Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change Relating to the ICC Governance Playbook, 15747-15750 [2021-06002]

Download as PDF Federal Register / Vol. 86, No. 55 / Wednesday, March 24, 2021 / Notices Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of NSCC and on DTCC’s website (https://dtcc.com/legal/sec-rulefilings.aspx). 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–NSCC– 2021–002 and should be submitted on or before April 14, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.61 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2021–05995 Filed 3–23–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91348; File No. SR– NASDAQ–2020–062] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 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. 1, To Amend Listing Rules Applicable to Special Purpose Acquisition Companies Whose Business Plan Is To Complete One or More Business Combinations khammond on DSKJM1Z7X2PROD with NOTICES March 18, 2021. On September 3, 2020, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend its listing rules to permit companies whose business plan is to complete one or more business combinations (‘‘SPACs’’ or ‘‘Acquisition Companies’’) 15 calendar days following the closing of a business combination to demonstrate that the SPAC has satisfied the applicable round lot shareholder requirement. The proposed rule change was published for comment in the 61 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 19:37 Mar 23, 2021 Jkt 253001 Federal Register on September 22, 2020.3 On November 4, 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 December 16, 2020, the Commission instituted proceedings under Section 19(b)(2)(B) of the Act 6 to determine whether to approve or disapprove the proposed rule change.7 On February 25, 2021, the Exchange filed Amendment No. 1 to the proposed rule change, which superseded the proposed rule change as originally filed. Amendment No. 1 to the proposed rule change was published for comment in the Federal Register on March 16, 2021.8 Section 19(b)(2) of the Exchange Act 9 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, however, by not more than 60 days if the Commission determines that a longer period is appropriate and publishes the reasons for such determination. The proposed rule change was published for comment in the Federal Register on September 22, 2020. The 180th day after publication of the Notice is March 21, 2021. The Commission is extending the time period for approving or disapproving the proposal for an additional 60 days. 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 as modified by Amendment No. 1, along with the 3 See Securities Exchange Act Release No. 89897 (September 16, 2020), 85 FR 59574 (‘‘Notice’’). Comments received on the proposal are available on the Commission’s website at: https://www.sec.gov/ comments/sr-nasdaq-2020-062/ srnasdaq2020062.htm. 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 90340, 85 FR 71704 (November 10, 2020). The Commission designated December 21, 2020, as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change. 6 15 U.S.C. 78s(b)(2)(B). 7 See Securities Exchange Act Release No. 90682, 85 FR 83113 (December 16, 2020). 8 See Securities Exchange Act Release No. 91294 (March 10, 2021), 86 FR 14508 (March 16, 2021). 9 15 U.S.C. 78s(b)(2). PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 15747 comments received on the proposal and the Exchange’s response. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Exchange Act,10 designates May 20, 2021 as the date by which the Commission shall either approve or disapprove the proposed rule change (File No. SR–NASDAQ– 2020–062) as modified by Amendment No. 1. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2021–05994 Filed 3–23–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91361; File No. SR–ICC– 2021–004] Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change Relating to the ICC Governance Playbook March 18, 2021. I. Introduction On January 29, 2021, 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 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to update and formalize the ICC Governance Playbook. The proposed rule change was published for comment in the Federal Register on February 16, 2021.3 The Commission did not receive comments regarding the proposed rule change. For the reasons discussed below, the Commission is approving the proposed rule change. II. Description of the Proposed Rule Change The principal purpose of the proposed rule change is to update and formalize the ICC Governance Playbook.4 Specifically, the proposed rule change would consolidate and summarize governance arrangements set forth in the ICC Clearing Rules 10 Id. 11 17 CFR 200.30–3(a)(57). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change Relating to the ICC Governance Playbook; Exchange Act Release No. 91090 (Feb. 9, 2021); 86 FR 9557 (Feb. 16, 2021) (‘‘Notice’’). 4 The description that follows is substantially excerpted from the Notice, 86 FR at 9557. 1 15 E:\FR\FM\24MRN1.SGM 24MRN1 15748 Federal Register / Vol. 86, No. 55 / Wednesday, March 24, 2021 / Notices (‘‘Rules’’), operating agreement, and other ICC policies and procedures within the Governance Playbook document. The Governance Playbook contains information regarding the governance structure at ICC, which includes the Board, committees, and management. The document is divided in six parts and sets out (i) the purpose of the document, (ii) an introduction to the ICC governance structure, (iii) information on the ICC Board of Managers (the ‘‘Board,’’ with each member a ‘‘Manager’’), (iv) descriptions of the committees at ICC, (v) descriptions of the special purpose committees at ICC, and (vi) a revision history of the Governance Playbook and an appendix that outlines the roles, responsibilities, and required skills of key senior management positions and provides an email template relating to the annual reconstitution of ICC’s Risk Committee. khammond on DSKJM1Z7X2PROD with NOTICES 1. Purpose ICC proposes to formalize and update the purpose section of the Governance Playbook. Specifically, the purpose section includes a statement that the governance guidelines set forth in the Governance Playbook are intended to comply with applicable Commission and Commodity Futures Trading Commission (‘‘CFTC’’) regulations. This statement would include an updated citation to a relevant CFTC Regulation. 