
[Federal Register Volume 81, Number 130 (Thursday, July 7, 2016)]
[Notices]
[Pages 44357-44358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16032]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78205; File No. SR-ICC-2016-009]


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

June 30, 2016.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder \2\ notice is hereby given that 
on June 15, 2016, 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 prepared primarily 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. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of proposed rule change is to revise the ICC Treasury 
Operations Policies and Procedures to provide for the use of a 
committed foreign exchange (``FX'') facility, to make changes to the 
investment guidelines as well as additional clean-up changes, and to 
provide additional clarification regarding the calculation of 
collateral haircuts. These revisions do not require any changes to the 
ICC Clearing Rules.

II. Self-Regulatory Organization'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 and 
discussed any comments it received on the proposed rule change. 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. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    ICC proposes changes to the ICC Treasury Operations Policies and 
Procedures to provide for the use of a committed FX facility, to make 
changes to the investment guidelines as well as additional clean-up 
changes, and to provide additional clarification regarding the 
calculation of collateral haircuts. ICC believes 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. The proposed revisions are 
described in detail as follows.
    ICC has revised its Treasury Operations Policies and Procedures to 
provide for the use of a committed FX facility. ICC has established a 
committed FX facility which provides for same day settled spot FX 
transactions. The facility allows ICC to use available United States 
Dollars (``USD'') to convert into Euro to meet a Euro liquidity need, 
for example in the unlikely event of a Clearing Participant default 
when Euro is needed for liquidity but only USD is available. In 
addition, the policy has been revised to document that the FX facility 
will be tested twice a year.
    Additionally, ICC has revised its Treasury Operations Policies and 
Procedures to make changes to the ICC Treasury Department investment 
guidelines for operating capital and guaranty fund and margin cash. ICC 
has updated the list of permitted investments to add short term US 
Treasury securities (with a final maturity of no greater than 98 days) 
and remove Money Market Mutual Funds. ICC has also updated its 
investment policy for operating capital to include Treasury/agency 
reverse repurchase (``repo'') agreements. ICC has updated the 
governance section of the operating capital investment policy to note 
that the Risk Committee will review any proposed changes to the policy 
and make recommendations to the Board. Further, ICC has removed 
reference to an obsolete financial report.
    ICC also has made additional clean-up changes throughout the 
Treasury Operations Policies and Procedures. Specifically, ICC has 
removed outdated language stating that ICC treasury services are 
provided by The Clearing Corporation. Further, throughout the document, 
ICC changed references to the ``Director of Operations'' to the ``Chief 
Operating Officer,'' to correctly reflect the officer title. ICC 
removed reference to specific reverse repo counterparties to reflect 
the addition of multiple reverse repo counterparties. Further, ICC 
notes that it has arrangements in place to settle tri-party and 
bilateral reverse repo transactions, both of which settle delivery vs. 
payment (``DVP''). As a result, ICC has clarified references throughout 
the policy from ``DVP reverse repo'' to more specifically refer to 
``bilateral reverse repo.'' ICC removed reference to the titles of 
specific agreements that it may enter to effect reverse repo 
transactions and added general language to encompass all agreements 
that may be required. ICC removed information regarding the monitoring 
of available liquidity resources and added reference to the ICC 
Liquidity Risk Management Framework. ICC clarified that its committed 
repo facility may be used to convert sovereign debt into cash and that 
the facility will be tested twice per calendar year. ICC removed 
outdated information under the ``ICE Clear Credit Banking 
Relationships'' section of the policy and added language stating that 
ICC endeavors to maintain banking relationships with highly 
creditworthy and reliable bank institutions that provide operational 
and strategic support with respect to holding margin and Guaranty Fund 
cash and collateral. ICC also removed references to specific banking 
counterparties, as ICC's banking relationships have expanded to include 
multiple counterparties. ICC replaced the specific names with a generic 
reference, to capture all counterparties utilized by ICC. ICC also 
updated certain SWIFT banking information throughout the policy. 
Further, ICC updated the list of applications used by the Treasury 
Department to perform daily operations.
    Finally, ICC revised its Treasury Operations Policies and 
Procedures to provide additional clarification regarding the 
calculation of collateral haircuts when yield rates are less than or 
equal to one basis point. This change documents current ICC practices 
as related to collateral haircut calculation; there is no change to the 
collateral haircut methodology.

