
[Federal Register Volume 88, Number 211 (Thursday, November 2, 2023)]
[Notices]
[Pages 75353-75359]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-24180]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98815; File No. SR-ICEEU-2023-011]


Self-Regulatory Organizations; ICE Clear Europe Limited; Order 
Approving Proposed Rule Change, as Modified by Amendment No. 1, 
Relating to Amendments to the Wind Down Framework and Plan

October 27, 2023.

I. Introduction

    On August 11, 2023, ICE Clear Europe Limited (``ICEEU'') filed with 
the Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ 
and Rule 19b-4 thereunder,\2\ a proposed rule change to amend its Wind 
Down Framework and Plan (to be renamed the ``Wind Down Plan'') (the 
``Plan''). On August 22, 2023, ICE Clear Europe filed Amendment No. 1 
to the proposed rule change to make certain changes to the Exhibit 
5.\3\ Notice of the proposed rule change, as modified by Amendment No. 
1, was published for comment in the Federal Register on August 30, 
2023.\4\ On September 26, 2023, the Commission designated a longer 
period for Commission action on the proposed rule change until November 
28, 2023.\5\

[[Page 75354]]

The Commission has not received any comments on the proposed rule 
change, as modified by Amendment No. 1 (hereinafter, ``Proposed Rule 
Change''). For the reasons discussed below, the Commission is approving 
the Proposed Rule Change.\6\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 updates the Exhibit 5 to correct the 
presentation of three of the proposed changes to the Wind Down 
Framework and Plan that were filed with the Commission on August 11, 
2023. The proposed rule change incudes an Exhibit 4. Exhibit 4 shows 
the change that Amendment No. 1 makes to the Exhibit 5.
    \4\ Securities Exchange Act Release No. 98217 (August 24, 2023), 
88 FR 60001 (August 30, 2023) (File No. SR-ICEEU-2023-011) 
(``Notice'').
    \5\ Self-Regulatory Organizations; ICE Clear Europe Limited; 
Notice of Designation of Longer Period for Commission Action on 
Proposed Rule Change, as Modified by Amendment No. 1, Relating to 
Amendments to the Wind Down Framework and Plan; Exchange Act Release 
No. 98536 (Sept. 26, 2023), 88 FR 67834 (Oct. 2, 2023) (File No. SR-
ICEEU-2023-011).
    \6\ Capitalized terms not otherwise defined herein have the 
meanings assigned to them in the Plan or, if not defined therein, 
ICE Clear Europe's Clearing Rules.
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II. Description of the Proposed Rule Change

    ICEEU is a covered clearing agency. Under Rule 17Ad-22(e)(3)(ii), 
ICEEU must ``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 the covered clearing agency, 
which . . . includes plans for the recovery and orderly wind-down of 
the covered clearing agency necessitated by credit losses, liquidity 
shortfalls, losses from general business risk, or other losses.'' \7\ 
The Plan addresses scenarios in which ICEEU determines to wind down in 
an orderly fashion. For example, one circumstance that could lead ICEEU 
to wind down in an orderly fashion is insolvency because of either 
member default or some other reason (e.g., fraud). ICEEU may also 
choose to wind down in an orderly fashion when it is not insolvent 
(e.g., for business reasons).\8\
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    \7\ 17 CFR 240.17Ad-22(e)(3)(ii).
    \8\ Self-Regulatory Organizations; ICE Clear Europe Limited; 
Order Approving Proposed Rule Changes Related to the ICE Clear 
Europe Recovery and Wind-Down Plans; Exchange Act Release No. 83651 
(July 17, 2018), 83 FR 34891, 34893 (July 23, 2018) (File No. SR-
ICEEU-2017-016 and SR-ICEEU-2017-017).
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    Through the Proposed Rule Change, ICEEU proposes to make changes to 
the Plan. These proposed changes update the Plan's introduction, 
preparations for winding down, planning options, discussion of meeting 
liquidity requirements during wind-down, and document governance.\9\
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    \9\ In addition to the proposed changes described below, the 
Proposed Rule Change makes grammatical and non-substantive edits 
throughout the Plan.
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1. The Plan's Introduction

