81 FR 55254 - Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change To Revise the ICC Treasury Operations Policies and Procedures

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 160 (August 18, 2016)

Page Range		55254-55256
FR Document		2016-19688
Federal Register, Volume 81 Issue 160 (Thursday, August 18, 2016)
[Federal Register Volume 81, Number 160 (Thursday, August 18, 2016)]
[Notices]
[Pages 55254-55256]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-19688]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78566; File No. SR-ICC-2016-009]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change To Revise the ICC Treasury Operations 
Policies and Procedures

August 12, 2016.

I. Introduction

    On June 15, 2016, 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 (``Act'') \1\ 
and Rule 19b-4 thereunder,\2\ a proposed rule change to revise the ICC 
Treasury Operations Policies and Procedures to provide for the use of a 
committed foreign exchange (``FX'') facility, to make changes to the 
investment guidelines as well as additional clean-up changes, and to 
provide additional clarification regarding the calculation of 
collateral haircuts (SR-ICC-2016-009). The proposed rule change was 
published for comment in the Federal Register on June 30, 2016.\3\ The 
Commission did not receive comments on the proposed rule change. For 
the reasons discussed below, the Commission is approving the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-78205 (June 30, 
2016), 81 FR 44357 (July 7, 2016) (SR-ICC-2016-009).
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II. Description of the Proposed Rule Change

    ICC will revise its Treasury Operations Policies and Procedures to 
provide for the use of a committed FX facility. ICC has established a 
committed FX facility which provides for same day settled spot FX 
transactions. ICC represents that the facility allows ICC to use 
available United States Dollars (``USD'') to convert into Euro to meet 
a Euro liquidity need, for example in the

[[Page 55255]]

