Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change Relating to the ICC Clearing Participant Default Management Procedures, 30812-30815 [2023-10129]
Download as PDF
<![CDATA[
30812
Federal Register / Vol. 88, No. 92 / Friday, May 12, 2023 / Notices
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–
C2–2023–011 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
lotter on DSK11XQN23PROD with NOTICES1
All submissions should refer to File
Number SR–C2–2023–011. 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 that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
offices of the Exchange. Do not include
personal identifiable information in
submissions; you should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–C2–2023–011, and
should be submitted on or before June
2, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–10123 Filed 5–11–23; 8:45 am]
BILLING CODE 8011–01–P
12 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
19:11 May 11, 2023
Jkt 259001
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34909; 812–15454]
SEI Alternative Income Fund, et al.
May 8, 2023.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (the ‘‘Act’’) for an exemption from
sections 18(a)(2), 18(c) and 18(i) of the
Act, under sections 6(c) and 23(c) of the
Act for an exemption from rule 23c–3
under the Act, and for an order pursuant
to section 17(d) of the Act and rule 17d–
1 under the Act.
SUMMARY OF APPLICATION: Applicants
request an order to permit certain
registered closed-end management
investment companies to issue multiple
classes of shares and to impose early
withdrawal charges and asset-based
distribution and/or service fees with
respect to certain classes.
APPLICANTS: SEI Alternative Income
Fund, SEI Investments Distribution Co.
and SEI Investments Management
Corporation.
FILING DATE: The application was filed
on April 10, 2023.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing on any application by
emailing the SEC’s Secretary at
Secretarys-Office@sec.gov and serving
the relevant applicant with a copy of the
request by email, if an email address is
listed for the relevant applicant below,
or personally or by mail, if a physical
address is listed for the relevant
applicant below. Hearing requests
should be received by the Commission
by 5:30 p.m. on June 2, 2023, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
emailing the Commission’s Secretary.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov. Applicants:
Timothy D. Barto, tbarto@seic.com and
Sean Graber, sean.graber@
morganlewis.com.
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
FOR FURTHER INFORMATION CONTACT:
Trace W. Rakestraw, Senior Special
Counsel, at (202) 551–6825 (Chief
Counsel’s Office, Division of Investment
Management).
SUPPLEMENTARY INFORMATION: For
Applicants’ representations, legal
analysis, and condition, please refer to
Applicants’ application, dated April 10,
2023, which may be obtained via the
Commission’s website by searching for
the file number at the top of this
document, or for an Applicant using the
Company name search field, on the
SEC’s EDGAR system. The SEC’s
EDGAR system may be searched at
https://www.sec.gov/edgar/searchedgar/
legacy/companysearch.html. You may
also call the SEC’s Public Reference
Room at (202) 551–8090.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–10132 Filed 5–11–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97455; File No. SR–ICC–
2023–008]
Self-Regulatory Organizations; ICE
Clear Credit LLC; Notice of Filing of
Proposed Rule Change Relating to the
ICC Clearing Participant Default
Management Procedures
May 8, 2023.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4,2 notice is
hereby given that on May 02, 2023, ICE
Clear Credit LLC (‘‘ICC’’) 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
primarily by ICC. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
ICC proposes a rule change to update
the ICC Clearing Participant (‘‘CP’’)
Default Management Procedures (the
‘‘ICC Default Management Procedures’’).
These revisions do not require any
changes to the ICC Clearing Rules (the
‘‘Rules’’).
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
E:\FR\FM\12MYN1.SGM
12MYN1
Federal Register / Vol. 88, No. 92 / Friday, May 12, 2023 / Notices
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, ICC
included statements concerning the
purpose of and basis for the proposed
rule change, security-based swap
submission, or advance notice and
discussed any comments it received on
the proposed rule change, securitybased swap submission, or advance
notice. The text of these statements may
be examined at the places specified in
Item IV below. ICC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements.
lotter on DSK11XQN23PROD with NOTICES1
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
(a) Purpose
ICC proposes to update the ICC
Clearing Participant Default
Management Procedures (the ‘‘ICC
Default Management Procedures’’). The
ICC Default Management Procedures set
forth ICC’s default management process,
including the actions taken by ICC to
determine that a CP is in default of its
obligations to ICC under the Rules, as
well as the actions taken by ICC in
connection with the close-out of the
defaulter’s portfolio (the ‘‘Close-Out’’).