    The Plan currently has an overview and context section. The 
overview section contains background information on ICEEU. For example, 
it identifies ICEEU's regulators, parent entities, functions, clearing 
strategy, and tools for risk management. Among other things, the 
context section discusses certain regulatory requirements imposed on 
ICEEU and ICEEU's Recovery Plan. The Proposed Rule Change would delete 
the overview section and portions of the context section. Specifically, 
the Proposed Rule Change would delete portions of the context section 
that discuss regulatory requirements and ICEEU's Recovery Plan, and a 
statement that the Plan also reflects feedback received from certain 
regulators, because ICEEU no longer considers this level of detail of 
background information to be necessary.\10\ It would also delete a 
reference to EMIR requirements, because these no longer apply to 
ICEEU.\11\
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    \10\ Notice, 88 FR at 60001-02.
    \11\ Id. at 60002.
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    The Proposed Rule Change would divide the rest of the remaining 
context section into a new four-part executive summary section. The 
first part of the executive summary would be titled ``Purpose of the 
Plan.'' This section would include portions of the existing context 
section describing when the Plan would be required and the time span 
for a wind-down. The Proposed Rule Change would add a sentence noting 
that the Plan sets out the relevant information, the steps to take, and 
the options available with respect to winding down some or all of 
ICEEU's business. The Proposed Rule Change would also note that the 
Plan seeks to support ICEEU's compliance with all relevant regulatory 
obligations with respect to wind-down. Finally, the Proposed Rule 
Change would add a footnote to explain that references to EMIR 
requirements and other EU legislation refer to legislation on-shored 
into United Kingdom legislation following the withdrawal of the United 
Kingdom from the European Union.
    The second portion of the executive summary would be titled 
``Summary of the Plan.'' This section would include portions of the 
existing context section describing the things the Plan considers 
(e.g., scenarios). The current Plan already notes that it includes 
consideration of all existing contractual obligations with, for 
example, exchanges, payment banks, custodians, CSDs, repo 
counterparties, data providers, IT providers, contractors, buildings, 
and staff. The Proposed Rule Change would add that the Plan also 
considers other services that ICEEU may be providing, such as intra-
group services.
    The third part of the executive summary would be titled ``Structure 
of the Plan.'' This section would include portions of the existing 
context section describing the Plan's contents, central aspects of the 
Plan, and assumptions underlying the Plan. The Proposed Rule Change 
would amend the content to state that extensive consultation with 
relevant stakeholders will be likely, rather than always occurring, 
prior to any final decisions regarding the execution of the Plan. ICEEU 
proposes this change to reflect that different forms and extents of 
consultation with particular stakeholders may be appropriate for 
different circumstances and proposed actions.\12\
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    \12\ Id.
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    The fourth section of the executive summary would be titled 
``Execution of the Plan.'' It would not include any portions of the 
existing context section. This new section would add to the Plan a 
discussion of the establishment, responsibilities, and composition of 
the Wind Down Planning Committee. For example, this new section would 
note that ICEEU establishes the Wind Down Planning Committee, this 
committee reports to the Board, and the committee liaises with all 
stakeholders. Further, this committee includes a non-executive director 
chair, senior officers, and other advisors as appropriate.\13\
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    \13\ The Proposed Rule Change would make similar changes to the 
``Analysis, Consultation, and Planning'' section of the Plan. 
Specifically, it would note that the composition of the Planning 
Committee shall include relevant members of the senior management of 
ICEEU and any other senior ICE representatives as considered 
appropriate by ICEU senior management rather than simply noting that 
the composition of the Planning Committee would include the senior 
management of ICEEU.
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2. Preparations for Winding Down

    ICEEU also proposes changes to the Plan related to its preparations 
for winding down. The Proposed Rule Change would add text clarifying 
that the Wind Down Planning Committee will try to ensure that the 
impact of any plans on relevant stakeholders (in addition to members) 
would be as minimal as possible. In considering a potential transfer to 
an alternative CCP, the Proposed Rule Change would clarify that the 
Wind Down Planning Committee should answer if there are any 
jurisdictional complications, materially differing membership 
requirements, or regulatory processes that should be factored into the 
timeline for wind-down. Additionally, the Proposed Rule Change would 
edit the Plan so that it no longer requires the Wind Down Planning 
Committee to consider whether the members would accept a particular 
contract not being

[[Page 75355]]

available for clearing at the time of transfer. The Proposed Rule 
Change would eliminate this consideration because ICEEU believes 
transfer would likely not be feasible in a scenario where a particular 
contract is not available for clearing at the time of transfer.\14\ In 
considering a potential termination, the Proposed Rule Change would add 
that the Wind Down Planning Committee should answer whether the 
relevant regulators are likely to be accepting of the termination and 
whether the relevant regulatory processes have been adequately factored 
into the proposed timeline.
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    \14\ Notice, 88 FR at 60002.
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    The Proposed Rule Change would note that as part of planning for 
wind-down, ICEEU shall assess the impact of services it receives and 
provides. Relevant factors in this assessment include timing and costs. 
The Proposed Rule Change would also state that ICEEU's plans assume 
that ICEEU continues to call and receive all margin requirements and 
operate during the wind-down period. The Proposed Rule Change would 
provide a caveat that under certain circumstances, such as an unplanned 
disruption from a Clearing Member default or a material non-default 
event or loss, revised timelines and other actions may be required.

