Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, Relating to the ICC Recovery Plan and the ICC Wind-Down Plan, 52138-52141 [2024-13538]

Download as PDF 52138 Federal Register / Vol. 89, No. 120 / Friday, June 21, 2024 / Notices repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 41 The fact that this market is competitive has also long been recognized by the courts. In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit stated as follows: ‘‘[n]o one disputes that competition for order flow is ‘fierce.’ . . . As the SEC explained, ‘[i]n the U.S. national market system, buyers and sellers of securities, and the brokerdealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution’; [and] ‘no exchange can afford to take its market share percentages for granted’ because ‘no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers’ . . . .’’.42 Accordingly, the Exchange does not believe its proposed change imposes any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. ddrumheller on DSK120RN23PROD with NOTICES1 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 43 and paragraph (f) of Rule 19b–4 44 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the 41 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 42 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782– 83 (December 9, 2008) (SR–NYSEArca–2006–21)). 43 15 U.S.C. 78s(b)(3)(A). 44 17 CFR 240.19b–4(f). VerDate Sep<11>2014 17:46 Jun 20, 2024 Jkt 262001 Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or 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: SR–CboeBYX–2024–021 and should be submitted on or before July 12, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.45 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–13544 Filed 6–20–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments [Release No. 34–100335; File No. SR–ICC– 2024–004] • 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– CboeBYX–2024–021 on the subject line. Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, Relating to the ICC Recovery Plan and the ICC Wind-Down Plan Paper Comments June 14, 2024. • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. 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 June 4, 2024, ICE Clear Credit LLC (‘‘ICC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change, as described in Items I, II and III below, which Items have been prepared primarily by ICC. On June 6, 2024, ICE Clear Credit filed Amendment No. 1 to the proposed rule change to make certain changes to the narrative description of the proposed changes.3 The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 1 (hereafter ‘‘the proposed rule change’’), from interested persons. All submissions should refer to file number SR–CboeBYX–2024–021. 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 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 PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 I. Clearing Agency’s Statement of the Terms of Substance of the Proposed Rule Change ICC proposes revising the ICC Recovery Plan and the ICC Wind-Down Plan, which serve as 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, consistent with Rule 17ad–22(e)(3)(ii).4 ICC proposes to make such changes effective following Commission approval of the proposed 45 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Amendment No. 1 inserts a bullet point to the ‘‘ICC Recovery Plan’’ paragraph of the Form 19b– 4 and the Exhibit 1A with the following text, ‘‘description of Guaranty Fund Replenishment in Section VIII.B;’’. Amendment No. 1 also removes the same bullet point from the ‘‘ICC Wind-Down Plan’’ paragraph of the Form 19b–4 and Exhibit 1A. 4 17 CFR 240.17Ad–22(e)(3)(ii). 1 15 E:\FR\FM\21JNN1.SGM 21JNN1 Federal Register / Vol. 89, No. 120 / Friday, June 21, 2024 / Notices rule change. The proposed rule change is described in detail as follows. 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, 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 ddrumheller on DSK120RN23PROD with NOTICES1 (a) Purpose ICC proposes revising the ICC Recovery Plan and the ICC Wind-Down Plan, which serve as 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, consistent with Rule 17ad–22(e)(3)(ii).5 ICC proposes to make such changes effective following Commission approval of the proposed rule change. The proposed rule change is described in detail as follows. ICC Recovery Plan Consistent with the regulations applicable to ICC, the ICC Recovery Plan is designed 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. ICC proposes general updates and edits to promote clarity and to ensure that the information provided is current. The proposed amendments reflect and relate to changes that impacted ICC in the past year, including the addition of new ICC clearing participants (‘‘CP’’) (Intesa Sanpaolo S.p.A. and Royal Bank of Canada), the addition of British