[[Page 44358]]

    Section 17A(b)(3)(F) of the Act \3\ 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 and to comply with the provisions of the Act and the rules 
and regulations thereunder. ICC believes that the proposed revisions to 
the ICC Treasury Operations Policies and Procedures are consistent with 
the requirements of the Act and the rules and regulations thereunder 
applicable to ICC, in particular, to section 17A(b)(3)(F),\4\ because 
ICC believes that the proposed rule changes will facilitate the prompt 
and accurate settlement of swaps and security-based swaps, and 
contribute to the safeguarding of securities and funds associated with 
swap and security-based swap transactions which are in the custody or 
control of ICC or for which it is responsible.\5\ The changes to 
provide for the use of a committed FX facility will enhance ICC's 
liquidity resources, and the changes to the investment guidelines 
ensure the reliable investment of assets in ICC's control with minimal 
risk. The additional clean-up changes ensure that the documentation of 
ICC's treasury arrangements remains up-to-date, clear, and transparent. 
Similarly, the additional clarification regarding the calculation of 
collateral haircuts promotes transparency of ICC's risk management 
practices as related to collateral haircuts. As such, the proposed rule 
changes will facilitate the prompt and accurate settlement of swaps and 
contribute to the safeguarding of customer funds and securities within 
the control of ICC within the meaning of section 17A(b)(3)(F) \6\ of 
the Act.
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    \3\ 15 U.S.C. 78q-1(b)(3)(F).
    \4\ Id.
    \5\ The Commission has modified the text prepared by ICC as 
agreed upon by ICC.
    \6\ Id.
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    In addition, the proposed revisions to the ICC Treasury Operations 
Policies and Procedures are consistent with the relevant requirements 
of Rule 17Ad-22.\7\ In particular, the use of a committed FX facility 
further ensures that ICC maintains sufficient financial resources at 
all times to meet the requirements set forth in Rule 17Ad-22(b)(3).\8\ 
Additionally, the changes to the investment guidelines result in 
investment arrangements with minimal credit, market and liquidity 
risks. Such changes are therefore reasonably designed to meet the 
requirements of Rule 17Ad-22(d)(3).\9\ Finally, the additional clean-up 
changes and clarification regarding the calculation of collateral 
haircuts ensure ICC's governance arrangements remain clear and 
transparent, consistent with the requirements of Rule 17AD-
22(d)(8).\10\
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    \7\ 17 CFR 240.17Ad-22.
    \8\ 17 CFR 240.17Ad-22(b)(3).
    \9\ 17 CFR 240.17Ad-22(d)(3).
    \10\ 17 CFR 240.17Ad-22(d)(8).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    ICC does not believe the proposed revisions would have any impact, 
or impose any burden, on competition. The revisions to ICC's Treasury 
Operations Policies and Procedures to provide for the use of a 
committed FX facility, to make changes to the investment guidelines as 
well as additional clean-up changes, and to provide additional 
clarification regarding the calculation of collateral haircuts apply 
uniformly across all CPs. Therefore, ICC does not believe the proposed 
revisions impose any burden on competition that is inappropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments relating to the proposed rule changes 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 (i) as the Commission may 
designate up to 90 days of such date 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

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-ICC-2016-009 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-2016-009. 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 Web site (http://www.sec.gov/rules/sro.shtml). 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 Web site 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 Web site at https://www.theice.com/clear-credit/regulation.
    All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-ICC-2016-009 
and should be submitted on or before July 28, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-16032 Filed 7-6-16; 8:45 am]
 BILLING CODE 8011-01-P


