Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change Relating to the ICC Clearing Participant Default Management Procedures and ICC Risk Management Framework, 34021-34025 [2019-15023]
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Federal Register / Vol. 84, No. 136 / Tuesday, July 16, 2019 / Notices
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[FR Doc. 2019–15045 Filed 7–15–19; 8:45 am]
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86341; File No. SR–ICC–
2019–008]
Self-Regulatory Organizations; ICE
Clear Credit LLC; Notice of Filing of
Proposed Rule Change Relating to the
ICC Clearing Participant Default
Management Procedures and ICC Risk
Management Framework
July 10, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 28,
2019, ICE Clear Credit LLC (‘‘ICC’’) filed
with the Securities and Exchange
Commission the proposed rule change
as described in Items I, II, and III below,
which Items have been prepared
primarily by ICC. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
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 formalize the
ICC Clearing Participant (‘‘CP’’) Default
Management Procedures (‘‘Default
Management Procedures’’). ICC also
proposes related default management
enhancements to the ICC Risk
Management Framework. These
revisions do not require any changes to
the ICC Clearing Rules (the ‘‘Rules’’).
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, ICC
included statements concerning the
purpose of and basis for the proposed
rule change, security-based swap
submission, or advance notice and
discussed any comments it received on
the proposed rule change, securitybased swap submission, or advance
notice. The text of these statements may
be examined at the places specified in
Item IV below. ICC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
(a) Purpose
ICC proposes to formalize the Default
Management Procedures. ICC also
proposes related default management
1 15
or otherwise communicated to more than ten
persons.
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2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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enhancements to the Risk Management
Framework. ICC believes such revisions
will facilitate the prompt and accurate
clearance and settlement of securities
transactions and derivative agreements,
contracts, and transactions for which it
is responsible. ICC proposes to make
such changes effective following
Commission approval of the proposed
rule change. The proposed revisions are
described in detail as follows.
Default Management Procedures
The Default Management Procedures
set forth ICC’s default management
process, including the actions taken by
ICC to determine that a CP is in default
as well as the actions taken by ICC in
connection with such default to closeout the defaulter’s portfolio (the ‘‘CloseOut’’). Currently, ICC’s default
management rules and procedures,
including the tools available to manage
a default and return to a matched book,
are in several ICC documents, including
the ICC Rules, the Default Auction
Procedures—Initial Default Auctions,
and the Secondary Auction Procedures.
The Default Management Procedures do
not change ICC’s existing default
management rules and procedures.
Instead, the Default Management
Procedures provide additional detail
with respect to ICC’s existing default
management rules and procedures, such
as assigning responsibility for default
management actions and adding
instructions on how to perform default
management actions. ICC’s default
management process is comprised of the
following sub-processes, each of which
is detailed in a section in the document:
Monitoring CPs to identify those that are
at risk of defaulting or are in default
(‘‘Default Risk CPs’’); declaring a
default; transferring a defaulter’s client
portfolios (‘‘Porting Portfolios’’) to nondefaulting Futures Commission
Merchants (‘‘Potential Receiving
FCMs’’); consulting with the CDS
Default Committee, which is comprised
of representatives from no more than
three CDS Committee-Eligible
Participants; 3 performing Standard
Default Management Actions and
Secondary Default Management Actions
to facilitate the Close-Out; and
managing default resources.
The Default Management Procedures
introduce ICC’s default management
process. The document contains a list of
defined terms that are key for default
management and an overview of ICC’s
default management process that
consists of descriptions of the
abovementioned sub-processes.
3 A CP that has been approved by the Board for
participation in the CDS Default Committee.
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Moreover, the Default Management
Procedures describe how ICC and its
CPs maintain operational readiness to
execute the default management
process. ICC maintains a CDS Default
Committee whose members consist of
experienced trading personnel at CDS
Committee-Eligible Participants that
serve on the CDS Default Committee on
a six-month rotating basis and, upon the
declaration of a CP default, are
seconded to ICC to assist with default
management. The Default Management
Procedures set forth detailed procedures
for performing tasks that are necessary
to maintain operational readiness,
including administering the CDS
Default Committee rotation process,
working with customers of CPs who
want to directly participate in auctions
(‘‘Direct Participating Customers’’),
maintaining up-to-date contact
information, and testing the default
management process (‘‘Default Test’’).
ICC annually conducts a Default Test, in
coordination with its CPs, and reviews
the results to identify any issues or
lessons learned.
The Default Management Procedures
describe the sub-process of monitoring
CPs. As part of a counterparty
monitoring program, ICC performs
daily, weekly, and quarterly monitoring
designed, in part, to identify Default
Risk CPs. Upon identifying such CPs,
the ICC President (the ‘‘President’’) may
take no action or may activate the team
responsible for overseeing the default
management process, which is
composed of ICC management, the ICC
Risk Oversight Officer, and the most
senior member of the Treasury
Department (‘‘Head of Treasury’’)
(together, the ‘‘Close-Out Team’’), to
move forward with the process of
declaring a default. The Default
Management Procedures establish the
general procedures for identifying
Default Risk CPs and activating the
Close-Out Team in addition to the
procedures that are specific to certain
types of defaults and circumstances,
including where a CP fails to meet
payment obligations to ICC; a CP has
filed for bankruptcy or is likely to fail
to meet obligations due to dissolution,
insolvency, or bankruptcy related
events; a CP has not complied, or is
likely not to comply, with certain
limitations, conditions, or restrictions
imposed on it by ICC; and a CP or its
guarantor has failed, or is likely to fail,
to meet obligations of ICC membership.
