Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change, Security-Based Swap Submission, or Advance Notice Relating to the Clearance of an Additional Credit Default Swap Contract, 7751-7753 [2021-02004]
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Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices
Commission shall issue an order
approving or disapproving the proposed
rule change not later than 180 days after
the date of publication of notice of filing
of the proposed rule change. The
Commission may extend the period for
issuing an order approving or
disapproving the proposed rule change
by not more than 60 days if the
Commission determines that a longer
period is appropriate and publishes
reasons for such determination. The
proposed rule change was published for
notice and comment in the Federal
Register on August 7, 2020. February 3,
2021 is 180 days from that date, and
April 4, 2021 is 240 days from that date.
The Commission finds it appropriate
to designate a longer period within
which to issue an order approving or
disapproving the proposed rule change
so that it has sufficient time to consider
the proposed rule change. Accordingly,
the Commission, pursuant to Section
19(b)(2) of the Exchange Act,10
designates April 4, 2021 as the date by
which the Commission shall either
approve or disapprove the proposed
rule change (File No. SR–NASDAQ–
2020–017).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
J. Matthew DeLesDernier,
Assistant Secretary.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90989; File No. SR–ICC–
2021–002]
Self-Regulatory Organizations; ICE
Clear Credit LLC; Notice of Filing of
Proposed Rule Change, SecurityBased Swap Submission, or Advance
Notice Relating to the Clearance of an
Additional Credit Default Swap
Contract
January 26, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934,1 and
Rule 19b–4,2 notice is hereby given that
on January 15, 2021, ICE Clear Credit
LLC (‘‘ICC’’) filed with the Securities
and Exchange Commission the proposed
rule change, security-based swap
submission, or advance notice as
described in Items I, II and III below,
which Items have been prepared by ICC.
The Commission is publishing this
notice to solicit comments on the
proposed rule change, security-based
swap submission, or advance notice
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change, Security-Based Swap
Submission, or Advance Notice
[FR Doc. 2021–02009 Filed 1–29–21; 8:45 am]
The principal purpose of the
proposed rule change is to revise the
ICC Rulebook (the ‘‘Rules’’) to provide
for the clearance of an additional
Standard Emerging Market Sovereign
CDS contract (the ‘‘EM Contract’’).
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting; Cancellation
FEDERAL REGISTER CITATION OF PREVIOUS
ANNOUNCEMENT: 86 FR 6687, January 22,
2021.
PREVIOUSLY ANNOUNCED TIME AND DATE OF
THE MEETING: Wednesday, January 27,
2021 at 2:00 p.m.
The Closed
Meeting scheduled for Wednesday,
January 27, 2021 at 2:00 p.m., has been
cancelled.
CHANGES IN THE MEETING:
CONTACT PERSON FOR MORE INFORMATION:
For further information; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
Dated: January 27, 2021.
Vanessa A. Countryman,
Secretary.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change, Security-Based
Swap Submission, or Advance Notice
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.
[FR Doc. 2021–02131 Filed 1–28–21; 11:15 am]
BILLING CODE 8011–01–P
1 15
10 Id.
11 17
CFR 200.30–3(a)(31).
VerDate Sep<11>2014
16:57 Jan 29, 2021
2 17
Jkt 253001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00064
Fmt 4703
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change, Security-Based
Swap Submission, or Advance Notice
(a) Purpose
The purpose of the proposed rule
change is to adopt rules that will
provide the basis for ICC to clear an
additional credit default swap contract.
ICC proposes to make such change
effective following Commission
approval of the proposed rule change.
ICC believes the addition of this
contract will benefit the market for
credit default swaps by providing
market participants the benefits of
clearing, including reduction in
counterparty risk and safeguarding of
margin assets pursuant to clearing house
rules. Clearing of the additional EM
Contract will not require any changes to
ICC’s Risk Management Framework or
other policies and procedures
constituting rules within the meaning of
the Securities Exchange Act of 1934
(‘‘Act’’).
ICC proposes amending Subchapter
26D of its Rules to provide for the
clearance of the additional EM Contract,
namely Ukraine. This additional EM
Contract has terms consistent with the
other EM Contracts approved for
clearing at ICC and governed by
Subchapter 26D of the Rules. A minor
revision to Subchapter 26D (Standard
Emerging Market Sovereign (‘‘SES’’)
Single Name) is made to provide for
clearing the additional EM Contract.