Pounds Sterling cash (‘‘GBP’’) as acceptable client-related initial margin, the removal of references to ICE Clear Europe (‘‘ICEU’’) Credit Default Swap (‘‘CDS’’) clearing as that service has closed, and a change to the Managers of the ICC Board of Managers (the ‘‘Board’’). ICC proposes general updates to ensure that the information in the ICC Recovery Plan is current. In Section I and throughout the document, the 5 17 CFR 240.17Ad–22(e)(3)(ii). VerDate Sep<11>2014 17:46 Jun 20, 2024 Jkt 262001 proposed changes specify that the information provided is current as of December 31, 2023, unless otherwise stated. Namely, the proposed changes ensure that relevant information regarding ICC for recovery planning, such as information about ICC’s ownership and operation, is current with respect to: • description of an ICC Independent Director in Section IV.C.; • data regarding ICC revenues, volumes, and expenses in Section IV.D.; • MLE Interconnections in Section VI.; • ICC Third-Party Systems in Section VI.A.; • description of services provided to ICC by Intercontinental Exchange, Inc. in Section VI.; • ICC personnel and facilities in Section VI.A.; • addition of Jacksonville Facilities in Section VI.A.; • description of ICC in-house systems in Section VI.A.; • identification of ICC’s counterparties in the Counterparty Chart in Section VI.B.; • description of monitoring mechanisms for CP default in Section VII.A.; • description of initial default auction in Section VIII.A.; • direct infusion of cash to ICC from ICE Group in Section VIII.B.; • reduce or eliminate dividend payment to ICE Holding in Section VIII.B.; • renegotiation of fee cap on transaction and clearing fees in Section VIII.B.; • amend outsourcing agreements in Section VIII.B.; • reduce ICC headcount in Section VIII.B.; • elimination of bonuses in Section VIII.B.; • waiver/suspension of ICC lease payments in Section VIII.B.; • change in Management contact regarding capital infusion from ICE Group to ICC in Section VIII.B; • description of Guaranty Fund Replenishment in Section VIII.B; description of financial resources for recovery in Section X.; • ICC and ICE Group financial information in Section XI.; • key ICC reports and descriptions, Exhibit 35, in Section XII.B.; 6 and 6 Several decommissioned reports have been removed from the list: ‘DTCC Vendor Credit Terminations’ (information no longer relevant to ICC); ‘Other Firms Trades Report’ (report replaced with FIX protocol messages); ‘Index Participant Missed Quotes Surveillance Report’ (information available in another key report) and ‘Index Participant Submission Detail Report’ (information PO 00000 Frm 00130 Fmt 4703 Sfmt 4703 52139 • Financial service providers that hold CP cash and collateral in Appendix C in Section XIII. ICC proposes the addition of two new CP’s in Section IV.B. Specifically, ICC proposes to add new CP Intesa Sanpaolo S.p.A, which became effective on May 3, 2023. Also, ICC proposes to add new CP Royal Bank of Canada, which became effective on April 15, 2024. Also, ICC proposes the addition of GBP as acceptable client-related initial margin in Section IV.B and Section IV.E. In response to the addition of GBP, ICC proposes to revise Section IV.E., to clarify the description of ICC’s collateral valuation process to all collateral types. Also, ICC proposes the removal of references to ICEU CDS clearing in Section V.C. as ICEU closed its CDS clearing services on or about October 21, 2023. Additionally, ICC proposes modifications to reflect the change in the Non-Independent Managers to the Board, in Section IV.C. Specifically, ICE US Holding Company L.P. (‘‘ICE US Holding’’) replaced former NonIndependent Manager Christopher Edmonds with Elizabeth King, Chief Regulatory Officer, and President of ICE’s Sustainable Finance business. Also, ICC proposes minor updates to Section VIII.B. to reflect the change of the Managers as described above. ICC proposes minor updates to promote clarity and consistency in the ICC Recovery Plan. In Section VII.A., ICC proposes the addition of a Securities and Exchange Commission regulation cite (17 CFR 240.17Ad– 22(e)(4)) to reflect and reference the applicable regulations more accurately. Finally, ICC proposes minor typographical fixes in the ICC Recovery Plan including grammatical and formatting changes. ICC Wind-Down Plan The ICC Wind-Down Plan is designed to establish how ICC could be wounddown in an orderly manner. ICC proposes general updates and edits to promote clarity and to ensure that the information provided is current. The proposed amendments reflect and relate to changes that impacted ICC in the past year, including the addition of new CP’s (Intesa Sanpaolo S.p.A. and Royal Bank of Canada), and the removal of references to ICEU CDS clearing as that service has closed, and a change to the Managers of the Board. available in another key