ICC’s activities immediately after the
identification of a potential default
comprise the default declaration subprocess. The Default Management
Procedures list the actions that the
Close-Out Team performs after
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activation but before a default
declaration. The Close-Out Team holds
an initial meeting to discuss, among
other matters, the circumstances
surrounding the Default Risk CP(s),
ICC’s strategy for the Close-Out, and
ICC’s plans for meeting upcoming
payment obligations. When the ICC
General Counsel (‘‘General Counsel’’) is
satisfied that all conditions for
determining the Default Risk CP(s) to be
in default are met and all required
approvals are secured, the General
Counsel confirms by email which
Default Risk CP(s) are in default. ICC
then communicates the default(s),
including to ICC’s CPs, regulators, Risk
Committee chairman, and the public.
The Default Management Procedures
also set forth the procedures applicable
to the Close-Out Team following a
default declaration to prepare for the
Close-Out.
The Default Management Procedures
discuss the CDS Default Committee
consultation sub-process. Certain
matters are subject to consultation with
the CDS Default Committee, including
the unwinding of the defaulter’s
remaining portfolio and the structure
and characteristics of an auction, and
certain actions may be delegated to the
CDS Default Committee, such as
executing Initial Cover Transactions 4 on
ICC’s behalf. The Default Management
Procedures establish procedures for
convening and adjourning a CDS
Default Committee meeting in addition
to the actions taken at the initial CDS
Default Committee meeting, which
include reviewing the defaulter’s
cleared portfolio, the Close-Out strategy,
the plan for transferring the Porting
Portfolios to Potential Receiving FCMs,
and a schedule for re-convening the
CDS Default Committee over the period
required to complete the Close-Out (the
‘‘Close-Out Period’’).
To facilitate the Close-Out, ICC
performs Standard Default Management
Actions during the Close-Out Period.
ICC allows customers of CPs who are
not yet Direct Participating Customers to
register as such during the Close-Out
Period to take part in auctions run by
ICC. The ICC Risk Department (‘‘Risk
Department’’) and Close-Out Team work
together, in consultation with the CDS
Default Committee, to implement the
Close-Out strategy through Standard
Default Management Actions.
Specifically, the Default Management
Procedures incorporate instructions on
executing Initial Cover Transactions by
4 As part of the Close-Out, ICC may enter into
transactions with CPs with respect to the defaulter’s
open positions to facilitate an orderly unwind of the
defaulter’s open positions and to mitigate damages
to ICC and other CPs.
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auction and bilaterally, conducting
Initial Default Auctions (‘‘Initial
Auctions’’),5 and executing bilateral
direct liquidation transactions in the
market to liquidate positions. The
document further assigns responsibility
for tracking the position changes that
result from the movement of positions
or the creation of new positions.
In addition to Standard Default
Management Actions, ICC may take
Secondary Default Management Actions
to facilitate the Close-Out where default
resources are significantly depleted or
no default resources remain. ICC may
call for assessment contributions, which
CPs are obligated to meet by providing
additional amounts to the Guaranty
Fund (‘‘GF’’), in the event that the GF
has been depleted or ICC anticipates the
need for additional funds related to a
default. The Default Management
Procedures discuss the procedures for
calling for assessment contributions and
initiating a Cooling-Off Period.6 During
the Cooling-Off Period, the Risk
Department and Close-Out Team, in
consultation with the CDS Default
Committee, continue to try to liquidate
the defaulter’s remaining portfolio
through Secondary Auctions,7 which
are subject to additional governance
requirements. If available default
resources are exhausted and ICC has not
returned to a matched book, the CloseOut Team uses reasonable efforts to
consult with the Risk Committee and
then seeks the Board’s decision on
whether to (1) enter a Loss Distribution
Period,8 (2) execute a partial tear-up, 9
(3) or terminate clearing services. The
Default Management Procedures detail
the procedures for each of the
abovementioned Secondary Default
Management Actions, including
notifying the public, CPs, and
regulators; consulting with the Risk
Committee; obtaining the requisite
5 The Default Auction Procedures—Initial Default
Auctions, which govern Initial Auctions are
available at: https://www.theice.com/publicdocs/
ICC_Default_Auction_Procedures.pdf.
6 During a Cooling-Off Period, the aggregate
liability of CPs for ents of the GF and assessment
contributions would be capped at ‘‘3x’’ their GF
contribution for all defaults during that period.
7 The Secondary Auction Procedures, which
govern Secondary Auctions are available at: https://
www.theice.com/publicdocs/ICC_Secondary_
Auction_Procedures.pdf.
8 A Loss Distribution Period commences from and
includes the date specified by ICC in a notice
following a reduced gains distribution (‘‘RGD’’)
determination. RGD allows ICC to reduce payment
of variation gains that would otherwise be owed to
CPs as ICC attempts a Secondary Auction or
conducts a partial tear-up.
9 In a partial tear-up, ICC terminates positions of
non-defaulting CPs that exactly offset those in the
defaulting CP’s remaining portfolio.
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Board approvals; and executing the
action.
The Default Management Procedures
provide an overview of the post-default
porting sub-process. The Risk
Department, in consultation with the
CDS Default Committee, determine
which Porting Portfolios to try to
transfer to Potential Receiving FCMs. To
facilitate the transfers, ICC distributes
the Porting Portfolios to Potential
Receiving FCMs and asks them to
indicate which portfolios they are
willing to receive by a deadline
(‘‘Porting Response Deadline’’). The
Default Management Procedures also
discuss specific procedures for postdefault porting in the case of a
bankruptcy-related default, which
require ICC to communicate and
coordinate with the defaulter’s trustee
in bankruptcy. Following the Porting
Response Deadline, ICC determines
which Porting Portfolios to transfer to
which Potential Receiving FCMs,
communicates to each Potential
Receiving FCM its assigned Porting
Portfolios (if any), and executes the
relevant transfers.