3. Planning Options

    According to the Plan, ICEEU may either transfer certain aspects of 
its business (e.g., F&O clearing or CDS clearing) to another 
clearinghouse or terminate those aspects of its business. Additionally, 
the Plan includes a section dedicated to terminating service 
agreements. ICEEU proposes changes to the Plan impacting a potential 
transfer of its business, the potential termination of its business, 
and how it would go about terminating service agreements in the event 
of any type of wind-down.
A. Transfer Option
    The current Plan states that if a particular market wishes and is 
able to continue trading and settling via a CCP then the wind down plan 
is based on the transfer option. The Proposed Rule Change would clarify 
that if a particular market wishes and is able to continue trading and 
settling via an alternative CCP, then the wind-down plan is based on 
the transfer option. The Proposed Rule Change would adjust multiple 
aspects of the Plan's discussion of the transfer option. Specifically, 
the current Plan describes how ICEEU would implement a transfer, for 
both its F&O and CDS businesses. The Plan describes the transfer of 
each business in terms of an overall approach to transfer, assumptions 
ICEEU makes as part of the transfer, activities that ICEEU will 
undertake, the timeline for transfer, and the resources needed for 
transfer.
Overall Approach To Transfer
    The proposed rule change would update the description of ICEEU's 
overall approach to the transfer of its F&O and CDS businesses. With 
respect to transfer of the F&O business, the current Plan states that 
where an F&O contract is not cleared by the clearing house receiving 
the transfer, then ICEEU would terminate the contract and exclude it 
from transfer until the recipient clearing house begins clearing the 
contract. The Proposed Rule Change would modify this statement to state 
instead that ICEEU will just exclude the contract from transfer. ICEEU 
proposes this modification because it believes that the delay 
accompanying a later transfer would not be feasible.\15\
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    \15\ Id.
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    With respect to ICEEU's approach to transfer of the CDS business, 
the current Plan states that for ICEEU CDS contracts that are not 
currently cleared on the recipient clearing house's platform, the 
necessary capability to clear the contract will be built and tested by 
the recipient clearing house in time for transfer and will be included 
in the transfer. The Proposed Rule Change would add language to this 
provision subjecting this requirement to the clearing house's relevant 
new product approval and regulatory processes. The Proposed Rule Change 
would further note that if the recipient clearing house cannot build 
and test clearing methods in an acceptable timeframe, then ICEEU's 
clearing of those CDS contracts may, rather than will, be terminated 
through rebilateralisation.\16\
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    \16\ Transactions that ICEEU clears and settles centrally may 
also be cleared and settled bilaterally, using only two parties as 
opposed to clearing and settling a transaction through a CCP. 
Rebilateralisation describes the process of clearing and settling 
positions bilaterally that were once cleared and settled centrally.
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Assumptions
    Another aspect of the Plan's discussion of the transfer option that 
the Proposed Rule Change addresses are the assumptions underlying a 
plan for the transfer of ICEEU's F&O or CDS business. In both the F&O 
and CDS contexts, the current Plan assumes that the questions around 
viable and willing clearing houses have been answered. The Proposed 
Rule Change would clarify in both the F&O and CDS contexts that the 
questions around viable and willing clearing houses include 
jurisdictional considerations.\17\
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    \17\ Notice, 88 FR at 60002.
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    In the F&O context, the current Plan assumes that ICEEU's clearing 
of the F&O market may legally be transferred to one or more clearing 
houses. The Proposed Rule Change would add an explanation to this 
assumption acknowledging that ICEEU clears a diverse profile of markets 
so that it may not be possible to transfer all to a single clearing 
house.\18\ Where the current Plan assumes that the questions around 
viable and willing clearing houses have been answered, it also includes 
a clause stating that there would be a maximum of two viable and 
willing clearing houses. The Proposed Rule Change would remove this 
clause.
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    \18\ A similar explanation is added to the portion of the Plan 
addressing the timeline for transfer of ICEEU's F&O business.
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    In the assumptions for CDS transfers, as well as in other locations 
throughout the Plan's discussion of the CDS transfer option, the 
Proposed Rule Change would add language recognizing that alternative 
CCPs may have different membership requirements from ICEEU. For 
example, the current Plan assumes that the receiving clearing house's 
rules contain no impediments to the transfer. The Proposed Rule Change 
would add to this assumption by noting that the receiving clearing 
house's rules (including membership criteria) contain no impediments to 
the transfer.
Activities
    A third aspect of the Plan's discussion of the transfer option that 
the Proposed Rule Change addresses are plan activities with respect to 
the transfer of ICEEU's F&O or CDS business. In the discussion of plan 
activities for both the transfer of ICEEU's F&O business and its CDS 
business, the current Plan calls for the transfer of margin funds to 
recipient clearing houses at the end of the weekend. The Proposed Rule 
Change would highlight that relevant collateral must be transferred to 
a recipient clearing house at the end of the weekend rather than margin 
funds.\19\
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    \19\ The Proposed Rule Change makes changes throughout the Plan 
that align with this change.
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    In the discussion of plan activities for the transfer of ICEEU's 
F&O business, the Proposed Rule Change would update references to 
ICEEU's position management and other systems (e.g., FEC and ECS). The 
current Plan indicates that novation of member F&O contract positions 
from ICEEU to recipient clearing houses would be agreed. The Proposed 
Rule Change would add that Novation of related collateral from ICEEU to 
recipient