report). In addition, the title of two reports was revised to better reflect in the information contained therein. Finally, two new reports were added to the list, both related to exercised/assigned index swaptions. E:\FR\FM\21JNN1.SGM 21JNN1 ddrumheller on DSK120RN23PROD with NOTICES1 52140 Federal Register / Vol. 89, No. 120 / Friday, June 21, 2024 / Notices ICC proposes general updates to ensure that the information in the ICC Wind-Down Plan is current. In Section I and throughout the document, the proposed changes specify that the information provided is current as of December 31, 2023, unless otherwise stated. The proposed revisions ensure that relevant information regarding ICC for wind-down planning, such as information about ICC’s ownership and operation, is current with respect to: • activities of ICE in Section II.A.; • description of an ICC Independent Director in Section IV.B.; • MLE Interconnections in Section VII.; • Material legal entity chart in Section VII.; • ICC personnel and facilities in Section VII.C.; • description of ICC in-house systems in Section VII.C.; • identification of ICC’s counterparties in the ICC Counterparty Chart VII.D.; • financial resources to support winddown in Section IX.; and • Banking Institutions and Example Proportion of Holdings charts in Section XI.C. Additionally, ICC proposes the addition of two new CP’s in Section IV. A. Specifically, ICC proposes to add new CP Intesa Sanpaolo S.p.A, which became effective on May 3, 2023. Also, ICC proposes to add new CP Royal Bank of Canada, which became effective on April 15, 2024. Also, ICC proposes the removal of references to ICEU CDS clearing in Section VII.C. as ICEU successfully completed the close-out process on or about October 21, 2023. Additionally, ICC proposes modifications to the non-independent Board of Managers and the titles of such Managers, in Section IV.B. Specifically, ICE US Holding Company L.P. (‘‘ICE US Holding’’) did not re-appoint Christopher Edmonds as an ICC nonindependent manager because Mr. Edmonds has expanded his role within ICE to include leading ICE’s Fixed Income and Data services business segment. ICE US Holding appointed Elizabeth King, Chief Regulatory Officer, and President of ICE’s Sustainable Finance business as the new ICC nonindependent Manager. ICC proposes additional updates and edits to promote clarity and consistency in the ICC Wind-Down Plan. In Section XII, the proposed changes update the index of exhibits with the current versions of policies and procedures, consistent with updated footnote references. VerDate Sep<11>2014 17:46 Jun 20, 2024 Jkt 262001 (b) Statutory Basis ICC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act 7 and the regulations thereunder applicable to it, including the applicable standards under Rule 17Ad–22.8 In particular, Section 17A(b)(3)(F) of the Act 9 requires that the rule change be 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. ICC believes the proposed changes would enhance its ability to effectuate a successful recovery as well as to execute an orderly wind-down by providing updates and additional clarity with respect to ICC’s recovery and winddown processes and procedures. As discussed herein, the proposed revisions ensure that relevant information regarding ICC for recovery and wind-down planning is current, including updated information regarding personnel and facilities, finances and operations, updating new CP’s, removing ICEU references, for recovery and wind-down. To support and enhance the implementation of the Plans, additional language clarifications or edits are included so that the Plans remain up-to-date, transparent, and focused on clearly articulating the policies and procedures used to support ICC’s recovery and wind-down efforts. Such revisions include additional details regarding required disclosures, references to relevant policies, updated information regarding recovery tools, and amended language that is intended to be more precise. The Plans would thus promote ICC’s ability to continue providing clearing services with as little disruption as possible, and should continuation not be feasible, promote ICC’s ability to discontinue clearing services in an orderly manner with minimum negative impact to the marketplace and stakeholders. Accordingly, in ICC’s view, the proposed rule change is consistent with the prompt and accurate clearance and settlement of securities transactions, derivatives agreements, contracts, and transactions, 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.10 Rule 17Ad–22(e)(3)(ii) 11 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 ICC Recovery Plan continues 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 ICC Wind-Down Plan continues to establish how ICC could be wound-down in an orderly manner should its recovery efforts fail. As described above, the proposed changes include