Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change Relating to the Clearance of Additional Credit Default Swap Contracts, 76870-76872 [2023-24517]
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76870
Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Notices
submit a completed Company Event
Notification Form no later than 12:00
p.m. ET five business days prior to the
market effective date will help ensure
that Nasdaq has timely, complete, and
accurate information to process the
reverse stock split prior to the effective
date.34 While Nasdaq currently is
required to receive notification and
certain information about a reverse
stock split no later than 15 calendar
days before it is scheduled to occur,
Nasdaq has represented in its proposal
that this longer time frame creates issues
because some of the terms of the reverse
stock split may not be set or available
at that time or may change before the
reverse stock split is to occur. As
Nasdaq has stated, shortening the
timeframe for notifying the Exchange
about a reverse stock split to five
business days should help to reduce the
possibility of errors and allow
companies to provide more complete
and accurate information about a
reverse stock split in a single
submission to Nasdaq. This can also
inure to the benefit of investors by
ultimately providing the marketplace
with improved and timely information
about a reverse stock split.
The Commission also believes that the
other changes in proposed Nasdaq Rule
5250(e)(7) and to the Company
Notification Form appear to be
reasonable additions to address
Nasdaq’s and market participants’
concerns about having adequate,
accurate, and complete information in a
timely manner about reverse stock
splits. As described above, these
changes include, among others,
requiring companies to submit a draft of
its public disclosure of the reverse stock
split no later than 12 p.m. ET five
business days prior to the market
effective date so that the Exchange can
ensure the disclosure aligns with the
announcement Nasdaq will be making,
including on the split ratio and effective
date of the reverse split. In addition, as
described above, new Nasdaq Rule
5250(e)(7) will specifically indicate that
in certain circumstances such as when
a company takes action to effect a
reverse stock split but has failed to
satisfy the rule’s requirements or a
company provides incomplete or
inaccurate information about the timing
or ratio of the reverse stock split in its
public disclosure, Nasdaq will halt the
trading in the stock in accordance with
its provisions on material news halts in
Equity Rule 4, Rule 4120(a)(1).
The proposal will also provide the
investing public and other market
participants with at least one additional
34 See
supra note 23.
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business day of public notice to help
reduce the risk that investors and
brokers inadvertently miss the public
announcement of the reverse stock split
or fail to process the event in their
systems, helping to maintain fair and
orderly markets, and protecting
investors and the public interest.35
The Commission also finds that the
other changes in proposed Nasdaq Rule
5250(b)(1) and the addition of Nasdaq
Rule 5250(b)(4) and IM–5250–3 will
enhance the transparency of the reverse
stock split disclosure process to issuers
and investors. Finally, the Commission
notes that the two comment letters
received on the proposal were
supportive.36
For the reasons discussed above, the
Commission finds that the proposed
rule change is consistent with section
6(b)(5) of the Act 37 and the rules and
regulations thereunder applicable to a
national securities exchange.
IV. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,38 that the
proposed rule change (SR–NASDAQ–
2023–025), be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.39
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–24522 Filed 11–6–23; 8:45 am]
BILLING CODE 8011–01–P
35 See supra note 12 (noting concerns about
market volatility in stock prices if a market
participant misses the current one business day
announcement and continues to accept orders at
pre-split prices and trading inaccurate share
amounts). The Exchange also state that it believes
the changes to both the notification and disclosure
requirements should help to address these concerns
about trading volatility and potential price
mistakes. See Notice, supra note 3, at 51378. See
also proposed Nasdaq Rule 5250(b)(4).
36 See Virtu Letter, supra note 3 (stating that,
among other things, (i) shortening the notice
requirement to Nasdaq from 15 calendar days to
five business days before the planned reverse stock
split would ‘‘provide issuers with additional time
to obtain more complete data and thorough
information before reporting the planned corporate
action to Nasdaq,’’ and ‘‘result in Nasdaq having
more complete information in advance of the
planned reverse split date to ensure that all of the
technical requirements have been satisfied’’; and (ii)
increasing the public notice requirement to two
business days ‘‘will enable market participants to
plan more effectively for a reverse stock split,
which will contribute to the maintenance of fair,
orderly, and efficient markets’’); Robinhood Letter,
supra note 3 (expressing general support for the
proposal and, in particular, the requirement to
increase the public notice requirement to two
business days).