The proposed revisions are designed to
address Commission regulatory
examination findings related to the
annual testing of the ICC Recovery Plan
and the ICC Wind-Down Plan
(collectively, the ‘‘Plans’’).3 The
proposed revisions are limited to
providing additional details with
respect to ICC’s testing of the Plans
included in the ICC Default
Management Procedures. ICC believes
such revisions will facilitate the prompt
and accurate clearance and settlement of
securities transactions and derivative
agreements, contracts, and transactions
for which it is responsible. ICC proposes
to make such changes effective
following Commission approval of the
proposed rule change. The proposed
updates are described in detail as
follows.
Specifically, ICC purposes to revise
the ICC Default Management Procedures
by adding Section 4.6 Recovery and
Wind-Down Tests. Section 4.6 adds
detailed procedures with respect to
ICC’s annual Recovery and Wind-Down
testing. ICC conducts Recovery and
Wind-Down testing at least every twelve
3 The ICC Recovery Plan and ICC Wind-Down
Plan are the plans for the recovery and orderly
wind-down of ICC necessitated by credit losses,
liquidity shortfalls, losses from general business
risk, or other losses.
VerDate Sep<11>2014
19:11 May 11, 2023
Jkt 259001
months demonstrating ICC’s readiness
to execute the Plans as applicable (i) to
address uncovered credit losses,
liquidity shortfalls and general business
risk, operational risk, or any other risk
that threatens ICC’s viability as a going
concern, and (ii) in the event recovery
actions fail to preserve ICC’s viability as
a going concern or ICC makes a business
decision to exit all clearing activities, to
wind-down ICC in an orderly manner
(the ‘‘Recovery and Wind-Down Test’’).
Proposed Section 4.6 also includes
details on how the scope of each
Recovery and Wind-Down Test is
determined. It is the responsibility of
the ICC Risk Oversight Officer (‘‘ROO’’)
to plan and coordinate the execution of
the Recovery and Wind-Down Test,
including the determination of the
scope of the Recovery and Wind-Down
Test which includes coordination with
the ICC Close-Out Team.4 Such scope
will include which recovery and winddown scenarios will be tested, the
selected stress scenario(s), and the
recovery tools to be tested. In the
determination of which scenarios and
tools are to be tested, ICC will give
consideration to scenarios, business
processes, and tools which have not
been recently tested. In addition, ICC
will consider the applicability of new
Rules, procedures, or newly
implemented ICC capabilities (e.g., new
cleared contracts). The scope also will
include all three wind-down options set
forth in the ICC Wind-Down Plan.
Section 4.6 further provides that with
respect to the testing of business
processes and tools to address CP
default scenarios, ICC may choose to
include such testing in ICC’s default
management tests, and testing of non-CP
default scenarios will be conducted
through a separate table-top exercise.
Furthermore, proposed Section 4.6
assigns responsibility for the execution
of the Recovery and Wind-Down Test to
the ICC Close-Out Team, capturing
results, and making them available to
the ROO. The ROO collates the results
and, identifies any issues or lessons
learned, including any revisions that
should be made to the ICC Recovery
Plan or ICC Wind-Down Plan. The ROO
collates the information from the
Recovery and Wind-Down Test into a
presentation which is reviewed with the
Close-Out Team, the ICC Risk
Committee and the ICC Board of
Managers. The ROO maintains a list of
work items for the future development
and/or enhancement of the business
processes and capabilities necessary to
execute the ICC Recovery Plan and ICC
LLC Wind-Down Plan.