[[Page 75356]]

clearing houses would also be agreed as appropriate. Finally, the 
current Plan calls for open position data migration to recipient 
clearing houses, excluding any non-transferring contracts, to be built 
and tested. The Proposed Rule Change would call for relevant collateral 
migration to recipient clearing houses to be built and tested as well.
    In the discussion of plan activities for the transfer of ICEEU's 
CDS business, the current Plan states that following a gap analysis, 
the members and contracts that were missing from the alternative 
clearing house's platform would be identified and the timeframe for 
adding them agreed. If the timescale for adding any missing contracts 
was not acceptable to the market, then they would be terminated, 
positions would not be migrated, and once the recipient clearing house 
is able to clear them they would be back-loaded. The Proposed Rule 
Change would note that if the timescale for adding any missing 
contracts was not acceptable to the market, then they would be 
terminated, positions would not be migrated, and once the recipient 
clearing house is able to clear them they could (rather than would) be 
back-loaded.
Timeline
    The Proposed Rule Change also would adjust sections on the timeline 
for transfer of ICEEU's F&O and CDS businesses. The Proposed Rule 
Change would adjust the timeline for transfer of ICEEU's F&O and CDS 
businesses from no more than six months to approximately six 
months.\20\ Moreover, the Proposed Rule Change would add text to the 
sections on the timeline for transfer of ICEEU's F&O and CDS businesses 
acknowledging that a transfer may need to involve more than one 
recipient clearing house which may affect the timeline for transfer.
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    \20\ The Proposed Rule Change adjusts a graphic in a different 
section of the Plan in a manner that aligns with this change. 
Likewise, the Proposed Rule Change adjusts the Plan's conclusion to 
both align with this timeline and note that the timeline could be 
affected by factors such as the need for multiple alternative 
clearing venues.
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Resources
    The Proposed Rule Change would make one edit in the context of both 
its F&O and CDS business related to the resources needed for transfer. 
The current plan notes that risk management will continue with initial 
margin (IM) and variation margin (VM) operating unchanged. The Proposed 
Rule Change would note that risk management will therefore continue 
with initial margin (IM) and variation margin (VM) operating unchanged.
b. Termination Option
    The Proposed Rule Change would clarify that a wind-down is based on 
the termination option if market conditions are so distressed that 
trading cannot continue, or an alternative CCP cannot be found. The 
Proposed Rule Change would adjust multiple aspects of the Plan's 
discussion of the termination option, including the timeline for 
termination, overall approach to termination, activities that ICEEU 
will undertake, resources needed for termination, and the rules 
applicable to termination.
Timeline
    The Proposed Rule Change would contemplate a more fluid timeline 
for termination of both the F&O and CDS business. Throughout the Plan, 
the Proposed Rule Change would make changes so that the timeline for 
termination in the case of the F&O business, or termination, wind-down, 
or rebilateralisation in the case of the CDS business, will take 
approximately five months, as opposed to exactly five months. Moreover, 
the Proposed Rule Change would contemplate that F&O and CDS termination 
occur on a designated Withdrawal Date. This added flexibility would 
allow ICEEU to account for the particular circumstances of the 
termination, such as differing maturity profiles in the context of F&O 
termination.\21\
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    \21\ Notice, 88 FR at 60002.
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Approach
    The Proposed Rule Change also addresses the approach to terminating 
the F&O business. The Proposed Rule Change would clarify that F&O 
members will be notified by circular of ICEEU's intent to terminate the 
clearing of contracts. It also would revise the maturity profile for 
different product groups based on expiration date, because the maturity 
profile may be materially different between product groups.\22\ While 
acknowledging that the maturity profile may materially differ between 
product groups within the F&O clearing service, ICEEU would note that a 
common approach to termination may not be appropriate across all 
groups; therefore, the wind-down plan should consider the profile by 
relevant group, specifically with respect to the time required for 
termination. At the same time, ICEEU would note that the process of 
terminating open positions at Withdrawal Date is common across all 
maturities and product groups. Moreover, the Proposed Rule Change would 
note that the percentage of total open contracts expected to wind down 
naturally via expiration within three months is approximately 30 
percent as opposed to approximately 35 percent. The Proposed Rule 
Change would also add that new trades would be accepted until the 
Withdrawal Date, with the expectation that they serve to reduce risk 
and therefore reduce open interest. ICEEU would also note that open F&O 
positions will be terminated through closing them down via offsetting 
transactions at the end-of-day settlement price, which is calculated in 
accordance with Clearing House Rules 701 and 802. It also would adjust 
the options available to F&O members to close out open positions 
themselves leading up to the Withdrawal Date. For example, the Proposed 
Rule Change would add that F&O members may use comparable trading 
strategies to Exchanges for Swaps to take positions off-market (in 
addition to being allowed to use Exchanges for Swaps).\23\ Conforming 
changes would also be made to the assumptions underlying an F&O 
termination and the activities associated with an F&O termination in 
the Proposed Rule Change.
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    \22\ Id.
    \23\ Exchanges for Swaps are off-exchange bilaterally-negotiated 
transactions involving the simultaneous exchange of an exchange 
futures position for a corresponding related OTC swap or other OTC 
derivative in the same or related product. ICE Futures U.S. EFRP 
FAQs.
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Activities
    The Proposed Rule Change would also amend the activities associated 
with termination of ICEEU's F&O business. In the context of activities 
associated with ICEEU's F&O business, the Proposed Rule Change would 
note that all related margin, rather than only initial margin, is 
returned at contract termination.
Resources
    The Proposed Rule Change would also amend a section addressing 
resources needed for termination in the context of ICEEU's CDS 
business. The Proposed Rule Change would note that ICEEU will continue 
to provide CDS clearing while reducing open interest, as opposed to 
reducing volume, until the time that clearing is terminated.
Rules
    In the current Plan, Continuing CDS Rule Provisions specify the 
basis for calculating close-out amounts. These provisions also form the 
legal basis for any wind down. The Proposed Rule Change would remove 
text related to references to Continuing CDS Rule Provisions because 
the Continuing CDS