37 15 U.S.C. 78f(b)(5).
38 15 U.S.C. 78s(b)(2).
39 17 CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98833; File No. SR–ICC–
2023–014]
Self-Regulatory Organizations; ICE
Clear Credit LLC; Notice of Filing of
Proposed Rule Change Relating to the
Clearance of Additional Credit Default
Swap Contracts
November 1, 2023.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934,1 and
Rule 19b–4,2 notice is hereby given that
on October 25, 2023, ICE Clear Credit
LLC (‘‘ICC’’) filed with the Securities
and Exchange 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
The principal purpose of the
proposed rule change is to revise the
ICC Rulebook (the ‘‘Rules’’) to provide
for the clearance of additional Standard
Emerging Market Sovereign Single
Name CDS contracts (‘‘EM Contracts’’).
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 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. 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
The purpose of the proposed rule
change is to adopt rules that will
provide the basis for ICC to clear
additional CDS contracts. ICC proposes
to make such change effective following
Commission approval of the proposed
rule change. ICC believes the addition of
these EM Contracts will benefit the
market for CDS by providing market
participants the benefits of clearing,
including reduction in counterparty
risk, and safeguarding of margin assets
1 15
2 17
U.S.C. 78s(b)(1)
CFR 240.19b–4
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Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Notices
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pursuant to clearing house rules.
Clearing of the additional EM Contracts
will not require any changes to ICC’s
Risk Management Framework or other
policies and procedures constituting
rules within the meaning of the
Securities Exchange Act of 1934
(‘‘Act’’).
ICC proposes amending Subchapter
26D of its Rules to provide for the
clearance of additional EM Contracts,
specifically the Kingdom of Morocco
and the Federal Republic of Nigeria.
These additional EM Contracts have
terms consistent with the other EM
Contracts approved for clearing at ICC
and governed by Subchapter 26D of the
Rules. Minor revisions to Subchapter
26D (Standard Emerging Market
Sovereign (‘‘SES’’) Single Name) are
made to provide for clearing the
additional EM Contracts. Specifically, in
Rule 26D–102 (Definitions), ‘‘Eligible
SES Reference Entities’’ is modified to
include the Kingdom of Morocco and
the Federal Republic of Nigeria in the
list of specific Eligible SES Reference
Entities to be cleared by ICC.
(b) Statutory Basis
Section 17A(b)(3)(F) of the Act 3
requires, among other things, that the
rules of a clearing agency be designed to
promote the prompt and accurate
clearance and settlement of securities
transactions and, to the extent
applicable, derivative agreements,
contracts, and transactions; to assure the
safeguarding of securities and funds
which are in the custody or control of
ICC or for which it is responsible; and
to comply with the provisions of the Act
and the rules and regulations
thereunder. The additional EM
Contracts proposed for clearing are
similar to the EM Contracts currently
cleared by ICC and will be cleared
pursuant to ICC’s existing clearing
arrangements and related financial
safeguards, protections, and risk
management procedures. Clearing of the
additional EM Contracts will allow
market participants an increased ability
to manage risk and ensure the
safeguarding of margin assets pursuant
to clearing house rules. ICC believes that
acceptance of the new EM Contracts, on
the terms and conditions set out in the
Rules, is consistent with the prompt and
accurate clearance and settlement of
securities transactions and derivative
agreements, contracts and transactions
cleared by ICC, the safeguarding of
securities and funds in the custody or
control of ICC or for which it is
responsible, and the protection of
investors and the public interest, within
the meaning of section 17A(b)(3)(F) of
the Act.4
Clearing of the additional EM
Contracts will also satisfy the relevant
requirements of Rule 17Ad–22,5 as set
forth in the following discussion.