(b) Statutory Basis
Section 17A(b)(3)(F) of the Act 5
requires, among other things, that the
rules of a clearing agency be designed to
promote the prompt and accurate
clearance and settlement of securities
transactions, and to the extent
applicable, derivative agreements,
contracts and transactions; to assure the
safeguarding of securities and funds
which are in the custody or control of
the clearing agency or for which it is
responsible; in general, to protect
investors and the public interest; and to
comply with the provisions of the Act
and the rules and regulations
thereunder. ICC believes that the
proposed additional procedural details
to ICC’s Default Management
Procedures included in the proposed
rule change are consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
ICC, in particular, to section
17(A)(b)(3)(F),6 because ICC believes
that the proposed additional procedural
details to ICC’s Default Management
Procedures enhances policies, practices
and procedures with respect to the
testing of ICC Recovery Plan and the ICC
Wind-Down Plan. Such sound policies,
practices and procedures are important
to enhance ICC’s ability to withstand
defaults and continue providing
clearing services, thereby promoting the
prompt and accurate clearance and
settlement of securities transactions,
derivatives agreements, contracts, and
transactions; the safeguarding of
securities and funds which are in the
custody or control of ICC or for which
it is responsible; and the protection of
investors and the public interest. As
such, the proposed rule change is
designed to promote the prompt and
accurate clearance and settlement of
securities transactions, derivatives
agreements, contracts, and transactions;
to contribute to the safeguarding of
securities and funds associated with
security-based swap transactions in
ICC’s custody or control, or for which
ICC is responsible; and, in general, to
protect investors and the public interest
within the meaning of section
17A(b)(3)(F) of the Act.7
In addition, the proposed rule change
is consistent with the relevant
requirements of Rule 17Ad–22.8 Rule
5 15
4 The
ICC Close-Out Team is comprised of ICC
management, the ROO, and the most senior member
of the ICC Treasury Department.
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
30813
U.S.C. 78q–1(b)(3)(F).
6 Id.
7 Id.
8 17
CFR 240.17Ad–22.
E:\FR\FM\12MYN1.SGM
12MYN1
lotter on DSK11XQN23PROD with NOTICES1
30814
Federal Register / Vol. 88, No. 92 / Friday, May 12, 2023 / Notices
17Ad–22(b)(3) 9 requires ICC to
establish, implement, maintain and
enforce written policies and procedures
reasonably designed to maintain
sufficient financial resources to
withstand, at a minimum, a default by
the two CP families to which it has the
largest exposures in extreme but
plausible market conditions. ICC
believes that such changes enhance
ICC’s ability to manage a default by
providing additional detail,
transparency and clarity with respect to
ICC’s default management rules and
procedures, thereby ensuring that ICC
continues to maintain sufficient
financial resources to withstand, at a
minimum, a default by the two CP
families to which it has the largest
exposures in extreme but plausible
market conditions, consistent with the
requirements of Rule 17Ad–22(b)(3).10
Rule 17Ad–22(e)(2)(i) and (v) 11
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. The
Recovery and Wind-down Testing
updates to the ICC Default Management
Procedures enhance the clarity and
transparency of such procedures by
providing additional information
relating to the assignment of
responsibilities in the determination of
the scope of the annual Recovery and
Wind-down Test, and the assignment of
responsibilities in the execution of the
annual Recovery and Wind-Down Test,
consistent with the requirements of Rule
17Ad–22(e)(2)(i) and (v).12
Rule 17Ad–22(e)(3)(ii) 13 requires ICC
to establish, implement, maintain, and
enforce written policies and procedures
reasonably designed to maintain a
sound risk management framework for
comprehensively managing legal, credit,
liquidity, operational, general business,
investment, custody, and other risks
that arise in or are borne by ICC, which
includes plans for the recovery and
orderly wind-down of ICC necessitated
by credit losses, liquidity shortfalls,
losses from general business risk, or any
other losses. The Default Management
Procedures continue to establish ICC’s
actions to maintain its viability as a
going concern to address any uncovered
credit loss, liquidity shortfall, capital
inadequacy, or business, operational or
other structural weakness that threatens
9 17
ICC’s viability. The proposed changes to
the Default Management Procedures
provide additional detailed procedures
with respect to the annual Recovery and
Wind-Down testing, improving both the
comprehension and transparency of
ICC’s Recovery and Wind-Down testing.
In ICC’s view, such proposed changes
will improve ICC’s Default Management
Procedures and ensure they remain
comprehensive and useful in providing
for ICC’s written policies and
procedures related to ICC’s recovery and
orderly wind-down, consistent with the
requirements of Rule 17Ad–
22(e)(3)(ii).14
Rule 17Ad–22(e)(13) 15 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.
The proposed changes to the Default
Management Procedures enhance the
clarity and transparency of such
procedures by providing additional
information relating to the assignment
of responsibilities in the determination
of the scope of the annual Recovery and
Wind-down Test, and the assignment of
responsibilities in the execution of the
annual Recovery and Wind-Down Test.
Such proposed changes, therefore,
improve the design of ICC’s annual
Recovery and Wind-Down Testing,
consistent with the requirements of Rule
17ad–22(e)(13).16
(B) Clearing Agency’s Statement on
Burden on Competition
ICC does not believe the proposed
rule change would have any impact, or
impose any burden, on competition.