updates and edits to promote clarity and to ensure that the information in the Plans is current. In ICC’s view, such changes would ensure that the Plans remain useful and effective in a recovery and wind-down scenario. The proposed rule change would thus promote ICC’s ability to carry out a successful recovery or orderly wind-down, consistent with the requirements of Rule 17Ad– 22(e)(3)(ii).12 Rule 17Ad–22(e)(15) 13 requires ICC to establish, implement, maintain, and enforce written policies and procedures reasonably designed to identify monitor, and manage ICC’s general business risk and hold sufficient liquid net assets funded by equity to cover potential general business losses so that ICC can continue operations and services as a going concern if those losses materialize, including by (i) determining the amount of liquid net assets funded by equity based upon its general business risk profile and the length of time required to achieve a recovery or orderly wind-down, as appropriate, of its critical operations and services if such action is taken; (ii) holding liquid net assets funded by equity equal to the greater of either (x) six months of ICC’s current operating expenses, or (y) the amount determined by the Board to be sufficient to ensure a recovery or orderly wind-down of critical operations and services of ICC, as contemplated by the 10 Id. 7 15 U.S.C. 78q–1. 8 17 CFR 240.17Ad–22. 9 15 U.S.C. 78q–1(b)(3)(F). PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 11 17 CFR 240.17Ad–22(e)(3)(ii). 12 Id. 13 17 E:\FR\FM\21JNN1.SGM CFR 240.17Ad–22(e)(15). 21JNN1 Federal Register / Vol. 89, No. 120 / Friday, June 21, 2024 / Notices plans established under Rule 17ad– 22(e)(3)(ii); 14 and (iii) maintain a viable plan, approved by the Board and updated at least annually, for raising additional equity should its equity fall close to or below the amount required under Rule 17ad–22(e)(15)(ii).15 The Plans continue to analyze ICC’s particular circumstances and risks to ensure that ICC maintains financial resources necessary to implement both Plans and that ICC remains in compliance with all regulatory capital requirements. The Plans includes information on the financial resources maintained by ICC for recovery and to support wind-down in compliance with relevant regulations and include procedures to follow in case of any shortfall. As such, ICC believes that the proposed rule change is consistent with the requirements of Rule 17Ad– 22(e)(15).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 changes to the Plans will apply uniformly across all market participants. The changes are being proposed to promote clarity and ensure that the information provided is current in the Plans. ICC does not believe the amendments would affect the costs of clearing or the ability of market participants to access clearing. Therefore, ICC does not believe the proposed rule change would impose 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. ddrumheller on DSK120RN23PROD with NOTICES1 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 14 17 CFR 240.17Ad–22(e)(3)(ii). CFR 240.17Ad–22(e)(15)(ii). 16 17 CFR 240.17Ad–22(e)(15). 15 17 VerDate Sep<11>2014 17:46 Jun 20, 2024 Jkt 262001 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: 52141 protection. All submissions should refer to file number SR–ICC–2023–014 and should be submitted on or before July 12, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–13538 Filed 6–20–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION 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–2024–004 on the subject line. [Release No. 34–100338; File No. SR– PEARL–2024–26] 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–2024–004. 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/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 June 14, 2024. PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX Pearl Equities Fee Schedule Pursuant to the provisions of 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 June 7, 2024, MIAX PEARL, LLC (‘‘MIAX Pearl’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing a proposal to amend the fee schedule (the ‘‘Fee Schedule’’) applicable to MIAX Pearl Equities, an equities trading facility of the Exchange. The text of the proposed rule change is available on the Exchange’s website at https://www.miaxglobal.com/markets/ us-equities/pearl-equities/rule-filings, at MIAX Pearl’s principal office, and at the Commission’s Public Reference Room. 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 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\21JNN1.SGM 21JNN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 89, Number 120 (Friday, June 21, 2024)]
[Notices]
[Pages 52138-52141]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13538]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100335; File No. SR-ICC-2024-004]

Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change, as Modified by Amendment No. 1,
Relating to the ICC Recovery Plan and the ICC Wind-Down Plan

June 14, 2024.
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 June 4,
2024, ICE Clear Credit LLC (``ICC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change, as
described in Items I, II and III below, which Items have been prepared
primarily by ICC. On June 6, 2024, ICE Clear Credit filed Amendment No.
1 to the proposed rule change to make certain changes to the narrative
description of the proposed changes.\3\ The Commission is publishing
this notice to solicit comments on the proposed rule change, as
modified by Amendment No. 1 (hereafter ``the proposed rule change''),
from interested persons.
---------------------------------------------------------------------------

\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 inserts a bullet point to the ``ICC Recovery
Plan'' paragraph of the Form 19b-4 and the Exhibit 1A with the
following text, ``description of Guaranty Fund Replenishment in
Section VIII.B;''. Amendment No. 1 also removes the same bullet
point from the ``ICC Wind-Down Plan'' paragraph of the Form 19b-4
and Exhibit 1A.
---------------------------------------------------------------------------

I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change

ICC proposes revising the ICC Recovery Plan and the ICC Wind-Down
Plan, which serve as 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, consistent with Rule 17ad-
22(e)(3)(ii).\4\ ICC proposes to make such changes effective following
Commission approval of the proposed

[[Page 52139]]

rule change. The proposed rule change is described in detail as
follows.
---------------------------------------------------------------------------

\4\ 17 CFR 240.17Ad-22(e)(3)(ii).
---------------------------------------------------------------------------

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,
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 revising the ICC Recovery Plan and the ICC Wind-Down
Plan, which serve as 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, consistent with Rule 17ad-
22(e)(3)(ii).\5\ ICC proposes to make such changes effective following
Commission approval of the proposed rule change. The proposed rule
change is described in detail as follows.
---------------------------------------------------------------------------

\5\ 17 CFR 240.17Ad-22(e)(3)(ii).
---------------------------------------------------------------------------

ICC Recovery Plan
Consistent with the regulations applicable to ICC, the ICC Recovery
Plan is designed 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. ICC proposes
general updates and edits to promote clarity and to ensure that the
information provided is current. The proposed amendments reflect and
relate to changes that impacted ICC in the past year, including the
addition of new ICC clearing participants (``CP'') (Intesa Sanpaolo
S.p.A. and Royal Bank of Canada), the addition of British Pounds
Sterling cash (``GBP'') as acceptable client-related initial margin,
the removal of references to ICE Clear Europe (``ICEU'') Credit Default
Swap (``CDS'') clearing as that service has closed, and a change to the
Managers of the ICC Board of Managers (the ``Board'').
ICC proposes general updates to ensure that the information in the
ICC Recovery Plan is current. In Section I and throughout the document,
the proposed changes specify that the information provided is current
as of December 31, 2023, unless otherwise stated. Namely, the proposed
changes ensure that relevant information regarding ICC for recovery
planning, such as information about ICC's ownership and operation, is
current with respect to:
description of an ICC Independent Director in Section
IV.C.;
data regarding ICC revenues, volumes, and expenses in
Section IV.D.;
MLE Interconnections in Section VI.;
ICC Third-Party Systems in Section VI.A.;
description of services provided to ICC by
Intercontinental Exchange, Inc. in Section VI.;
ICC personnel and facilities in Section VI.A.;
addition of Jacksonville Facilities in Section VI.A.;
description of ICC in-house systems in Section VI.A.;
identification of ICC's counterparties in the Counterparty
Chart in Section VI.B.;
description of monitoring mechanisms for CP default in
Section VII.A.;
description of initial default auction in Section VIII.A.;
direct infusion of cash to ICC from ICE Group in Section
VIII.B.;
reduce or eliminate dividend payment to ICE Holding in
Section VIII.B.;
renegotiation of fee cap on transaction and clearing fees
in Section VIII.B.;
amend outsourcing agreements in Section VIII.B.;
reduce ICC headcount in Section VIII.B.;
elimination of bonuses in Section VIII.B.;
waiver/suspension of ICC lease payments in Section
VIII.B.;
change in Management contact regarding capital infusion
from ICE Group to ICC in Section VIII.B;
description of Guaranty Fund Replenishment in Section
VIII.B; description of financial resources for recovery in Section X.;
ICC and ICE Group financial information in Section XI.;
key ICC reports and descriptions, Exhibit 35, in Section
XII.B.; \6\ and
---------------------------------------------------------------------------

\6\ Several decommissioned reports have been removed from the
list: `DTCC Vendor Credit Terminations' (information no longer
relevant to ICC); `Other Firms Trades Report' (report replaced with
FIX protocol messages); `Index Participant Missed Quotes
Surveillance Report' (information available in another key report)
and `Index Participant Submission Detail Report' (information
available in another key report). In addition, the title of two
reports was revised to better reflect in the information contained
therein. Finally, two new reports were added to the list, both
related to exercised/assigned index swaptions.
---------------------------------------------------------------------------

