[Federal Register Volume 88, Number 119 (Thursday, June 22, 2023)]
[Notices]
[Pages 40874-40877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-13219]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97734; File No. SR-ICC-2023-007]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change Relating to the ICC Recovery Plan and 
the ICC Wind-Down Plan

June 15, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4,\2\ notice is hereby given that on June 
05, 2023, 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. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    ICC proposes revising the ICC Recovery Plan and the ICC Wind-Down 
Plan, which serve as plans for the recovery and orderly wind-down of 
ICC necessitated by credit losses, liquidity shortfalls, losses from 
general business risk, or any other losses, consistent with Rule 17ad-
22(e)(3)(ii).\3\ ICC proposes to make such changes effective following 
Commission approval of the proposed rule change. The proposed rule 
change is described in detail as follows.
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    \3\ 17 CFR 240.17Ad-22(e)(3)(ii).
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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, 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 revising the ICC Recovery Plan and the ICC Wind-Down 
Plan, which serve as plans for the recovery and orderly wind-down of 
ICC

[[Page 40875]]

necessitated by credit losses, liquidity shortfalls, losses from 
general business risk, or any other losses, consistent with Rule 17ad-
22(e)(3)(ii).\4\ ICC proposes to make such changes effective following 
Commission approval of the proposed rule change. The proposed rule 
change is described in detail as follows.
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    \4\ 17 CFR 240.17Ad-22(e)(3)(ii).
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ICC Recovery Plan
    Consistent with the regulations applicable to ICC, the ICC Recovery 
Plan is designed to establish ICC's actions to maintain its viability 
as a going concern to address any uncovered credit loss, liquidity 
shortfall, capital inadequacy, or business, operational or other 
structural weakness that threatens ICC's viability. ICC proposes 
general updates and edits to promote clarity and to ensure that the 
information provided is current. The proposed amendments reflect and 
relate to changes that impacted ICC in the past year, including changes 
to the coverage amount under the ICC clearing participant (``CP'') 
default insurance policy (``CP Default Insurance Policy''),\5\ and the 
addition of ICC specific procedures for financial resource 
calculations.
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    \5\ The CP Default Insurance Policy covers specified losses 
resulting from a CP default.
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    ICC proposes general updates to ensure that the information in the 
ICC Recovery Plan is current. In Section I and throughout the document, 
the proposed changes specify that the information provided is current 
as of December 31, 2022, unless otherwise stated. Namely, the proposed 
changes ensure that relevant information regarding ICC for recovery 
planning, such as information about ICC's ownership and operation, is 
current with respect to:
     activities of Intercontinental Exchange, Inc. (``ICE'' or 
collectively, the ``ICE Group'' of affiliated companies with ICE as the 
ultimate parent) in Section II.A;
     a new ICC membership category--Associate Clearing 
Participant in Section IV.B;
     correction to the Management/Governance chart in Section 
IV.C; \6\
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    \6\ The BCP and DR Oversight Committee is a sub-committee of the 
ICC Compliance Committee. The Management/Governance chart 
incorrectly indicated that the BCP and DR Oversight Committee is a 
sub-committee of the ICC Audit Committee--and such error has been 
corrected.
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     description of an ICC Independent Director in Section 
IV.C;
     data regarding ICC revenues, volumes, and expenses in 
Section IV.D;
     ICC personnel and facilities in Section VI.A;
     description of ICC in-house systems in Section VI.A; \7\
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    \7\ In connection with a future datacenter migration effort, 
ICC's in-house systems were renamed, recategorized and consolidated 
in an ICE Group enterprise-wide coordination of all ICE business 
applications. As a result of these comprehensive changes in naming 
conventions, the December 31, 2021 chart of ICC's in-house systems 
in Section VI.A. has been removed and replaced with a new chart of 
ICC's current in-house systems that reflect the new names, 
