Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change Relating to the ICC Clearing Participant Default Management Procedures, 9404-9406 [2021-02868]
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9404
Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Notices
estimates that it would take
approximately 15 minutes to create and
submit each fingerprint card. The total
time burden is therefore estimated to be
approximately 70,451 hours, or
approximately 18 hours per respondent,
annually.
In addition, the SROs charge an
estimated $26 fee for processing
fingerprint cards submitted
electronically, resulting in a total annual
cost to all 3,900 respondents of
approximately $6,596,746, or
approximately $1,691 per respondent
per year. The SROs charge an estimated
$41 fee for processing fingerprint cards
submitted in hard copy, resulting in a
total annual cost to all 3,900
respondents of approximately
$1,151,403, or approximately $295 per
respondent per year. The combined
annual cost to all respondents is thus
approximately $7,748,149.
Because the FBI will not accept
fingerprint cards directly from
submitting organizations, Commission
approval of fingerprint plans from
certain SROs is essential to carry out the
Congressional goal to fingerprint
securities industry personnel. Filing
these plans for review assures users and
their personnel that fingerprint cards
will be handled responsibly and with
due care for confidentiality.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function. Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice to (i) www.reginfo.gov/public/do/
PRAMain and (ii) David Bottom,
Director/Chief Information Officer,
Securities and Exchange Commission, c/
o Cynthia Roscoe, 100 F Street NE,
Washington, DC 20549, or by sending an
email to: PRA_Mailbox@sec.gov.
Dated: February 9, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–02959 Filed 2–11–21; 8:45 am]
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91075; File No. SR–ICC–
2020–014]
Self-Regulatory Organizations; ICE
Clear Credit LLC; Order Approving
Proposed Rule Change Relating to the
ICC Clearing Participant Default
Management Procedures
February 8, 2021.
Introduction
On December 22, 2020, ICE Clear
Credit LLC (‘‘ICC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
revise its Clearing Participant (‘‘CP’’)
Default Management Procedures (the
‘‘Default Management Procedures’’).3
The proposed rule change was
published for comment in the Federal
Register on January 8, 2020.4 The
Commission did not receive comments
on the proposed rule change. For the
reasons discussed below, the
Commission is approving the proposed
rule change.
II. Description of the Proposed Rule
Change
ICC’s proposed rule change would
make clarifying changes to the Default
Management Procedures to formalize
the process for convening remote
meetings of ICC’s CDS Default
Committee, and to update certain
procedures for notifications by
designated ICC officers as part of its CP
default management process.5 This
process includes the actions that ICC
takes to determine that a CP is in default
and to close-out the defaulting CP’s
portfolio.6
Specifically, ICC proposes revisions to
Subsection 4.4 (Secure Trading Facility)
of the Default Management Procedures
related to convening the ICC CDS
Default Committee, which consists of
designated employees of eligible CPs
that have CDS trading experience and
are deemed seconded to ICC to assist
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Capitalized terms used but not defined herein
have the meanings specified in the ICC Clearing
Rules (the ‘‘Rules’’).
4 Self-Regulatory Organizations; ICE Clear Credit
LLC; Notice of Filing of Proposed Rule Change
Relating to the ICC Clearing Participant Default
Management Procedures, Exchange Act Release No.
90841 (January 4, 2021), 86 FR 1555 (January 8,
2021) (SR–ICC–2020–014) (‘‘Notice’’).
5 The description herein is substantially
excerpted from the Notice.
6 See Notice, 86 FR at 1555.
2 17
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Sfmt 4703
with default management and the closeout process. Currently, Subsection 4.4
provides only for an in-person meeting
of the CDS Default Committee in a
private room at ICC’s New York offices
(‘‘Secure Trading Facility’’). The
proposed changes specify that ICC may
convene its CDS Default Committee at
the Secure Trading Facility or remotely
by teleconference (‘‘Remote Trader
Consultation’’) in the event the
Committee is unable to meet in person.
The proposed changes also specify that
the ICC Chief Risk Officer (‘‘CRO’’) will
decide whether to convene the CDS
Default Committee in person or
remotely, and that such decision will
depend on the circumstances at the time
of the declaration of the default.