[[Page 75357]]

Rule Provisions have been deleted from the Rules.\24\
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    \24\ Notice, 88 FR at 60002.
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c. Terminating Service Agreements
    The Proposed Rule Change would change portions of the Plan 
governing the termination of service contracts. It would change the 
length of the notice provided for terminating service contracts from 
exactly six months to approximately six months, and note that 
appropriate notice should be given with respect to termination of 
relevant employee contracts instead of six months' notice.
    The Proposed Rule Change would add introductory text to a table 
listing relevant services and contracts. The introductory text would 
explain that the list is an illustrative summary only, and that a more 
complete, separately maintained list of service arrangements is 
available for reference as part of any wind-down planning. 
Additionally, the introductory text would state that IT services and 
licenses are largely provided by ICEEU's parent or affiliates and that 
IT services provided by external third parties are not expected to have 
a material impact on timelines or costs relating to wind-down plans.
    The Proposed Rule Change would also adjust the table listing 
relevant services and contracts. It would combine the treatment of a 
number of clearing services agreements with different affiliated ICE 
markets into a single category to ensure that the treatment is 
presented consistently in the Plan. Additionally, the Proposed Rule 
Change would also clarify that exit provisions are not included as part 
of intra-group agreements regarding property; add a Clearing and 
Settlement Services Agreement with Intercontinental Exchange Holdings; 
replace Dutch National Bank with European Central Bank in order to 
reflect that ICEEU uses European Central Bank as a concentration bank; 
change a reference from referring to specific exchanges to referring to 
relevant ICE Exchanges; and change the notice time period for Clearing 
and Settlement Services Agreements from twelve months to twenty-four 
months.