Rule 17Ad–22(e)(6)(i) 6 requires each
covered clearing agency to establish,
implement, maintain, and enforce
written policies and procedures
reasonably designed to cover its credit
exposures to its participants by
establishing a risk-based margin system
that, at a minimum, considers, and
produces margin levels commensurate
with, the risks and particular attributes
of each relevant product, portfolio, and
market. In terms of financial resources,
ICC will apply its existing margin
methodology to the new EM Contracts,
which are similar to the EM Contracts
currently cleared by ICC. ICC believes
that this model will provide sufficient
margin requirements to cover its credit
exposure to its clearing members from
clearing such contracts, consistent with
the requirements of Rule 17Ad–
22(e)(6)(i).7
Rule 17Ad–22(e)(4)(ii) 8 requires each
covered clearing agency to establish,
implement, maintain, and enforce
written policies and procedures
reasonably designed to effectively
identify, measure, monitor, and manage
its credit exposures to participants and
those arising from its payment, clearing,
and settlement processes, including by
maintaining additional financial
resources at the minimum to enable it
to cover a wide range of foreseeable
stress scenarios that include, but are not
limited to, the default of the two
participant families that would
potentially cause the largest aggregate
credit exposure for the covered clearing
agency in extreme but plausible market
conditions. ICC believes its Guaranty
Fund, under its existing methodology,
will, together with the required initial
margin, provide sufficient financial
resources to support the clearing of the
additional EM Contracts, consistent
with the requirements of Rule 17Ad–
22(e)(4)(ii).9
Rule 17Ad–22(e)(17) 10 requires, in
relevant part, each covered clearing
agency to establish, implement,
maintain, and enforce written policies
and procedures reasonably designed to
manage its operational risks by (i)
identifying the plausible sources of
4 Id.
5 17
6 17
CFR 240.17Ad–22.
CFR 240.17Ad–22(e)(6)(i).
7 Id.
8 17
U.S.C. 78q–1(b)(3)(F).
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operational risk, both internal and
external, and mitigating their impact
through the use of appropriate systems,
policies, procedures, and controls; and
(ii) ensuring that systems have a high
degree of security, resiliency,
operational reliability, and adequate,
scalable capacity. ICC believes that its
existing operational and managerial
resources will be sufficient for clearing
of the additional EM Contracts,
consistent with the requirements of Rule
17Ad–22(e)(17),11 as the new contracts
are substantially the same from an
operational perspective as existing
contracts.
Rule 17Ad–22(e)(8), (9) and (10) 12
requires each covered clearing agency to
establish, implement, maintain, and
enforce written policies and procedures
reasonably designed to define the point
at which settlement is final to be no
later than the end of the day on which
payment or obligation is due and, where
necessary or appropriate, intraday or in
real time; conduct its money settlements
in central bank money, where available
and determined to be practical by the
Board, and minimize and manage credit
and liquidity risk arising from
conducting its money settlements in
commercial bank money if central bank
money is not used; and establish and
maintain transparent written standards
that state its obligations with respect to
the delivery of physical instruments,
and establish and maintain operational
practices that identify, monitor, and
manage the risks associated with such
physical deliveries. ICC will use its
existing rules, settlement procedures
and account structures for the new EM
Contracts, which are similar to the SES
contracts currently cleared by ICC,
consistent with the requirements of Rule
17Ad–22(e)(8), (9) and (10) 13 as to the
finality and accuracy of its daily
settlement process and addressing the
risks associated with physical
deliveries.
Rule 17Ad–22(e)(2)(i) and (v) 14
requires each covered clearing agency to
establish, implement, maintain, and
enforce written policies and procedures
reasonably designed to provide for
governance arrangements that are clear
and transparent and specify clear and
direct lines of responsibility. ICC
determined to accept the additional EM
Contracts for clearing in accordance
with its governance process, which
included review of the contract and
related risk management considerations
by the ICC Risk Committee and approval
11 Id.
CFR 240.17Ad–22(e)(4)(ii).
12 17
9 Id.
3 15
76871
CFR 240.17Ad–22(e)(8), (9) and (10).
13 Id.
CFR 240.17Ad–22(e)(17)(i) and (ii).
Frm 00153
Fmt 4703
Sfmt 4703
14 17
E:\FR\FM\07NON1.SGM
CFR 240.17Ad–22(e)(2)(i) and (v).