ICC also proposes updates to Section
6 (Default Declaration). Currently,
Subsection 6.1.5 (CCO Pre-Declaration
Initiated Actions) requires the ICC Chief
Compliance Officer (‘‘CCO’’) to inform
default contacts at the Commission and
the Commodity Futures Trading
Commission (‘‘CFTC’’) by telephone of a
potential CP default. The proposed
changes to Subsection 6.1.5 would
allow the CCO to inform the default
contacts at Commission and the CFTC
by telephone or email of a potential
default, and further direct the CCO to
inform other regulators of the potential
default as may be required. Amended
Subsection 6.4 (Default Declaration
Notification) similarly directs the CCO
to notify other regulators (in addition to
the Commission and the CFTC) of a
default if applicable, and replaces the
word ‘‘all’’ with ‘‘above’’ in the phrase
‘‘Upon the CCO confirming all
notifications have been completed,’’ in
the last paragraph of this subsection.
The proposed updates to Subsection
6.5.3 (CRO Post-Declaration
Preparation) relate to the CRO’s actions
to convene the CDS Default Committee
after a declaration of default and to
determine whether this Committee will
meet in person or remotely at such postdeclaration phase. If the CRO convenes
an in-person CDS Default Committee
meeting at the Secure Trading Facility,
the proposed updates to Subsection
6.5.3 clarify that the CRO will work
with ICC’s Risk Committee and other
ICC staff as required to perform certain
specified actions. The proposed
revisions to Subsection 6.5.4 (CCO PostDeclaration Actions) make clarifications
in respect of the notice that the CCO
provides to the compliance personnel of
a CDS Default Committee member
following a declaration of a default,
including the prospect that the CDS
Default Committee may meet by
teleconference.
E:\FR\FM\12FEN1.SGM
12FEN1
Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Notices
ICC also proposes changes to Section
7 (CDS Default Committee
Consultation). The proposed changes
reference ICC’s ability to convene the
CDS Default Committee remotely.
Amended Subsection 7.1 (Convening a
CDS Default Committee Meeting)
formalizes the process for convening a
CDS Default Committee for Remote
Trader Consultation, including the
procedure for the CRO to request that
ICC’s Risk Department will provide the
notice via email to CDS Default
Committee members and what
information is included in the notice.
The changes also specify the particular
email contents and other actions that
would be taken for convening the CDS
Default Committee at the Secure
Trading Facility or by Remote Trader
Consultation, respectively, or by either
means. Amended Subsection 7.3 (Initial
CDS Default Committee Meeting)
specifies that ICC’s provision of access
to the cleared portfolios of defaulting
CPs are conducted where
technologically practicable during the
initial CDS Default Committee meeting.
Current Subsection 7.3 does not contain
the phrase ‘‘where technologically
practicable.’’ In addition, amended
Subsection 7.3 makes minor
grammatical updates, including adding
a parenthetical and updating the
sentence structure for clarity.
III. Commission Findings
Section 19(b)(2)(C) of the Act directs
the Commission to approve a proposed
rule change of a self-regulatory
organization if it finds that the proposed
rule change is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
the organization presenting it.7 For the
reasons given below, the Commission
finds that the proposed rule change is
consistent with Section 17A(b)(3)(F) of
the Act 8 and Rules 17Ad–22(e)(2)(i),
(e)(2)(v), and (e)(13) thereunder.9
A. Consistency With Section
17A(b)(3)(F) of the Act
Section 17A(b)(3)(F) of the Act
requires, among other things, that the
rules of ICC 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
7 15
U.S.C. 78s(b)(2)(C).
U.S.C. 78q–1(b)(3)(F).
9 17 CFR 240.17Ad–22(e)(2)(i), (e)(2)(v), and
(e)(13).
responsible, and, in general, to protect
investors and the public interest.10
The Commission believes that, by
clarifying ICC’s process for convening
remote meetings of its CDS Default
Committee and updating its default
notification procedures to regulators
and CP trading and compliance
personnel, the proposed rule change
should enhance ICC’s ability to manage
the risks associated with a CP default
and the timely close-out of the
defaulter’s CDS portfolio. Specifically,
the Commission believes that, by
including explicit authorization and
instructions for the CRO to convene the
CDS Default Committee for Remote
Trader Consultation via teleconference
if circumstances prevent the CDS
Default Committee from meeting in
person, the proposed rule change would
enhance the ability of ICC to respond
promptly to the risks posed by a given
CP default situation and would provide
particular processes for addressing a
default via a Remote Trader
Consultation. Likewise, the Commission
believes that, by including updated
notification procedures related to a CP
default, ICC’s relevant stakeholders,
such as the CDS Default Committee
members, CP trading and compliance
personnel, and regulators, would be
better informed of the status of a CP
default situation, thus facilitating their
ability to participate in the default
management process as needed and
provide prompt and responsive
feedback.