The proposed rule change to update the
ICC Default Management Procedures
will apply uniformly across all market
participants. Therefore, ICC does not
believe the proposed rule change
imposes any burden on competition that
is inappropriate in furtherance of the
purposes of the Act.
CFR 240.17Ad–22(b)(3).
10 Id.
11 17
CFR 240.17Ad–22(e)(2)(i) and (v).
13 17
14 Id.
15 17
12 Id.
CFR 240.17Ad–22(e)(3)(ii).
VerDate Sep<11>2014
19:11 May 11, 2023
CFR 240.17Ad–22(e)(13).
16 Id.
Jkt 259001
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change 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 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 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–2023–008 on the subject line.
Paper Comments
Send paper comments in triplicate to
Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–ICC–2023–008. 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 that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
E:\FR\FM\12MYN1.SGM
12MYN1
Federal Register / Vol. 88, No. 92 / Friday, May 12, 2023 / Notices
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.
Do not include personal identifiable
information in submissions; you should
submit only information that you wish
to make available publicly. We may
redact in part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–ICC–2023–008 and
should be submitted on or before June
2, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–10129 Filed 5–11–23; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–97454; File No. SR–
PEARL–2023–21]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Exchange
Rule 2622, Limit Up-Limit Down Plan
and Trading Halts
lotter on DSK11XQN23PROD with NOTICES1
May 8, 2023.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on May 3,
2023, MIAX PEARL, LLC (‘‘MIAX Pearl’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
as described in Items I and II 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.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
19:11 May 11, 2023
Jkt 259001
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
17 17
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to make a
correction to a recently filed proposal to
amend Exchange Rule 2622, which sets
forth common criteria and procedures
for halting and resuming trading in
equity securities on the Exchange’s
equity trading platform (referred to
herein as ‘‘MIAX Pearl Equities’’) in the
event of regulatory or operational issues.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/pearl at MIAX Pearl’s principal
office, and at the Commission’s Public
Reference Room.
1. Purpose
In conjunction with the adoption of
an amended Nasdaq UTP Plan proposed
by its participants (‘‘Amended Nasdaq
UTP Plan’’),3 the Exchange recently
amended Exchange Rule 2622 to
integrate several definitions and
concepts from the Amended Nasdaq
3 On February 11, 2021, the Nasdaq UTP Plan
participants filed Amendment 50 to the Plan, to
revise provisions governing regulatory and
operational halts. See Letter from Robert Brooks,
Chairman, UTP Operating Committee, Nasdaq UTP
Plan, to Vanessa Countryman, Secretary, Securities
and Exchange Commission, dated February 11,
2021. The Nasdaq UTP Plan subsequently filed two
partial amendments to the 50th Amendment, on
March 31, 2021 and on April 7, 2021. The
Commission approved the amendments on May 28,
2021. See Securities Exchange Act Release No. 34–
92071 (May 28, 2021), 86 FR 29846 (June 3, 2021)
(S7–24–89). The Amended Nasdaq UTP Plan
includes provisions requiring participant selfregulatory organizations (‘‘SROs’’) to honor a
Regulatory Halt declared by the Primary Listing
Market. The provisions in the Nasdaq UTP Plan,
and the plan for consolidation of data for nonNasdaq-listed securities, the Consolidated Tape
System and Consolidated Quotations System
(collectively, the ‘‘CTA/CQS Plan’’), include
provisions similar to the changes proposed by the
Exchange in this filing.
PO 00000
Frm 00104
Fmt 4703
Sfmt 4703
30815
UTP Plan and to reorganize the rule in
light of the Exchange’s experience with
applying the rule over the past few years
as a national securities exchange.4 In
sum, the proposal amended Exchange
Rule 2622 to set forth common criteria
and procedures for halting and
resuming trading in equity securities on
MIAX Pearl Equities in the event of
regulatory or operational issues. As part
of that proposal, the Exchange adopted
paragraph (h)(3)(C)(ii) of Exchange Rule
2622, which provides that ‘‘orders
entered during the Operational Halt 5
will not be accepted, unless subject to
instructions that the order will be
directed to another Trading Center.’’
The text of paragraph (h)(3)(C)(ii) of
Exchange Rule 2622 was adopted in
error since the Exchange does accept
orders during an Operational Halt, as set
forth under Exchange Rule 2615(e),6
described below. Paragraph (h)(3)(C)(ii)
of Exchange Rule 2622, therefore,
conflicts with existing provisions in
Exchange Rule 2615(e). The Exchange
proposes to amend paragraph
(h)(3)(C)(ii) of Exchange Rule 2622 to
clarify how the Exchange handles orders
during an operational halt and to be
consistent with current Exchange Rule
2615(e).