4. Meeting Liquidity Requirements During Wind-Down

    The Proposed Rule Change would edit a section of the Plan 
discussing how ICEEU will meet its liquidity requirements during wind-
down. The Plan currently states that ``members cash held as cash is 
immediate or available in short term.'' The Proposed Rule Change would 
make edits clarifying that collateral held as cash from Clearing 
Members should be immediately accessible or available at short notice. 
Further, the Proposed Rule Change would make edits that note that the 
vast majority, instead of approximately 99 percent, of funds should be 
invested in high-quality, short-term instruments. Moreover, the 
Proposed Rule Change would note that all investments are made in 
accordance with ICEEU's Liquidity and Investment Management Policy. The 
Proposed Rule Change would remove a specific reference to maximum 
maturity and liquidity requirements mentioning the weighted-average 
life of investments and reverse repos. It would edit a liquidity 
requirement to note that outright purchases are limited to high-quality 
and liquid government debt that can be liquidated on short notice in 
the secondary market. With respect to non-cash assets, the Proposed 
Rule Change would note that these assets are immediately available for 
meeting any liquidity requirements arising in a wind-down scenario, and 
that the non-cash collateral pool consists of highly liquid assets. The 
Proposed Rule Change would also highlight that ICEEU runs liquidity 
stress tests every day inclusive of extreme-but-plausible scenarios to 
ensure that it can maintain a healthy liquidity position. ICEEU 
proposes these changes to make this portion of the Plan consistent with 
the Liquidity and Investment Management Policy.\25\
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    \25\ Id. at 60003.
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5. Document Governance

    The Proposed Rule Change would delete the Plan's Governance section 
and replace it with a Document Governance and Exception Handling 
section that is consistent with recently-adopted ICEEU policies.\26\ 
Under this section, the owner of the Plan would be responsible for 
ensuring that the Plan remains up to date and is reviewed in accordance 
with ICE Clear Europe's governance processes. Such reviews would 
encompass, at a minimum, regulatory compliance; documentation and 
purpose; implementation; use; and open items from previous validations 
or reviews (where appropriate). The results of the review, including 
any findings, would be reported to ICE Clear Europe's Executive Risk 
Committee along with the priority of findings, proposed remediations 
and target due date to remediate the findings.
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    \26\ Id. For example, ICEEU recently amended its Recovery Plan 
and Outsourcing Policy to make changes similar to those now 
proposed. See Securities Exchange Act Release No. 98337 (Sept. 8, 
2023), 88 FR 63149, 63154-55 (Sept. 14, 2023) (File No. SR-ICEEU-
2023-020) (Recovery Plan); Securities Exchange Act Release No. 98387 
(Sept. 14, 2023), 88 FR 64953, 64955 (Sept. 20, 2023) (File No. SR-
ICEEU-2023-018) (Outsourcing Policy).
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    The document owner also would be responsible for reporting material 
breaches or unapproved deviations from the Plan to their Head of 
Department, the Chief Risk Officer, and the Head of Regulation and 
Compliance (or, as applicable, their respective delegates). Those 
individuals together would determine if further escalation should be 
made to relevant senior executives, the Board, and/or competent 
authorities.
    Finally, exceptions to the Plan would be approved in accordance 
with ICE Clear Europe's governance process for the approval of changes, 
and changes to the Plan would have to be approved in accordance with 
ICE Clear Europe's governance process. Such changes only would take 
effect after completion of all necessary internal and regulatory 
approvals.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act requires the Commission to approve a 
proposed rule change of a self-regulatory organization if it finds that 
the proposed rule change is consistent with the requirements of the Act 
and the rules and regulations thereunder applicable to the 
organization.\27\ For the reasons given below, the Commission finds 
that the Proposed Rule Change is consistent with Section 17A(b)(3)(F) 
of the Act \28\ and Rules 17Ad-22(e)(2)(i), (e)(2)(v),\29\ and 
(e)(3)(ii) thereunder.\30\
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    \27\ 15 U.S.C. 78s(b)(2)(C).
    \28\ 15 U.S.C. 78q-1(b)(3)(F).
    \29\ 17 CFR 240.17Ad-22(e)(2).
    \30\ 17 CFR 240.17Ad-22(e)(18).
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A. Consistency With Section 17A(b)(3)(F) of the Act