Therefore, the Commission believes
that the proposed rule change generally
should provide ICC with enhanced
clarity, efficiency and flexibility in how
it manages and responds to the risks of
CP defaults, which in turn should help
ICC maintain its resilience in the event
of a default. By improving ICC’s ability
to manage a CP default, the Commission
believes that the proposed rule change
should also improve ICC’s ability to
avoid losses that could result from a CP
default. The Commission further
believes that such losses, if not properly
managed, could hinder ICC’s ability to
continue operations and therefore clear
and settle securities transactions and
safeguard securities and funds in its
custody or control. Therefore, for these
reasons, the Commission finds that the
proposed rule change should promote
the prompt and accurate clearance and
settlement of securities transactions and
assure the safeguarding of securities and
funds in ICC’s custody and control,
consistent with the Section 17A(b)(3)(F)
of the Act.11
B. Consistency With Rules 17Ad–
22(e)(2)(i) and (v)
Rules 17Ad–22(e)(2)(i) and (v)
require, in relevant part, that ICC
establish, implement, maintain, and
enforce written policies and procedures
reasonably designed to provide for
governance arrangements that are clear
and transparent and that specify clear
and direct lines of responsibility.12
The Commission believes that the
proposed rule change’s revisions to
assign clear and updated
responsibilities to the CRO and CCO
during each phase of the default
declaration process in the Default
Management Procedures provide for
governance arrangements that are clear
and transparent and that specify clear
and direct lines of responsibility.
Specifically, the proposed rule change
would update and clarify the CCO’s predeclaration, default declaration, and
post-declaration notification
responsibilities, so that information is
imparted to all relevant stakeholders.
Further, the proposed rule change
would update and clarify the CRO’s
post-declaration responsibilities,
including documenting the CRO’s
decision-making authority and actions
for convening the CDS Default
Committee at either an in-person
meeting at the Secure Trading Facility
or via Remote Trader Consultation by
teleconference, depending on the
circumstances at the time of the default
declaration. In the Commission’s view,
including these responsibilities should
ensure that the relevant stakeholders
have clear and transparent information
on their respective roles and
responsibilities at each phase of the
default management process.
Accordingly, the Commission believes
that the proposed revisions to the
Default Management Procedures are
reasonably designed to provide for
governance arrangements that are clear
and transparent and that specify clear
and direct lines of responsibility,
consistent with Rules 17Ad–22(e)(2)(i)
and (v).13
C. Consistency With Rule 17Ad–
22(e)(13)
Rule 17Ad–22(e)(13) requires ICC to
establish, implement, maintain and
enforce written policies and procedures
reasonably designed to ensure that 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
8 15
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10 15
11 15
PO 00000
U.S.C. 78q–1(b)(3)(F).
U.S.C. 78q–1(b)(3)(F).
Frm 00089
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Sfmt 4703
9405
12 17
13 17
E:\FR\FM\12FEN1.SGM
CFR 240.17Ad–22(e)(2)(i) and (v).
CFR 240.17Ad–22(e)(2)(i) and (v).
12FEN1
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Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Notices
participate in the testing and review of
its default procedures, including any
close-out procedure, at least annually
and following material changes thereto.
By amending the Default Management
Procedures to document and formalize
the procedures for convening the CDS
Default Committee remotely by
teleconference, the proposed rule
change would promote ICC’s ability to
efficiently and safely manage its closeout process when the CDS Default
Committee cannot meet in person,
which would help to ensure that ICC
has the authority and operational
capacity to take timely action to contain
losses and liquidity demands and
continue to meet its obligations in the
event of default. In addition, the
Commission believes the proposed
updates and clarification changes to the
default notification procedures would
ensure that ICC’s relevant stakeholders
stay informed throughout the default
management process and enable them to
provide responsive feedback that may
also help ICC to take timely action to
contain losses and liquidity demands
while meeting its obligations. For these
reasons, the Commission finds that the
proposed rule change is consistent with
Rule 17Ad–22(e)(13).14
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act, and in
particular, with the requirements of
Section 17A(b)(3)(F) of the Act 15 and
Rules 17Ad–22(e)(2)(i), (e)(2)(v), and
(e)(13) thereunder.16
It is therefore ordered pursuant to
Section 19(b)(2) of the Act 17 that the
proposed rule change (SR–ICC–2020–
014) be, and hereby is, approved.18
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–02868 Filed 2–11–21; 8:45 am]
BILLING CODE 8011–01–P
14 17
CFR 240.17Ad–22(e)(13).