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76872
Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Notices
by the ICC Board. These governance
arrangements continue to be clear and
transparent, such that information
relating to the assignment of
responsibilities and the requisite
involvement of the ICC Board and
committees is clearly detailed in the ICC
Rules and policies and procedures,
consistent with the requirements of Rule
17Ad–22(e)(2)(i) and (v).15
Rule 17Ad–22(e)(13) 16 requires each
covered clearing agency to establish,
implement, maintain, and enforce
written policies and procedures
reasonably designed to ensure it has the
authority and operational capacity to
take timely action to contain losses and
liquidity demands and continue to meet
its obligations by, at a minimum,
requiring its participants and, when
practicable, other stakeholders to
participate in the testing and review of
its default procedures, including any
close-out procedures, at least annually
and following material changes thereto.
ICC will apply its existing default
management policies and procedures for
the additional EM Contracts. ICC
believes that these procedures allow for
it to take timely action to contain losses
and liquidity demands and to continue
meeting its obligations in the event of
clearing member insolvencies or
defaults in respect of the additional
single name, in accordance with Rule
17Ad–22(e)(13).17
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants or Others
(B) Clearing Agency’s Statement on
Burden on Competition
• 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–2023–014 on the subject line.
ICC does not believe the proposed
amendments will have any impact, or
impose any burden, on competition not
necessary or appropriate in furtherance
of the purposes of the Act. As discussed
above, the purpose of the proposed rule
change is to adopt rules that will
provide the basis for ICC to clear
additional credit default swap contracts.
The additional EM Contracts will be
available to all ICC participants for
clearing. The clearing of the additional
EM Contracts by ICC does not preclude
the offering of the additional EM
Contracts for clearing by other market
participants. Accordingly, ICC does not
believe that clearance of the additional
EM Contracts will impose any burden
on competition not necessary or
appropriate in furtherance of the
purposes of the Act.
15 Id.
16 17
CFR 240.17Ad–22(e)(13).
17 Id.
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16:30 Nov 06, 2023
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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
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–2023–014. 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
PO 00000
Frm 00154
Fmt 4703
Sfmt 4703
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 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.ice.com/clearcredit/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–2023–014 and
should be submitted on or before
November 28, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–24517 Filed 11–6–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98836; File No. SR–
CboeEDGA–2023–018]
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Rules Relating to the Continuing
Education for Registered Persons
November 1, 2023.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
19, 2023, Cboe EDGA Exchange, Inc.
(the ‘‘Exchange’’ or ‘‘EDGA’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to section 19(b)(3)(A)(iii) of the
Act 3 and Rule 19b–4(f)(6) thereunder.4
The Commission is publishing this
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
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]]>Agencies
[Federal Register Volume 88, Number 214 (Tuesday, November 7, 2023)]
[Notices]
[Pages 76870-76872]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-24517]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98833; File No. SR-ICC-2023-014]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change Relating to the Clearance of Additional
Credit Default Swap Contracts
November 1, 2023.
Pursuant to section 19(b)(1) of the Securities Exchange Act of
1934,\1\ and Rule 19b-4,\2\ notice is hereby given that on October 25,
2023, ICE Clear Credit LLC (``ICC'') filed with the Securities and
Exchange 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
The principal purpose of the proposed rule change is to revise the
ICC Rulebook (the ``Rules'') to provide for the clearance of additional
Standard Emerging Market Sovereign Single Name CDS contracts (``EM
Contracts'').
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 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. 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
The purpose of the proposed rule change is to adopt rules that will
provide the basis for ICC to clear additional CDS contracts. ICC
proposes to make such change effective following Commission approval of
the proposed rule change. ICC believes the addition of these EM
Contracts will benefit the market for CDS by providing market
participants the benefits of clearing, including reduction in
counterparty risk, and safeguarding of margin assets
[[Page 76871]]
pursuant to clearing house rules. Clearing of the additional EM
Contracts will not require any changes to ICC's Risk Management
Framework or other policies and procedures constituting rules within
the meaning of the Securities Exchange Act of 1934 (``Act'').