2. Introduction to ICC Governance Structure In the introduction section of the Governance Playbook, ICC proposes to formalize its general mission and describe its overall governance structure, comprised of its Board, committees and management. The introduction section reflects the Boarddetermined mission statement that ICC is to provide safe and sound central counterparty services to reduce systemic risk in an efficient and compliant manner while generating positive returns for shareholders. The introduction section also states that ICC’s governance arrangements are clear and transparent, promote its safety and efficiency and support the stability of the broader financial system, other relevant public interest considerations and the objectives of relevant stakeholders. 3. Board of Managers In this section of the Governance Playbook, ICC proposes to formalize the Board’s sole responsibility for the control and management of ICC’s operations, subject only to prior consultation rights of the ICC Risk VerDate Sep<11>2014 16:30 Mar 23, 2021 Jkt 253001 Committee and the ICC Risk Management Subcommittee as described in Chapter 5 of its Rules. This section would clarify that ICC’s officers, including the Chief Operating Officer, Chief Compliance Officer, Chief Risk Officer and General Counsel, are designated by the Board following a determination that they possess the requisite experience and skills to discharge their responsibilities and report to the ICC President. The section also formalizes additional reporting lines of certain ICC officers to ensure that relevant personnel have sufficient access to the Board, consistent with relevant regulation. Specifically, the Chief Compliance Officer has an additional reporting line directly to the Board, and the Chief Risk Officer has an additional reporting line directly to the Chairperson of the Risk Committee, who also is a Manager on the Board. This section of the Governance Playbook details how the Board guides management with respect to strategic planning and priority setting. Additionally, this section of the Governance Playbook describes the composition of the Board, and specifies the fitness standards required of each Manager, as well as the fitness standards and qualifications of the Board as a whole. ICC represents that it includes such procedures in the Governance Playbook to ensure that the Board consists of suitable individuals having appropriate skills and incentives and that Managers have the appropriate experience, skills, and integrity necessary to discharge their Board responsibilities.5 The Governance Playbook describes the election procedures for new Managers and specifies who is responsible for electing new Managers and for ensuring such Managers meet the fitness standards. The Governance Playbook also contains information regarding scheduling of meetings and meeting frequency, and lists all documents relevant to Board operations. The Governance Playbook sets forth the process for determining the independence of those Managers who are required to be independent. Additionally, the document lists the independence qualifications considered as part of such independence determinations and describes the annual questionnaire process each independent Manager is required to complete. The Governance Playbook also describes the self-evaluation survey process by which ICC reviews the performance of the Board and its individual Managers on 5 See PO 00000 Notice, 86 FR at 9557. Frm 00109 Fmt 4703 Sfmt 4703 an annual basis in accordance with applicable regulation. The Governance Playbook also contains information on required disclosures of the Board’s major decisions under relevant regulations. The Governance Playbook formalizes arrangements by which all major decisions of the Board are clearly disclosed to clearing members, other relevant stakeholders, and ICC’s regulators. In addition, the Governance Playbook provides governance procedures for clearly disclosing to the public the Board’s major decisions that have a broad market impact. With respect to information made available to the public, ICC posts on its website relevant rules and material procedures and documents. ICC maintains a comprehensive public Disclosure Framework that describes its material rules, policies, and procedures regarding its legal, governance, risk management, and operating framework. ICC updates the Disclosure Framework every two years or more frequently following material changes to ICC’s systems or environment in which it operates. Further, the Governance Playbook describes the Board’s role in reviewing the performance and compensation of senior managers who are responsible for executing the Board’s decisions throughout the year. As part of this process, the Board will consider, in accordance with relevant regulation, whether senior management continues to have the appropriate experience, skills, and integrity necessary to discharge their responsibilities. 4. Committees In this section of the Governance Playbook, ICC would formalize information regarding the roles and responsibilities of the various committees at ICC, including the Audit Committee, Risk Committee, Risk Management Subcommittee, Advisory Committee, Futures Commission Merchant (FCM) Executive Council, Participant Review Committee, Credit Review Subcommittee, New Initiatives Approval Committee, Operations Working Group, Trading Advisory Group, Business Continuity Planning (BCP) and Disaster Recovery (DR) Oversight Committee of the Compliance Committee, Risk Working Group, Compliance Committee, and Steering Committee. The Governance Playbook further details and updates the membership composition and meeting frequency for each committee and contains a listing of all relevant committee documents (including, as applicable, a charter, meeting minutes, E:\FR\FM\24MRN1.SGM 24MRN1 Federal Register / Vol. 86, No. 55 / Wednesday, March 24, 2021 / Notices and agendas). As applicable, the Governance Playbook details procedures for electing new members to a committee. The Governance Playbook also includes procedures for the annual Audit Committee performance review and the annual reconstitution of the Risk Committee. 5. Special Purpose Committees This section of the Governance Playbook would formalize information regarding ICC’s special purpose committees, including the Business Conduct Committee, Regional CDS Committees, and the CDS Default Committee. The Governance Playbook contains a brief description of each special purpose committee, details membership composition and meeting frequency, and lists relevant committee documents. As applicable, the Governance Playbook contains information regarding the appointment of new members. 