The Default Management Procedures
set forth the default resource
management sub-process. The
document includes procedures for the
identification and execution of
collateral management activities that are
necessary for ICC to meet upcoming
payment obligations. The Close-Out
Team meets daily during the Close-Out
Period to review the available liquid
resources and determine how to meet
upcoming payment obligations. The
Chief Operating Officer and Head of
Treasury coordinate the execution of
collateral management activities,
including liquidating non-cash
collateral in the defaulter’s house and/
or client accounts or utilizing ICC’s
committed FX or committed repo
facilities. Further, the Default
Management Procedures describe the
maintenance of a Default Management
Ledger, which serves as a record to
facilitate decision making and
implement ICC’s default waterfall; the
discussion points during the Close-Out
Team’s daily meeting during the CloseOut Period; and the application of any
special payments during the Close-Out
Period.
Risk Management Framework
ICC proposes related default
management enhancements to the ICC
Risk Management Framework.
Specifically, ICC proposes to
incorporate a reference to the Default
Management Procedures in the
‘Governance and Organization’ section
to specify that the Default Management
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Procedures contain details regarding
default management roles and
responsibilities of the Board, ICC
management, and relevant committees.
Additionally, ICC proposes changes to
the ‘Waterfall Level 6: GF
Replenishment’ sub-section to more
clearly describe CPs’ obligations with
respect to replenishment and
assessment contributions to the GF. The
proposed edits provide additional detail
regarding the aggregate liability of CPs
for replenishment and assessment
contributions. If the cap on the
additional GF contributions is reached,
ICC may apply additional Initial Margin
(‘‘IM’’) requirements if necessary to
maintain compliance with regulatory
financial resources requirements. The
proposed changes further discuss how
the additional IM requirements are
computed and communicated to CPs.
ICC also proposes to clarify the
maximum contribution of a retiring CP
that has given notice of its intent to
terminate its CP status. Given the
proposed formalization of the Default
Management Procedures, ICC proposes
replacing a reference to Appendix 3 of
the Risk Management Framework
(‘‘Appendix 3’’), which currently
contains default management
procedures, with a reference to the
Default Management Procedures in the
‘Default Treatment’ sub-section and
removing Appendix 3 from the Risk
Management Framework.
(b) Statutory Basis
Section 17A(b)(3)(F) of the Act 10
requires, among other things, that the
rules of a clearing agency be designed to
promote the prompt and accurate
clearance and settlement of securities
transactions, and to the extent
applicable, derivative agreements,
contracts and transactions; to assure the
safeguarding of securities and funds
which are in the custody or control of
the clearing agency or for which it is
responsible; in general, to protect
investors and the public interest; and to
comply with the provisions of the Act
and the rules and regulations
thereunder. ICC believes that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to ICC, in particular, to
Section 17(A)(b)(3)(F), 11 because ICC
believes that the proposed rule change
enhances ICC’s ability to manage the
risk of a default by describing the
processes for declaring a default and
facilitating the Close-Out and by
providing additional details regarding
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the roles and obligations of various
stakeholders, such as the Board, Risk
Committee, Close-Out Team, CPs, and
the CDS Default Committee. Namely,
the Default Management Procedures
provide more detail with respect to
ICC’s existing default management rules
and procedures, including assigning
responsibility for default management
actions and adding instructions on how
to perform default management actions.
The proposed changes to the Risk
Management Framework incorporate
reference to the proposed Default
Management Procedures and more
clearly describe CPs’ obligations and
aggregate liability with respect to
replenishment and assessment
contributions to the GF. ICC believes
that the formalization of the Default
Management Procedures and the
amendments to the Risk Management
Framework augment ICC’s procedures
relating to default management and
enhance ICC’s ability to withstand
defaults and continue providing
clearing services, thereby promoting the
prompt and accurate clearance and
settlement of securities transactions,
derivatives agreements, contracts, and
transactions; the safeguarding of
securities and funds which are in the
custody or control of ICC or for which
it is responsible; and the protection of
investors and the public interest. As
such, the proposed rule change is
designed to promote the prompt and
accurate clearance and settlement of
securities transactions, derivatives
agreements, contracts, and transactions;
to contribute to the safeguarding of
securities and funds associated with
security-based swap transactions in
ICC’s custody or control, or for which
ICC is responsible; and, in general, to
protect investors and the public interest
within the meaning of Section
17A(b)(3)(F) of the Act.12
In addition, the proposed rule change
is consistent with the relevant
requirements of Rule 17Ad–22.13 Rule
17Ad–22(b)(3) 14 requires ICC to
establish, implement, maintain and
enforce written policies and procedures
reasonably designed to maintain
sufficient financial resources to
withstand, at a minimum, a default by
the two CP families to which it has the
largest exposures in extreme but
plausible market conditions. The
Default Management Procedures
provide detailed instructions regarding
the process for managing a default and
returning to a matched book, including
conducting Standard and Secondary
12 Id.
10 15
U.S.C. 78q–1(b)(3)(F).
11 Id.
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13 17
14 17
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CFR 240.17Ad–22.
CFR 240.17Ad–22(b)(3).
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Default Management Actions,
identifying and executing collateral
management activities to meet payment
obligations, and tracking default
management resources. The proposed
changes to the Risk Management
Framework provide additional clarity
regarding CPs’ obligations regarding
replenishment and assessment
contributions as well as the
computation of additional IM
requirements that allow ICC to maintain
compliance with regulatory financial
resources requirements. ICC believes
that such changes enhance ICC’s ability
to manage a default by providing
additional detail, transparency and
clarity with respect to ICC’s default
management rules and procedures,
thereby ensuring that ICC continues to
maintain sufficient financial resources
to withstand, at a minimum, a default
by the two CP families to which it has
the largest exposures in extreme but
plausible market conditions, consistent
with the requirements of Rule 17Ad–
22(b)(3).15
Rule 17Ad–22(d)(4) 16 requires ICC to
establish, implement, maintain and
enforce written policies and procedures
reasonably designed to identify sources
of operational risk and minimize them
through the development of appropriate
systems, controls, and procedures;
implement systems that are reliable,
resilient and secure, and have adequate
scalable capacity; and have business
continuity plans that allow for timely
recovery of operations and fulfillment of
a clearing agency’s obligations. The
Default Management Procedures
describe how ICC and its CPs maintain
operational readiness to execute the
default management process. The
document sets forth ICC’s processes for
carrying out an annual Default Test,
reviewing the results of the annual
Default Test, and maintaining up-to-date
contact information for default contacts.
