Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change Relating to the ICC Clearing Participant Default Management Procedures, 42126-42128 [2023-13864]
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42126
Federal Register / Vol. 88, No. 124 / Thursday, June 29, 2023 / Notices
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–BOX–2023–17. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
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you should submit only information
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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–BOX–2023–17 and should be
submitted on or before July 20, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 2023–13795 Filed 6–28–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97792; File No. SR–ICC–
2023–008]
Self-Regulatory Organizations; ICE
Clear Credit LLC; Order Approving
Proposed Rule Change Relating to the
ICC Clearing Participant Default
Management Procedures
June 26, 2023.
I. Introduction
On May 2, 2023, ICE Clear Credit LLC
(‘‘ICC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to Section 19(b)(2) of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to amend the ICC
Clearing Participant Default
Management Procedures. The proposed
rule change was published for comment
in the Federal Register on May 12,
2023.3 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
ICC is registered with the Commission
as a clearing agency for the purpose of
clearing CDS contracts. ICC clears CDS
contracts for its members, which it
refers to as Clearing Participants.4
Clearing CDS contracts for Clearing
Participants presents certain risks to
ICC, such as the risk that a Clearing
Participant may default on payments or
other obligations it owes to ICC.
Accordingly, ICC has developed a
comprehensive set of tools to manage
and mitigate such risks. These tools
include, among other things, collecting
margin from Clearing Participants,
maintaining a Guaranty Fund, and
establishing procedures to manage a
Clearing Participant’s default.
The proposed rule change relates to
the third set of risk management tools—
procedures that explain what happens
when a Clearing Participant is in default
and how ICC responds to the default,
which ICC refers to as its Clearing
Participant Default Management
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Self-Regulatory Organizations; ICE Clear Credit
LLC; Notice of Filing of Proposed Rule Change
Relating to the ICC Clearing Participant Default
Management Procedures; Exchange Act Release No.
97455 (May 8, 2023), 88 FR 30812 (May 12, 2023)
(File No. SR–ICC–2023–008) (‘‘Notice’’).
4 Capitalized terms not otherwise defined herein
have the meanings assigned to them in the ICC
Clearing Participant Default Management
Procedures or the ICC Clearing Rules.
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2 17
25 17
CFR 200.30–3(a)(12).
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Procedures (the ‘‘Procedures’’). The
proposed rule change would amend the
Procedures.
The proposed rule change would add
Section 4.6 to the Procedures, which
would explain how ICC tests both its
Recovery Plan and its Wind-Down Plan
(together the ‘‘Plans’’). ICC would test
the Plans at least once every twelve
months, and the purpose of these
annual tests would be to demonstrate
that ICC is ready to execute the Plans
when needed. ICC would need to
execute the plans, for example, in the
following circumstances: (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) to wind-down ICC in an
orderly manner.
Section 4.6 would detail (i) the ICC
personnel responsible for planning and
conducting the tests and (ii) the overall
scope of the tests. With respect to
responsible personnel, the ICC Risk
Oversight Officer (‘‘ROO’’) would have
overall responsibility for planning and
coordinating the execution of each test.
In doing so, the ROO would work with
other members of the Close-Out Team 5
to determine the scope of the test. The
proposed scope and format of the test
would be presented to the ICC Board of
Managers for review prior to execution
of the test. After Board review, the
Close-Out Team would then be
responsible for executing the tests,
capturing the results of the tests, and
providing the results to the ROO.
Once provided with the results, the
ROO would collate the information,
summarize any lessons learned, and
identify possible revisions that should
be made to the Plans. The ROO would
then develop a presentation to
summarize the tests. The Close-Out
Team, ICC Risk Committee, and Board
would review this presentation. Going
forward, the ROO would maintain a list
of work items for the future
development and/or enhancement of the
business processes and capabilities
necessary to execute the Plans.
With respect to the overall scope of
each test, this would include choosing
the recovery and wind-down scenarios
and the recovery tools to test. In
choosing the scenarios and tools, ICC
would give consideration to scenarios,
business processes, and tools which
have not been recently tested. In
addition, ICC would consider the
applicability of new Rules, procedures,
or newly implemented ICC capabilities
5 The ICC Close-Out Team is comprised of ICC
management, the ROO, and the most senior member
of the ICC Treasury Department.
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Federal Register / Vol. 88, No. 124 / Thursday, June 29, 2023 / Notices
(such as new cleared contracts). Finally,
Section 4.6 would specify that ICC
would always include in the test all
three wind-down options set forth in the
Wind-Down Plan.