unlikely event of a Clearing Participant default when Euro is needed 
for liquidity but only USD is available. In addition, the policy will 
be revised to document that the FX facility will be tested twice a 
year.
    Additionally, ICC will revise its Treasury Operations Policies and 
Procedures to make changes to the ICC Treasury Department investment 
guidelines for operating capital, guaranty fund, and margin cash. ICC 
will update the list of permitted investments to add short term US 
Treasury securities (with a final maturity of no greater than 98 days) 
and remove Money Market Mutual Funds. ICC will also update its 
investment policy for operating capital to include Treasury/agency 
reverse repurchase (``repo'') agreements. ICC will update the 
governance section of the operating capital investment policy to note 
that the Risk Committee will review any proposed changes to the policy 
and make recommendations to the Board. Further, ICC will remove 
reference to an obsolete financial report.
    ICC will make additional clean-up changes throughout the Treasury 
Operations Policies and Procedures. Specifically, ICC will remove 
outdated language stating that ICC treasury services are provided by 
The Clearing Corporation. Further, throughout the document, ICC will 
change references to the ``Director of Operations'' to the ``Chief 
Operating Officer,'' to correctly reflect the officer title. ICC will 
remove reference to specific reverse repo counterparties to reflect the 
addition of multiple reverse repo counterparties. Further, ICC has 
noted that it has arrangements in place to settle tri-party and 
bilateral reverse repo transactions, both of which settle delivery vs. 
payment (``DVP''). As a result, ICC will clarify references throughout 
the policy from ``DVP reverse repo'' to more specifically refer to 
``bilateral reverse repo.'' ICC will remove reference to the titles of 
specific agreements that it may enter into to effect reverse repo 
transactions and add general language to encompass all agreements that 
may be required. ICC will remove information regarding the monitoring 
of available liquidity resources and add reference to the ICC Liquidity 
Risk Management Framework. ICC has clarified that its committed repo 
facility may be used to convert sovereign debt into cash and that the 
facility will be tested twice per calendar year. ICC will remove 
outdated information under the ``ICE Clear Credit Banking 
Relationships'' section of the policy and add language stating that ICC 
endeavors to maintain banking relationships with highly creditworthy 
and reliable bank institutions that provide operational and strategic 
support with respect to holding margin and guaranty fund cash and 
collateral. ICC also will remove references to specific banking 
counterparties, as ICC's banking relationships have expanded to include 
multiple counterparties. ICC will replace the specific names with a 
generic reference, to capture all counterparties utilized by ICC. ICC 
also will update certain SWIFT banking information throughout the 
policy. Further, ICC will update the list of applications used by the 
Treasury Department to perform daily operations.
    Finally, ICC will revise its Treasury Operations Policies and 
Procedures to provide additional clarification regarding the 
calculation of collateral haircuts when yield rates are less than or 
equal to one basis point. This change will document current ICC 
practices as related to collateral haircut calculation; there will be 
no change to the collateral haircut methodology.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \4\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if the 
Commission finds that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such self-regulatory organization. Section 17A(b)(3)(F) 
of the Act \5\ requires, among other things, that the rules of a 
clearing agency are designed to promote the prompt and accurate 
clearance and settlement of securities transactions and, to the extent 
applicable, derivative agreements, contracts, and transactions and to 
comply with the provisions of the Act and the rules and regulations 
thereunder.
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    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds that the proposed rule change is consistent 
with the requirements of Section 17A of the Act \6\ and the rules and 
regulations thereunder applicable to ICC. ICC asserts that the changes 
to provide for the use of a committed FX facility will enhance ICC's 
liquidity resources, and the changes to the investment guidelines will 
ensure the reliable investment of assets in ICC's control with minimal 
risk. ICC further asserts that the additional clean-up changes will 
ensure that the documentation of ICC's treasury arrangements remains 
up-to-date, clear, and transparent. Similarly, ICC represents that the 
additional clarification regarding the calculation of collateral 
haircuts will promote transparency of ICC's risk management practices 
as related to collateral haircuts. The Commission therefore believes 
that the proposed rule changes are designed to promote the prompt and 
accurate settlement of securities transactions and, to the extent 
applicable, derivatives agreements, contracts, and transactions, and to 
contribute to the safeguarding of customer funds and securities within 
the control of ICC in accordance with Section 17A(b)(3)(F) of the 
Act.\7\
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    \6\ 15 U.S.C. 78q-1.
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    In addition, the Commission finds that the proposed revisions to 
the ICC Treasury Operations Policies and Procedures are consistent with 
the relevant requirements of Rule 17Ad-22.\8\ In particular, the use of 
a committed FX facility is intended to further ensure that ICC 
maintains sufficient financial resources at all times to meet the 
requirements set forth in Rule 17Ad-22(b)(3).\9\ Additionally, the 
changes to the investment guidelines are aimed to minimize credit, 
market, and liquidity risks of investment arrangements. Such changes 
are therefore reasonably designed to meet the requirements of Rule 
17Ad-22(d)(3).\10\ Finally, the additional clean-up changes and 
clarification regarding the calculation of collateral haircuts are 
constructed to ensure ICC's governance arrangements to remain clear and 
transparent, consistent with the requirements of Rule 17Ad-
22(d)(8).\11\
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    \8\ 17 CFR 240.17Ad-22.
    \9\ 17 CFR 240.17Ad-22(b)(3).
    \10\ 17 CFR 240.17Ad-22(d)(3).
    \11\ 17 CFR 240.17Ad-22(d)(8).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \12\ and the 
rules and regulations thereunder.
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    \12\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\13\ that the proposed rule change (File No. SR-ICC-2016-009) be, 
and hereby is, approved.\14\
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    \13\ 15 U.S.C. 78s(b)(2).
    \14\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).