Financial service providers that hold CP cash and
collateral in Appendix C in Section XIII.
ICC proposes the addition of two new CP's in Section IV.B.
Specifically, ICC proposes to add new CP Intesa Sanpaolo S.p.A, which
became effective on May 3, 2023. Also, ICC proposes to add new CP Royal
Bank of Canada, which became effective on April 15, 2024.
Also, ICC proposes the addition of GBP as acceptable client-related
initial margin in Section IV.B and Section IV.E. In response to the
addition of GBP, ICC proposes to revise Section IV.E., to clarify the
description of ICC's collateral valuation process to all collateral
types.
Also, ICC proposes the removal of references to ICEU CDS clearing
in Section V.C. as ICEU closed its CDS clearing services on or about
October 21, 2023.
Additionally, ICC proposes modifications to reflect the change in
the Non-Independent Managers to the Board, in Section IV.C.
Specifically, ICE US Holding Company L.P. (``ICE US Holding'') replaced
former Non-Independent Manager Christopher Edmonds with Elizabeth King,
Chief Regulatory Officer, and President of ICE's Sustainable Finance
business. Also, ICC proposes minor updates to Section VIII.B. to
reflect the change of the Managers as described above.
ICC proposes minor updates to promote clarity and consistency in
the ICC Recovery Plan. In Section VII.A., ICC proposes the addition of
a Securities and Exchange Commission regulation cite (17 CFR 240.17Ad-
22(e)(4)) to reflect and reference the applicable regulations more
accurately.
Finally, ICC proposes minor typographical fixes in the ICC Recovery
Plan including grammatical and formatting changes.
ICC Wind-Down Plan
The ICC Wind-Down Plan is designed to establish how ICC could be
wound-down in an orderly manner. ICC proposes general updates and edits
to promote clarity and to ensure that the information provided is
current. The proposed amendments reflect and relate to changes that
impacted ICC in the past year, including the addition of new CP's
(Intesa Sanpaolo S.p.A. and Royal Bank of Canada), and the removal of
references to ICEU CDS clearing as that service has closed, and a
change to the Managers of the Board.

[[Page 52140]]

ICC proposes general updates to ensure that the information in the
ICC Wind-Down Plan is current. In Section I and throughout the
document, the proposed changes specify that the information provided is
current as of December 31, 2023, unless otherwise stated. The proposed
revisions ensure that relevant information regarding ICC for wind-down
planning, such as information about ICC's ownership and operation, is
current with respect to:
activities of ICE in Section II.A.;
description of an ICC Independent Director in Section
IV.B.;
MLE Interconnections in Section VII.;
Material legal entity chart in Section VII.;
ICC personnel and facilities in Section VII.C.;
description of ICC in-house systems in Section VII.C.;
identification of ICC's counterparties in the ICC
Counterparty Chart VII.D.;
financial resources to support wind-down in Section IX.;
and
Banking Institutions and Example Proportion of Holdings
charts in Section XI.C.
Additionally, ICC proposes the addition of two new CP's in Section
IV. A. Specifically, ICC proposes to add new CP Intesa Sanpaolo S.p.A,
which became effective on May 3, 2023. Also, ICC proposes to add new CP
Royal Bank of Canada, which became effective on April 15, 2024.
Also, ICC proposes the removal of references to ICEU CDS clearing
in Section VII.C. as ICEU successfully completed the close-out process
on or about October 21, 2023.
Additionally, ICC proposes modifications to the non-independent
Board of Managers and the titles of such Managers, in Section IV.B.
Specifically, ICE US Holding Company L.P. (``ICE US Holding'') did not
re-appoint Christopher Edmonds as an ICC non-independent manager
because Mr. Edmonds has expanded his role within ICE to include leading
ICE's Fixed Income and Data services business segment. ICE US Holding
appointed Elizabeth King, Chief Regulatory Officer, and President of
ICE's Sustainable Finance business as the new ICC non-independent
Manager.
ICC proposes additional updates and edits to promote clarity and
consistency in the ICC Wind-Down Plan. In Section XII, the proposed
changes update the index of exhibits with the current versions of
policies and procedures, consistent with updated footnote references.
(b) Statutory Basis
ICC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act \7\ and the regulations
thereunder applicable to it, including the applicable standards under
Rule 17Ad-22.\8\ In particular, Section 17A(b)(3)(F) of the Act \9\
requires that the rule change be 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.
---------------------------------------------------------------------------

\7\ 15 U.S.C. 78q-1.
\8\ 17 CFR 240.17Ad-22.
\9\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