Section 4.6 would also state that ICC
could conduct some of the testing as
part of its annual default management
tests. Specifically, Section 4.6 would
explain that ICC may test those parts of
the Plans that address a Clearing
Participant’s default, such as business
processes and tools, as part of its annual
default management tests. With respect
to the business processes and tools to
address losses not related to a Clearing
Participant’s default, however, Section
4.6 would clarify that ICC will test those
in a separate table-top exercise. ICC will
test those parts of the Plans that relate
to non-default losses apart from its
annual default management tests.
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)(i),
(e)(2)(v), and (e)(3)(ii) 8 thereunder.
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A. Consistency With Section
17A(b)(3)(F) of the Act
Section 17A(b)(3)(F) of the Act
requires, among other things, that the
rules of ICE Clear Credit be designed to
promote the prompt and accurate
clearance and settlement of securities
transactions and, to the extent
applicable, derivative agreements,
contracts, and transactions.9 Based on
its review of the record, and for the
reasons discussed below, the
Commission believes the proposed
changes to the Procedures are consistent
with the promotion of the prompt and
accurate clearance and settlement of
securities transactions.
As discussed above, the proposed rule
change would modify the Procedures to
require that ICC conduct annual testing
of the Plans. Section 4.6 also would
detail (i) the ICC personnel responsible
for planning and conducting the tests
and (ii) the overall scope of the tests.
6 15
U.S.C. 78s(b)(2)(C).
U.S.C. 78q–1(b)(3)(F).
8 17 CFR 240.17Ad–22(e)(2)(i), (e)(2)(v), and
(e)(3)(ii).
9 15 U.S.C. 78q–1(b)(3)(F).
7 15
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The Commission believes that requiring
annual testing and establishing relevant
responsibilities for conducting the tests
would each help to ensure that ICC tests
the Plans at least once every twelve
months. The Commission further
believes that the proposed scope for the
tests would help to ensure that the tests
identify any possible issues with, or
improvements to, the Plans. Thus, the
Commission believes that the proposed
rule change would help to ensure that
ICC maintains and enforces an effective
Recovery Plan and an effective WindDown Plan.
The Commission believes that ICC’s
Recovery Plan is designed to help ICC
promote the prompt and accurate
clearance and settlement of securities
transactions, by providing a roadmap for
actions it may employ to monitor and
manage its risks, and, as needed, to
stabilize its financial condition in the
event those risks materialize. The
Commission similarly believes ICC’s
Wind-Down Plan is designed to help
ICC to promote the prompt and accurate
clearance and settlement of securities
transactions by providing a roadmap to
wind-down as needed. The Commission
believes the actions set forth in the
Plans would help to ensure the
availability of ICC’s services to the
marketplace in the event of a recovery
or wind-down, while reducing
disruption to the operations of Clearing
Participants and financial markets.10
The Commission thus believes both
Plans would help ICC to avoid
disruption to its operations, and
therefore promote ICC’s ability to
promptly and accurately clear and settle
transactions.
Because the proposed rule change
would help ICC to maintain, enforce,
and improve the Plans, and because the
Commission believes the Plans would
promote the prompt and accurate
clearance and settlement of securities
transactions, the Commission therefore
believes the proposed rule change
would promote the prompt and accurate
clearance and settlement of securities
transactions, consistent with Section
17A(b)(3)(F) of the Act.11
B. Consistency With Rules 17Ad–
22(e)(2)(i) and (v)
Rules 17Ad–22(e)(2)(i) and (v) require
ICC to establish, implement, maintain,
and enforce written policies and
procedures reasonably designed to, as
applicable, provide for governance
arrangements that are clear and
transparent and specify clear and direct
lines of responsibility.12 The
Commission believes the governance
arrangements for testing the Plans, as
discussed above, would be clear and
transparent and would specify clear and
direct lines of responsibility. For
example, the ROO would, among other
things, have overall responsibility for
planning and coordinating the
execution of each test; work with other
members of the Close-Out Team to
determine the scope of each the test;
and collate and summarize the results of
each test. The Close-Out Team would be
responsible for executing the tests,
capturing the results of the tests, and
providing the results to the ROO. The
Board would review the scope and
format prior to the execution of each test
as well as the results of each test. The
Commission believes overall these
arrangements would be clear and
transparent and specify clear and direct
responsibilities for the ROO, Close-Out
Team, and Board, consistent with Rules
17Ad–22(e)(2)(i) and (v).13
C. Consistency With Rule 17Ad–
22(e)(3)(ii)
Rule 17Ad–22(e)(3)(ii) 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.14 As discussed above, the
Commission believes the proposed rule
change would help ICC to maintain,
enforce, and improve the Plans. The
Commission further believes that the
Plans generally would provide for the
recovery and orderly wind-down of ICC
necessitated by credit losses, liquidity
shortfalls, losses from general business
risk, or any other losses.15 The
Commission therefore believes that the
proposed rule change, in helping to
maintain, enforce, and improve the
12 17
CFR 240.17Ad–22(e)(2)(i), (v).