[[Page 55256]]


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19688 Filed 8-17-16; 8:45 am]
 BILLING CODE 8011-01-P
55254 Federal Register / Vol. 81, No. 160 / Thursday, August 18, 2016 / Notices

increased the contestability of that action is necessary or appropriate in the 2016–40, and should be submitted on or
market. While BDs have previously public interest, for the protection of before September 8, 2016.
published their proprietary data investors, or would otherwise further For the Commission, by the Division of
individually, Regulation NMS the purposes of the Act. If the Trading and Markets, pursuant to delegated
encourages market data vendors and Commission takes such action, the authority.21
BDs to produce proprietary products Commission shall institute proceedings Robert W. Errett,
cooperatively in a manner never before to determine whether the proposed rule Deputy Secretary.
possible. Multiple market data vendors should be approved or disapproved. [FR Doc. 2016–19687 Filed 8–17–16; 8:45 am]
already have the capability to aggregate
IV. Solicitation of Comments BILLING CODE 8011–01–P
data and disseminate it on a profitable
scale, including Bloomberg and Interested persons are invited to
Thomson Reuters. In Europe, Cinnober submit written data, views, and SECURITIES AND EXCHANGE
aggregates and disseminates data from arguments concerning the foregoing, COMMISSION
over 40 brokers and multilateral trading including whether the proposed rule
facilities.18 change is consistent with the Act. [Release No. 34–78566; File No. SR–ICC–
In this environment, a super- Comments may be submitted by any of 2016–009]
competitive increase in the fees charged the following methods:
for either transactions or data has the Self-Regulatory Organizations; ICE
Electronic Comments Clear Credit LLC; Order Approving
potential to impair revenues from both
products. ‘‘No one disputes that • Use the Commission’s Internet Proposed Rule Change To Revise the
competition for order flow is ‘fierce’.’’ comment form (http://www.sec.gov/ ICC Treasury Operations Policies and
NetCoalition I at 539. The existence of rules/sro.shtml); or Procedures
fierce competition for order flow • Send an email to rule-comments@ August 12, 2016.
implies a high degree of price sensitivity sec.gov. Please include File Number SR–
on the part of BDs with order flow, since BOX–2016–40 on the subject line. I. Introduction
they may readily reduce costs by Paper Comments On June 15, 2016, ICE Clear Credit
directing orders toward the lowest-cost LLC (‘‘ICC’’) filed with the Securities
trading venues. A BD that shifted its • Send paper comments in triplicate and Exchange Commission
order flow from one platform to another to Secretary, Securities and Exchange (‘‘Commission’’), pursuant to Section
in response to order execution price Commission, 100 F Street NE., 19(b)(1) of the Securities Exchange Act
differentials would both reduce the Washington, DC 20549–1090. of 1934 (‘‘Act’’) 1 and Rule 19b–4
value of that platform’s market data and All submissions should refer to File thereunder,2 a proposed rule change to
reduce its own need to consume data Number SR–BOX–2016–40. This file revise the ICC Treasury Operations
from the disfavored platform. If a number should be included on the Policies and Procedures to provide for
platform increases its market data fees, subject line if email is used. To help the the use of a committed foreign exchange
the change will affect the overall cost of Commission process and review your (‘‘FX’’) facility, to make changes to the
doing business with the platform, and comments more efficiently, please use investment guidelines as well as
affected BDs will assess whether they only one method. The Commission will additional clean-up changes, and to
can lower their trading costs by post all comments on the Commission’s provide additional clarification
directing orders elsewhere and thereby Internet Web site (http://www.sec.gov/ regarding the calculation of collateral
lessening the need for the more rules/sro.shtml). Copies of the haircuts (SR–ICC–2016–009). The
expensive data. submission, all subsequent proposed rule change was published for
amendments, all written statements comment in the Federal Register on
C. Self-Regulatory Organization’s
with respect to the proposed rule June 30, 2016.3 The Commission did not
Statement on Comments on the
change that are filed with the receive comments on the proposed rule
Proposed Rule Change Received From
Commission, and all written change. For the reasons discussed
Members, Participants, or Others
communications relating to the below, the Commission is approving the
No written comments were either proposed rule change between the proposed rule change.
solicited or received. Commission and any person, other than
those that may be withheld from the II. Description of the Proposed Rule
III. Date of Effectiveness of the Change
Proposed Rule Change and Timing for public in accordance with the
Commission Action provisions of 5 U.S.C. 552, will be ICC will revise its Treasury
available for Web site viewing and Operations Policies and Procedures to
The foregoing rule change has become printing in the Commission’s Public provide for the use of a committed FX
effective pursuant to Section Reference Room, 100 F Street NE., facility. ICC has established a
19(b)(3)(A)(ii) of the Exchange Act 19 Washington, DC 20549 on official committed FX facility which provides
and Rule 19b–4(f)(2) thereunder,20 business days between the hours of for same day settled spot FX
because it establishes or changes a due, 10:00 a.m. and 3:00 p.m. Copies of such transactions. ICC represents that the
or fee. filing also will be available for facility allows ICC to use available
At any time within 60 days of the inspection and copying at the principal United States Dollars (‘‘USD’’) to
filing of the proposed rule change, the office of the Exchange. All comments convert into Euro to meet a Euro
Commission summarily may
rmajette on DSK2TPTVN1PROD with NOTICES