U.S.C. 78q–1(b)(3)(F).
16 17 CFR 240.17Ad–22(e)(2)(i), (e)(2)(v), and
(e)(13).
17 15 U.S.C. 78s(b)(2).
18 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
19 17 CFR 200.30–3(a)(12).
15 15
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SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–104, OMB Control No.
3235–0119]
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Extension:
Rule 12g3–2
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 12g3–2 (17 CFR 240.12g3–2)
under the Securities Exchange Act of
1934 (the ‘‘Exchange Act’’) provides an
exemption from Section 12(g) of the
Exchange Act (15 U.S.C. 78l(g)) for
foreign private issuers. Rule 12g3–2 is
designed to provide investors in foreign
securities with information about such
securities and the foreign issuer. The
information filed under Rule 12g3–2
must be filed with the Commission and
is publicly available. We estimate that it
takes 8.95 hours per response to prepare
and is filed by approximately 1,386
respondents. Each respondent files an
estimated 12 times submissions
pursuant to Rule 12g3–2 per year for a
total of 16,632 respondents. We estimate
that 25% of 8.95 hours per response
(2.237 hours per response) to provide
the information required under Rule
12g3–2 for a total annual reporting
burden of 37,206 hours (2.237 hours per
response × 16,632 responses).
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
PO 00000
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in writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Cynthia
Roscoe, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: February 8, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–02865 Filed 2–11–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91078; File No. SR–
CboeEDGX–2021–009]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Relating To
Amend the Fee Schedule
February 8, 2021.
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 February
1, 2021, Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the 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
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) is filing with
the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change to amend the fee
schedule. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
1 15
2 17
E:\FR\FM\12FEN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
12FEN1
]]>Agencies
[Federal Register Volume 86, Number 28 (Friday, February 12, 2021)]
[Notices]
[Pages 9404-9406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02868]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91075; File No. SR-ICC-2020-014]
Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change Relating to the ICC Clearing Participant
Default Management Procedures
February 8, 2021.
Introduction
On December 22, 2020, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\
and Rule 19b-4 thereunder,\2\ a proposed rule change to revise its
Clearing Participant (``CP'') Default Management Procedures (the
``Default Management Procedures'').\3\ The proposed rule change was
published for comment in the Federal Register on January 8, 2020.\4\
The Commission did not receive comments on the proposed rule change.
For the reasons discussed below, the Commission is approving the
proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Capitalized terms used but not defined herein have the
meanings specified in the ICC Clearing Rules (the ``Rules'').
\4\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice
of Filing of Proposed Rule Change Relating to the ICC Clearing
Participant Default Management Procedures, Exchange Act Release No.
90841 (January 4, 2021), 86 FR 1555 (January 8, 2021) (SR-ICC-2020-
014) (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
ICC's proposed rule change would make clarifying changes to the
Default Management Procedures to formalize the process for convening
remote meetings of ICC's CDS Default Committee, and to update certain
procedures for notifications by designated ICC officers as part of its
CP default management process.\5\ This process includes the actions
that ICC takes to determine that a CP is in default and to close-out
the defaulting CP's portfolio.\6\
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\5\ The description herein is substantially excerpted from the
Notice.
\6\ See Notice, 86 FR at 1555.
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Specifically, ICC proposes revisions to Subsection 4.4 (Secure
Trading Facility) of the Default Management Procedures related to
convening the ICC CDS Default Committee, which consists of designated
employees of eligible CPs that have CDS trading experience and are
deemed seconded to ICC to assist with default management and the close-
out process. Currently, Subsection 4.4 provides only for an in-person
meeting of the CDS Default Committee in a private room at ICC's New
York offices (``Secure Trading Facility''). The proposed changes
specify that ICC may convene its CDS Default Committee at the Secure
Trading Facility or remotely by teleconference (``Remote Trader
Consultation'') in the event the Committee is unable to meet in person.
The proposed changes also specify that the ICC Chief Risk Officer
(``CRO'') will decide whether to convene the CDS Default Committee in
person or remotely, and that such decision will depend on the
circumstances at the time of the declaration of the default.
ICC also proposes updates to Section 6 (Default Declaration).