categories and updated descriptions.
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     ICC Counterparty Chart in Section VI.B; \8\
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    \8\ The Counterparty Chart has been updated due to the 
termination of three reverse repurchase agreements and the addition 
of one new reverse repurchase agreement.
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     contacts under the ICC Default Insurance Policy in Section 
VIII.B;
     coverage amount under the Professional Liability/Cyber 
(E&O) Insurance Policy in Section VIII.B;
     financial resources for recovery in Section X; and
     ICC and ICE Group financial information in Section VIII 
and XI.
    Additionally, ICC proposes updates regarding the CP Default 
Insurance Policy maintained at the ICE Group level, which may be used 
as a recovery tool in a CP default scenario. In Section VIII.B, the ICC 
CP Default Insurance Policy coverage amount has increased to $75 
million instead of the prior $50 million, to the extent that the 
defaulting CP's obligations to ICC exceed the sum of: (1) the 
defaulting CP's available margin and Guaranty Fund contributions; and 
(2) the ICC ``skin in the game'' contributions to default resources of 
$50 million.
    Also, in Section VIII.3.iii., ICC proposes to add a footnote 
reference to ICC's Risk Appetite Statements and Metrics to describe the 
thresholds with respect to regulatory capital requirements that would 
trigger alerts for ICC nearing a capital requirement breach (i.e., the 
current alert is triggered if ICC maintains 110% or less of its 
required regulatory capital). Such reference to ICC's Risk Appetite 
Statements and Metrics is intended to provide further details on how 
decreases in ICC's regulatory capital will trigger escalation within 
ICC which may lead to potential remedial actions, including whether ICC 
should initiate its plan to raise additional equity.
    In Section X, ICC proposes including additional details regarding 
the calculation of ICC's financial resources available for recovery to 
reflect new ICC specific Financial Resource Calculation Procedures. 
Specifically, ICC completes a voluntary annual calculation of 
regulatory requirements under European Market Infrastructure Regulation 
(``EMIR'') guidelines.\9\ ICC's calculation approximates the EMIR 
requirements and is calculated by ICE Treasury on an annual basis upon 
the finalization of ICC's statutory audit and financial statements and 
a discussion of future expectations with the ICC Treasury Director. The 
EMIR Estimate includes four elements relating to: winding down/
restructuring; operational and legal risks; credit and counterparty 
risk/market risk; and business risks. Such procedures include 
additional details regarding the calculation of regulatory capital 
requirements under EMIR guidelines, which ICC complies with on a 
voluntary basis.
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    \9\ See EU clearing house regulatory capital requirements as 
defined by EMIR under EU Regulation 153/2013.
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    ICC proposes additional minor edits for clarity and consistency in 
the ICC Recovery Plan. In the counterparty contractual agreements chart 
in Section VI, ICC removed the reference to a service no longer 
received from a specific external service provider (i.e., receipt of 
market data to value FX positions and collateral). In Section XIII, 
Appendix G, the applicable contact information on the CP Default 
Insurance Policy has been updated. Specifically, the carrier and the 
insurance contract policy number has been updated. In Section XIV, the 
proposed changes update the index of exhibits with the current versions 
of policies and procedures, consistent with updated footnote 
references. Finally, ICC proposes minor typographical fixes in the ICC 
Recovery Plan as well as conforming changes in in the ICC Wind-Down 
Plan, including updates to entity names, and grammatical and formatting 
changes.
ICC Wind-Down Plan
    The ICC Wind-Down Plan is designed to establish how ICC could be 
wound-down in an orderly manner. ICC proposes corresponding changes to 
the ICC Wind-Down Plan. ICC proposes general updates and edits to 
promote clarity and to ensure that the information provided is current. 
The proposed amendments reflect and relate to changes that have 
impacted ICC in the past year, including the addition of ICC specific 
procedures for financial resource calculations.
    ICC proposes general updates to ensure that the information in the 
ICC Wind-Down Plan is current. In Section I and throughout the 
document, the proposed changes specify that the information provided is 
current as of December 31, 2022, unless otherwise stated. The proposed 
revisions ensure