6. Revision History and Appendix Finally, the Governance Playbook includes a revision history to document the date, versions, and revisions to the Governance Playbook document. An appendix follows the revision history with relevant detailed information, including a record of the roles, responsibilities, and required skills of key senior management in Appendix 1, and an email template relating to the annual reconstitution of the ICC Risk Committee composition in Appendix 2. khammond on DSKJM1Z7X2PROD with NOTICES III. Discussion and 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 such proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to such organization.6 For the reasons given below, the Commission finds that the proposed rule change is consistent with Section 17A(b)(3)(F) of the Act 7 and Rules 17Ad–22(e)(2) and (e)(23)(i), (iv), and (v) thereunder.8 A. Consistency With Section 17A(b)(3)(F) of the Act Section 17A(b)(3)(F) of the Act requires, in part, that the rules of a clearing agency, such as 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 to protect the public interest.9 As noted above, the principal purpose of the proposed rule change is to formalize and update the Governance Playbook as a single reference document of governance guidelines that consolidates and summarizes the ICC governance arrangements set forth in the Rules, operating agreement, and a number of written ICC policies and procedures. The introduction section of the Governance Playbook states its intended purposes to ensure that ICC’s governance arrangements are clear and transparent, promote ICC’s safety and efficiency and support the stability of the broader financial system, other relevant public interest considerations and the objectives of relevant stakeholders. The Governance Playbook also reflects the Board’s sole responsibility for the control and management of ICC’s operations, subject only to prior consultation rights of the ICC Risk Committee and the ICC Risk Management Subcommittee as described in Chapter 5 of ICC’s Rules. The Governance Playbook describes the composition of the Board and the election procedures for new Managers, provides information regarding scheduling of meetings and meeting frequency, and updates required disclosures under relevant regulations of the Board’s major decisions. The Governance Playbook describes the role of the Board in reviewing the performance and compensation of senior managers responsible for executing the Board’s decisions, information regarding the roles and responsibilities of the various committees at ICC, information regarding ICC’s special purpose committees, and a revision history and an appendix with relevant information that outlines the roles, responsibilities, and required skills of key senior management positions and provides an email template relating to the annual reconstitution of ICC’s Risk Committee. Governance arrangements are critical to the sound operation of clearing agencies.10 Specifically, clear and transparent governance documents promote accountability and reliability in the decisions, rules, and procedures of 9 15 6 15 U.S.C. 78s(b)(2)(C). 7 15 U.S.C. 78q–1(b)(3)(F). 8 17 CFR 240.17Ad–22(e)(2) and (e)(23)(i), (iv), and (v). VerDate Sep<11>2014 16:30 Mar 23, 2021 Jkt 253001 U.S.C. 78q–1(b)(3)(F). Exchange Act Release No. 71699 (May 21, 2014), 79 FR 29508, 29521 (May 22, 2014) (‘‘Covered Clearing Agency Standards Proposing Release’’). 10 Securities PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 15749 a clearing agency.11 Clear and transparent governance documents also provide interested parties, including owners, members, and general members of the public, with information about how a clearing agency’s decisions are made and what the rules and procedures are designed to accomplish.12 Further, the decisions, rules, and procedures of a clearing agency are important, as they can have widespread impact, affecting multiple market members, financial institutions, markets, and jurisdictions.13 The Commission believes that the proposed rule change would provide ICC stakeholders with a better understanding of how ICC makes decisions that could ultimately affect them and, potentially, the broader financial system. The proposed rule change would also help the Board, as well as ICC’s management, employees, and members, understand the roles and responsibilities of ICC officers, committees and subcommittees. The Commission further believes that the Governance Playbook should enhance the clarity and transparency of ICC’s governance structure and facilitate the efficiency and effectiveness of ICC’s governance procedures by providing a single, consolidated summary document of governance guidelines for ease of reference. For these reasons, the proposed rule change should facilitate ICC’s ability to provide clearing services that are supported by, and consistent with, clear and transparent governance arrangements that comply with relevant regulations and internal policies and procedures, thereby helping ICC maintain prudent risk management processes to promote the prompt and accurate clearance of settlement and securities transactions and derivative agreements, contracts and transactions cleared by ICC, to assure the safeguarding of securities and funds in the custody or control of ICC, and to protect the public interest.14 For these reasons, the Commission finds that the proposed rule change is consistent with Section 17A(b)(3)(F) of the Act.15 B. Consistency With Rule 17Ad–22(e)(2) Under the Act Rule 17Ad–22(e)(2) under the Act requires each covered clearing agency to establish, implement, maintain and 11 Securities Exchange Act Release No. 64017 (March 3, 2011), 76 FR 14472 (March 16, 2011) at 14488. 12 Id. 13 Covered Clearing Agency Standards Proposing Release, 79 FR at 29521. 14 15 U.S.C. 78q–1(b)(3)(F). 