
[Federal Register Volume 83, Number 248 (Friday, December 28, 2018)]
[Notices]
[Pages 67445-67447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28186]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84889; File No. SR-ICC-2018-011]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change Relating to ICC's New Initiatives 
Approval Policy and Procedural Framework

December 20, 2018.
    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 December 18, 2018, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission the proposed rule change as 
described in Items I, II and III below, which Items have been 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 New Initiatives Approval Policy and Procedural Framework (``NIA 
Policy''). These revisions do not require any changes to the ICC 
Clearing Rules (``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 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) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

(a) Purpose

    ICC proposes to formalize its NIA Policy. ICC believes that such a 
change 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 rule change is 
described in detail as follows.
    The NIA Policy sets forth ICC's policies and procedures for the 
review and approval of certain new initiatives to be offered or 
implemented by ICC. The NIA Policy clarifies and harmonizes the 
policies, procedures, and documentation for the review and approval of 
new initiatives that involve potentially significant changes. The 
intention of the NIA Policy is to notify all relevant departments of 
the introduction of the new initiative, provide for information sharing 
between departments and ensure a thorough understanding of the new 
initiative, and establish requirements for the pre-launch verification 
and testing of the new initiative.
    The NIA Policy includes a list of definitions that serves to 
clarify and recognize the projects, key participants, and documents 
that are subject to the NIA Policy. New projects that are approved by 
the Steering Committee, a management committee responsible for 
prioritizing the implementation of initiatives and monitoring and 
guiding delivery, and meet the following criteria are defined as New 
Initiatives that are subject to the NIA Policy: (1) Involve new and 
material modifications to the risk or pricing methodology; (2) involve 
potential significant changes to the processing system, ICC Clearing 
Rules, or clearing operating procedures; (3) involve new and material 
modifications to existing and significant capabilities provided by ICC; 
or (4) involve Model Changes \3\ classified as Materiality A under 
ICC's Model Validation Framework. The New Initiative Approval Committee 
(the ``NIAC'') identifies, reviews, and approves New Initiatives and is 
composed of ICC management, including department heads, and 
representatives from

[[Page 67446]]