[[Page 40876]]

that relevant information regarding ICC for wind-down planning, such as 
information about ICC's ownership and operation, is current with 
respect to:
     activities of ICE in Section II.A;
     correction to the Management/Governance chart in Section 
IV.B; \10\
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    \10\ The BCP and DR Oversight Committee is a sub-committee of 
the ICC Compliance Committee. The Management/Governance chart 
incorrectly indicated that the BCP and DR Oversight Committee is a 
sub-committee of the ICC Audit Committee--and such error has been 
corrected.
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     description of an ICC Independent Director in Section 
IV.B;
     ICC revenues in Section VII.A;
     ICC personnel and facilities in Section VII.C;
     description of ICC in-house systems in Section VII.C; \11\
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    \11\ In connection with a future datacenter migration effort, 
ICC's in-house systems were renamed, recategorized and consolidated 
in an ICE Group enterprise-wide coordination of all ICE business 
applications. As a result of these comprehensive changes in naming 
conventions, the December 31, 2021 chart of ICC's in-house systems 
in Section VII.C. has been removed and replaced with a new chart of 
ICC's current in-house systems that reflect the new names, 
categories and updated descriptions.
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     ICC Counterparty Chart VII.D; \12\ and
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    \12\ The Counterparty Chart has been updated due to the 
termination of three reverse repurchase agreements and the addition 
of one new reverse repurchase agreement.
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     financial resources to support wind-down in Section IX.
    ICC also proposes including additional details regarding the 
calculation of ICC's financial resources available for wind-down to 
reflect the new ICC specific Financial Resource Calculation Procedures. 
Such procedures include additional details regarding the calculation of 
regulatory capital requirements under EMIR guidelines, which ICC 
complies with on a voluntary basis.
    ICC proposes additional updates and edits to promote clarity and 
consistency in the ICC Wind-Down Plan. In the counterparty contractual 
agreements chart in Section VIII, ICC removed the reference to a 
service no longer received from a specific external service provider 
(i.e., receipt of market data to value FX positions and collateral). In 
Section XII, the proposed changes update the index of exhibits with the 
current versions of policies and procedures, consistent with updated 
footnote references.
(b) Statutory Basis
    ICC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \13\ and the regulations 
thereunder applicable to it, including the applicable standards under 
Rule 17Ad-22.\14\ In particular, Section 17A(b)(3)(F) of the Act \15\ 
requires that the rule change be consistent with the prompt and 
accurate clearance and settlement of securities transactions and 
derivative agreements, contracts and transactions cleared by ICC, the 
safeguarding of securities and funds in the custody or control of ICC 
or for which it is responsible, and the protection of investors and the 
public interest.
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    \13\ 15 U.S.C. 78q-1.
    \14\ 17 CFR 240.17Ad-22.
    \15\ 15 U.S.C. 78q-1(b)(3)(F).
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    ICC believes the proposed changes would enhance its ability to 
effectuate a successful recovery as well as to execute an orderly wind-
down by providing updates and additional clarity with respect to ICC's 
recovery and wind-down processes and procedures. As discussed herein, 
the proposed revisions ensure that relevant information regarding ICC 
for recovery and wind-down planning is current, including updated 
information regarding personnel and facilities, finances and 
operations, and financial resources for recovery and wind-down. To 
support and enhance the implementation of the Plans, additional 
language clarifications or edits are included so that the Plans remain 
up-to-date, transparent, and focused on clearly articulating the 
policies and procedures used to support ICC's recovery and wind-down 
efforts.
    Such revisions include additional details regarding required 
disclosures, references to relevant policies, updated information 
regarding recovery tools, and amended language that is intended to be 
more precise. The Plans would thus promote ICC's ability to continue 
providing clearing services with as little disruption as possible, and 
should continuation not be feasible, promote ICC's ability to 
discontinue clearing services in an orderly manner with minimum 
negative impact to the marketplace and stakeholders. Accordingly, in 
ICC's view, the proposed rule change is consistent with the prompt and 
accurate clearance and settlement of securities transactions, 
derivatives agreements, contracts, and transactions, the safeguarding 
of securities and funds in the custody or control of ICC or for which 
it is responsible, and the protection of investors and the public 
interest, within the meaning of Section 17A(b)(3)(F) of the Act.\16\
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    \16\ Id.
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    Rule 17Ad-22(e)(3)(ii) \17\ requires ICC to establish, implement, 
maintain, and enforce written policies and procedures reasonably 
designed to maintain a sound risk management framework for 
comprehensively managing legal, credit, liquidity, operational, general 
business, investment, custody, and other risks that arise in or are 
borne by ICC, which includes plans for the recovery and orderly wind-
down of ICC necessitated by credit losses, liquidity shortfalls, losses 
from general business risk, or any other losses. The ICC Recovery Plan 
continues to establish ICC's actions to maintain its viability as a 
going concern to address any uncovered credit loss, liquidity 
shortfall, capital inadequacy, or business, operational or other 
structural weakness that threatens ICC's viability. The ICC Wind-Down 
Plan continues to establish how ICC could be wound-down in an orderly 
manner should its recovery efforts fail. As described above, the 
proposed changes include updates and edits to promote clarity and to 
ensure that the information in the Plans is current, such as updated 
information regarding financial resources for recovery and wind-down. 
In ICC's view, such changes would ensure that the Plans remain useful 
and effective in a recovery and wind-down scenario. The proposed rule 
change would thus promote ICC's ability to carry out a successful 
recovery or orderly wind-down, consistent with the requirements of Rule 
17Ad-22(e)(3)(ii).\18\
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    \17\ 17 CFR 240.17Ad-22(e)(3)(ii).
    \18\ Id.
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    Rule 17Ad-22(e)(15) \19\ requires ICC to establish, implement, 
maintain, and enforce written policies and procedures reasonably 
designed to identify monitor, and manage ICC's general business risk 
and hold sufficient liquid net assets funded by equity to cover 
potential general business losses so that ICC can continue operations 
and services as a going concern if those losses materialize, including 
by (i) determining the amount of liquid net assets funded by equity 
based upon its general business risk profile and the length of time 
required to achieve a recovery or orderly wind-down, as appropriate, of 
its critical operations and services if such action is taken; (ii) 
holding liquid net assets funded by equity equal to the greater of 
either (x) six months of ICC's current operating expenses, or (y) the 
amount determined by the Board to be sufficient to ensure a recovery or 
orderly wind-down of critical operations and services of ICC, as 
contemplated by the plans established under Rule 17ad-22(e)(3)(ii) 
\20\; and (iii) maintain a viable plan, approved by the Board and 
updated at least annually, for raising additional equity should its 
equity fall