Currently, Subsection 6.1.5 (CCO Pre-Declaration Initiated Actions)
requires the ICC Chief Compliance Officer (``CCO'') to inform default
contacts at the Commission and the Commodity Futures Trading Commission
(``CFTC'') by telephone of a potential CP default. The proposed changes
to Subsection 6.1.5 would allow the CCO to inform the default contacts
at Commission and the CFTC by telephone or email of a potential
default, and further direct the CCO to inform other regulators of the
potential default as may be required. Amended Subsection 6.4 (Default
Declaration Notification) similarly directs the CCO to notify other
regulators (in addition to the Commission and the CFTC) of a default if
applicable, and replaces the word ``all'' with ``above'' in the phrase
``Upon the CCO confirming all notifications have been completed,'' in
the last paragraph of this subsection.
The proposed updates to Subsection 6.5.3 (CRO Post-Declaration
Preparation) relate to the CRO's actions to convene the CDS Default
Committee after a declaration of default and to determine whether this
Committee will meet in person or remotely at such post-declaration
phase. If the CRO convenes an in-person CDS Default Committee meeting
at the Secure Trading Facility, the proposed updates to Subsection
6.5.3 clarify that the CRO will work with ICC's Risk Committee and
other ICC staff as required to perform certain specified actions. The
proposed revisions to Subsection 6.5.4 (CCO Post-Declaration Actions)
make clarifications in respect of the notice that the CCO provides to
the compliance personnel of a CDS Default Committee member following a
declaration of a default, including the prospect that the CDS Default
Committee may meet by teleconference.
[[Page 9405]]
ICC also proposes changes to Section 7 (CDS Default Committee
Consultation). The proposed changes reference ICC's ability to convene
the CDS Default Committee remotely. Amended Subsection 7.1 (Convening a
CDS Default Committee Meeting) formalizes the process for convening a
CDS Default Committee for Remote Trader Consultation, including the
procedure for the CRO to request that ICC's Risk Department will
provide the notice via email to CDS Default Committee members and what
information is included in the notice. The changes also specify the
particular email contents and other actions that would be taken for
convening the CDS Default Committee at the Secure Trading Facility or
by Remote Trader Consultation, respectively, or by either means.
Amended Subsection 7.3 (Initial CDS Default Committee Meeting)
specifies that ICC's provision of access to the cleared portfolios of
defaulting CPs are conducted where technologically practicable during
the initial CDS Default Committee meeting. Current Subsection 7.3 does
not contain the phrase ``where technologically practicable.'' In
addition, amended Subsection 7.3 makes minor grammatical updates,
including adding a parenthetical and updating the sentence structure
for clarity.
III. Commission Findings
Section 19(b)(2)(C) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
the proposed rule change is consistent with the requirements of the Act
and the rules and regulations thereunder applicable to the organization
presenting it.\7\ For the reasons given below, the Commission finds
that the proposed rule change is consistent with Section 17A(b)(3)(F)
of the Act \8\ and Rules 17Ad-22(e)(2)(i), (e)(2)(v), and (e)(13)
thereunder.\9\
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\7\ 15 U.S.C. 78s(b)(2)(C).
\8\ 15 U.S.C. 78q-1(b)(3)(F).
\9\ 17 CFR 240.17Ad-22(e)(2)(i), (e)(2)(v), and (e)(13).
---------------------------------------------------------------------------
A. Consistency With Section 17A(b)(3)(F) of the Act
Section 17A(b)(3)(F) of the Act requires, among other things, that
the rules of ICC 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, in
general, to protect investors and the public interest.\10\
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\10\ 15 U.S.C. 78q-1(b)(3)(F).
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The Commission believes that, by clarifying ICC's process for
convening remote meetings of its CDS Default Committee and updating its
default notification procedures to regulators and CP trading and
compliance personnel, the proposed rule change should enhance ICC's
ability to manage the risks associated with a CP default and the timely
close-out of the defaulter's CDS portfolio. Specifically, the
Commission believes that, by including explicit authorization and
instructions for the CRO to convene the CDS Default Committee for
Remote Trader Consultation via teleconference if circumstances prevent
the CDS Default Committee from meeting in person, the proposed rule
change would enhance the ability of ICC to respond promptly to the
risks posed by a given CP default situation and would provide
particular processes for addressing a default via a Remote Trader
Consultation. Likewise, the Commission believes that, by including
updated notification procedures related to a CP default, ICC's relevant
stakeholders, such as the CDS Default Committee members, CP trading and
compliance personnel, and regulators, would be better informed of the
status of a CP default situation, thus facilitating their ability to
participate in the default management process as needed and provide
prompt and responsive feedback.