Specifically, in Rule 26D–102
(Definitions), ‘‘Eligible SES Reference
Entities’’ is modified to include Ukraine
in the list of specific Eligible SES
Reference Entities to be cleared by ICC.
(b) Statutory Basis
Section 17A(b)(3)(F) of the Act 3
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
ICC or for which it is responsible; and
to comply with the provisions of the Act
and the rules and regulations
thereunder. The additional EM Contract
proposed for clearing is similar to the
EM Contracts currently cleared by ICC,
and will be cleared pursuant to ICC’s
existing clearing arrangements and
related financial safeguards, protections
and risk management procedures.
Clearing of the additional EM Contract
3 15
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7751
E:\FR\FM\01FEN1.SGM
U.S.C. 78q–1(b)(3)(F).
01FEN1
7752
Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices
will allow market participants an
increased ability to manage risk and
ensure the safeguarding of margin assets
pursuant to clearing house rules. ICC
believes that acceptance of the new EM
Contract, on the terms and conditions
set out in the Rules, is consistent with
the prompt and accurate clearance and
settlement of securities transactions and
derivative agreements, contracts and
transactions cleared by ICC, the
safeguarding of securities and funds in
the custody or control of ICC or for
which it is responsible, and the
protection of investors and the public
interest, within the meaning of Section
17A(b)(3)(F) of the Act.4
Clearing of the additional EM
Contract will also satisfy the relevant
requirements of Rule 17Ad–22,5 as set
forth in the following discussion.
Rule 17Ad–22(e)(6)(i) 6 requires each
covered clearing agency to establish,
implement, maintain, and enforce
written policies and procedures
reasonably designed to cover its credit
exposures to its participants by
establishing a risk-based margin system
that, at a minimum, considers, and
produces margin levels commensurate
with, the risks and particular attributes
of each relevant product, portfolio, and
market. In terms of financial resources,
ICC will apply its existing margin
methodology to the new EM Contract,
which is similar to the EM Contracts
currently cleared by ICC. ICC believes
that this model will provide sufficient
margin requirements to cover its credit
exposure to its clearing members from
clearing such contract, consistent with
the requirements of Rule 17Ad–
22(e)(6)(i).7
Rule 17Ad–22(e)(4)(ii) 8 requires each
covered clearing agency to establish,
implement, maintain, and enforce
written policies and procedures
reasonably designed to effectively
identify, measure, monitor, and manage
its credit exposures to participants and
those arising from its payment, clearing,
and settlement processes, including by
maintaining additional financial
resources at the minimum to enable it
to cover a wide range of foreseeable
stress scenarios that include, but are not
limited to, the default of the two
participant families that would
potentially cause the largest aggregate
credit exposure for the covered clearing
agency in extreme but plausible market
conditions. ICC believes its Guaranty
Fund, under its existing methodology,
will, together with the required initial
margin, provide sufficient financial
resources to support the clearing of the
additional EM Contract, consistent with
the requirements of Rule 17Ad–
22(e)(4)(ii).9
Rule 17Ad–22(e)(17) 10 requires, in
relevant part, each covered clearing
agency to establish, implement,
maintain, and enforce written policies
and procedures reasonably designed to
manage its operational risks by (i)
identifying the plausible sources of
operational risk, both internal and
external, and mitigating their impact
through the use of appropriate systems,
policies, procedures, and controls; and
(ii) ensuring that systems have a high
degree of security, resiliency,
operational reliability, and adequate,
scalable capacity. ICC believes that its
existing operational and managerial
resources will be sufficient for clearing
of the additional EM Contract,
consistent with the requirements of Rule
17Ad–22(e)(17),11 as the new contract is
substantially the same from an
operational perspective as existing
contracts.