15 15 U.S.C. 78q–1(b)(3)(F). E:\FR\FM\24MRN1.SGM 24MRN1 15750 Federal Register / Vol. 86, No. 55 / Wednesday, March 24, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES enforce written policies and procedures reasonably designed to provide for governance arrangements that, among other things, are clear and transparent, establish that the board of directors and senior management have appropriate experience and skills to discharge their duties and responsibilities, and specify clear and direct lines of responsibility.16 As stated above, the proposed rule change would update and formalize the Governance Playbook to reflect the governance arrangements in place at ICC, including those that specify: the Board’s responsibility for the control and management of ICC’s operations, the composition of the Board, the election procedures for new Managers, the fitness standards and qualifications required of each Manager and the Board as a whole, and the process to review the performance of ICC’s senior managers. The Commission believes that these aspects of the proposed rule change should help ICC ensure that the Board and individual Managers, as well as ICC’s senior managers, including the Chief Operating Officer, Chief Compliance Officer, Chief Risk Officer and General Counsel, have the appropriate experience and skills to discharge their duties and responsibilities. Further, the Commission believes the Governance Playbook specifies clear and direct lines of responsibility by identifying reporting lines of certain ICC officers to ensure they have sufficient access to the Board, consistent with relevant regulation. For these reasons, the Commission believes that the proposed rule change is consistent with Rule 17Ad–22(e)(2) 17 under the Act. C. Consistency With Rule 17Ad– 22(e)(23)(i), (iv), and (v) Under the Act Rule 17Ad–22(e)(23)(i), (iv), and (v) under the Act requires each covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for, among other things, (1) publicly disclosing all relevant rules and material procedures, including key aspects of its default rules and procedures, (2) a comprehensive public disclosure that describes its material rules, policies, and procedures regarding its legal, governance, risk management, and operating framework, accurate in all material respects at the time of publication, and (3) updating the public disclosure every two years, or more frequently following changes to its system or the environment in which it operates to the extent necessary to 16 17 17 17 CFR 240.17Ad–22(e)(2). CFR 240.17Ad–22(e)(2). VerDate Sep<11>2014 16:30 Mar 23, 2021 Jkt 253001 ensure statements previously provided remain accurate in all material respects.18 As noted above, the Governance Playbook reflects updated arrangements by which all major decisions of the Board are clearly disclosed to clearing members, other relevant stakeholders, and ICC’s regulators. In addition, the Governance Playbook provides governance procedures for clearly disclosing to the public the Board’s major decisions that have a broad market impact. With respect to information made available to the public, the Governance Playbook specifies that ICC posts on its website all relevant rules and material procedures and documents, as required by applicable regulations. The Commission believes that these aspects of the Governance Playbook should help ensure that ICC publicly discloses all relevant rules and material procedures, including key aspects of its default rules and procedures. In addition, the Governance Playbook specifies that ICC maintains a comprehensive public Disclosure Framework that describes its material rules, policies, and procedures regarding its legal, governance, risk management, and operating framework. The Governance Playbook formalizes the process by which ICC Legal will update the public Disclosure Framework every two years or more frequently following material changes to ICC’s systems or environment in which it operates, including updates for major decisions of the Board with a broad market impact. The Commission believes that these aspects of the Governance Playbook should help ensure ICC’s compliance with its regulatory obligation to provide a comprehensive public disclosure that is updated every two years or more frequently following material changes. For these reasons, the Commission believes that the proposed rule change is consistent with Rule 17Ad– 22(e)(23)(i), (iv), and (v) 19 under the Act. D. 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 20 and Rules 17Ad–22(e)(2) and (e)(23)(i), (iv), and (v) thereunder.21 18 17 CFR 240.17Ad–22(e)(23)(i), (iv), and (v). CFR 240.17Ad–22(e)(23)(i), (iv) and (v). 20 15 U.S.C. 78q–1(b)(3)(F). 21 17 CFR 240.17Ad–22(e)(2) and (e)(23)(i), (iv), and (v). 19 17 PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 It is therefore ordered pursuant to Section 19(b)(2) of the Act 22 that the proposed rule change (SR–ICC–2021– 004), be, and hereby is, approved.23 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.24 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2021–06002 Filed 3–23–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91347; File No. SR–NSCC– 2021–801] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Advance Notice To Amend the Supplemental Liquidity Deposit Requirements March 18, 2021. Pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act entitled the Payment, Clearing, and Settlement Supervision Act of 2010 (‘‘Clearing Supervision Act’’) 1 and Rule 19b–4(n)(1)(i) under the Securities Exchange Act of 1934 (‘‘Act’’),2 notice is hereby given that on March 5, 2021, National Securities Clearing Corporation (‘‘NSCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the advance notice as described in Items I, II and III below, which Items have been prepared by the clearing agency.3 The Commission is publishing this notice to solicit comments on the advance notice from interested persons. I. Clearing Agency’s Statement of the Terms of Substance of the Advance Notice This advance notice consists of modifications to Rule 4(A) (Supplemental Liquidity Deposits) of the NSCC’s Rules & Procedures (‘‘Rules’’) to (1) calculate and collect, when applicable, supplemental 22 15 U.S.C. 78s(b)(2). approving the proposed rule change, the Commission considered the proposal’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 24 17 CFR 200.30–3(a)(12). 1 12 U.S.C. 5465(e)(1). 2 17 CFR 240.19b–4(n)(1)(i). 3 NSCC filed this advance notice as a proposed rule change (File No. SR–NSCC–2021–002) with the Commission pursuant to Section 19(b)(1) of the Act, 15 U.S.C. 78s(b)(1), and Rule 19b-4 thereunder, 17 CFR 240.19b–4. A copy of the proposed rule change is available at https://www.dtcc.com/legal/sec-rulefilings.aspx. 23 In E:\FR\FM\24MRN1.SGM 24MRN1