CFR 240.17Ad–22(e)(2)(i), (v).
14 17 CFR 240.17Ad–22(e)(3)(ii).
15 For a further discussion of the Plans, see SelfRegulatory Organizations; ICE Clear Credit LLC;
Order Approving Proposed Rule Change Relating to
the ICC Recovery Plan and the ICC Wind-Down
Plan, Exchange Act Release No. 91806 (May 10,
2021), 86 FR 26561 (May 14, 2021) (SR–ICC–2021–
005).
13 17
10 For a further discussion of the Plans, see SelfRegulatory Organizations; ICE Clear Credit LLC;
Order Approving Proposed Rule Change Relating to
the ICC Recovery Plan and the ICC Wind-Down
Plan, Exchange Act Release No. 91806 (May 10,
2021), 86 FR 26561 (May 14, 2021) (SR–ICC–2021–
005).
11 15 U.S.C. 78q–1(b)(3)(F).
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Federal Register / Vol. 88, No. 124 / Thursday, June 29, 2023 / Notices
Plans, would be consistent with Rule
17Ad–22(e)(3)(ii).16
You
may obtain a copy of the information
collection and supporting documents
from the Agency Clearance Office at
Curtis.Rich@sba.gov; (202) 205–7030, or
from www.reginfo.gov/public/do/
PRAMain.
FOR FURTHER INFORMATION CONTACT:
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act, and in
particular, with the requirements of
Section 17A(b)(3)(F) of the Act, and
Rules 17Ad–22(e)(2)(i), (e)(2)(v), and
(e)(3)(ii) thereunder.17
It is therefore ordered pursuant to
Section 19(b)(2) of the Act 18 that the
proposed rule change (SR–ICC–2023–
008), be, and hereby is, approved.19
To obtain
the information needed to carry out its
oversight responsibilities under the
Small Business Investment Act, the
Small Business Administration (SBA)
requires Small Business Investment
Companies (SBICs) to submit financial
statements and supplementary
information on SBA Form 468. SBA
uses this information to monitor SBIC
financial condition and regulatory
compliance, for credit analysis when
considering SBIC leverage applications,
and to evaluate financial risk and
economic impact for individual SBICs
and the program as a whole.
SUPPLEMENTARY INFORMATION:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 2023–13864 Filed 6–28–23; 8:45 am]
BILLING CODE 8011–01–P
Solicitation of Public Comments
SMALL BUSINESS ADMINISTRATION
Reporting and Recordkeeping
Requirements Under OMB Review
Small Business Administration.
30-day notice.
AGENCY:
ACTION:
The Small Business
Administration (SBA) is seeking
approval from the Office of Management
and Budget (OMB) for the information
collection described below. In
accordance with the Paperwork
Reduction Act and OMB procedures,
SBA is publishing this notice to allow
all interested member of the public an
additional 30 days to provide comments
on the proposed collection of
information.
DATES: Submit comments on or before
July 31, 2023.
ADDRESSES: Written comments and
recommendations for this information
collection request should be sent within
30 days of publication of this notice to
www.reginfo.gov/public/do/PRAMain.
Find this particular information
collection request by selecting ‘‘Small
Business Administration’’; ‘‘Currently
Under Review,’’ then select the ‘‘Only
Show ICR for Public Comment’’
checkbox. This information collection
can be identified by title and/or OMB
Control Number.
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SUMMARY:
16 17
CFR 240.17Ad–22(e)(3)(ii).
17 15 U.S.C. 78q–1(b)(3)(F); 17 CFR 240.17Ad–
22(e)(2)(i), (e)(2)(v), and (e)(3)(ii).
18 15 U.S.C. 78s(b)(2).
19 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).
20 17 CFR 200.30–3(a)(12).