Exchange Rule 2615(e) describes the
Exchange’s Re-Opening Process and
provides, in sum, that while an equity
security is subject to a halt, other than
a halt initiated pursuant to Exchange
Rule 2622(b)(2) following a Level 3
Market Decline, suspension, or pause in
trading, the Exchange will accept orders
for queuing prior to the resumption of
trading in the security for participation
in the Re-Opening Process. Exchange
Rule 2615(e)(1) further provides, in
sum, that the Re-Opening Process will
occur in the same manner as the
Exchange’s Opening Process,7 and
enumerates certain exceptions. One
exception is set forth under Exchange
Rule 2615(e)(1)(A), which provides that
4 See Securities Exchange Act Release No. 97093
(March 9, 2023), 88 FR 16045 (March 15, 2023) (SR–
PEARL–2023–11).
5 Exchange Rule 2622(h)(1)(D) defines
‘‘Operational Halt’’ as having the same meaning as
in Section X.A.7 of the Amended Nasdaq UTP Plan.
Specifically, the Exchange defined Operational Halt
to mean a halt in trading in one or more securities
only on the market declaring the halt and is not a
Regulatory Halt. An Operational Halt is effective
only on the Exchange; other markets are not
required to halt trading in the impacted securities.
See also id.
6 See Securities Exchange Act Release No. 89563
(August 14, 2020), 85 FR 51510 (August 20, 2020)
(SR–PEARL–2020–03) (adopting Exchange Rule
2615(e)).
7 See Exchange Rule 2615(a)–(c) for a description
of the Exchange’s Opening Process.
E:\FR\FM\12MYN1.SGM
12MYN1
]]>Agencies
[Federal Register Volume 88, Number 92 (Friday, May 12, 2023)]
[Notices]
[Pages 30812-30815]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10129]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97455; File No. SR-ICC-2023-008]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change Relating to the ICC Clearing Participant
Default Management Procedures
May 8, 2023.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4,\2\ notice is hereby given that on May
02, 2023, ICE Clear Credit LLC (``ICC'') 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
primarily by ICC. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
ICC proposes a rule change to update the ICC Clearing Participant
(``CP'') Default Management Procedures (the ``ICC Default Management
Procedures''). These revisions do not require any changes to the ICC
Clearing Rules (the ``Rules'').
[[Page 30813]]
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, ICC included statements
concerning the purpose of and basis for the proposed rule change,
security-based swap submission, or advance notice and discussed any
comments it received on the proposed rule change, security-based swap
submission, or advance notice. The text of these statements may be
examined at the places specified in Item IV below. ICC has prepared
summaries, set forth in sections (A), (B), and (C) below, of the most
significant aspects of these statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
(a) Purpose
ICC proposes to update the ICC Clearing Participant Default
Management Procedures (the ``ICC Default Management Procedures''). The
ICC Default Management Procedures set forth ICC's default management
process, including the actions taken by ICC to determine that a CP is
in default of its obligations to ICC under the Rules, as well as the
actions taken by ICC in connection with the close-out of the
defaulter's portfolio (the ``Close-Out''). The proposed revisions are
designed to address Commission regulatory examination findings related
to the annual testing of the ICC Recovery Plan and the ICC Wind-Down
Plan (collectively, the ``Plans'').\3\ The proposed revisions are
limited to providing additional details with respect to ICC's testing
of the Plans included in the ICC Default Management Procedures. ICC
believes such revisions will facilitate the prompt and accurate
clearance and settlement of securities transactions and derivative
agreements, contracts, and transactions for which it is responsible.
ICC proposes to make such changes effective following Commission
approval of the proposed rule change. The proposed updates are
described in detail as follows.
---------------------------------------------------------------------------
\3\ The ICC Recovery Plan and ICC Wind-Down Plan are the plans
for the recovery and orderly wind-down of ICC necessitated by credit
losses, liquidity shortfalls, losses from general business risk, or
other losses.