    Under Section 17A(b)(3)(F) of the Act, ICEEU's rules, among other 
things, must 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 . . . .'' \31\ Based on its review of the record, and for 
the reasons discussed below, ICEEU's Proposed Rule Change is consistent 
with Section 17A(b)(3)(F).
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    \31\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Proposed Rule Change would focus the Plan on the wind-down 
process. For example, the Proposed Rule Change would delete unnecessary 
portions of the overview and context

[[Page 75358]]

section of the current Plan. It would also create a new Executive 
Summary section centered around aspects of the Plan (e.g., the purpose 
of the Plan, summary of the Plan, structure of the Plan, and execution 
of the Plan) and populate that Executive Summary with remaining 
portions of the current Plan's context section with a few 
modifications.
    The Proposed Rule Change would also add or update details integral 
to operating the Plan. For example, the Proposed Rule Change would add 
text to clarify that the Wind Down Planning Committee will try to 
ensure that the impact of any plans on relevant stakeholders (in 
addition to members) would be as minimal as possible; add additional 
text identifying the Wind Down Planning Committee's composition and 
duties; revise the maturity profile for different product groups based 
on expiration date; update numerous timelines within the plan; delete 
inapplicable references to statutes or rules; update the meaning of 
other references to statutes; edit questions that ICEEU's Wind Down 
Planning Committee should consider as it tries to determine whether 
ICEEU should terminate or transfer its business; and acknowledge that a 
transfer may need to involve more than one recipient clearing house. 
Further, ICEEU proposes additions that would consider differences among 
stakeholders and products, as well as whether a specific course of 
action would be feasible. For example, the Proposed Rule Change would 
amend the Plan to state that extensive consultation with relevant 
stakeholders will be likely, rather than will always occur, prior to 
any final decisions regarding the execution of the Plan, because 
different forms and extents of consultation with particular 
stakeholders may be appropriate for different circumstances and 
proposed actions. The Proposed Rule Change would also edit the Plan so 
that it no longer requires the Wind Down Planning Committee to consider 
whether the members would accept a particular contract not being 
available for clearing at the time of transfer, because ICEEU believes 
transfer would likely not be feasible in a scenario where a particular 
contract is not available for clearing at the time of transfer.
    Finally, the Proposed Rule Change would make a number of changes to 
ensure that the Plan is consistent with itself and other ICEEU 
policies. For example, the Proposed Rule Change would combine the 
treatment of a number of clearing services agreements with different 
affiliated ICE markets into a single category on a table and would make 
edits to a section of the Plan discussing how ICEEU will meet its 
liquidity requirements during a wind-down.
    In focusing the Plan and ensuring that it is internally consistent 
and consistent with other ICEEU policies, the Proposed Rule Change 
would make Plan clearer and easier to apply and thereby improve ICEEU's 
ability to facilitate the orderly close out of positions and potential 
transfer of positions to other clearing houses. The Proposed Rule 
Change would also facilitate the orderly close out of positions and 
potential transfer of positions to other clearing houses through adding 
and updating details integral to operating the Plan. Facilitation of 
the orderly close out of positions and potential transfer of positions 
to other clearing houses enhances ICEEU's ability to maintain and 
continue the prompt and accurate clearance and settlement of 
transactions by assuring that such transactions are closed-out and 
transferred to other clearing houses in an orderly and transparent 
manner. Further, by adding and updating details integral to operating 
the Plan, the Proposed Rule Change would also help assure an efficient 
and orderly wind-down. This, in turn, would help assure the 
safeguarding of securities or funds in the custody or control of ICE 
Clear Europe by reducing the likelihood of an inefficient or disorderly 
wind-down, which could disrupt access to such securities or funds.
    Therefore, the Proposed Rule Change is consistent with the 
requirements of Section 17A(b)(3)(F) of the Act.\32\
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    \32\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Consistency With Rule 17Ad-22(e)(2)(i) and (v)