Agencies

[Federal Register Volume 86, Number 55 (Wednesday, March 24, 2021)]
[Notices]
[Pages 15747-15750]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-06002]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91361; File No. SR-ICC-2021-004]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change Relating to the ICC Governance Playbook

March 18, 2021.

I. Introduction

    On January 29, 2021, 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 (the ``Act'') 
\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to update and 
formalize the ICC Governance Playbook. The proposed rule change was 
published for comment in the Federal Register on February 16, 2021.\3\ 
The Commission did not receive comments regarding 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\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice 
of Filing of Proposed Rule Change Relating to the ICC Governance 
Playbook; Exchange Act Release No. 91090 (Feb. 9, 2021); 86 FR 9557 
(Feb. 16, 2021) (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The principal purpose of the proposed rule change is to update and 
formalize the ICC Governance Playbook.\4\ Specifically, the proposed 
rule change would consolidate and summarize governance arrangements set 
forth in the ICC Clearing Rules

[[Page 15748]]

(``Rules''), operating agreement, and other ICC policies and procedures 
within the Governance Playbook document. The Governance Playbook 
contains information regarding the governance structure at ICC, which 
includes the Board, committees, and management. The document is divided 
in six parts and sets out (i) the purpose of the document, (ii) an 
introduction to the ICC governance structure, (iii) information on the 
ICC Board of Managers (the ``Board,'' with each member a ``Manager''), 
(iv) descriptions of the committees at ICC, (v) descriptions of the 
special purpose committees at ICC, and (vi) a revision history of the 
Governance Playbook and an appendix that outlines the roles, 
responsibilities, and required skills of key senior management 
positions and provides an email template relating to the annual 
reconstitution of ICC's Risk Committee.
---------------------------------------------------------------------------

    \4\ The description that follows is substantially excerpted from 
the Notice, 86 FR at 9557.
---------------------------------------------------------------------------

1. Purpose

    ICC proposes to formalize and update the purpose section of the 
Governance Playbook. Specifically, the purpose section includes a 
statement that the governance guidelines set forth in the Governance 
Playbook are intended to comply with applicable Commission and 
Commodity Futures Trading Commission (``CFTC'') regulations. This 
statement would include an updated citation to a relevant CFTC 
Regulation.

2. Introduction to ICC Governance Structure

    In the introduction section of the Governance Playbook, ICC 
proposes to formalize its general mission and describe its overall 
governance structure, comprised of its Board, committees and 
management. The introduction section reflects the Board-determined 
mission statement that ICC is to provide safe and sound central 
counterparty services to reduce systemic risk in an efficient and 
compliant manner while generating positive returns for shareholders. 
The introduction section also states that ICC's governance arrangements 
are clear and transparent, promote its safety and efficiency and 
support the stability of the broader financial system, other relevant 
public interest considerations and the objectives of relevant 
stakeholders.