Rule 17Ad–22(e)(8), (9) and (10) 12
requires each covered clearing agency to
establish, implement, maintain, and
enforce written policies and procedures
reasonably designed to define the point
at which settlement is final to be no
later than the end of the day on which
payment or obligation is due and, where
necessary or appropriate, intraday or in
real time; conduct its money settlements
in central bank money, where available
and determined to be practical by the
Board, and minimize and manage credit
and liquidity risk arising from
conducting its money settlements in
commercial bank money if central bank
money is not used; and establish and
maintain transparent written standards
that state its obligations with respect to
the delivery of physical instruments,
and establish and maintain operational
practices that identify, monitor, and
manage the risks associated with such
physical deliveries. ICC will use its
existing rules, settlement procedures
and account structures for the new EM
Contract, which is similar to the EM
Contracts currently cleared by ICC,
consistent with the requirements of Rule
17Ad–22(e)(8), (9) and (10) 13 as to the
finality and accuracy of its daily
settlement process and addressing the
4 Id.
9 Id.
5 17
10 17
CFR 240.17Ad–22.
6 17 CFR 240.17Ad–22(e)(6)(i).
7 Id.
8 17 CFR 240.17Ad–22(e)(4)(ii).
VerDate Sep<11>2014
16:57 Jan 29, 2021
CFR 240.17Ad–22(e)(17)(i) and (ii).
11 Id.
12 17
PO 00000
(B) Clearing Agency’s Statement on
Burden on Competition
The additional EM Contract will be
available to all ICC participants for
clearing. The clearing of the additional
EM Contract by ICC does not preclude
the offering of the additional EM
Contract for clearing by other market
participants. Accordingly, ICC does not
believe that clearance of the additional
EM Contract will impose any burden on
competition not necessary or
14 17
CFR 240.17Ad–22(e)(2)(i) and (v).
15 Id.
CFR 240.17Ad–22(e)(8), (9) and (10).
13 Id.
Jkt 253001
risks associated with physical
deliveries.
Rule 17Ad–22(e)(2)(i) and (v) 14
requires each covered clearing agency 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. ICC
determined to accept the additional EM
Contract for clearing in accordance with
its governance process, which included
review of the contract and related risk
management considerations by the ICC
Risk Committee and approval by its
Board. These governance arrangements
continue to be clear and transparent,
such that information relating to the
assignment of responsibilities and the
requisite involvement of the ICC Board
and committees is clearly detailed in the
ICC Rules and policies and procedures,
consistent with the requirements of Rule
17Ad–22(e)(2)(i) and (v).15
Rule 17Ad–22(e)(13) 16 requires each
covered clearing agency to establish,
implement, maintain, and enforce
written policies and procedures
reasonably designed to ensure it has the
authority and operational capacity to
take timely action to contain losses and
liquidity demands and continue to meet
its obligations by, at a minimum,
requiring its participants and, when
practicable, other stakeholders to
participate in the testing and review of
its default procedures, including any
close-out procedures, at least annually
and following material changes thereto.
ICC will apply its existing default
management policies and procedures for
the additional EM Contract. ICC believes
that these procedures allow for it to take
timely action to contain losses and
liquidity demands and to continue
meeting its obligations in the event of
clearing member insolvencies or
defaults in respect of the additional
single name, in accordance with Rule
17Ad–22(e)(13).17
Frm 00065
16 17
CFR 240.17Ad–22(e)(13).
17 Id.
Fmt 4703
Sfmt 4703
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Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices
appropriate 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, Security-Based
Swap Submission, or Advance Notice
and Timing for Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve or disapprove
such proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, security-based swap
submission, or advance notice 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–2021–002 on the subject line.
Paper Comments
Send paper comments in triplicate to
Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–ICC–2021–002. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
VerDate Sep<11>2014
16:57 Jan 29, 2021
Jkt 253001
amendments, all written statements
with respect to the proposed rule
change, security-based swap
submission, or advance notice that are
filed with the Commission, and all
written communications relating to the
proposed rule change, security-based
swap submission, or advance notice
between the Commission and any
person, other than those that may be
withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will
be available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filings will also be available for
inspection and copying at the principal
office of ICE Clear Credit and on ICE
Clear Credit’s website at https://
www.theice.com/clear-credit/regulation.
All comments received will be posted
without change. Persons submitting
comments are cautioned that we do not
redact or edit personal identifying
information from comment submissions.