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Comments may be submitted on (a)
whether the collection of information is
necessary for the agency to properly
perform its functions; (b) whether the
burden estimates are accurate; (c)
whether there are ways to minimize the
burden, including through the use of
automated techniques or other forms of
information technology; and (d) whether
there are ways to enhance the quality,
utility, and clarity of the information.
OMB Control Number: 3245–0063.
Title: SBIC Financial Reports.
Description of Respondents: Small
Business Investment Companies.
SBA Form Number: 468 (Short Form,
Long Form, Reinvest or Reporting
Appendix).
Estimated Number of Respondents:
309.
Estimated Annual Responses: 1,047.
Estimated Annual Hour Burden:
26,973.
Curtis Rich,
Agency Clearance Officer.
[FR Doc. 2023–13826 Filed 6–28–23; 8:45 am]
BILLING CODE 8026–09–P
SMALL BUSINESS ADMINISTRATION
Reporting and Recordkeeping
Requirements Under OMB Review
Small Business Administration.
30-Day notice.
AGENCY:
ACTION:
The Small Business
Administration (SBA) is seeking
approval from the Office of Management
and Budget (OMB) for the information
collection described below. In
accordance with the Paperwork
SUMMARY:
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
Reduction Act and OMB procedures,
SBA is publishing this notice to allow
all interested member of the public an
additional 30 days to provide comments
on the proposed collection of
information.
Submit comments on or before
July 31, 2023.
DATES:
Written comments and
recommendations for this information
collection request should be sent within
30 days of publication of this notice to
www.reginfo.gov/public/do/PRAMain.
Find this particular information
collection request by selecting ‘‘Small
Business Administration’’; ‘‘Currently
Under Review,’’ then select the ‘‘Only
Show ICR for Public Comment’’
checkbox. This information collection
can be identified by title and/or OMB
Control Number.
ADDRESSES:
You
may obtain a copy of the information
collection and supporting documents
from the Agency Clearance Office at
Curtis.Rich@sba.gov; (202) 205–7030, or
from www.reginfo.gov/public/do/
PRAMain.
FOR FURTHER INFORMATION CONTACT:
To obtain
the information needed to carry out its
program evaluation and oversight
responsibilities. SBA requires small
business investment companies (SBICs)
to provide information on SBA Form
1031 each time financing is extended to
a small business concern. SBA uses this
information to evaluate how SBICs fill
market financing gaps and contribute to
economic growth, and to monitor the
regulatory compliance of individual
SBICs.
SUPPLEMENTARY INFORMATION:
Solicitation of Public Comments
Comments may be submitted on (a)
whether the collection of information is
necessary for the agency to properly
perform its functions; (b) whether the
burden estimates are accurate; (c)
whether there are ways to minimize the
burden, including through the use of
automated techniques or other forms of
information technology; and (d) whether
there are ways to enhance the quality,
utility, and clarity of the information.
OMB Control Number: 3245–0078.
Title: Portfolio Financial Reports.
Description of Respondents: Small
Business Investment Companies.
SBA Form Number: 1031.
Estimated Number of Respondents:
309.
Estimated Annual Responses: 2,755.
E:\FR\FM\29JNN1.SGM
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]]>Agencies
[Federal Register Volume 88, Number 124 (Thursday, June 29, 2023)]
[Notices]
[Pages 42126-42128]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-13864]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97792; File No. SR-ICC-2023-008]
Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change Relating to the ICC Clearing Participant
Default Management Procedures
June 26, 2023.
I. Introduction
On May 2, 2023, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(2) of the Securities Exchange Act of 1934 (the ``Act'')
\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to amend the
ICC Clearing Participant Default Management Procedures. The proposed
rule change was published for comment in the Federal Register on May
12, 2023.\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 Clearing
Participant Default Management Procedures; Exchange Act Release No.
97455 (May 8, 2023), 88 FR 30812 (May 12, 2023) (File No. SR-ICC-
2023-008) (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
ICC is registered with the Commission as a clearing agency for the
purpose of clearing CDS contracts. ICC clears CDS contracts for its
members, which it refers to as Clearing Participants.\4\ Clearing CDS
contracts for Clearing Participants presents certain risks to ICC, such
as the risk that a Clearing Participant may default on payments or
other obligations it owes to ICC. Accordingly, ICC has developed a
comprehensive set of tools to manage and mitigate such risks. These
tools include, among other things, collecting margin from Clearing
Participants, maintaining a Guaranty Fund, and establishing procedures
to manage a Clearing Participant's default.