Such testing and preparation allow ICC
to identify sources of operational risk
and minimize them through the
development of appropriate systems,
controls, and procedures and implement
systems that are reliable, resilient and
secure, and have adequate scalable
capacity, consistent with the
requirements of Rule 17Ad–22(d)(4).17
Rule 17Ad–22(d)(8) 18 requires ICC to
establish, implement, maintain and
enforce written policies and procedures
reasonably designed to have governance
arrangements that are clear and
transparent to fulfill the public interest
requirements in Section 17A of the
Act.19 The proposed changes to the Risk
Management Framework strengthen the
governance arrangements set forth in the
document by incorporating reference to
the Default Management Procedures to
note the default management roles and
responsibilities of the Board, ICC
management, and relevant committees.
Moreover, the Default Management
Procedures clearly assign and document
responsibility and accountability for
default management actions and
decisions. The governance procedures
provide for consultation with the Risk
Committee and the CDS Default
Committee, approval from the Board,
and notification to the public, CPs, and
regulators. As such, these governance
arrangements are clear and transparent,
such that information relating to the
assignment of responsibilities and the
requisite involvement of the Board, Risk
Committee, CDS Default Committee,
and Close-Out Team is clearly
documented, consistent with the
requirements of Rule 17Ad–22(d)(8).20
Rule 17Ad–22(d)(11) 21 requires ICC
to establish, implement, maintain and
enforce written policies and procedures
reasonably designed to make key
aspects of the clearing agency’s default
procedures publicly available and
establish default procedures that ensure
that the clearing agency can take timely
action to contain losses and liquidity
pressures and to continue meeting its
obligations in the event of a participant
default. ICC’s default management rules
and procedures contained in the ICC
Rules, the Default Auction Procedures—
Initial Default Auctions, and the
Secondary Auction Procedures are
publically available on ICC’s website.
Additionally, the proposed Default
Management Procedures clarify and
augment ICC’s existing rules and
procedures relating to default
management and enhance ICC’s ability
to withstand defaults and continue
providing clearing services, including
by assigning responsibility for default
management actions and adding
instructions on how to perform default
management actions, to ensure that ICC
can take timely action to contain losses
and liquidity pressures and to continue
meeting its obligations in the event of a
participant default, consistent with the
requirements of Rule 17Ad–22(d)(11).22
19 15
U.S.C. 78q–1.
CFR 240.17Ad–22(d)(8).
21 17 CFR 240.17Ad–22(d)(11).
22 Id.
15 Id.
16 17
20 17
CFR 240.17Ad–22(d)(4).
17 Id.
18 17
CFR 240.17Ad–22(d)(8).
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(B) Clearing Agency’s Statement on
Burden on Competition
ICC does not believe the proposed
rule change would have any impact, or
impose any burden, on competition.
The proposed rule change to formalize
the ICC Default Management Procedures
and to amend the ICC Risk Management
Framework will apply uniformly across
all market participants. Therefore, ICC
does not believe the proposed rule
change imposes any burden on
competition that is inappropriate in
furtherance of the purposes of the Act.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change, Security-Based Swap
Submission, or Advance Notice
Received From Members, Participants or
Others
Written comments relating to the
proposed rule change have not been
solicited or received. ICC will notify the
Commission of any written comments
received by ICC.
III. Date of Effectiveness of the
Proposed Rule Change
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 rule-comments@
sec.gov. Please include File Number SR–
ICC–2019–008 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–2019–008. This file
number should be included on the
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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
10:00 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–2019–008 and
should be submitted on or before
August 6, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–15023 Filed 7–15–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86345; File No. SR–MIAX–
2019–32]
jspears on DSK30JT082PROD with NOTICES
Self-Regulatory Organizations; Miami
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Exchange Rule 503,
Openings on the Exchange
July 10, 2019.
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on July 3, 2019, Miami International
Securities Exchange, LLC (‘‘MIAX
Options’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend Exchange Rule 503, Openings on
the Exchange.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/ at MIAX Options’ principal
office, and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange 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. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Exchange Rule 503, Openings on the
Exchange, to make minor nonsubstantive edits to harmonize the rule
text to that of the Exchange’s affiliate,
MIAX Emerald, LLC (‘‘MIAX Emerald’’
or ‘‘Emerald’’). Additionally, the
Exchange proposes to amend subsection
(f)(2)(iv)(A)2. to adopt new rule text
relating to the price at which an
Intermarket Sweep Order (‘‘ISO’’) is
routed in order to align the rule text to
the operation of the System.3 The
Exchange also proposes to adopt new
subsection (f)(2)(xi) related to the
2 17
CFR 240.19b–4.
term ‘‘System’’ means the automated
trading system used by the Exchange for the trading
of securities. See Exchange Rule 100.
3 The
23 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
VerDate Sep<11>2014
17:33 Jul 15, 2019
Jkt 247001
PO 00000
Frm 00122
Fmt 4703
Sfmt 4703
34025
operation of Route Timers and
Imbalance Timers during the Opening
Process.4 Finally, the Exchange
proposes to amend paragraph (g) to
adopt new rule text that identifies Help
Desk staff authorized to take actions
during Opening Process to maintain a
fair and orderly market.