You should submit only information
that you wish to make available
publicly. All submissions should refer
to File Number SR–ICC–2021–002 and
should be submitted on or before
February 22, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–02004 Filed 1–29–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90993; File No. SR–
CboeBYX–2020–021]
Self-Regulatory Organizations; Cboe
BYX Exchange, Inc.; Notice of
Designation of a Longer Period for
Commission Action on Proceedings To
Determine Whether To Approve or
Disapprove a Proposed Rule Change,
as Modified by Amendment No. 2, To
Introduce Periodic Auctions for the
Trading of U.S. Equity Securities
January 26, 2021.
On July 17, 2020, Cboe BYX
Exchange, Inc. (‘‘Exchange’’ or ‘‘BYX’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange
18 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00066
Fmt 4703
Sfmt 4703
7753
Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to introduce
periodic auctions in U.S. equity
securities. The proposed rule change
was published for comment in the
Federal Register on August 4, 2020.3
On September 10, 2020, pursuant to
Section 19(b)(2) of the Exchange Act,4
the Commission designated a longer
period within which to approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether to
disapprove the proposed rule change.5
On October 27, 2020, the Exchange filed
Amendment No. 1 to the proposed rule
change, and on October 28, 2020 the
Exchange filed Amendment No. 2 to the
proposed rule change, which replaced
in its entirety the proposed rule change
as modified by Amendment No. 1.6 On
October 30, 2020, the Commission
noticed the filing of Amendment No. 2
and instituted proceedings under
Section 19(b)(2)(B) of the Exchange Act 7
to determine whether to approve or
disapprove the proposed rule change.8
The Commission has received comment
letters on the proposed rule change.9
Section 19(b)(2) of the Exchange
Act 10 provides that, after initiating
disapproval proceedings, the
Commission shall issue an order
approving or disapproving the proposed
rule change not later than 180 days after
the date of publication of notice of filing
of the proposed rule change. The
Commission may extend the period for
issuing an order approving or
disapproving the proposed rule change
by not more than 60 days if the
Commission determines that a longer
period is appropriate and publishes
reasons for such determination. The
proposed rule change was published for
notice and comment in the Federal
Register on August 4, 2020. January 31,
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 89424
(July 29, 2020), 85 FR 47262.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 89820,
85 FR 57891 (September 16, 2020). The
Commission designated November 2, 2020 as the
date by which the Commission shall approve or
disapprove, or institute proceedings to determine
whether to disapprove, the proposed rule change.
6 Comments on the proposal, including
Amendments No. 1 and No. 2, can be found on the
Commission’s website at: https://www.sec.gov/
comments/sr-cboebyx-2020-021/
srcboebyx2020021.htm.
7 15 U.S.C. 78s(b)(2)(B).
8 See Securities Exchange Act Release No. 90288,
85 FR 70678 (November 5, 2020).
9 Comments on the proposed rule change can be
found on the Commission’s website at: https://
www.sec.gov/comments/sr-cboebyx-2020-021/
srcboebyx2020021.htm.
10 15 U.S.C. 78s(b)(2).
2 17
E:\FR\FM\01FEN1.SGM
01FEN1
]]>Agencies
[Federal Register Volume 86, Number 19 (Monday, February 1, 2021)]
[Notices]
[Pages 7751-7753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02004]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90989; File No. SR-ICC-2021-002]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change, Security-Based Swap Submission, or
Advance Notice Relating to the Clearance of an Additional Credit
Default Swap Contract
January 26, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934,\1\ and Rule 19b-4,\2\ notice is hereby given that on January 15,
2021, ICE Clear Credit LLC (``ICC'') filed with the Securities and
Exchange Commission the proposed rule change, security-based swap
submission, or advance notice as described in Items I, II and III
below, which Items have been prepared by ICC. The Commission is
publishing this notice to solicit comments on the proposed rule change,
security-based swap submission, or advance notice 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, Security-Based Swap Submission, or Advance Notice
The principal purpose of the proposed rule change is to revise the
ICC Rulebook (the ``Rules'') to provide for the clearance of an
additional Standard Emerging Market Sovereign CDS contract (the ``EM
Contract'').