---------------------------------------------------------------------------
\4\ Capitalized terms not otherwise defined herein have the
meanings assigned to them in the ICC Clearing Participant Default
Management Procedures or the ICC Clearing Rules.
---------------------------------------------------------------------------
The proposed rule change relates to the third set of risk
management tools--procedures that explain what happens when a Clearing
Participant is in default and how ICC responds to the default, which
ICC refers to as its Clearing Participant Default Management Procedures
(the ``Procedures''). The proposed rule change would amend the
Procedures.
The proposed rule change would add Section 4.6 to the Procedures,
which would explain how ICC tests both its Recovery Plan and its Wind-
Down Plan (together the ``Plans''). ICC would test the Plans at least
once every twelve months, and the purpose of these annual tests would
be to demonstrate that ICC is ready to execute the Plans when needed.
ICC would need to execute the plans, for example, in the following
circumstances: (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) to
wind-down ICC in an orderly manner.
Section 4.6 would detail (i) the ICC personnel responsible for
planning and conducting the tests and (ii) the overall scope of the
tests. With respect to responsible personnel, the ICC Risk Oversight
Officer (``ROO'') would have overall responsibility for planning and
coordinating the execution of each test. In doing so, the ROO would
work with other members of the Close-Out Team \5\ to determine the
scope of the test. The proposed scope and format of the test would be
presented to the ICC Board of Managers for review prior to execution of
the test. After Board review, the Close-Out Team would then be
responsible for executing the tests, capturing the results of the
tests, and providing the results to the ROO.
---------------------------------------------------------------------------
\5\ The ICC Close-Out Team is comprised of ICC management, the
ROO, and the most senior member of the ICC Treasury Department.
---------------------------------------------------------------------------
Once provided with the results, the ROO would collate the
information, summarize any lessons learned, and identify possible
revisions that should be made to the Plans. The ROO would then develop
a presentation to summarize the tests. The Close-Out Team, ICC Risk
Committee, and Board would review this presentation. Going forward, the
ROO would maintain a list of work items for the future development and/
or enhancement of the business processes and capabilities necessary to
execute the Plans.
With respect to the overall scope of each test, this would include
choosing the recovery and wind-down scenarios and the recovery tools to
test. In choosing the scenarios and tools, ICC would give consideration
to scenarios, business processes, and tools which have not been
recently tested. In addition, ICC would consider the applicability of
new Rules, procedures, or newly implemented ICC capabilities
[[Page 42127]]
(such as new cleared contracts). Finally, Section 4.6 would specify
that ICC would always include in the test all three wind-down options
set forth in the Wind-Down Plan.
Section 4.6 would also state that ICC could conduct some of the
testing as part of its annual default management tests. Specifically,
Section 4.6 would explain that ICC may test those parts of the Plans
that address a Clearing Participant's default, such as business
processes and tools, as part of its annual default management tests.
With respect to the business processes and tools to address losses not
related to a Clearing Participant's default, however, Section 4.6 would
clarify that ICC will test those in a separate table-top exercise. ICC
will test those parts of the Plans that relate to non-default losses
apart from its annual default management tests.
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)(i), (e)(2)(v), and (e)(3)(ii) \8\
thereunder.
---------------------------------------------------------------------------
\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)(i), (e)(2)(v), and (e)(3)(ii).
---------------------------------------------------------------------------
A. Consistency With Section 17A(b)(3)(F) of the Act
Section 17A(b)(3)(F) of the Act requires, among other things, that
the rules of ICE Clear Credit be designed to promote the prompt and
accurate clearance and settlement of securities transactions and, to
the extent applicable, derivative agreements, contracts, and
transactions.\9\ Based on its review of the record, and for the reasons
discussed below, the Commission believes the proposed changes to the
Procedures are consistent with the promotion of the prompt and accurate
clearance and settlement of securities transactions.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
As discussed above, the proposed rule change would modify the
Procedures to require that ICC conduct annual testing of the Plans.
Section 4.6 also would detail (i) the ICC personnel responsible for
planning and conducting the tests and (ii) the overall scope of the
tests. The Commission believes that requiring annual testing and
establishing relevant responsibilities for conducting the tests would
each help to ensure that ICC tests the Plans at least once every twelve
months. The Commission further believes that the proposed scope for the
tests would help to ensure that the tests identify any possible issues
with, or improvements to, the Plans. Thus, the Commission believes that
the proposed rule change would help to ensure that ICC maintains and
enforces an effective Recovery Plan and an effective Wind-Down Plan.