First, the Exchange proposes to
amend subsection (b) to adopt new rule
text that is identical to rule text found
in Emerald,5 to state that the order types
that may participate in the opening
process are set forth in Rule 516, Order
Types Defined. The Exchange believes
that this provides additional detail and
clarity to the rule.
Next, the Exchange proposes to
amend subsection (f)(2)(iv) to insert the
word ‘‘Trading’’ to provide consistency
and clarity within the rule text. The rule
discusses Minimum Trading
Increments,6 and the last reference in
the sentence is to the Minimum
Increment. The Exchange now proposes
to change this phrase to, ‘‘Minimum
Trading Increment,’’ to align to the rest
of the rule text and to the rule text of
Emerald.7
Next, the Exchange proposes to
amend subsection (f)(2)(iv)(A)(1.) and
(2.) to correct the formatting of
subsection (1.) and (2.) to remove the
parentheses to make the formatting
consistent with the hierarchical
convention used throughout the
rulebook. The Exchange also proposes
to amend subsection 2. to conform the
rule to the current System behavior and
state that any order that is routed
pursuant to this Rule will be marked as
an Intermarket Sweep Order (‘‘ISO’’), as
defined in Rule 1400(h), with a limit
price equal to the ‘‘away market’s
displayed price,’’ and not the
Exchange’s ‘‘opening price’’ as currently
stated in the rule.8
As described in the Exchange’s
current rule, the Exchange will route to
other markets disseminating prices
better than the Exchange’s opening price
and will also route to other markets
disseminating prices equal to the
Exchange’s opening price if necessary.9
Given that the order is being routed to
another market center for execution the
limit price of the order being routed
should be equal to the away market’s
displayed price rather than the
Exchange’s opening price (although, in
4 See
Exchange Rule 503(f).
MIAX Emerald Exchange Rule 503(b).
6 See Exchange Rule 510.
7 See MIAX Emerald Exchange Rule 503(f)(2)(iv).
8 The Exchange notes that Rule 1400(h) pertains
primarily to ISOs received by the Exchange,
whereas in this instance the Exchange will be
sending the ISO to another exchange.
9 See Exchange Rule 503(f)(2)(iv)(A).
5 See
E:\FR\FM\16JYN1.SGM
16JYN1
]]>Agencies
[Federal Register Volume 84, Number 136 (Tuesday, July 16, 2019)]
[Notices]
[Pages 34021-34025]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15023]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86341; File No. SR-ICC-2019-008]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change Relating to the ICC Clearing Participant
Default Management Procedures and ICC Risk Management Framework
July 10, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 28, 2019, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
primarily by ICC. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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 formalize
the ICC Clearing Participant (``CP'') Default Management Procedures
(``Default Management Procedures''). ICC also proposes related default
management enhancements to the ICC Risk Management Framework. These
revisions do not require any changes to the ICC Clearing Rules (the
``Rules'').
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, ICC included statements
concerning the purpose of and basis for the proposed rule change,
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. ICC has prepared
summaries, set forth in sections (A), (B), and (C) below, of the most
significant aspects of these statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
(a) Purpose
ICC proposes to formalize the Default Management Procedures. ICC
also proposes related default management enhancements to the Risk
Management Framework. ICC believes such revisions will facilitate the
prompt and accurate clearance and settlement of securities transactions
and derivative agreements, contracts, and transactions for which it is
responsible. ICC proposes to make such changes effective following
Commission approval of the proposed rule change. The proposed revisions
are described in detail as follows.
Default Management Procedures
The Default Management Procedures set forth ICC's default
management process, including the actions taken by ICC to determine
that a CP is in default as well as the actions taken by ICC in
connection with such default to close-out the defaulter's portfolio
(the ``Close-Out''). Currently, ICC's default management rules and
procedures, including the tools available to manage a default and
return to a matched book, are in several ICC documents, including the
ICC Rules, the Default Auction Procedures--Initial Default Auctions,
and the Secondary Auction Procedures. The Default Management Procedures
do not change ICC's existing default management rules and procedures.
Instead, the Default Management Procedures provide additional detail
with respect to ICC's existing default management rules and procedures,
such as assigning responsibility for default management actions and
adding instructions on how to perform default management actions. ICC's
default management process is comprised of the following sub-processes,
each of which is detailed in a section in the document: Monitoring CPs
to identify those that are at risk of defaulting or are in default
(``Default Risk CPs''); declaring a default; transferring a defaulter's
client portfolios (``Porting Portfolios'') to non-defaulting Futures
Commission Merchants (``Potential Receiving FCMs''); consulting with
the CDS Default Committee, which is comprised of representatives from
no more than three CDS Committee-Eligible Participants; \3\ performing
Standard Default Management Actions and Secondary Default Management
Actions to facilitate the Close-Out; and managing default resources.
---------------------------------------------------------------------------
\3\ A CP that has been approved by the Board for participation
in the CDS Default Committee.
---------------------------------------------------------------------------
The Default Management Procedures introduce ICC's default
management process. The document contains a list of defined terms that
are key for default management and an overview of ICC's default
management process that consists of descriptions of the abovementioned
sub-processes.
[[Page 34022]]
Moreover, the Default Management Procedures describe how ICC and its
CPs maintain operational readiness to execute the default management
process. ICC maintains a CDS Default Committee whose members consist of
experienced trading personnel at CDS Committee-Eligible Participants
that serve on the CDS Default Committee on a six-month rotating basis
and, upon the declaration of a CP default, are seconded to ICC to
assist with default management. The Default Management Procedures set
forth detailed procedures for performing tasks that are necessary to
maintain operational readiness, including administering the CDS Default
Committee rotation process, working with customers of CPs who want to
directly participate in auctions (``Direct Participating Customers''),
maintaining up-to-date contact information, and testing the default
management process (``Default Test''). ICC annually conducts a Default
Test, in coordination with its CPs, and reviews the results to identify
any issues or lessons learned.