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change, Security-Based Swap Submission, or
Advance Notice
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, Security-Based Swap Submission, or
Advance Notice
(a) Purpose
The purpose of the proposed rule change is to adopt rules that will
provide the basis for ICC to clear an additional credit default swap
contract. ICC proposes to make such change effective following
Commission approval of the proposed rule change. ICC believes the
addition of this contract will benefit the market for credit default
swaps by providing market participants the benefits of clearing,
including reduction in counterparty risk and safeguarding of margin
assets pursuant to clearing house rules. Clearing of the additional EM
Contract will not require any changes to ICC's Risk Management
Framework or other policies and procedures constituting rules within
the meaning of the Securities Exchange Act of 1934 (``Act'').
ICC proposes amending Subchapter 26D of its Rules to provide for
the clearance of the additional EM Contract, namely Ukraine. This
additional EM Contract has terms consistent with the other EM Contracts
approved for clearing at ICC and governed by Subchapter 26D of the
Rules. A minor revision to Subchapter 26D (Standard Emerging Market
Sovereign (``SES'') Single Name) is made to provide for clearing the
additional EM Contract. Specifically, in Rule 26D-102 (Definitions),
``Eligible SES Reference Entities'' is modified to include Ukraine in
the list of specific Eligible SES Reference Entities to be cleared by
ICC.
(b) Statutory Basis
Section 17A(b)(3)(F) of the Act \3\ 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 ICC or for which it is responsible;
and to comply with the provisions of the Act and the rules and
regulations thereunder. The additional EM Contract proposed for
clearing is similar to the EM Contracts currently cleared by ICC, and
will be cleared pursuant to ICC's existing clearing arrangements and
related financial safeguards, protections and risk management
procedures. Clearing of the additional EM Contract
[[Page 7752]]
will allow market participants an increased ability to manage risk and
ensure the safeguarding of margin assets pursuant to clearing house
rules. ICC believes that acceptance of the new EM Contract, on the
terms and conditions set out in the Rules, is consistent with the
prompt and accurate clearance and settlement of securities transactions
and derivative agreements, contracts and transactions cleared by ICC,
the safeguarding of securities and funds in the custody or control of
ICC or for which it is responsible, and the protection of investors and
the public interest, within the meaning of Section 17A(b)(3)(F) of the
Act.\4\
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78q-1(b)(3)(F).
\4\ Id.
---------------------------------------------------------------------------
Clearing of the additional EM Contract will also satisfy the
relevant requirements of Rule 17Ad-22,\5\ as set forth in the following
discussion.
---------------------------------------------------------------------------
\5\ 17 CFR 240.17Ad-22.
---------------------------------------------------------------------------
Rule 17Ad-22(e)(6)(i) \6\ requires each covered clearing agency to
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to cover its credit exposures to its
participants by establishing a risk-based margin system that, at a
minimum, considers, and produces margin levels commensurate with, the
risks and particular attributes of each relevant product, portfolio,
and market. In terms of financial resources, ICC will apply its
existing margin methodology to the new EM Contract, which is similar to
the EM Contracts currently cleared by ICC. ICC believes that this model
will provide sufficient margin requirements to cover its credit
exposure to its clearing members from clearing such contract,
consistent with the requirements of Rule 17Ad-22(e)(6)(i).\7\
---------------------------------------------------------------------------
\6\ 17 CFR 240.17Ad-22(e)(6)(i).
\7\ Id.
---------------------------------------------------------------------------
Rule 17Ad-22(e)(4)(ii) \8\ requires each covered clearing agency to
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to effectively identify, measure,
monitor, and manage its credit exposures to participants and those
arising from its payment, clearing, and settlement processes, including
by maintaining additional financial resources at the minimum to enable
it to cover a wide range of foreseeable stress scenarios that include,
but are not limited to, the default of the two participant families
that would potentially cause the largest aggregate credit exposure for
the covered clearing agency in extreme but plausible market conditions.
ICC believes its Guaranty Fund, under its existing methodology, will,
together with the required initial margin, provide sufficient financial
resources to support the clearing of the additional EM Contract,
consistent with the requirements of Rule 17Ad-22(e)(4)(ii).\9\
---------------------------------------------------------------------------
\8\ 17 CFR 240.17Ad-22(e)(4)(ii).
\9\ Id.