---------------------------------------------------------------------------
Specifically, ICC purposes to revise the ICC Default Management
Procedures by adding Section 4.6 Recovery and Wind-Down Tests. Section
4.6 adds detailed procedures with respect to ICC's annual Recovery and
Wind-Down testing. ICC conducts Recovery and Wind-Down testing at least
every twelve months demonstrating ICC's readiness to execute the Plans
as applicable (i) to address uncovered credit losses, liquidity
shortfalls and general business risk, operational risk, or any other
risk that threatens ICC's viability as a going concern, and (ii) in the
event recovery actions fail to preserve ICC's viability as a going
concern or ICC makes a business decision to exit all clearing
activities, to wind-down ICC in an orderly manner (the ``Recovery and
Wind-Down Test'').
Proposed Section 4.6 also includes details on how the scope of each
Recovery and Wind-Down Test is determined. It is the responsibility of
the ICC Risk Oversight Officer (``ROO'') to plan and coordinate the
execution of the Recovery and Wind-Down Test, including the
determination of the scope of the Recovery and Wind-Down Test which
includes coordination with the ICC Close-Out Team.\4\ Such scope will
include which recovery and wind-down scenarios will be tested, the
selected stress scenario(s), and the recovery tools to be tested. In
the determination of which scenarios and tools are to be tested, ICC
will give consideration to scenarios, business processes, and tools
which have not been recently tested. In addition, ICC will consider the
applicability of new Rules, procedures, or newly implemented ICC
capabilities (e.g., new cleared contracts). The scope also will include
all three wind-down options set forth in the ICC Wind-Down Plan.
Section 4.6 further provides that with respect to the testing of
business processes and tools to address CP default scenarios, ICC may
choose to include such testing in ICC's default management tests, and
testing of non-CP default scenarios will be conducted through a
separate table-top exercise.
---------------------------------------------------------------------------
\4\ The ICC Close-Out Team is comprised of ICC management, the
ROO, and the most senior member of the ICC Treasury Department.
---------------------------------------------------------------------------
Furthermore, proposed Section 4.6 assigns responsibility for the
execution of the Recovery and Wind-Down Test to the ICC Close-Out Team,
capturing results, and making them available to the ROO. The ROO
collates the results and, identifies any issues or lessons learned,
including any revisions that should be made to the ICC Recovery Plan or
ICC Wind-Down Plan. The ROO collates the information from the Recovery
and Wind-Down Test into a presentation which is reviewed with the
Close-Out Team, the ICC Risk Committee and the ICC Board of Managers.
The ROO maintains a list of work items for the future development and/
or enhancement of the business processes and capabilities necessary to
execute the ICC Recovery Plan and ICC LLC Wind-Down Plan.
(b) Statutory Basis
Section 17A(b)(3)(F) of the Act \5\ requires, among other things,
that the rules of a clearing agency be designed to promote the prompt
and accurate clearance and settlement of securities transactions, and
to the extent applicable, derivative agreements, contracts and
transactions; to assure the safeguarding of securities and funds which
are in the custody or control of the clearing agency or for which it is
responsible; in general, to protect investors and the public interest;
and to comply with the provisions of the Act and the rules and
regulations thereunder. ICC believes that the proposed additional
procedural details to ICC's Default Management Procedures included in
the proposed rule change are consistent with the requirements of the
Act and the rules and regulations thereunder applicable to ICC, in
particular, to section 17(A)(b)(3)(F),\6\ because ICC believes that the
proposed additional procedural details to ICC's Default Management
Procedures enhances policies, practices and procedures with respect to
the testing of ICC Recovery Plan and the ICC Wind-Down Plan. Such sound
policies, practices and procedures are important to enhance ICC's
ability to withstand defaults and continue providing clearing services,
thereby promoting the prompt and accurate clearance and settlement of
securities transactions, derivatives agreements, contracts, and
transactions; the safeguarding of securities and funds which are in the
custody or control of ICC or for which it is responsible; and the
protection of investors and the public interest. As such, the proposed
rule change is designed to promote the prompt and accurate clearance
and settlement of securities transactions, derivatives agreements,
contracts, and transactions; to contribute to the safeguarding of
securities and funds associated with security-based swap transactions
in ICC's custody or control, or for which ICC is responsible; and, in
general, to protect investors and the public interest within the
meaning of section 17A(b)(3)(F) of the Act.\7\
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78q-1(b)(3)(F).
\6\ Id.
\7\ Id.
