
[Federal Register Volume 80, Number 48 (Thursday, March 12, 2015)]
[Notices]
[Pages 13055-13057]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-05608]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 74456; File No. SR-ICC-2015-002]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change To Revise the ICC Treasury Operations 
Policies and Procedures

March 6, 2015.

I. Introduction

    On January 6, 2015 ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change SR-ICC-2015-002 pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder.\2\ The 
proposed rule change was published for comment in the Federal Register 
on January 23, 2015.\3\ The Commission did not receive any comments. 
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. 34-74084 (Jan. 16, 
2015), 80 FR 3691 (January 23, 2015) (File No. SR-ICC-2015-002).
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II. Description of the Proposed Rule Change

    ICC has proposed revising its Treasury Operations Policies and 
Procedures to provide for the use of a Federal Reserve Account, to 
provide for the use of a committed repurchase (``repo'') facility and 
to provide for USD and Euro investment guidelines for use by outside 
investment managers.
    ICC has stated that it has applied for a Federal Reserve Account to 
hold both USD cash and US Treasuries and that, in its application, it 
requested separate accounts for house origin funds and customer origin 
funds. ICC has represented that, if it is approved for a

[[Page 13056]]

single account origin, it will utilize the Federal Reserve Accounts to 
hold house collateral, and customer collateral will continue to be held 
in commercial banks. ICC has represented that, if it is approved for an 
additional account origin, it will utilize the second origin to hold 
customer collateral at the Federal Reserve.
    ICC proposes to use the Federal Reserve Account(s) as a depository 
account, in which cash will be consolidated on a daily basis and held 
overnight. ICC will continue using its commercial bank accounts for 
Clearing Participant money movements, and the net excess/deficit will 
be deposited to/withdrawn from the Federal Reserve cash Account as 
necessary. ICC proposes to use a Federal Reserve securities Account as 
a custody account to hold US Treasuries deposited by Clearing 
Participants with ICC's commercial banks.
    Additionally, ICC has proposed revising its Treasury Operations 
Policies and Procedures to provide for use of a committed repo 
facility. ICC represents that it has established a committed repo 
facility that will allow ICC to consider US Treasury securities 
deposited at ICC as an additional qualifying liquidity resource, and 
the facility can be used to convert US Treasuries into cash when the 
sale of pledged securities needed for liquidity cannot be settled on a 
timely or same-day basis. Specifically, ICC represents that the 
facility is to be used to generate temporary liquidity through the sale 
and agreement to repurchase securities pledged by ICC Clearing 
Participants to satisfy their Initial Margin and Guaranty Fund 
requirements. According to ICC, the facility will include 
counterparties that are banks and/or broker dealers (which may include 
ICC Clearing Participants and/or their affiliates) that each provide a 
committed repo line to ICC, and committed repo will be subject to a 
haircut which will be the greater of 5% or the haircut that central 
banks employ for repo transactions using the same or similar purchased 
securities.
    Under ICC's proposal, the committed repo facility can be used on an 
open or overnight basis. The open repo will be closed as soon as the 
ICC Treasury Department (``ICC Treasury'') can facilitate the sale and 
settlement of the securities involved in the repo transaction. USD repo 
will be settled delivery versus payment (``DVP'') on a bilateral basis. 
In order to initiate a committed repo transaction, ICC Treasury can 
send an email to the counterparty with a list of the securities that 
will be delivered. The counterparty will reply confirming the trade and 
providing the ``purchase amount'' of the repo transaction. The purchase 
amount will be equal to the mark-to-market (``MTM'') of the securities 
less the haircut. The repo details will then be sent to ICC's custodian 
for settlement. ICC Treasury will monitor bank activity to ensure 
settlement is complete. Once ICC Treasury has arranged for the ultimate 
sale of the securities involved in the repo transaction, it will close-
out the repo transaction(s).
    Finally, ICC has proposed revising its Treasury Operations Policies 
and Procedures to provide for the engagement of outside investment 
managers to invest guaranty fund and margin cash pursuant to ICC's USD 
and Euro investment guidelines. ICC has proposed extending its current 
investment guidelines set forth in in the ICC Treasury Operations 
Policies and Procedures to apply to outside investment managers. ICC 
represents that its cash investment guidelines for USD and Euro cash 
provide for the investment of cash in overnight reverse repo with high 
quality sovereign debt as collateral. Under ICC's proposal, if the 
investment manager cannot place 100% of the allocated cash in overnight 
reverse repo, the investment guidelines permit the investment manager 
to make backup investments in term reverse repo and direct investment 
in high quality sovereign debt. With respect to Euro cash, ICC proposes 
that investment in reverse repo transactions and non-US sovereign debt 
will be utilized only with respect to house origin cash, and shall not 
be utilized with respect to customer origin cash pursuant to Commodity 
Futures Trading Commission regulations. ICC's proposed USD investment 
guidelines provide for use by outside investment managers with respect 
to USD cash that is not otherwise invested pursuant to the ICC Treasury 
Operations Policies and Procedures. ICC represents that these revisions 
to the Treasury Operations Policies and Procedures do not require any 
operational changes.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \4\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if the 
Commission finds that such proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such self-regulatory organization. Section 17A(b)(3)(F) 
of the Act \5\ requires, among other things, that the rules of a 
clearing agency are 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 and, in general, to protect investors and the public 
interest.
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    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds that ICC's proposed revisions to its Treasury 
Operations Policies & Procedures is consistent with the requirements of 
Section 17A of the Act \6\ and regulations thereunder applicable to it, 
including the standards under Rule 17Ad-22.\7\ The proposed rule change 
is designed to facilitate use of Federal Reserve accounts, authorize an 
additional liquidity resource and authorize use of an outside 
investment manager to invest guaranty fund and margin cash pursuant to 
ICC's investment guidelines. The Commission believes that the proposal 
is designed to promote the prompt and accurate clearance and settlement 
of securities transactions and derivative agreements, contracts and 
transactions cleared by ICC, assure the safeguarding of securities and 
funds which are in the custody or control of the clearing agency or for 
which it is responsible and, in general, to protect investors and the 
public interest, consistent with Section 17A(b)(3)(F) of the Act.\8\ 
Further, the Commission believes that the proposal is reasonably 
designed to enhance ICC's ability to hold assets in a manner that 
minimizes risk of loss or of delay in its access to them and invest 
assets with minimal credit, market and liquidity risks, consistent with 
Rule 17Ad-22(d)(3).\9\
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    \6\ 15 U.S.C. 78q-1.
    \7\ 17 CFR 240.17Ad-22.
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
    \9\ 17 CFR 240.17Ad-22(d)(3).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \10\ and the 
rules and regulations thereunder.
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    \10\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-ICC-2015-002) be, and hereby 
is, approved.\12\
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    \11\ 15 U.S.C. 78s(b)(2).
    \12\ 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).


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Jill M. Peterson,
Assistant Secretary.
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    \13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-05608 Filed 3-11-15; 8:45 am]
 BILLING CODE 8011-01-P