3. Board of Managers

    In this section of the Governance Playbook, ICC proposes to 
formalize the Board's sole responsibility for the control and 
management of ICC's operations, subject only to prior consultation 
rights of the ICC Risk Committee and the ICC Risk Management 
Subcommittee as described in Chapter 5 of its Rules. This section would 
clarify that ICC's officers, including the Chief Operating Officer, 
Chief Compliance Officer, Chief Risk Officer and General Counsel, are 
designated by the Board following a determination that they possess the 
requisite experience and skills to discharge their responsibilities and 
report to the ICC President. The section also formalizes additional 
reporting lines of certain ICC officers to ensure that relevant 
personnel have sufficient access to the Board, consistent with relevant 
regulation. Specifically, the Chief Compliance Officer has an 
additional reporting line directly to the Board, and the Chief Risk 
Officer has an additional reporting line directly to the Chairperson of 
the Risk Committee, who also is a Manager on the Board. This section of 
the Governance Playbook details how the Board guides management with 
respect to strategic planning and priority setting.
    Additionally, this section of the Governance Playbook describes the 
composition of the Board, and specifies the fitness standards required 
of each Manager, as well as the fitness standards and qualifications of 
the Board as a whole. ICC represents that it includes such procedures 
in the Governance Playbook to ensure that the Board consists of 
suitable individuals having appropriate skills and incentives and that 
Managers have the appropriate experience, skills, and integrity 
necessary to discharge their Board responsibilities.\5\ The Governance 
Playbook describes the election procedures for new Managers and 
specifies who is responsible for electing new Managers and for ensuring 
such Managers meet the fitness standards. The Governance Playbook also 
contains information regarding scheduling of meetings and meeting 
frequency, and lists all documents relevant to Board operations. The 
Governance Playbook sets forth the process for determining the 
independence of those Managers who are required to be independent. 
Additionally, the document lists the independence qualifications 
considered as part of such independence determinations and describes 
the annual questionnaire process each independent Manager is required 
to complete. The Governance Playbook also describes the self-evaluation 
survey process by which ICC reviews the performance of the Board and 
its individual Managers on an annual basis in accordance with 
applicable regulation.
---------------------------------------------------------------------------

    \5\ See Notice, 86 FR at 9557.
---------------------------------------------------------------------------

    The Governance Playbook also contains information on required 
disclosures of the Board's major decisions under relevant regulations. 
The Governance Playbook formalizes arrangements by which all major 
decisions of the Board are clearly disclosed to clearing members, other 
relevant stakeholders, and ICC's regulators. In addition, the 
Governance Playbook provides governance procedures for clearly 
disclosing to the public the Board's major decisions that have a broad 
market impact. With respect to information made available to the 
public, ICC posts on its website relevant rules and material procedures 
and documents. ICC maintains a comprehensive public Disclosure 
Framework that describes its material rules, policies, and procedures 
regarding its legal, governance, risk management, and operating 
framework. ICC updates the Disclosure Framework every two years or more 
frequently following material changes to ICC's systems or environment 
in which it operates.
    Further, the Governance Playbook describes the Board's role in 
reviewing the performance and compensation of senior managers who are 
responsible for executing the Board's decisions throughout the year. As 
part of this process, the Board will consider, in accordance with 
relevant regulation, whether senior management continues to have the 
appropriate experience, skills, and integrity necessary to discharge 
their responsibilities.

4. Committees

    In this section of the Governance Playbook, ICC would formalize 
information regarding the roles and responsibilities of the various 
committees at ICC, including the Audit Committee, Risk Committee, Risk 
Management Subcommittee, Advisory Committee, Futures Commission 
Merchant (FCM) Executive Council, Participant Review Committee, Credit 
Review Subcommittee, New Initiatives Approval Committee, Operations 
Working Group, Trading Advisory Group, Business Continuity Planning 
(BCP) and Disaster Recovery (DR) Oversight Committee of the Compliance 
Committee, Risk Working Group, Compliance Committee, and Steering 
Committee. The Governance Playbook further details and updates the 
membership composition and meeting frequency for each committee and 
contains a listing of all relevant committee documents (including, as 
applicable, a charter, meeting minutes,

[[Page 15749]]

and agendas). As applicable, the Governance Playbook details procedures 
for electing new members to a committee. The Governance Playbook also 
includes procedures for the annual Audit Committee performance review 
and the annual reconstitution of the Risk Committee.

5. Special Purpose Committees

    This section of the Governance Playbook would formalize information 
regarding ICC's special purpose committees, including the Business 
Conduct Committee, Regional CDS Committees, and the CDS Default 
Committee. The Governance Playbook contains a brief description of each 
special purpose committee, details membership composition and meeting 
frequency, and lists relevant committee documents. As applicable, the 
Governance Playbook contains information regarding the appointment of 
new members.

