[Federal Register Volume 86, Number 144 (Friday, July 30, 2021)]
[Notices]
[Pages 41123-41125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16233]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92504; File No. SR-ICC-2021-017]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change Relating to the ICE Clear Credit 
Operating Agreement and Governance Playbook

July 26, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
\1\ and Rule 19b-4,\2\ notice is hereby given that on July 20, 2021, 
ICE Clear Credit LLC (``ICE Clear Credit'' or the ``Clearing House'') 
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 primarily by ICE Clear Credit. 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 amend and 
restate ICE Clear Credit's Fifth Amended and Restated Operating 
Agreement (such amended and restated document, the Sixth Amended and 
Restated Operating Agreement or ``Sixth A&R Operating Agreement'') to 
(i) reduce the number of managers on its Board of Managers (the 
``Board'') designated by its Parent, ICE US Holding Company L.P., 
(``ICE-designated managers''), and (ii) remove outdated provisions and 
make certain other non-substantive amendments.\3\ ICE Clear Credit 
proposes corresponding changes to the Governance Playbook to update the 
composition of the Board and to make other non-substantive amendments. 
These revisions do not require any changes to the ICE Clear Credit 
Clearing Rules (the ``Rules'').
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    \3\ Capitalized terms used but not defined herein have the 
meanings specified in the Sixth A&R Operating Agreement.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    In its filing with the Commission, ICE Clear Credit included 
statements concerning the purpose of and basis for the proposed rule 
change, security-based swap submission, or advance notice and discussed 
any comments it received on the proposed rule change, security-based 
swap submission, or advance notice. The text of these statements may be 
examined at the places specified in Item IV below. ICE Clear Credit 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
    ICE Clear Credit proposes to adopt the Sixth A&R Operating 
Agreement, which would amend and restate its Fifth Amended and Restated 
Operating Agreement, and to make corresponding changes to the 
Governance Playbook. The proposed revisions are described in detail as 
follows.
I. Sixth A&R Operating Agreement
    ICE Clear Credit is proposing to adopt the Sixth A&R Operating 
Agreement to reduce the number of ICE-designated managers on the Board 
and to remove outdated provisions and make other non-substantive 
amendments.
Board of Managers
    Proposed amendments to Section 3.02(a)(i) would reduce the number 
of Parent Independent Managers (those independent managers designated 
by the Parent with no material relationships with ICE Clear Credit or 
its affiliates) from four to three managers. It would also remove all 
references to names of such Parent Independent Managers, as such 
persons have been appointed and need not be named in the operating 
agreement. Section 3.02(a)(ii) would reduce the number of Parent Non-
Independent Managers (those non-independent managers designated by the 
Parent) from three to two managers. It would also similarly remove all 
references to names of such Parent Non-Independent Managers. The 
amendments would not change the numbers of Risk Committee Independent 
Managers or Risk Committee Non-Independent Managers (those independent 
and non-independent managers designated by the Risk Committee under the 
Rules, rather than by the Parent).
    The amendments also update Section 3.03 to reflect prior amendments 
to the operating agreement that the Board will meet no less frequently 
than quarterly at such time and place as may be determined by the chair 
and may meet more frequently (either in person or telephonically) as 
circumstances dictate, and to remove a requirement that the Board meet 
telephonically no less than twice per calendar year.
Removal of Outdated Information Related to Conversion
    Sections 2.01 and 2.02 would be revised to remove outdated 
provisions of the Fifth Amended and Restated Operating Agreement 
relating to the operation of the Clearing House prior to its conversion 
in 2011 to a Delaware limited liability company and to reflect the 
occurrence of that conversion. Related defined terms would be removed 
and/or updated as necessary to reflect these changes.
General Drafting Clarifications and Improvements
    ICE Clear Credit additionally proposes other general drafting 
clarifications and improvements. The proposed changes revise outdated 
references to the name, jurisdiction of organization, and/or governing 
document of certain Intercontinental Exchange, Inc. entities and 
replace references to the Chief Executive Officer with references to 
the President (which is the correct title of the relevant officer) to 
reflect prior amendments to the operating agreement. The other changes 
that would be made throughout the Sixth A&R Operating Agreement include 
updating the Clearing House's and the Parent's notice information as 
presented in Section 7.01(a) and (b), updating the Clearing House's 
registered office and agent in Delaware, referencing the Fifth Amended 
and Restated Operating Agreement where necessary, updating the 
definition of ICE's Board of Director Governance Principles to refer to 
the current Independence Policy of the Board of Directors of ICE as 
well as other typographical and grammatical updates.
II. Governance Playbook
    ICE Clear Credit proposes conforming changes to update the 
composition of the Board and to make other non-substantive amendments 
to the Governance Playbook, which consolidates governance arrangements 
set forth in ICE Clear Credit's Rules, operating agreement, and other 
ICE Clear Credit policies and procedures. The changes to Section III.A 
would similarly reduce the number of Parent

[[Page 41124]]