received will be posted without change; liquidity need, for example in the
temporarily suspend the rule change if the Commission does not edit personal
it appears to the Commission that the identifying information from 21 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
18 See http://www.cinnober.com/boat-trade-
submissions. You should submit only
2 17 CFR 240.19b–4.
reporting.
information that you wish to make 3 Securities Exchange Act Release No. 34–78205
19 15 U.S.C. 78s(b)(3)(A)(ii). available publicly. All submissions (June 30, 2016), 81 FR 44357 (July 7, 2016) (SR–
20 17 CFR 240.19b–4(f)(2). should refer to File Number SR–BOX– ICC–2016–009).

VerDate Sep<11>2014 15:05 Aug 17, 2016 Jkt 238001 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 E:\FR\FM\18AUN1.SGM 18AUN1
55256 Federal Register / Vol. 81, No. 160 / Thursday, August 18, 2016 / Notices

For the Commission, by the Division of Percent The following areas have been
Trading and Markets, pursuant to delegated determined to be adversely affected by
authority.15 Non-Profit Organizations with- the disaster:
Robert W. Errett, out Credit Available Else- Primary Counties:
Deputy Secretary. where ..................................... 2.625 Ashland, Bayfield, Burnett, Douglas,
[FR Doc. 2016–19688 Filed 8–17–16; 8:45 am]
For Economic Injury: Florence, Iron, Sawyer, Washburn,
Businesses & Small Agricultural and the Bad River Band of the Lake
BILLING CODE 8011–01–P
Cooperatives without Credit
Available Elsewhere .............. 4.000
Superior Chippewa Tribe
Non-Profit Organizations with- The Interest Rates are:
SMALL BUSINESS ADMINISTRATION out Credit Available Else-
where ..................................... 2.625 Percent
[Disaster Declaration #14797 and #14798]
The number assigned to this disaster For Physical Damage:
California Disaster #CA–00250 Non-Profit Organizations with
for physical damage is 14797 5 and for
Credit Available Elsewhere ... 2.625
AGENCY: U.S. Small Business economic injury is 14798 0. Non-Profit Organizations with-
Administration. The State which received an EIDL out Credit Available Else-
ACTION: Notice. Declaration # is California. where ..................................... 2.625
(Catalog of Federal Domestic Assistance For Economic Injury:
SUMMARY: This is a notice of an Number 59008) Non-Profit Organizations with-
Administrative declaration of a disaster out Credit Available Else-
for the State of California dated 08/10/ Dated: August 10, 2016. where ..................................... 2.625
2016. Maria Contreras-Sweet,
Incident: Mission and 29th Street Administrator. The number assigned to this disaster
Fire. for physical damage is 14801B and for
[FR Doc. 2016–19761 Filed 8–17–16; 8:45 am]
Incident Period: 06/18/2016. economic injury is 14802B
BILLING CODE 8025–01–P
DATES: Effective Date: 08/10/2016. (Catalog of Federal Domestic Assistance
Physical Loan Application Deadline Number 59008)
Date: 10/11/2016. SMALL BUSINESS ADMINISTRATION James E. Rivera,
Economic Injury (EIDL) Loan Associate Administrator for Disaster
Application Deadline Date: 05/10/2017. [Disaster Declaration #14801 and #14802]
Assistance.
ADDRESSES: Submit completed loan Wisconsin Disaster #WI–00052 [FR Doc. 2016–19757 Filed 8–17–16; 8:45 am]
applications to: U.S. Small Business BILLING CODE 8025–01–P
Administration, Processing and AGENCY: U.S. Small Business