Therefore, the Commission believes that the proposed rule change
generally should provide ICC with enhanced clarity, efficiency and
flexibility in how it manages and responds to the risks of CP defaults,
which in turn should help ICC maintain its resilience in the event of a
default. By improving ICC's ability to manage a CP default, the
Commission believes that the proposed rule change should also improve
ICC's ability to avoid losses that could result from a CP default. The
Commission further believes that such losses, if not properly managed,
could hinder ICC's ability to continue operations and therefore clear
and settle securities transactions and safeguard securities and funds
in its custody or control. Therefore, for these reasons, the Commission
finds that the proposed rule change should promote the prompt and
accurate clearance and settlement of securities transactions and assure
the safeguarding of securities and funds in ICC's custody and control,
consistent with the Section 17A(b)(3)(F) of the Act.\11\
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\11\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Consistency With Rules 17Ad-22(e)(2)(i) and (v)
Rules 17Ad-22(e)(2)(i) and (v) require, in relevant part, that ICC
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to provide for governance arrangements
that are clear and transparent and that specify clear and direct lines
of responsibility.\12\
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\12\ 17 CFR 240.17Ad-22(e)(2)(i) and (v).
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The Commission believes that the proposed rule change's revisions
to assign clear and updated responsibilities to the CRO and CCO during
each phase of the default declaration process in the Default Management
Procedures provide for governance arrangements that are clear and
transparent and that specify clear and direct lines of responsibility.
Specifically, the proposed rule change would update and clarify the
CCO's pre-declaration, default declaration, and post-declaration
notification responsibilities, so that information is imparted to all
relevant stakeholders. Further, the proposed rule change would update
and clarify the CRO's post-declaration responsibilities, including
documenting the CRO's decision-making authority and actions for
convening the CDS Default Committee at either an in-person meeting at
the Secure Trading Facility or via Remote Trader Consultation by
teleconference, depending on the circumstances at the time of the
default declaration. In the Commission's view, including these
responsibilities should ensure that the relevant stakeholders have
clear and transparent information on their respective roles and
responsibilities at each phase of the default management process.
Accordingly, the Commission believes that the proposed revisions to the
Default Management Procedures are reasonably designed to provide for
governance arrangements that are clear and transparent and that specify
clear and direct lines of responsibility, consistent with Rules 17Ad-
22(e)(2)(i) and (v).\13\
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\13\ 17 CFR 240.17Ad-22(e)(2)(i) and (v).
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C. Consistency With Rule 17Ad-22(e)(13)
Rule 17Ad-22(e)(13) requires ICC to establish, implement, maintain
and enforce written policies and procedures reasonably designed to
ensure that 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
[[Page 9406]]
participate in the testing and review of its default procedures,
including any close-out procedure, at least annually and following
material changes thereto.
By amending the Default Management Procedures to document and
formalize the procedures for convening the CDS Default Committee
remotely by teleconference, the proposed rule change would promote
ICC's ability to efficiently and safely manage its close-out process
when the CDS Default Committee cannot meet in person, which would help
to ensure that ICC has the authority and operational capacity to take
timely action to contain losses and liquidity demands and continue to
meet its obligations in the event of default. In addition, the
Commission believes the proposed updates and clarification changes to
the default notification procedures would ensure that ICC's relevant
stakeholders stay informed throughout the default management process
and enable them to provide responsive feedback that may also help ICC
to take timely action to contain losses and liquidity demands while
meeting its obligations. For these reasons, the Commission finds that
the proposed rule change is consistent with Rule 17Ad-22(e)(13).\14\
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\14\ 17 CFR 240.17Ad-22(e)(13).
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IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act,
and in particular, with the requirements of Section 17A(b)(3)(F) of the
Act \15\ and Rules 17Ad-22(e)(2)(i), (e)(2)(v), and (e)(13)
thereunder.\16\
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\15\ 15 U.S.C. 78q-1(b)(3)(F).
\16\ 17 CFR 240.17Ad-22(e)(2)(i), (e)(2)(v), and (e)(13).
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It is therefore ordered pursuant to Section 19(b)(2) of the Act
\17\ that the proposed rule change (SR-ICC-2020-014) be, and hereby is,
approved.\18\
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\17\ 15 U.S.C. 78s(b)(2).
\18\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
\19\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-02868 Filed 2-11-21; 8:45 am]
BILLING CODE 8011-01-P