6. Revision History and Appendix

    Finally, the Governance Playbook includes a revision history to 
document the date, versions, and revisions to the Governance Playbook 
document. An appendix follows the revision history with relevant 
detailed information, including a record of the roles, 
responsibilities, and required skills of key senior management in 
Appendix 1, and an email template relating to the annual reconstitution 
of the ICC Risk Committee composition in Appendix 2.

III. Discussion and 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 
such proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to such 
organization.\6\ For the reasons given below, the Commission finds that 
the proposed rule change is consistent with Section 17A(b)(3)(F) of the 
Act \7\ and Rules 17Ad-22(e)(2) and (e)(23)(i), (iv), and (v) 
thereunder.\8\
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    \6\ 15 U.S.C. 78s(b)(2)(C).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
    \8\ 17 CFR 240.17Ad-22(e)(2) and (e)(23)(i), (iv), and (v).
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A. Consistency With Section 17A(b)(3)(F) of the Act

    Section 17A(b)(3)(F) of the Act requires, in part, that the rules 
of a clearing agency, such as 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 to protect the public interest.\9\
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    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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    As noted above, the principal purpose of the proposed rule change 
is to formalize and update the Governance Playbook as a single 
reference document of governance guidelines that consolidates and 
summarizes the ICC governance arrangements set forth in the Rules, 
operating agreement, and a number of written ICC policies and 
procedures. The introduction section of the Governance Playbook states 
its intended purposes to ensure that ICC's governance arrangements are 
clear and transparent, promote ICC's safety and efficiency and support 
the stability of the broader financial system, other relevant public 
interest considerations and the objectives of relevant stakeholders.
    The Governance Playbook also reflects the Board's sole 
responsibility for the control and management of ICC's operations, 
subject only to prior consultation rights of the ICC Risk Committee and 
the ICC Risk Management Subcommittee as described in Chapter 5 of ICC's 
Rules. The Governance Playbook describes the composition of the Board 
and the election procedures for new Managers, provides information 
regarding scheduling of meetings and meeting frequency, and updates 
required disclosures under relevant regulations of the Board's major 
decisions. The Governance Playbook describes the role of the Board in 
reviewing the performance and compensation of senior managers 
responsible for executing the Board's decisions, information regarding 
the roles and responsibilities of the various committees at ICC, 
information regarding ICC's special purpose committees, and a revision 
history and an appendix with relevant information that outlines the 
roles, responsibilities, and required skills of key senior management 
positions and provides an email template relating to the annual 
reconstitution of ICC's Risk Committee.
    Governance arrangements are critical to the sound operation of 
clearing agencies.\10\ Specifically, clear and transparent governance 
documents promote accountability and reliability in the decisions, 
rules, and procedures of a clearing agency.\11\ Clear and transparent 
governance documents also provide interested parties, including owners, 
members, and general members of the public, with information about how 
a clearing agency's decisions are made and what the rules and 
procedures are designed to accomplish.\12\ Further, the decisions, 
rules, and procedures of a clearing agency are important, as they can 
have widespread impact, affecting multiple market members, financial 
institutions, markets, and jurisdictions.\13\
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    \10\ Securities Exchange Act Release No. 71699 (May 21, 2014), 
79 FR 29508, 29521 (May 22, 2014) (``Covered Clearing Agency 
Standards Proposing Release'').
    \11\ Securities Exchange Act Release No. 64017 (March 3, 2011), 
76 FR 14472 (March 16, 2011) at 14488.
    \12\ Id.
    \13\ Covered Clearing Agency Standards Proposing Release, 79 FR 
at 29521.
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    The Commission believes that the proposed rule change would provide 
ICC stakeholders with a better understanding of how ICC makes decisions 
that could ultimately affect them and, potentially, the broader 
financial system. The proposed rule change would also help the Board, 
as well as ICC's management, employees, and members, understand the 
roles and responsibilities of ICC officers, committees and 
subcommittees. The Commission further believes that the Governance 
Playbook should enhance the clarity and transparency of ICC's 
governance structure and facilitate the efficiency and effectiveness of 
ICC's governance procedures by providing a single, consolidated summary 
document of governance guidelines for ease of reference. For these 
reasons, the proposed rule change should facilitate ICC's ability to 
provide clearing services that are supported by, and consistent with, 
clear and transparent governance arrangements that comply with relevant 
regulations and internal policies and procedures, thereby helping ICC 
maintain prudent risk management processes to promote the prompt and 
accurate clearance of settlement and securities transactions and 
derivative agreements, contracts and transactions cleared by ICC, to 
assure the safeguarding of securities and funds in the custody or 
control of ICC, and to protect the public interest.\14\
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    \14\ 15 U.S.C. 78q-1(b)(3)(F).
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    For these reasons, the Commission finds that the proposed rule 
change is consistent with Section 17A(b)(3)(F) of the Act.\15\
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    \15\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(2) Under the Act