ICC believes the proposed changes would enhance its ability to
effectuate a successful recovery as well as to execute an orderly wind-
down by providing updates and additional clarity with respect to ICC's
recovery and wind-down processes and procedures. As discussed herein,
the proposed revisions ensure that relevant information regarding ICC
for recovery and wind-down planning is current, including updated
information regarding personnel and facilities, finances and
operations, updating new CP's, removing ICEU references, for recovery
and wind-down. To support and enhance the implementation of the Plans,
additional language clarifications or edits are included so that the
Plans remain up-to-date, transparent, and focused on clearly
articulating the policies and procedures used to support ICC's recovery
and wind-down efforts.
Such revisions include additional details regarding required
disclosures, references to relevant policies, updated information
regarding recovery tools, and amended language that is intended to be
more precise. The Plans would thus promote ICC's ability to continue
providing clearing services with as little disruption as possible, and
should continuation not be feasible, promote ICC's ability to
discontinue clearing services in an orderly manner with minimum
negative impact to the marketplace and stakeholders. Accordingly, in
ICC's view, the proposed rule change is consistent with the prompt and
accurate clearance and settlement of securities transactions,
derivatives agreements, contracts, and transactions, 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.\10\
---------------------------------------------------------------------------

\10\ Id.
---------------------------------------------------------------------------

Rule 17Ad-22(e)(3)(ii) \11\ 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 ICC Recovery Plan
continues 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 ICC Wind-Down
Plan continues to establish how ICC could be wound-down in an orderly
manner should its recovery efforts fail. As described above, the
proposed changes include updates and edits to promote clarity and to
ensure that the information in the Plans is current. In ICC's view,
such changes would ensure that the Plans remain useful and effective in
a recovery and wind-down scenario. The proposed rule change would thus
promote ICC's ability to carry out a successful recovery or orderly
wind-down, consistent with the requirements of Rule 17Ad-
22(e)(3)(ii).\12\
---------------------------------------------------------------------------

\11\ 17 CFR 240.17Ad-22(e)(3)(ii).
\12\ Id.
---------------------------------------------------------------------------

Rule 17Ad-22(e)(15) \13\ requires ICC to establish, implement,
maintain, and enforce written policies and procedures reasonably
designed to identify monitor, and manage ICC's general business risk
and hold sufficient liquid net assets funded by equity to cover
potential general business losses so that ICC can continue operations
and services as a going concern if those losses materialize, including
by (i) determining the amount of liquid net assets funded by equity
based upon its general business risk profile and the length of time
required to achieve a recovery or orderly wind-down, as appropriate, of
its critical operations and services if such action is taken; (ii)
holding liquid net assets funded by equity equal to the greater of
either (x) six months of ICC's current operating expenses, or (y) the
amount determined by the Board to be sufficient to ensure a recovery or
orderly wind-down of critical operations and services of ICC, as
contemplated by the

[[Page 52141]]

plans established under Rule 17ad-22(e)(3)(ii); \14\ and (iii) maintain
a viable plan, approved by the Board and updated at least annually, for
raising additional equity should its equity fall close to or below the
amount required under Rule 17ad-22(e)(15)(ii).\15\
---------------------------------------------------------------------------

\13\ 17 CFR 240.17Ad-22(e)(15).
\14\ 17 CFR 240.17Ad-22(e)(3)(ii).
\15\ 17 CFR 240.17Ad-22(e)(15)(ii).
---------------------------------------------------------------------------

The Plans continue to analyze ICC's particular circumstances and
risks to ensure that ICC maintains financial resources necessary to
implement both Plans and that ICC remains in compliance with all
regulatory capital requirements. The Plans includes information on the
financial resources maintained by ICC for recovery and to support wind-
down in compliance with relevant regulations and include procedures to
follow in case of any shortfall. As such, ICC believes that the
proposed rule change is consistent with the requirements of Rule 17Ad-
22(e)(15).\16\
---------------------------------------------------------------------------

\16\ 17 CFR 240.17Ad-22(e)(15).
---------------------------------------------------------------------------

(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 changes to
the Plans will apply uniformly across all market participants. The
changes are being proposed to promote clarity and ensure that the
information provided is current in the Plans. ICC does not believe the
amendments would affect the costs of clearing or the ability of market
participants to access clearing. Therefore, ICC does not believe the
proposed rule change would impose any burden on competition that is
inappropriate in furtherance of the purposes of the Act.

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-2024-004 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-2024-004. 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 July 12, 2024.

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. 2024-13538 Filed 6-20-24; 8:45 am]
BILLING CODE 8011-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.