---------------------------------------------------------------------------
In addition, the proposed rule change is consistent with the
relevant requirements of Rule 17Ad-22.\8\ Rule
[[Page 30814]]
17Ad-22(b)(3) \9\ requires ICC to establish, implement, maintain and
enforce written policies and procedures reasonably designed to maintain
sufficient financial resources to withstand, at a minimum, a default by
the two CP families to which it has the largest exposures in extreme
but plausible market conditions. ICC believes that such changes enhance
ICC's ability to manage a default by providing additional detail,
transparency and clarity with respect to ICC's default management rules
and procedures, thereby ensuring that ICC continues to maintain
sufficient financial resources to withstand, at a minimum, a default by
the two CP families to which it has the largest exposures in extreme
but plausible market conditions, consistent with the requirements of
Rule 17Ad-22(b)(3).\10\
---------------------------------------------------------------------------
\8\ 17 CFR 240.17Ad-22.
\9\ 17 CFR 240.17Ad-22(b)(3).
\10\ Id.
---------------------------------------------------------------------------
Rule 17Ad-22(e)(2)(i) and (v) \11\ 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. The Recovery and Wind-down Testing
updates to the ICC Default Management Procedures enhance the clarity
and transparency of such procedures by providing additional information
relating to the assignment of responsibilities in the determination of
the scope of the annual Recovery and Wind-down Test, and the assignment
of responsibilities in the execution of the annual Recovery and Wind-
Down Test, consistent with the requirements of Rule 17Ad-22(e)(2)(i)
and (v).\12\
---------------------------------------------------------------------------
\11\ 17 CFR 240.17Ad-22(e)(2)(i) and (v).
\12\ Id.
---------------------------------------------------------------------------
Rule 17Ad-22(e)(3)(ii) \13\ requires ICC to establish, implement,
maintain, and enforce written policies and procedures reasonably
designed to maintain a sound risk management framework for
comprehensively managing legal, credit, liquidity, operational, general
business, investment, custody, and other risks that arise in or are
borne by ICC, which includes plans for the recovery and orderly wind-
down of ICC necessitated by credit losses, liquidity shortfalls, losses
from general business risk, or any other losses. The Default Management
Procedures continue to establish ICC's actions to maintain its
viability as a going concern to address any uncovered credit loss,
liquidity shortfall, capital inadequacy, or business, operational or
other structural weakness that threatens ICC's viability. The proposed
changes to the Default Management Procedures provide additional
detailed procedures with respect to the annual Recovery and Wind-Down
testing, improving both the comprehension and transparency of ICC's
Recovery and Wind-Down testing. In ICC's view, such proposed changes
will improve ICC's Default Management Procedures and ensure they remain
comprehensive and useful in providing for ICC's written policies and
procedures related to ICC's recovery and orderly wind-down, consistent
with the requirements of Rule 17Ad-22(e)(3)(ii).\14\
---------------------------------------------------------------------------
\13\ 17 CFR 240.17Ad-22(e)(3)(ii).
\14\ Id.
---------------------------------------------------------------------------
Rule 17Ad-22(e)(13) \15\ 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. The proposed changes to the Default
Management Procedures enhance the clarity and transparency of such
procedures by providing additional information relating to the
assignment of responsibilities in the determination of the scope of the
annual Recovery and Wind-down Test, and the assignment of
responsibilities in the execution of the annual Recovery and Wind-Down
Test. Such proposed changes, therefore, improve the design of ICC's
annual Recovery and Wind-Down Testing, consistent with the requirements
of Rule 17ad-22(e)(13).\16\
---------------------------------------------------------------------------
\15\ 17 CFR 240.17Ad-22(e)(13).
\16\ Id.
---------------------------------------------------------------------------
(B) Clearing Agency's Statement on Burden on Competition
ICC does not believe the proposed rule change would have any
impact, or impose any burden, on competition. The proposed rule change
to update the ICC Default Management Procedures will apply uniformly
across all market participants. Therefore, ICC does not believe the
proposed rule change imposes any burden on competition that is
inappropriate in furtherance of the purposes of the Act.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
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 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 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-2023-008 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities and
Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-ICC-2023-008. 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 that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than
[[Page 30815]]
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.
Do not include personal identifiable information in submissions;
you should submit only information that you wish to make available
publicly. We may redact in part or withhold entirely from publication
submitted material that is obscene or subject to copyright protection.
All submissions should refer to File Number SR-ICC-2023-008 and should
be submitted on or before June 2, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10129 Filed 5-11-23; 8:45 am]
BILLING CODE 8011-01-P