ICC proposes amending Subchapter 26D of its Rules to provide for
the clearance of additional EM Contracts, specifically the Kingdom of
Morocco and the Federal Republic of Nigeria. These additional EM
Contracts have terms consistent with the other EM Contracts approved
for clearing at ICC and governed by Subchapter 26D of the Rules. Minor
revisions to Subchapter 26D (Standard Emerging Market Sovereign
(``SES'') Single Name) are made to provide for clearing the additional
EM Contracts. Specifically, in Rule 26D-102 (Definitions), ``Eligible
SES Reference Entities'' is modified to include the Kingdom of Morocco
and the Federal Republic of Nigeria in the list of specific Eligible
SES Reference Entities to be cleared by ICC.
(b) Statutory Basis
Section 17A(b)(3)(F) of the Act \3\ requires, among other things,
that the rules of a clearing agency be designed to promote the prompt
and accurate clearance and settlement of securities transactions and,
to the extent applicable, derivative agreements, contracts, and
transactions; to assure the safeguarding of securities and funds which
are in the custody or control of ICC or for which it is responsible;
and to comply with the provisions of the Act and the rules and
regulations thereunder. The additional EM Contracts proposed for
clearing are similar to the EM Contracts currently cleared by ICC and
will be cleared pursuant to ICC's existing clearing arrangements and
related financial safeguards, protections, and risk management
procedures. Clearing of the additional EM Contracts will allow market
participants an increased ability to manage risk and ensure the
safeguarding of margin assets pursuant to clearing house rules. ICC
believes that acceptance of the new EM Contracts, on the terms and
conditions set out in the Rules, is consistent with the prompt and
accurate clearance and settlement of securities transactions and
derivative agreements, contracts and transactions cleared by ICC, the
safeguarding of securities and funds in the custody or control of ICC
or for which it is responsible, and the protection of investors and the
public interest, within the meaning of section 17A(b)(3)(F) of the
Act.\4\
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78q-1(b)(3)(F).
\4\ Id.
---------------------------------------------------------------------------
Clearing of the additional EM Contracts will also satisfy the
relevant requirements of Rule 17Ad-22,\5\ as set forth in the following
discussion.
---------------------------------------------------------------------------
\5\ 17 CFR 240.17Ad-22.
---------------------------------------------------------------------------
Rule 17Ad-22(e)(6)(i) \6\ requires each covered clearing agency to
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to cover its credit exposures to its
participants by establishing a risk-based margin system that, at a
minimum, considers, and produces margin levels commensurate with, the
risks and particular attributes of each relevant product, portfolio,
and market. In terms of financial resources, ICC will apply its
existing margin methodology to the new EM Contracts, which are similar
to the EM Contracts currently cleared by ICC. ICC believes that this
model will provide sufficient margin requirements to cover its credit
exposure to its clearing members from clearing such contracts,
consistent with the requirements of Rule 17Ad-22(e)(6)(i).\7\
---------------------------------------------------------------------------
\6\ 17 CFR 240.17Ad-22(e)(6)(i).
\7\ Id.
---------------------------------------------------------------------------
Rule 17Ad-22(e)(4)(ii) \8\ requires each covered clearing agency to
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to effectively identify, measure,
monitor, and manage its credit exposures to participants and those
arising from its payment, clearing, and settlement processes, including
by maintaining additional financial resources at the minimum to enable
it to cover a wide range of foreseeable stress scenarios that include,
but are not limited to, the default of the two participant families
that would potentially cause the largest aggregate credit exposure for
the covered clearing agency in extreme but plausible market conditions.
ICC believes its Guaranty Fund, under its existing methodology, will,
together with the required initial margin, provide sufficient financial
resources to support the clearing of the additional EM Contracts,
consistent with the requirements of Rule 17Ad-22(e)(4)(ii).\9\
---------------------------------------------------------------------------
\8\ 17 CFR 240.17Ad-22(e)(4)(ii).
\9\ Id.
