[Federal Register Volume 84, Number 231 (Monday, December 2, 2019)]
[Notices]
[Pages 66041-66042]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25968]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87622; File No. SR-ICC-2019-010]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Partial Amendment No. 1 and Order Instituting Proceedings To
Determine Whether To Approve or Disapprove Proposed Rule Change
Proposed Rule Change, as Modified by Partial Amendment No. 1, Relating
to Amendments to the ICC Clearing Rules To Address Non-Default Losses
November 25, 2019.
I. Introduction
On August 8, 2019, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (the
``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
amend ICC's Clearing Rules (the ``Rules'') \3\ to address treatment of
losses not related to a Clearing Participant default. The proposed rule
change was published for comment in the Federal Register on August 28,
2019.\4\ The Commission received comments regarding the proposed rule
change.\5\ On October 4, 2019, the Commission designated a longer
period of time for Commission action on the proposed rule change until
November 26, 2019.\6\ On October 7, 2019, ICC filed a partial amendment
(``Partial Amendment No. 1'') to modify the proposed rule change.\7\
The Commission is publishing this notice and order to solicit comments
on Partial Amendment No. 1 from interested persons and to institute
proceedings pursuant to Section 19(b)(2)(B) of the Act \8\ to determine
whether to approve or disapprove the proposed rule change, as modified
by Partial Amendment No. 1 (hereinafter, ``proposed rule change'').
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Capitalized terms used but not defined herein have the
meanings specified in the Rules.
\4\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice
of Filing of Proposed Rule Change, Security-Based Swap Submission,
or Advance Notice Relating to the ICC Clearing Rules; Exchange Act
Release No. 86729 (Aug. 22, 2019); 84 FR 45191 (Aug. 28, 2019)
(``Notice'').
\5\ Comments are available at https://www.sec.gov/comments/sr-icc-2019-010/sricc2019010.htm.
\6\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice
of Designation of Longer Period for Commission Action on Proposed
Rule Change Relating to Amendments to the ICC Clearing Rules To
Address Non-Default Losses; Exchange Act Release No. 87225 (Oct. 4,
2019); 84 FR 54712 (Oct. 10, 2019).
\7\ In Partial Amendment No. 1 to the proposed rule change, ICC
provided additional details and analyses surrounding the proposed
rule change in the form of a confidential Exhibit 3.
\8\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change
As described more fully in the Notice, the proposed rule change
would define three exclusive categories of losses not related to a
Clearing Participant default: (i) Investment Losses, (ii) Custodial
Losses, and (iii) Non-Default Losses. With respect to the treatment of
such losses, the proposed rule change would: (i) Define the resources
of ICC that ICC would apply to cover each such category of losses; (ii)
assign responsibility to Clearing Participants, in certain
circumstances, to make contributions with respect to Investment Losses
and Custodial Losses; and (iii) address the treatment of recoveries by
ICC with respect to such losses. The proposed rule change would also
make additional changes related to such losses, including addressing
the effect the proposed rule change would have on other ICC rules.
III. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Change and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act to determine whether the proposed rule change
should be approved or disapproved.\9\ Institution of proceedings is
appropriate at this time in view of the legal and policy issues raised
by the proposed rule change. Institution of proceedings does not
indicate that the Commission has reached any conclusions with respect
to any of the issues involved.
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\9\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\10\ the Commission is
providing notice of the potential grounds for approval or disapproval
under consideration. The Commission is instituting proceedings to allow
for additional analysis and input concerning the proposed rule change's
consistency with the Act and the rules thereunder, including the
following:
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\10\ 15 U.S.C. 78s(b)(2)(B).
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Section 17A(b)(3)(D) of the Act, which requires that that
the rules of ICC provide for the equitable allocation of reasonable
dues, fees, and other charges among its participants; \11\
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\11\ 15 U.S.C. 78q-1(b)(3)(D).
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Section 17A(b)(3)(F) of the Act, which requires, among
other things, that the rules of ICC be designed to promote the prompt
and accurate clearance and settlement of securities transactions
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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, in general, to protect investors and the public interest; \12\
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\12\ 15 U.S.C. 78q-1(b)(3)(F).
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Rule 17Ad-22(d)(3), which requires that ICC establish,
implement, maintain and enforce written policies and procedures
reasonably designed to hold assets in a way that minimizes risk of loss
or of delay in its access to them; \13\ and
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\13\ 15 U.S.C. 17Ad-22(d)(3).
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Rule 17Ad-22(d)(8), which requires that ICC establish,
implement, maintain and enforce written policies and procedures
reasonably designed to have governance arrangements that are clear and
transparent to fulfill the public interest requirements in Section 17A
of the Act applicable to clearing agencies, to support the objectives
of owners and participants, and to promote the effectiveness of ICC's
risk management procedures.\14\
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\14\ 15 U.S.C. 17Ad-22(d)(8).
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IV. Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments regarding the proposed
rule change and Partial Amendment No. 1 with respect to the issues
identified above, as well as any other concerns they may have with the
proposed rule change and Partial Amendment No. 1. In particular, the
Commission invites the written views of interested persons concerning
whether the proposed rule change is consistent with Section
17A(b)(3)(D) and (F) of the Act \15\ and Rules 17Ad-22(d)(3) and 17Ad-
22(d)(8) under the Act,\16\ or any other provision of the Act or rules
and regulations thereunder.
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\15\ 15 U.S.C. 78q-1(b)(3)(D) and (F).
\16\ 17 CFR 240.17Ad-22(d)(3) and (d)(8).
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Although there do not appear to be any issues relevant to approval
or disapproval that would be facilitated by an oral presentation of
views, data, and arguments, the Commission will consider, pursuant to
Rule 19b-4, any request for an opportunity to make an oral
presentation.\17\
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\17\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29, 89 Stat. 97 (1975),
grants the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Acts Amendments of
1975, Report of the Senate Committee on Banking, Housing and Urban
Affairs to Accompany S. 249, S. Rep. No. 75, 94th Cong., 1st Sess.
30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding Partial Amendment No. 1 and whether the proposed
rule change should be approved or disapproved on or before December 17,
2019. Any person who wishes to file a rebuttal to any other person's
submission must file that rebuttal on or before December 23, 2019.
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number ICC-2019-010 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-ICC-2019-010. 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 (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filings will also be available for inspection
and copying at the principal office of ICE Clear Credit and on ICE
Clear Credit's website at https://www.theice.com/clear-credit/regulation. All comments received will be posted without change.
Persons submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-ICC-2019-010 and should be
submitted on or before December 17, 2019. If comments are received, any
rebuttal comments should be submitted on or before December 23, 2019.
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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-25968 Filed 11-29-19; 8:45 am]
BILLING CODE 8011-01-P