Enterprise Risk, Quality Systems, and Systems Operations. The NIAC also 
determines any conditions, limitations, restrictions or pre-conditions 
(``Stipulations'') with respect to a New Initiative. The NIAC utilizes 
several templates in carrying out its responsibilities, such as a 
matrix evidencing that all necessary approvals have been obtained 
(``Approvals Matrix''); an assessment describing key risks, mitigation 
plans, and residual impact ratings and comments (``Risk Assessment''); 
a verification form evidencing that Stipulations have been met and 
testing has been completed (``New Initiative Pre-Launch Verification 
Form''); and a log tracking the NIAC's identification and review of New 
Initiatives (``New Initiative Log'').
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    \3\ Model Changes include new and enhanced risk modeling 
components of ICC's risk management system. Depending on how 
substantially the Model Change affects the system's assessment of 
risk for the related risk driver(s), it is classified as Materiality 
A (i.e., substantial impact) or Materiality B (i.e., no substantial 
impact).
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    The NIA Policy describes the roles of key participants involved in 
the identification, review, and approval of New Initiatives. Key 
participants include various departments and their department heads, 
who are responsible for completing certain templates, reviewing 
proposals for and providing sign-off of New Initiatives, and/or 
evaluating New Initiatives for compliance with applicable regulations. 
The NIA Policy provides the NIAC with the responsibility and the 
authority to identify projects approved by the Steering Committee as 
New Initiatives; review New Initiatives with consideration of the 
risks, financial impact, legal and regulatory concerns, and strategic 
direction of ICC; approve, with Stipulations if appropriate, New 
Initiatives; and review New Initiatives post-implementation to 
determine compliance with Stipulations. The Chair of the NIAC ensures 
compliance with the NIA Policy and is responsible for, among other 
things, ensuring appropriate communication and coordination between the 
NIAC and the Steering Committee.
    The NIAC's identification, review, and approval of New Initiatives 
is divided into five steps: Submission, identification, review, pre-
launch verification, and log. The NIA Policy sets out the procedures 
for each step and notes the template and standard for review to be used 
by the NIAC. The five steps include: (1) Submission of a project 
proposal approved by the Steering Committee to the NIAC; (2) 
identification of a project as a New Initiative by the NIAC; (3) review 
of the New Initiative by the NIAC, (4) pre-launch verification with 
evidence of completed testing and implemented Stipulations, along with 
a statement of any outstanding post-launch Stipulations; and (5) 
documentation of the New Initiative in the New Initiative Log.
    The NIA Policy is owned and maintained by the Chair of the NIAC. 
Material changes to the NIA Policy, as determined by the Chair of the 
NIAC, must be reviewed and approved by the ICC Board. Relevant 
templates utilized in the identification, review, and approval of New 
Initiatives are attached to the end of the NIA Policy, such as the 
Approvals Matrix, Risk Assessment, New Initiative Identification Form 
evidencing the identification of a project as a New Initiative by the 
NIAC, Charter of the NIAC, New Initiative Log, and New Initiative Pre-
Launch Verification Form.
(b) Statutory Basis
    Section 17A(b)(3)(F) of the Act \4\ 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; 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; in general, to protect investors and the public interest; 
and to comply with the provisions of the Act and the rules and 
regulations thereunder. ICC believes that the proposed rule change is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to ICC, in particular, to Section 
17(A)(b)(3)(F),\5\ because ICC believes that the proposed rule change 
establishes sound policies, practices, and procedures with respect to 
the offering or implementation of New Initiatives. Such sound policies, 
practices, and procedures are an important component of ICC's ability 
to comply with these requirements because disruptions to operations 
resulting from a new offering or implementation can impair the prompt 
and accurate clearance and settlement of securities transactions, 
derivatives agreements, contracts, and transactions; safeguarding of 
securities and funds which are in the custody or control of ICC or for 
which it is responsible; and protection of investors and the public 
interest. Moreover, the NIA Policy improves ICC's ability to assess and 
manage risk, including by notifying all relevant departments of the 
introduction of the New Initiative, providing for information sharing 
between departments and ensuring a thorough understanding of the New 
Initiative, and establishing procedures related to pre-launch 
verification and testing, thereby enhancing ICC's ability to promote 
the prompt and accurate clearance and settlement of securities 
transactions, derivatives agreements, contracts, and transactions; 
safeguarding of securities and funds which are in the custody or 
control of ICC or for which it is responsible; and protection of 
investors and the public interest. As such, the proposed rule change is 
designed to promote the prompt and accurate clearance and settlement of 
securities transactions, derivatives agreements, contracts, and 
transactions; to contribute to the safeguarding of securities and funds 
associated with security-based swap transactions in ICC's custody or 
control, or for which ICC is responsible; and, in general, to protect 
investors and the public interest within the meaning of Section 
17A(b)(3)(F) of the Act.\6\
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    \4\ 15 U.S.C. 78q-1(b)(3)(F).
    \5\ Id.
    \6\ Id.
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    In addition, the proposed rule change is consistent with the 
relevant requirements of Rule 17Ad-22.\7\ Rule 17Ad-22(d)(4) \8\ 
requires ICC to establish, implement, maintain and enforce written 
policies and procedures reasonably designed to, in relevant part, 
identify sources of operational risk and minimize them through the 
development of appropriate systems, controls, and procedures. The 
proposed rule change to formalize the NIA Policy sets forth ICC's 
procedures for the identification, review, and approval of New 
Initiatives to be offered or implemented by ICC. By establishing 
procedures that provide for notification to all relevant departments, 
information sharing between departments to ensure a thorough 
understanding, establishment of Stipulations, and establishment of 
requirements for pre-launch verification and testing with respect to a 
New Initiative, ICC believes that it will reduce the likelihood of a 
disruption in operations from a New Initiative. Moreover, the 
establishment of Stipulations and the review of a New Initiative by the 
NIAC, including review of the Risk Assessment and Approvals Matrix and 
with consideration of, among other things, the risks, financial impact, 
legal and regulatory concerns, and the strategic direction of ICC, will 
reduce the risk that a new offering or implementation disrupting system 
operations is launched, thereby improving ICC's ability to identify 
sources of operational risk and minimize them through the

[[Page 67447]]

development of appropriate systems, controls, and procedures, 
consistent with the requirements of Rule 17Ad-22(d)(4).\9\
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    \7\ 17 CFR 240.17Ad-22.
    \8\ 17 CFR 240.17Ad-22(d)(4).
    \9\ Id.
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    Rule 17Ad-22(d)(8) \10\ requires ICC to establish, implement, 
maintain and enforce written policies and procedures reasonably 
designed to have governance arrangements that are clear and transparent 
to fulfill the public interest requirements in Section 17A of the 
Act.\11\ The NIA Policy clearly assigns and documents responsibility 
and accountability for the identification, review, and approval of New 
Initiatives by the NIAC, the maintenance of the NIA Policy by the Chair 
of the NIAC, and the approval of material changes to the NIA Policy by 
the Board. These governance arrangements are clear and transparent, 
such that information relating to the assignment of responsibilities 
and the requisite involvement of department heads, the NIAC, and the 
Board is clearly documented, consistent with the requirements of Rule 
17Ad-22(d)(8).\12\
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    \10\ 17 CFR 240.17Ad-22(d)(8).
    \11\ 15 U.S.C. 78q-1.
    \12\ 17 CFR 240.17Ad-22(d)(8).
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(B) Clearing Agency's Statement on Burden on Competition

    ICC does not believe the proposed rule change would have any 
impact, or impose any burden, on competition. The proposed change to 
formalize ICC's NIA Policy will apply uniformly across all market 
participants. Therefore, ICC 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

     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-2018-011 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-2018-011. 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 (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 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 10:00 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 website at https://www.theice.com/clear-credit/regulation. All comments received will be posted without change. 
Persons submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-ICC-2018-011 and should be 
submitted on or before January 18, 2019.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Brent J. Fields,
Secretary.
[FR Doc. 2018-28186 Filed 12-27-18; 8:45 am]
 BILLING CODE 8011-01-P