The Default Management Procedures describe the sub-process of
monitoring CPs. As part of a counterparty monitoring program, ICC
performs daily, weekly, and quarterly monitoring designed, in part, to
identify Default Risk CPs. Upon identifying such CPs, the ICC President
(the ``President'') may take no action or may activate the team
responsible for overseeing the default management process, which is
composed of ICC management, the ICC Risk Oversight Officer, and the
most senior member of the Treasury Department (``Head of Treasury'')
(together, the ``Close-Out Team''), to move forward with the process of
declaring a default. The Default Management Procedures establish the
general procedures for identifying Default Risk CPs and activating the
Close-Out Team in addition to the procedures that are specific to
certain types of defaults and circumstances, including where a CP fails
to meet payment obligations to ICC; a CP has filed for bankruptcy or is
likely to fail to meet obligations due to dissolution, insolvency, or
bankruptcy related events; a CP has not complied, or is likely not to
comply, with certain limitations, conditions, or restrictions imposed
on it by ICC; and a CP or its guarantor has failed, or is likely to
fail, to meet obligations of ICC membership.
ICC's activities immediately after the identification of a
potential default comprise the default declaration sub-process. The
Default Management Procedures list the actions that the Close-Out Team
performs after activation but before a default declaration. The Close-
Out Team holds an initial meeting to discuss, among other matters, the
circumstances surrounding the Default Risk CP(s), ICC's strategy for
the Close-Out, and ICC's plans for meeting upcoming payment
obligations. When the ICC General Counsel (``General Counsel'') is
satisfied that all conditions for determining the Default Risk CP(s) to
be in default are met and all required approvals are secured, the
General Counsel confirms by email which Default Risk CP(s) are in
default. ICC then communicates the default(s), including to ICC's CPs,
regulators, Risk Committee chairman, and the public. The Default
Management Procedures also set forth the procedures applicable to the
Close-Out Team following a default declaration to prepare for the
Close-Out.
The Default Management Procedures discuss the CDS Default Committee
consultation sub-process. Certain matters are subject to consultation
with the CDS Default Committee, including the unwinding of the
defaulter's remaining portfolio and the structure and characteristics
of an auction, and certain actions may be delegated to the CDS Default
Committee, such as executing Initial Cover Transactions \4\ on ICC's
behalf. The Default Management Procedures establish procedures for
convening and adjourning a CDS Default Committee meeting in addition to
the actions taken at the initial CDS Default Committee meeting, which
include reviewing the defaulter's cleared portfolio, the Close-Out
strategy, the plan for transferring the Porting Portfolios to Potential
Receiving FCMs, and a schedule for re-convening the CDS Default
Committee over the period required to complete the Close-Out (the
``Close-Out Period'').
---------------------------------------------------------------------------
\4\ As part of the Close-Out, ICC may enter into transactions
with CPs with respect to the defaulter's open positions to
facilitate an orderly unwind of the defaulter's open positions and
to mitigate damages to ICC and other CPs.
---------------------------------------------------------------------------
To facilitate the Close-Out, ICC performs Standard Default
Management Actions during the Close-Out Period. ICC allows customers of
CPs who are not yet Direct Participating Customers to register as such
during the Close-Out Period to take part in auctions run by ICC. The
ICC Risk Department (``Risk Department'') and Close-Out Team work
together, in consultation with the CDS Default Committee, to implement
the Close-Out strategy through Standard Default Management Actions.
Specifically, the Default Management Procedures incorporate
instructions on executing Initial Cover Transactions by auction and
bilaterally, conducting Initial Default Auctions (``Initial
Auctions''),\5\ and executing bilateral direct liquidation transactions
in the market to liquidate positions. The document further assigns
responsibility for tracking the position changes that result from the
movement of positions or the creation of new positions.
---------------------------------------------------------------------------
\5\ The Default Auction Procedures--Initial Default Auctions,
which govern Initial Auctions are available at: https://www.theice.com/publicdocs/ICC_Default_Auction_Procedures.pdf.
---------------------------------------------------------------------------
In addition to Standard Default Management Actions, ICC may take
Secondary Default Management Actions to facilitate the Close-Out where
default resources are significantly depleted or no default resources
remain. ICC may call for assessment contributions, which CPs are
obligated to meet by providing additional amounts to the Guaranty Fund
(``GF''), in the event that the GF has been depleted or ICC anticipates
the need for additional funds related to a default. The Default
Management Procedures discuss the procedures for calling for assessment
contributions and initiating a Cooling-Off Period.\6\ During the
Cooling-Off Period, the Risk Department and Close-Out Team, in
consultation with the CDS Default Committee, continue to try to
liquidate the defaulter's remaining portfolio through Secondary
Auctions,\7\ which are subject to additional governance requirements.
If available default resources are exhausted and ICC has not returned
to a matched book, the Close-Out Team uses reasonable efforts to
consult with the Risk Committee and then seeks the Board's decision on
whether to (1) enter a Loss Distribution Period,\8\ (2) execute a
partial tear-up, \9\ (3) or terminate clearing services. The Default
Management Procedures detail the procedures for each of the
abovementioned Secondary Default Management Actions, including
notifying the public, CPs, and regulators; consulting with the Risk
Committee; obtaining the requisite
[[Page 34023]]
Board approvals; and executing the action.
---------------------------------------------------------------------------
\6\ During a Cooling-Off Period, the aggregate liability of CPs
for ents of the GF and assessment contributions would be capped at
``3x'' their GF contribution for all defaults during that period.
