[Federal Register Volume 84, Number 231 (Monday, December 2, 2019)]
[Notices]
[Pages 66041-66042]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25968]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87622; File No. SR-ICC-2019-010]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Partial Amendment No. 1 and Order Instituting Proceedings To 
Determine Whether To Approve or Disapprove Proposed Rule Change 
Proposed Rule Change, as Modified by Partial Amendment No. 1, Relating 
to Amendments to the ICC Clearing Rules To Address Non-Default Losses

November 25, 2019.

I. Introduction

    On August 8, 2019, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``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 
amend ICC's Clearing Rules (the ``Rules'') \3\ to address treatment of 
losses not related to a Clearing Participant default. The proposed rule 
change was published for comment in the Federal Register on August 28, 
2019.\4\ The Commission received comments regarding the proposed rule 
change.\5\ On October 4, 2019, the Commission designated a longer 
period of time for Commission action on the proposed rule change until 
November 26, 2019.\6\ On October 7, 2019, ICC filed a partial amendment 
(``Partial Amendment No. 1'') to modify the proposed rule change.\7\ 
The Commission is publishing this notice and order to solicit comments 
on Partial Amendment No. 1 from interested persons and to institute 
proceedings pursuant to Section 19(b)(2)(B) of the Act \8\ to determine 
whether to approve or disapprove the proposed rule change, as modified 
by Partial Amendment No. 1 (hereinafter, ``proposed rule change'').
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Capitalized terms used but not defined herein have the 
meanings specified in the Rules.
    \4\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice 
of Filing of Proposed Rule Change, Security-Based Swap Submission, 
or Advance Notice Relating to the ICC Clearing Rules; Exchange Act 
Release No. 86729 (Aug. 22, 2019); 84 FR 45191 (Aug. 28, 2019) 
(``Notice'').
    \5\ Comments are available at https://www.sec.gov/comments/sr-icc-2019-010/sricc2019010.htm.
    \6\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice 
of Designation of Longer Period for Commission Action on Proposed 
Rule Change Relating to Amendments to the ICC Clearing Rules To 
Address Non-Default Losses; Exchange Act Release No. 87225 (Oct. 4, 
2019); 84 FR 54712 (Oct. 10, 2019).
    \7\ In Partial Amendment No. 1 to the proposed rule change, ICC 
provided additional details and analyses surrounding the proposed 
rule change in the form of a confidential Exhibit 3.
    \8\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change

    As described more fully in the Notice, the proposed rule change 
would define three exclusive categories of losses not related to a 
Clearing Participant default: (i) Investment Losses, (ii) Custodial 
Losses, and (iii) Non-Default Losses. With respect to the treatment of 
such losses, the proposed rule change would: (i) Define the resources 
of ICC that ICC would apply to cover each such category of losses; (ii) 
assign responsibility to Clearing Participants, in certain 
circumstances, to make contributions with respect to Investment Losses 
and Custodial Losses; and (iii) address the treatment of recoveries by 
ICC with respect to such losses. The proposed rule change would also 
make additional changes related to such losses, including addressing 
the effect the proposed rule change would have on other ICC rules.

III. Proceedings To Determine Whether To Approve or Disapprove the 
Proposed Rule Change and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act to determine whether the proposed rule change 
should be approved or disapproved.\9\ Institution of proceedings is 
appropriate at this time in view of the legal and policy issues raised 
by the proposed rule change. Institution of proceedings does not 
indicate that the Commission has reached any conclusions with respect 
to any of the issues involved.
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    \9\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\10\ the Commission is 
providing notice of the potential grounds for approval or disapproval 
under consideration. The Commission is instituting proceedings to allow 
for additional analysis and input concerning the proposed rule change's 
consistency with the Act and the rules thereunder, including the 
following:
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    \10\ 15 U.S.C. 78s(b)(2)(B).
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     Section 17A(b)(3)(D) of the Act, which requires that that 
the rules of ICC provide for the equitable allocation of reasonable 
dues, fees, and other charges among its participants; \11\
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    \11\ 15 U.S.C. 78q-1(b)(3)(D).
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     Section 17A(b)(3)(F) of the Act, which requires, among 
other things, that the rules of ICC be designed to promote the prompt 
and accurate clearance and settlement of securities transactions

[[Page 66042]]

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 ICC or for which it is responsible, 
and, in general, to protect investors and the public interest; \12\
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    \12\ 15 U.S.C. 78q-1(b)(3)(F).
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     Rule 17Ad-22(d)(3), which requires that ICC establish, 
implement, maintain and enforce written policies and procedures 
reasonably designed to hold assets in a way that minimizes risk of loss 
or of delay in its access to them; \13\ and
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    \13\ 15 U.S.C. 17Ad-22(d)(3).
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     Rule 17Ad-22(d)(8), which requires that ICC 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 applicable to clearing agencies, to support the objectives 
of owners and participants, and to promote the effectiveness of ICC's 
risk management procedures.\14\
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    \14\ 15 U.S.C. 17Ad-22(d)(8).
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IV. Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments regarding the proposed 
rule change and Partial Amendment No. 1 with respect to the issues 
identified above, as well as any other concerns they may have with the 
proposed rule change and Partial Amendment No. 1. In particular, the 
Commission invites the written views of interested persons concerning 
whether the proposed rule change is consistent with Section 
17A(b)(3)(D) and (F) of the Act \15\ and Rules 17Ad-22(d)(3) and 17Ad-
22(d)(8) under the Act,\16\ or any other provision of the Act or rules 
and regulations thereunder.
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    \15\ 15 U.S.C. 78q-1(b)(3)(D) and (F).
    \16\ 17 CFR 240.17Ad-22(d)(3) and (d)(8).
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    Although there do not appear to be any issues relevant to approval 
or disapproval that would be facilitated by an oral presentation of 
views, data, and arguments, the Commission will consider, pursuant to 
Rule 19b-4, any request for an opportunity to make an oral 
presentation.\17\
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    \17\ Section 19(b)(2) of the Act, as amended by the Securities 
Acts Amendments of 1975, Public Law 94-29, 89 Stat. 97 (1975), 
grants the Commission flexibility to determine what type of 
proceeding--either oral or notice and opportunity for written 
comments--is appropriate for consideration of a particular proposal 
by a self-regulatory organization. See Securities Acts Amendments of 
1975, Report of the Senate Committee on Banking, Housing and Urban 
Affairs to Accompany S. 249, S. Rep. No. 75, 94th Cong., 1st Sess. 
30 (1975).
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    Interested persons are invited to submit written data, views, and 
arguments regarding Partial Amendment No. 1 and whether the proposed 
rule change should be approved or disapproved on or before December 17, 
2019. Any person who wishes to file a rebuttal to any other person's 
submission must file that rebuttal on or before December 23, 2019.
    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 ICC-2019-010 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-2019-010. 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-2019-010 and should be 
submitted on or before December 17, 2019. If comments are received, any 
rebuttal comments should be submitted on or before December 23, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-25968 Filed 11-29-19; 8:45 am]
BILLING CODE 8011-01-P