---------------------------------------------------------------------------
Rule 17Ad-22(e)(17) \10\ requires, in relevant part, each covered
clearing agency to establish, implement, maintain, and enforce written
policies and procedures reasonably designed to manage its operational
risks by (i) identifying the plausible sources of operational risk,
both internal and external, and mitigating their impact through the use
of appropriate systems, policies, procedures, and controls; and (ii)
ensuring that systems have a high degree of security, resiliency,
operational reliability, and adequate, scalable capacity. ICC believes
that its existing operational and managerial resources will be
sufficient for clearing of the additional EM Contract, consistent with
the requirements of Rule 17Ad-22(e)(17),\11\ as the new contract is
substantially the same from an operational perspective as existing
contracts.
---------------------------------------------------------------------------
\10\ 17 CFR 240.17Ad-22(e)(17)(i) and (ii).
\11\ Id.
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Rule 17Ad-22(e)(8), (9) and (10) \12\ requires each covered
clearing agency to establish, implement, maintain, and enforce written
policies and procedures reasonably designed to define the point at
which settlement is final to be no later than the end of the day on
which payment or obligation is due and, where necessary or appropriate,
intraday or in real time; conduct its money settlements in central bank
money, where available and determined to be practical by the Board, and
minimize and manage credit and liquidity risk arising from conducting
its money settlements in commercial bank money if central bank money is
not used; and establish and maintain transparent written standards that
state its obligations with respect to the delivery of physical
instruments, and establish and maintain operational practices that
identify, monitor, and manage the risks associated with such physical
deliveries. ICC will use its existing rules, settlement procedures and
account structures for the new EM Contract, which is similar to the EM
Contracts currently cleared by ICC, consistent with the requirements of
Rule 17Ad-22(e)(8), (9) and (10) \13\ as to the finality and accuracy
of its daily settlement process and addressing the risks associated
with physical deliveries.
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\12\ 17 CFR 240.17Ad-22(e)(8), (9) and (10).
\13\ Id.
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Rule 17Ad-22(e)(2)(i) and (v) \14\ requires each covered clearing
agency 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. ICC determined to accept the additional
EM Contract for clearing in accordance with its governance process,
which included review of the contract and related risk management
considerations by the ICC Risk Committee and approval by its Board.
These governance arrangements continue to be clear and transparent,
such that information relating to the assignment of responsibilities
and the requisite involvement of the ICC Board and committees is
clearly detailed in the ICC Rules and policies and procedures,
consistent with the requirements of Rule 17Ad-22(e)(2)(i) and (v).\15\
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\14\ 17 CFR 240.17Ad-22(e)(2)(i) and (v).
\15\ Id.
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Rule 17Ad-22(e)(13) \16\ requires each covered clearing agency to
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to ensure it has the authority and
operational capacity to take timely action to contain losses and
liquidity demands and continue to meet its obligations by, at a
minimum, requiring its participants and, when practicable, other
stakeholders to participate in the testing and review of its default
procedures, including any close-out procedures, at least annually and
following material changes thereto. ICC will apply its existing default
management policies and procedures for the additional EM Contract. ICC
believes that these procedures allow for it to take timely action to
contain losses and liquidity demands and to continue meeting its
obligations in the event of clearing member insolvencies or defaults in
respect of the additional single name, in accordance with Rule 17Ad-
22(e)(13).\17\
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\16\ 17 CFR 240.17Ad-22(e)(13).
\17\ Id.
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(B) Clearing Agency's Statement on Burden on Competition
The additional EM Contract will be available to all ICC
participants for clearing. The clearing of the additional EM Contract
by ICC does not preclude the offering of the additional EM Contract for
clearing by other market participants. Accordingly, ICC does not
believe that clearance of the additional EM Contract will impose any
burden on competition not necessary or
[[Page 7753]]
appropriate 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, Security-Based
Swap Submission, or Advance Notice and Timing for Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, security-based swap submission, or advance notice 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-2021-002 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities and
Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-ICC-2021-002. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change, security-based
swap submission, or advance notice that are filed with the Commission,
and all written communications relating to the proposed rule change,
security-based swap submission, or advance notice between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
such filings will also be available for inspection and copying at the
principal office of ICE Clear Credit and on ICE Clear Credit's website
at https://www.theice.com/clear-credit/regulation.
All comments received will be posted without change. Persons
submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-ICC-2021-002 and should be
submitted on or before February 22, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-02004 Filed 1-29-21; 8:45 am]
BILLING CODE 8011-01-P