\7\ The Secondary Auction Procedures, which govern Secondary
Auctions are available at: https://www.theice.com/publicdocs/ICC_Secondary_Auction_Procedures.pdf.
\8\ A Loss Distribution Period commences from and includes the
date specified by ICC in a notice following a reduced gains
distribution (``RGD'') determination. RGD allows ICC to reduce
payment of variation gains that would otherwise be owed to CPs as
ICC attempts a Secondary Auction or conducts a partial tear-up.
\9\ In a partial tear-up, ICC terminates positions of non-
defaulting CPs that exactly offset those in the defaulting CP's
remaining portfolio.
---------------------------------------------------------------------------
The Default Management Procedures provide an overview of the post-
default porting sub-process. The Risk Department, in consultation with
the CDS Default Committee, determine which Porting Portfolios to try to
transfer to Potential Receiving FCMs. To facilitate the transfers, ICC
distributes the Porting Portfolios to Potential Receiving FCMs and asks
them to indicate which portfolios they are willing to receive by a
deadline (``Porting Response Deadline''). The Default Management
Procedures also discuss specific procedures for post-default porting in
the case of a bankruptcy-related default, which require ICC to
communicate and coordinate with the defaulter's trustee in bankruptcy.
Following the Porting Response Deadline, ICC determines which Porting
Portfolios to transfer to which Potential Receiving FCMs, communicates
to each Potential Receiving FCM its assigned Porting Portfolios (if
any), and executes the relevant transfers.
The Default Management Procedures set forth the default resource
management sub-process. The document includes procedures for the
identification and execution of collateral management activities that
are necessary for ICC to meet upcoming payment obligations. The Close-
Out Team meets daily during the Close-Out Period to review the
available liquid resources and determine how to meet upcoming payment
obligations. The Chief Operating Officer and Head of Treasury
coordinate the execution of collateral management activities, including
liquidating non-cash collateral in the defaulter's house and/or client
accounts or utilizing ICC's committed FX or committed repo facilities.
Further, the Default Management Procedures describe the maintenance of
a Default Management Ledger, which serves as a record to facilitate
decision making and implement ICC's default waterfall; the discussion
points during the Close-Out Team's daily meeting during the Close-Out
Period; and the application of any special payments during the Close-
Out Period.
Risk Management Framework
ICC proposes related default management enhancements to the ICC
Risk Management Framework. Specifically, ICC proposes to incorporate a
reference to the Default Management Procedures in the `Governance and
Organization' section to specify that the Default Management Procedures
contain details regarding default management roles and responsibilities
of the Board, ICC management, and relevant committees. Additionally,
ICC proposes changes to the `Waterfall Level 6: GF Replenishment' sub-
section to more clearly describe CPs' obligations with respect to
replenishment and assessment contributions to the GF. The proposed
edits provide additional detail regarding the aggregate liability of
CPs for replenishment and assessment contributions. If the cap on the
additional GF contributions is reached, ICC may apply additional
Initial Margin (``IM'') requirements if necessary to maintain
compliance with regulatory financial resources requirements. The
proposed changes further discuss how the additional IM requirements are
computed and communicated to CPs. ICC also proposes to clarify the
maximum contribution of a retiring CP that has given notice of its
intent to terminate its CP status. Given the proposed formalization of
the Default Management Procedures, ICC proposes replacing a reference
to Appendix 3 of the Risk Management Framework (``Appendix 3''), which
currently contains default management procedures, with a reference to
the Default Management Procedures in the `Default Treatment' sub-
section and removing Appendix 3 from the Risk Management Framework.
(b) Statutory Basis
Section 17A(b)(3)(F) of the Act \10\ requires, among other things,
that the rules of a clearing agency be designed to promote the prompt
and accurate clearance and settlement of securities transactions, and
to the extent applicable, derivative agreements, contracts and
transactions; to assure the safeguarding of securities and funds which
are in the custody or control of the clearing agency or for which it is
responsible; in general, to protect investors and the public interest;
and to comply with the provisions of the Act and the rules and
regulations thereunder. ICC believes that the proposed rule change is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to ICC, in particular, to Section
17(A)(b)(3)(F), \11\ because ICC believes that the proposed rule change
enhances ICC's ability to manage the risk of a default by describing
the processes for declaring a default and facilitating the Close-Out
and by providing additional details regarding the roles and obligations
of various stakeholders, such as the Board, Risk Committee, Close-Out
Team, CPs, and the CDS Default Committee. Namely, the Default
Management Procedures provide more detail with respect to ICC's
existing default management rules and procedures, including assigning
responsibility for default management actions and adding instructions
on how to perform default management actions. The proposed changes to
the Risk Management Framework incorporate reference to the proposed
Default Management Procedures and more clearly describe CPs'
obligations and aggregate liability with respect to replenishment and
assessment contributions to the GF. ICC believes that the formalization
of the Default Management Procedures and the amendments to the Risk
Management Framework augment ICC's procedures relating to default
management and enhance ICC's ability to withstand defaults and continue
providing clearing services, thereby promoting the prompt and accurate
clearance and settlement of securities transactions, derivatives
agreements, contracts, and transactions; the safeguarding of securities
and funds which are in the custody or control of ICC or for which it is
responsible; and the protection of investors and the public interest.
As such, the proposed rule change is designed to promote the prompt and
accurate clearance and settlement of securities transactions,
derivatives agreements, contracts, and transactions; to contribute to
the safeguarding of securities and funds associated with security-based
swap transactions in ICC's custody or control, or for which ICC is
responsible; and, in general, to protect investors and the public
interest within the meaning of Section 17A(b)(3)(F) of the Act.\12\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78q-1(b)(3)(F).
\11\ Id.
\12\ Id.