Disbursement Center, 14925 Kingsport Administration.
Road, Fort Worth, TX 76155. ACTION: Notice. SMALL BUSINESS ADMINISTRATION
FOR FURTHER INFORMATION CONTACT: A.
SUMMARY:This is a Notice of the [Disaster Declaration #14799 and #14800]
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration, Presidential declaration of a major
disaster for Public Assistance Only for Maryland Disaster #MD–00033
409 3rd Street SW., Suite 6050,
Washington, DC 20416. the State of WISCONSIN (FEMA–4276– AGENCY: U.S. Small Business
DR), dated 08/09/2016. Administration.
SUPPLEMENTARY INFORMATION: Notice is
Incident: Severe Storms and Flooding. ACTION: Notice.
hereby given that as a result of the Incident Period: 07/11/2016 through
Administrator’s disaster declaration, 07/12/2016. SUMMARY: This is a notice of an
applications for disaster loans may be Effective Date: 08/09/2016. Administrative declaration of a disaster
filed at the address listed above or other Physical Loan Application Deadline for the State of Maryland dated 08/10/
locally announced locations. Date: 10/11/2016. 2016.
The following areas have been Economic Injury (EIDL) Loan Incident: Heavy Rains and Flooding.
determined to be adversely affected by Application Deadline Date: 05/09/2017. Incident Period: 07/30/2016.
the disaster:
ADDRESSES: Submit completed loan DATES: Effective date: 08/10/2016.
Primary Counties: San Francisco. applications to: U.S. Small Business Physical Loan Application Deadline
Contiguous Counties: California: Administration, Processing and Date: 10/11/2016.
Alameda, Marin, San Mateo. Disbursement Center, 14925 Kingsport Economic Injury (EIDL) Loan
The Interest Rates are: Road, Fort Worth, TX 76155. Application Deadline Date: 05/10/2017.
FOR FURTHER INFORMATION CONTACT: A. ADDRESSES: Submit completed loan
Percent applications to: U.S. Small Business
Escobar, Office of Disaster Assistance,
For Physical Damage: U.S. Small Business Administration, Administration, Processing and
Homeowners with Credit Avail- 409 3rd Street SW., Suite 6050, Disbursement Center, 14925 Kingsport
able Elsewhere ...................... 3.250 Washington, DC 20416. Road, Fort Worth, TX 76155.
Homeowners without Credit SUPPLEMENTARY INFORMATION: Notice is FOR FURTHER INFORMATION CONTACT: A.
Available Elsewhere .............. 1.625 hereby given that as a result of the Escobar, Office of Disaster Assistance,
rmajette on DSK2TPTVN1PROD with NOTICES

Businesses with Credit Avail- U.S. Small Business Administration,
President’s major disaster declaration on
able Elsewhere ...................... 6.250 409 3rd Street SW., Suite 6050,
Businesses without Credit 08/09/2016, Private Non-Profit
Available Elsewhere .............. 4.000 organizations that provide essential
Washington, DC 20416.
Non-Profit Organizations with services of governmental nature may file SUPPLEMENTARY INFORMATION: Notice is
Credit Available Elsewhere ... 2.625 disaster loan applications at the address hereby given that as a result of the
listed above or other locally announced Administrator’s disaster declaration,
15 17 CFR 200.30–3(a)(12). locations. applications for disaster loans may be

VerDate Sep<11>2014 15:05 Aug 17, 2016 Jkt 238001 PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 E:\FR\FM\18AUN1.SGM 18AUN1
Document Created: 2016-08-17 23:46:34
Document Modified: 2016-08-17 23:46:34
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		81 FR 55254