    Rule 17Ad-22(e)(2) under the Act requires each covered clearing 
agency to establish, implement, maintain and

[[Page 15750]]

enforce written policies and procedures reasonably designed to provide 
for governance arrangements that, among other things, are clear and 
transparent, establish that the board of directors and senior 
management have appropriate experience and skills to discharge their 
duties and responsibilities, and specify clear and direct lines of 
responsibility.\16\ As stated above, the proposed rule change would 
update and formalize the Governance Playbook to reflect the governance 
arrangements in place at ICC, including those that specify: the Board's 
responsibility for the control and management of ICC's operations, the 
composition of the Board, the election procedures for new Managers, the 
fitness standards and qualifications required of each Manager and the 
Board as a whole, and the process to review the performance of ICC's 
senior managers. The Commission believes that these aspects of the 
proposed rule change should help ICC ensure that the Board and 
individual Managers, as well as ICC's senior managers, including the 
Chief Operating Officer, Chief Compliance Officer, Chief Risk Officer 
and General Counsel, have the appropriate experience and skills to 
discharge their duties and responsibilities. Further, the Commission 
believes the Governance Playbook specifies clear and direct lines of 
responsibility by identifying reporting lines of certain ICC officers 
to ensure they have sufficient access to the Board, consistent with 
relevant regulation. For these reasons, the Commission believes that 
the proposed rule change is consistent with Rule 17Ad-22(e)(2) \17\ 
under the Act.
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    \16\ 17 CFR 240.17Ad-22(e)(2).
    \17\ 17 CFR 240.17Ad-22(e)(2).
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C. Consistency With Rule 17Ad-22(e)(23)(i), (iv), and (v) Under the Act

    Rule 17Ad-22(e)(23)(i), (iv), and (v) under the Act requires each 
covered clearing agency to establish, implement, maintain and enforce 
written policies and procedures reasonably designed to provide for, 
among other things, (1) publicly disclosing all relevant rules and 
material procedures, including key aspects of its default rules and 
procedures, (2) a comprehensive public disclosure that describes its 
material rules, policies, and procedures regarding its legal, 
governance, risk management, and operating framework, accurate in all 
material respects at the time of publication, and (3) updating the 
public disclosure every two years, or more frequently following changes 
to its system or the environment in which it operates to the extent 
necessary to ensure statements previously provided remain accurate in 
all material respects.\18\ As noted above, the Governance Playbook 
reflects updated arrangements by which all major decisions of the Board 
are clearly disclosed to clearing members, other relevant stakeholders, 
and ICC's regulators. In addition, the Governance Playbook provides 
governance procedures for clearly disclosing to the public the Board's 
major decisions that have a broad market impact. With respect to 
information made available to the public, the Governance Playbook 
specifies that ICC posts on its website all relevant rules and material 
procedures and documents, as required by applicable regulations. The 
Commission believes that these aspects of the Governance Playbook 
should help ensure that ICC publicly discloses all relevant rules and 
material procedures, including key aspects of its default rules and 
procedures.
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    \18\ 17 CFR 240.17Ad-22(e)(23)(i), (iv), and (v).
---------------------------------------------------------------------------

    In addition, the Governance Playbook specifies that ICC maintains a 
comprehensive public Disclosure Framework that describes its material 
rules, policies, and procedures regarding its legal, governance, risk 
management, and operating framework. The Governance Playbook formalizes 
the process by which ICC Legal will update the public Disclosure 
Framework every two years or more frequently following material changes 
to ICC's systems or environment in which it operates, including updates 
for major decisions of the Board with a broad market impact. The 
Commission believes that these aspects of the Governance Playbook 
should help ensure ICC's compliance with its regulatory obligation to 
provide a comprehensive public disclosure that is updated every two 
years or more frequently following material changes.
    For these reasons, the Commission believes that the proposed rule 
change is consistent with Rule 17Ad-22(e)(23)(i), (iv), and (v) \19\ 
under the Act.
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    \19\ 17 CFR 240.17Ad-22(e)(23)(i), (iv) and (v).
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D. 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 \20\ and Rules 17Ad-22(e)(2) and (e)(23)(i), (iv), and (v) 
thereunder.\21\
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    \20\ 15 U.S.C. 78q-1(b)(3)(F).
    \21\ 17 CFR 240.17Ad-22(e)(2) and (e)(23)(i), (iv), and (v).
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    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
\22\ that the proposed rule change (SR-ICC-2021-004), be, and hereby 
is, approved.\23\
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    \22\ 15 U.S.C. 78s(b)(2).
    \23\ 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).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\

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    \24\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2021-06002 Filed 3-23-21; 8:45 am]
BILLING CODE 8011-01-P
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