Independent Managers from four to three managers and the number of 
Parent Non-Independent Managers from three to two managers. Footnote 1 
would reference an amended version of the limited partnership agreement 
of the Parent and update the jurisdiction of organization of the 
Parent.\4\ In Section III.C, ICE Clear Credit proposes a minor 
clarification with respect to the receipt and review of resignation 
letters from managers. Additionally, the proposed changes to Section 
III.F update the number of independent managers on the Board as well as 
a link to ICE's Board of Director Governance Principles.
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    \4\ See SR-ICC-2021-010 for more information on the change in 
the jurisdiction of organization of the Parent.
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(b) Statutory Basis
    ICE Clear Credit believes that the proposed rule change is 
consistent with the requirements of Section 17A of the Act \5\ and the 
regulations thereunder applicable to it. In particular, Section 
17A(b)(3)(F) of the Act \6\ 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, the safeguarding of securities and funds in the custody 
or control of the clearing agency or for which it is responsible, and 
the protection of investors and the public interest. The proposed 
amendments to the number of ICE-designated managers are intended to 
promote efficient operation of the Board while maintaining appropriate 
diversity of viewpoints, representation of the interests of 
Participants and independence standards for managers. Specifically, as 
noted above, the amendments will not affect the number of managers 
designated by the Risk Committee under the Rules. ICE Clear Credit 
believes a board of 9 managers (rather than 11) remains an appropriate 
size for oversight of its ongoing operations. The other proposed 
clarifications and changes enhance readability and ensure that the 
Sixth A&R Operating Agreement and the Governance Playbook are clear and 
up to date, including by removing outdated provisions, incorporating 
prior amendments, or making other general clarifications and 
improvements, which would further ensure that relevant individuals 
carry out their responsibilities under the documents. In ICE Clear 
Credit's view, the amendments will thus enhance the overall governance 
of the Clearing House and are consistent with the prompt and accurate 
clearance and settlement of cleared contracts, the safeguarding of 
securities and funds in the custody or control of ICE Clear Credit or 
for which it is responsible, and the protection of investors and the 
public interest. Accordingly, the amendments satisfy the requirements 
of Section 17A(b)(3)(F).\7\
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    \5\ 15 U.S.C. 78q-1.
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    Further, Section 17A(b)(3)(C) of the Act \8\ requires that the 
rules of the clearing agency assure a fair representation of its 
shareholders (or members) and participants in the selection of its 
directors and administration of its affairs. The Sixth A&R Operating 
Agreement and the Governance Playbook will continue to set out the 
composition of the Board, with five managers (three independent and two 
non-independent) designated by the Parent and four managers (two 
independent and two non-independent) designated by the Risk Committee 
following the proposed amendments. The amendments will not affect the 
number of managers designated by the Risk Committee, the majority of 
whose members (9 of 12) are Participant representatives, and 
Participants will continue to be represented on the Board. As such, ICE 
Clear Credit believes that its governance arrangements, as modified by 
the proposed amendments, will continue to provide a fair representation 
of its shareholders and participants in the selection of its directors 
and administration of its affairs and are thus consistent with the 
requirements of Section 17A(b)(3)(C) of the Act.\9\
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    \8\ 15 U.S.C. 78q-1(b)(3)(C).
    \9\ 15 U.S.C. 78q-1(b)(3)(C).
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    Rule 17Ad-22(e)(2) \10\ requires clearing agencies to establish 
reasonably designed policies and procedures to provide for governance 
arrangements that, among other matters, establish that the board of 
directors have appropriate experience and skills to discharge their 
duties and responsibilities and consider the interests of relevant 
stakeholders of the clearing agency. As noted above, ICE Clear Credit 
believes the reduction in the number of ICE-designated managers is 
consistent with the ongoing effective oversight of the Clearing House 
by the Board. The amendments will not affect the number of managers 
designated by the Risk Committee, and thus will not adversely affect 
representation of Participants on the Board. Moreover, a majority of 
the Board will continue to be independent and have no material 
relationships with ICE Clear Credit and its affiliates. As such, ICE 
Clear Credit believes that the amendments set out in the Sixth A&R 
Operating Agreement and Governance Playbook are consistent with the 
requirements of Rule 17Ad-22(e)(2).\11\
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    \10\ 17 CFR 240.17 Ad-22(e)(2).
    \11\ 17 CFR 240.17 Ad-22(e)(2).
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(B) Clearing Agency's Statement on Burden on Competition

    ICE Clear Credit does not believe the proposed amendments would 
have any impact, or impose any burden, on competition not necessary or 
appropriate in furtherance of the purposes of the Act. The amendments 
are being adopted to update ICE Clear Credit's operating agreement and 
Governance Playbook, and specifically the number of managers designated 
by the Parent. As a result, ICE Clear Credit does not expect that the 
proposed changes will adversely affect access to clearing or the 
ability of Participants, their customers or other market participants 
to continue to clear contracts. ICE Clear Credit also does not believe 
the amendments would materially affect the cost of clearing or 
otherwise impact competition among market participants or limit market 
participants' choices for selecting clearing services. Accordingly, ICE 
Clear Credit does not believe the amendments would impose any burden on 
competition not necessary or appropriate in furtherance of the purpose 
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 amendments have not been 
solicited or received by ICE Clear Credit. ICE Clear Credit will notify 
the Commission of any written comments received with respect to the 
proposed rule change.

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

[[Page 41125]]

    (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-2021-017 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-2021-017. 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-2021-017 and should be 
submitted on or before August 20, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-16233 Filed 7-29-21; 8:45 am]
BILLING CODE 8011-01-P