---------------------------------------------------------------------------
In addition, the proposed rule change is consistent with the
relevant requirements of Rule 17Ad-22.\13\ Rule 17Ad-22(b)(3) \14\
requires ICC to establish, implement, maintain and enforce written
policies and procedures reasonably designed to maintain sufficient
financial resources to withstand, at a minimum, a default by the two CP
families to which it has the largest exposures in extreme but plausible
market conditions. The Default Management Procedures provide detailed
instructions regarding the process for managing a default and returning
to a matched book, including conducting Standard and Secondary
[[Page 34024]]
Default Management Actions, identifying and executing collateral
management activities to meet payment obligations, and tracking default
management resources. The proposed changes to the Risk Management
Framework provide additional clarity regarding CPs' obligations
regarding replenishment and assessment contributions as well as the
computation of additional IM requirements that allow ICC to maintain
compliance with regulatory financial resources requirements. ICC
believes that such changes enhance ICC's ability to manage a default by
providing additional detail, transparency and clarity with respect to
ICC's default management rules and procedures, thereby ensuring that
ICC continues to maintain sufficient financial resources to withstand,
at a minimum, a default by the two CP families to which it has the
largest exposures in extreme but plausible market conditions,
consistent with the requirements of Rule 17Ad-22(b)(3).\15\
---------------------------------------------------------------------------
\13\ 17 CFR 240.17Ad-22.
\14\ 17 CFR 240.17Ad-22(b)(3).
\15\ Id.
---------------------------------------------------------------------------
Rule 17Ad-22(d)(4) \16\ requires ICC to establish, implement,
maintain and enforce written policies and procedures reasonably
designed to identify sources of operational risk and minimize them
through the development of appropriate systems, controls, and
procedures; implement systems that are reliable, resilient and secure,
and have adequate scalable capacity; and have business continuity plans
that allow for timely recovery of operations and fulfillment of a
clearing agency's obligations. The Default Management Procedures
describe how ICC and its CPs maintain operational readiness to execute
the default management process. The document sets forth ICC's processes
for carrying out an annual Default Test, reviewing the results of the
annual Default Test, and maintaining up-to-date contact information for
default contacts. Such testing and preparation allow ICC to identify
sources of operational risk and minimize them through the development
of appropriate systems, controls, and procedures and implement systems
that are reliable, resilient and secure, and have adequate scalable
capacity, consistent with the requirements of Rule 17Ad-22(d)(4).\17\
---------------------------------------------------------------------------
\16\ 17 CFR 240.17Ad-22(d)(4).
\17\ Id.
---------------------------------------------------------------------------
Rule 17Ad-22(d)(8) \18\ requires ICC to establish, implement,
maintain and enforce written policies and procedures reasonably
designed to have governance arrangements that are clear and transparent
to fulfill the public interest requirements in Section 17A of the
Act.\19\ The proposed changes to the Risk Management Framework
strengthen the governance arrangements set forth in the document by
incorporating reference to the Default Management Procedures to note
the default management roles and responsibilities of the Board, ICC
management, and relevant committees. Moreover, the Default Management
Procedures clearly assign and document responsibility and
accountability for default management actions and decisions. The
governance procedures provide for consultation with the Risk Committee
and the CDS Default Committee, approval from the Board, and
notification to the public, CPs, and regulators. As such, these
governance arrangements are clear and transparent, such that
information relating to the assignment of responsibilities and the
requisite involvement of the Board, Risk Committee, CDS Default
Committee, and Close-Out Team is clearly documented, consistent with
the requirements of Rule 17Ad-22(d)(8).\20\
---------------------------------------------------------------------------
\18\ 17 CFR 240.17Ad-22(d)(8).
\19\ 15 U.S.C. 78q-1.
\20\ 17 CFR 240.17Ad-22(d)(8).
---------------------------------------------------------------------------
Rule 17Ad-22(d)(11) \21\ requires ICC to establish, implement,
maintain and enforce written policies and procedures reasonably
designed to make key aspects of the clearing agency's default
procedures publicly available and establish default procedures that
ensure that the clearing agency can take timely action to contain
losses and liquidity pressures and to continue meeting its obligations
in the event of a participant default. ICC's default management rules
and procedures contained in the ICC Rules, the Default Auction
Procedures--Initial Default Auctions, and the Secondary Auction
Procedures are publically available on ICC's website. Additionally, the
proposed Default Management Procedures clarify and augment ICC's
existing rules and procedures relating to default management and
enhance ICC's ability to withstand defaults and continue providing
clearing services, including by assigning responsibility for default
management actions and adding instructions on how to perform default
management actions, to ensure that ICC can take timely action to
contain losses and liquidity pressures and to continue meeting its
obligations in the event of a participant default, consistent with the
requirements of Rule 17Ad-22(d)(11).\22\
---------------------------------------------------------------------------
\21\ 17 CFR 240.17Ad-22(d)(11).
\22\ Id.
---------------------------------------------------------------------------
(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 rule change
to formalize the ICC Default Management Procedures and to amend the ICC
Risk Management Framework will apply uniformly across all market
participants. Therefore, ICC does not believe the proposed rule change
imposes any burden on competition that is inappropriate in furtherance
of the purposes of the Act.
(C) Clearing Agency's Statement on Comments on the Proposed Rule
Change, Security-Based Swap Submission, or Advance Notice Received From
Members, Participants or Others
Written comments relating to the proposed rule change have not been
solicited or received. ICC will notify the Commission of any written
comments received by ICC.
III. Date of Effectiveness of the Proposed Rule Change
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-2019-008 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-2019-008. This file
number should be included on the
[[Page 34025]]
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 10:00 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-2019-008 and should be
submitted on or before August 6, 2019.
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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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-15023 Filed 7-15-19; 8:45 am]
BILLING CODE 8011-01-P