---------------------------------------------------------------------------
Rule 17Ad-22(e)(17) \10\ requires, in relevant part, each covered
clearing agency to establish, implement, maintain, and enforce written
policies and procedures reasonably designed to manage its operational
risks by (i) identifying the plausible sources of operational risk,
both internal and external, and mitigating their impact through the use
of appropriate systems, policies, procedures, and controls; and (ii)
ensuring that systems have a high degree of security, resiliency,
operational reliability, and adequate, scalable capacity. ICC believes
that its existing operational and managerial resources will be
sufficient for clearing of the additional EM Contracts, consistent with
the requirements of Rule 17Ad-22(e)(17),\11\ as the new contracts are
substantially the same from an operational perspective as existing
contracts.
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\10\ 17 CFR 240.17Ad-22(e)(17)(i) and (ii).
\11\ Id.
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Rule 17Ad-22(e)(8), (9) and (10) \12\ requires each covered
clearing agency to establish, implement, maintain, and enforce written
policies and procedures reasonably designed to define the point at
which settlement is final to be no later than the end of the day on
which payment or obligation is due and, where necessary or appropriate,
intraday or in real time; conduct its money settlements in central bank
money, where available and determined to be practical by the Board, and
minimize and manage credit and liquidity risk arising from conducting
its money settlements in commercial bank money if central bank money is
not used; and establish and maintain transparent written standards that
state its obligations with respect to the delivery of physical
instruments, and establish and maintain operational practices that
identify, monitor, and manage the risks associated with such physical
deliveries. ICC will use its existing rules, settlement procedures and
account structures for the new EM Contracts, which are similar to the
SES contracts currently cleared by ICC, consistent with the
requirements of Rule 17Ad-22(e)(8), (9) and (10) \13\ as to the
finality and accuracy of its daily settlement process and addressing
the risks associated with physical deliveries.
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\12\ 17 CFR 240.17Ad-22(e)(8), (9) and (10).
\13\ Id.
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Rule 17Ad-22(e)(2)(i) and (v) \14\ requires each covered clearing
agency to establish, implement, maintain, and enforce written policies
and procedures reasonably designed to provide for governance
arrangements that are clear and transparent and specify clear and
direct lines of responsibility. ICC determined to accept the additional
EM Contracts for clearing in accordance with its governance process,
which included review of the contract and related risk management
considerations by the ICC Risk Committee and approval
[[Page 76872]]
by the ICC Board. These governance arrangements continue to be clear
and transparent, such that information relating to the assignment of
responsibilities and the requisite involvement of the ICC Board and
committees is clearly detailed in the ICC Rules and policies and
procedures, consistent with the requirements of Rule 17Ad-22(e)(2)(i)
and (v).\15\
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\14\ 17 CFR 240.17Ad-22(e)(2)(i) and (v).
\15\ Id.
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Rule 17Ad-22(e)(13) \16\ requires each covered clearing agency to
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to ensure it has the authority and
operational capacity to take timely action to contain losses and
liquidity demands and continue to meet its obligations by, at a
minimum, requiring its participants and, when practicable, other
stakeholders to participate in the testing and review of its default
procedures, including any close-out procedures, at least annually and
following material changes thereto. ICC will apply its existing default
management policies and procedures for the additional EM Contracts. ICC
believes that these procedures allow for it to take timely action to
contain losses and liquidity demands and to continue meeting its
obligations in the event of clearing member insolvencies or defaults in
respect of the additional single name, in accordance with Rule 17Ad-
22(e)(13).\17\
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\16\ 17 CFR 240.17Ad-22(e)(13).
\17\ Id.
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(B) Clearing Agency's Statement on Burden on Competition
ICC does not believe the proposed amendments will have any impact,
or impose any burden, on competition not necessary or appropriate in
furtherance of the purposes of the Act. As discussed above, the purpose
of the proposed rule change is to adopt rules that will provide the
basis for ICC to clear additional credit default swap contracts. The
additional EM Contracts will be available to all ICC participants for
clearing. The clearing of the additional EM Contracts by ICC does not
preclude the offering of the additional EM Contracts for clearing by
other market participants. Accordingly, ICC does not believe that
clearance of the additional EM Contracts will impose any burden on
competition not necessary or appropriate 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-2023-014 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-2023-014. 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 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.ice.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-2023-014 and should
be submitted on or before November 28, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-24517 Filed 11-6-23; 8:45 am]
BILLING CODE 8011-01-P