The Commission believes that ICC's Recovery Plan is designed to
help ICC promote the prompt and accurate clearance and settlement of
securities transactions, by providing a roadmap for actions it may
employ to monitor and manage its risks, and, as needed, to stabilize
its financial condition in the event those risks materialize. The
Commission similarly believes ICC's Wind-Down Plan is designed to help
ICC to promote the prompt and accurate clearance and settlement of
securities transactions by providing a roadmap to wind-down as needed.
The Commission believes the actions set forth in the Plans would help
to ensure the availability of ICC's services to the marketplace in the
event of a recovery or wind-down, while reducing disruption to the
operations of Clearing Participants and financial markets.\10\ The
Commission thus believes both Plans would help ICC to avoid disruption
to its operations, and therefore promote ICC's ability to promptly and
accurately clear and settle transactions.
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\10\ For a further discussion of the Plans, see Self-Regulatory
Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule
Change Relating to the ICC Recovery Plan and the ICC Wind-Down Plan,
Exchange Act Release No. 91806 (May 10, 2021), 86 FR 26561 (May 14,
2021) (SR-ICC-2021-005).
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Because the proposed rule change would help ICC to maintain,
enforce, and improve the Plans, and because the Commission believes the
Plans would promote the prompt and accurate clearance and settlement of
securities transactions, the Commission therefore believes the proposed
rule change would promote the prompt and accurate clearance and
settlement of securities transactions, consistent with Section
17A(b)(3)(F) of the Act.\11\
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\11\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Consistency With Rules 17Ad-22(e)(2)(i) and (v)
Rules 17Ad-22(e)(2)(i) and (v) require ICC to establish, implement,
maintain, and enforce written policies and procedures reasonably
designed to, as applicable, provide for governance arrangements that
are clear and transparent and specify clear and direct lines of
responsibility.\12\ The Commission believes the governance arrangements
for testing the Plans, as discussed above, would be clear and
transparent and would specify clear and direct lines of responsibility.
For example, the ROO would, among other things, have overall
responsibility for planning and coordinating the execution of each
test; work with other members of the Close-Out Team to determine the
scope of each the test; and collate and summarize the results of each
test. The Close-Out Team would be responsible for executing the tests,
capturing the results of the tests, and providing the results to the
ROO. The Board would review the scope and format prior to the execution
of each test as well as the results of each test. The Commission
believes overall these arrangements would be clear and transparent and
specify clear and direct responsibilities for the ROO, Close-Out Team,
and Board, consistent with Rules 17Ad-22(e)(2)(i) and (v).\13\
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\12\ 17 CFR 240.17Ad-22(e)(2)(i), (v).
\13\ 17 CFR 240.17Ad-22(e)(2)(i), (v).
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C. Consistency With Rule 17Ad-22(e)(3)(ii)
Rule 17Ad-22(e)(3)(ii) 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.\14\ As discussed
above, the Commission believes the proposed rule change would help ICC
to maintain, enforce, and improve the Plans. The Commission further
believes that the Plans generally would provide for the recovery and
orderly wind-down of ICC necessitated by credit losses, liquidity
shortfalls, losses from general business risk, or any other losses.\15\
The Commission therefore believes that the proposed rule change, in
helping to maintain, enforce, and improve the
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Plans, would be consistent with Rule 17Ad-22(e)(3)(ii).\16\
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\14\ 17 CFR 240.17Ad-22(e)(3)(ii).
\15\ For a further discussion of the Plans, see Self-Regulatory
Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule
Change Relating to the ICC Recovery Plan and the ICC Wind-Down Plan,
Exchange Act Release No. 91806 (May 10, 2021), 86 FR 26561 (May 14,
2021) (SR-ICC-2021-005).
\16\ 17 CFR 240.17Ad-22(e)(3)(ii).
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IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act,
and in particular, with the requirements of Section 17A(b)(3)(F) of the
Act, and Rules 17Ad-22(e)(2)(i), (e)(2)(v), and (e)(3)(ii)
thereunder.\17\
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\17\ 15 U.S.C. 78q-1(b)(3)(F); 17 CFR 240.17Ad-22(e)(2)(i),
(e)(2)(v), and (e)(3)(ii).
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It is therefore ordered pursuant to Section 19(b)(2) of the Act
\18\ that the proposed rule change (SR-ICC-2023-008), be, and hereby
is, approved.\19\
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\18\ 15 U.S.C. 78s(b)(2).
\19\ 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.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 2023-13864 Filed 6-28-23; 8:45 am]
BILLING CODE 8011-01-P