    Rule 17Ad-22(e)(2)(i) and (v) require ICEEU to ``establish, 
implement, maintain, and enforce written policies and procedures 
reasonably designed to . . . provide for governance arrangements that 
are clear and transparent . . . and specify clear and direct lines of 
responsibility.'' \33\ Based on its review of the record, and for the 
reasons discussed below, ICEEU's Proposed Rule Change is consistent 
with Rule 17Ad-22(e)(2)(i) and (v).
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    \33\ 17 CFR 240.17Ad-22(e)(2)(i) and (v).
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    As discussed above, the Proposed Rule Change would add a Document 
Governance and Exception Handling Section. This section would make the 
document owner responsible for ensuring that the Plan remains up-to-
date and is reviewed in accordance with ICE Clear Europe's governance 
processes. The document owner also would be responsible for reporting 
material breaches or unapproved deviations from the Plan to their Head 
of Department, the Chief Risk Officer, and the Head of Regulation and 
Compliance (or, as applicable, their respective delegates). These 
changes would establish clear and direct responsibilities for the 
document owner of the plan consistent with Rule 17Ad-22(e)(2)(i) and 
(v).\34\
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    \34\ 17 CFR 240.17Ad-22(e)(2)(i) and (v).
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    The Proposed Rule Change would also add a section to the Plan's 
Introduction titled ``Execution of the Plan.'' As noted above, this 
section adds to the Plan a discussion of the establishment, 
responsibilities, and composition of the Wind Down Planning Committee. 
In doing so, it notes that the Wind Down Planning Committee reports to 
the Board and liaises with all stakeholders. This change would also 
establish clear and direct responsibilities for the document owner of 
the plan consistent with Rule 17Ad-22(e)(2)(i) and (v).\35\
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    \35\ 17 CFR 240.17Ad-22(e)(2)(i) and (v).
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    Therefore, the Proposed Rule Change is consistent with the 
requirements of Rules 17Ad-22(e)(2)(i) and (v).\36\
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    \36\ 17 CFR 240.17Ad-22(e)(2)(i) and (v).
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C. Consistency With Rule 17Ad-22(e)(3)(ii)

    Rule 17Ad-22(e)(3)(ii) requires ICEEU 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 the covered clearing agency, which . . . includes plans for 
the recovery and orderly wind-down of the covered clearing agency 
necessitated by credit losses, liquidity shortfalls, losses from 
general business risk, or any other losses.'' \37\ Based on its review 
of the record, and for the reasons discussed below, ICEEU's Proposed 
Rule Change is consistent with Rule 17Ad-22(e)(3)(ii).
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    \37\ 17 CFR 240.17Ad-22(e)(18).
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    The Proposed Rule Change would edit the planning options in the 
Plan. In doing so, it would alter the approach to assumptions 
underlying, activities related to, and the timeline for the Plan. For 
example, the timeline for transfer of one of ICEEU's business lines 
would be now approximately six months as opposed to no more than six 
months. By making information like this available in the Plan, the 
Proposed Rule Change enables ICEEU to prepare in advance for

[[Page 75359]]

and practice the steps needed to effectuate a wind-down. The added 
timeline flexibility would enhance ICEEU's ability to use the Plan 
effectively to carry-out an orderly wind-down.
    Additionally, the Proposed Rule Change would edit a section of the 
Plan discussing how ICEEU will meet its liquidity requirements during 
wind-down. For example, the Proposed Rule Change would make clear that 
collateral held as cash from Clearing Members should be immediately 
accessible or available at short notice and that the vast majority, 
instead of approximately 99 percent, of funds should be invested in 
high-quality, short-term instruments. The Proposed Rule Change would 
make these edits to make this portion of the Plan consistent with the 
Liquidity and Investment Management Policy.\38\ By making the Plan 
consistent with the Liquidity and Investment Management Policy the 
Proposed Rule Change decreases the potential for confusion which allows 
ICEEU personnel to correctly interpret the liquidity provisions in the 
Plan and effectuate a wind-down in a consistent and coordinated 
fashion. This increases the likelihood of an orderly wind-down. 
Therefore, the Proposed Rule Change is consistent with the requirements 
of Rule 17Ad-22(e)(3)(ii).\39\
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    \38\ Notice, 88 FR at 60002.
    \39\ 17 CFR 240.17Ad-22(e)(3)(ii).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change, as modified by Amendment No. 1, is consistent 
with the requirements of the Act, and in particular, Section 
17A(b)(3)(F) of the Act \40\ and Rules 17Ad-22(e)(2)(i), (e)(2)(v),\41\ 
and (e)(3)(ii) thereunder.\42\
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    \40\ 15 U.S.C. 78q-1(b)(3)(F).
    \41\ 17 CFR 240.17Ad-22(e)(2)(i) and (v).
    \42\ 17 CFR 240.17Ad-22(e)(3)(ii).
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    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
that the proposed rule change, as modified by Amendment No. 1 (SR-
ICEEU-2023-011) be, and hereby is, approved.\43\
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    \43\ In approving the Proposed Rule Change, the Commission 
considered the proposal's impacts on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\44\
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    \44\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-24180 Filed 11-1-23; 8:45 am]
BILLING CODE 8011-01-P