[[Page 40877]]

close to or below the amount required under Rule 17ad-
22(e)(15)(ii).\21\
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    \19\ 17 CFR 240.17Ad-22(e)(15).
    \20\ 17 CFR 240.17Ad-22(e)(3)(ii).
    \21\ 17 CFR 240.17Ad-22(e)(15)(ii).
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    The Plans continue to analyze ICC's particular circumstances and 
risks to ensure that ICC maintains financial resources necessary to 
implement both Plans and that ICC remains in compliance with all 
regulatory capital requirements. The Plans include updated information 
on the financial resources maintained by ICC for recovery and to 
support wind-down in compliance with relevant regulations and include 
procedures to follow in case of any shortfall. Such changes continue to 
ensure that the Plans remain accurate and useful, and that ICC holds 
sufficient liquid net assets to achieve recovery or orderly wind-down. 
As such, ICC believes that the proposed rule change is consistent with 
the requirements of Rule 17Ad-22(e)(15).\22\
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    \22\ 17 CFR 240.17Ad-22(e)(15).
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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 changes to 
the Plans will apply uniformly across all market participants. The 
changes are being proposed to promote clarity and ensure that the 
information provided is current in the Plans. ICC does not believe the 
amendments would affect the costs of clearing or the ability of market 
participants to access clearing. Therefore, ICC does not believe the 
proposed rule change would impose 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

    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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-ICC-2023-007 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-2023-007. 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 (https://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 
a.m. and 3 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.
    Do not include personal identifiable information in submissions; 
you should submit only information that you wish to make available 
publicly. We may redact in part or withhold entirely from publication 
submitted material that is obscene or subject to copyright protection. 
All submissions should refer to file number SR-ICC-2023-007 and should 
be submitted on or before July 13, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-13219 Filed 6-21-23; 8:45 am]
BILLING CODE 8011-01-P


