Act.\13\
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\13\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Consistency With Rule 17Ad-22(e)(1)
Rule 17Ad-22(e)(1) requires ICC to establish, implement, maintain,
and enforce written policies and procedures reasonably designed to
provide for a well-founded, clear, transparent, and enforceable legal
basis for each aspect of its activities in all relevant
jurisdictions.\14\
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\14\ 17 CFR 240.17Ad-22(e)(1).
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The proposed rule change would help provide a well-founded, clear,
transparent, and enforceable legal basis for ICC's clearance of SES
contracts on the Republic of C[ocirc]te d'Ivoire. By amending Rule 26D-
102 to add the Republic of C[ocirc]te d'Ivoire to the list of specific
Eligible SES Reference Entities to be cleared by ICC, the proposed rule
change would help to ensure that ICC can clear SES contracts on that
country pursuant to its existing rules in Subchapter 26D. The revised
Subchapter 26D would provide a well-founded, clear, transparent, and
enforceable legal basis for ICC to clear these contracts, consistent
with the requirements of Rule 17Ad-22(e)(1).\15\
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\15\ 17 CFR 240.17Ad-22(e)(1).
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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,\16\ and Rule 17Ad-22(e)(1) \17\ thereunder.
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\16\ 15 U.S.C. 78q-1(b)(3)(F).
\17\ 17 CFR 240.17Ad-22(e)(1).
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It is therefore ordered pursuant to Section 19(b)(2) of the Act
\18\ that the proposed rule change (SR-ICC-2025-008) be, and hereby is,
approved.\19\
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\18\ 15 U.S.C. 78s(b)(2).
\19\ 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).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-12214 Filed 6-30-25; 8:45 am]
BILLING CODE 8011-01-P
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