FR 2021-00096

Summary of the Document

The document is a notice from the Securities and Exchange Commission (SEC) regarding a proposed rule change by ICE Clear Credit LLC (ICC). The suggested change involves modifying the procedures for managing defaults among its clearing participants. Specifically, the proposal aims to adapt the process for convening the CDS (credit default swaps) Default Committee to allow for remote meetings via teleconference when in-person meetings are not possible. The changes include updates to the notification methods to ensure timely alerts during the default management process. The SEC is inviting public comments on these proposed amendments.

Significant Issues and Concerns

There are a few notable concerns with the document:

1. Complex Language: The document employs legal and financial terminology that might be difficult for those not familiar with such language. This can make the content less accessible to the general public.

2. References to Regulations: The proposal frequently references specific sections of financial regulations, which may require readers to do additional research to fully grasp the implications.

3. Detailed Operational Procedures: The description of the responsibilities and processes for convening the CDS Default Committee is quite detailed, posing challenges for those not familiar with financial clearinghouse operations.

4. Impact on Competition: The document acknowledges that changes should apply uniformly across all market participants, yet it does not elucidate how this will be ensured, leaving room for interpretation.

5. Lack of Evidence: While it claims there's no additional burden on competition, there are no specific examples or evidence to back this assurance.

Impact on the Public

Broadly, the proposed rule change aims to increase the efficiency of ICC's default management procedures by utilizing modern telecommunication tools. This ensures that financial markets can continue to function smoothly, even in extenuating circumstances such as the need for remote meetings. By promoting stable clearing operations, the changes may contribute to the robust functioning of financial markets. For the public, this stability translates to fewer disruptions in financial services that rely on these clearing operations, such as banking and investment operations.

Impact on Specific Stakeholders

For clearing participants, the rule change potentially offers greater flexibility and resilience in managing defaults. By formalizing remote participation in default management meetings, ICC is potentially reducing the geographical and logistical constraints that might hinder the prompt action in a financial crisis.

On the regulatory side, ensuring that processes are clearly defined and technologically adaptable could allow for more efficient regulatory oversight. This might lead to a faster response to financial disruptions, potentially safeguarding investor interests more effectively.

However, without detailed evidence or data demonstrating the lack of competitive burden, smaller market participants could still harbor concerns about disproportionate impacts or operational burdens being overlooked in such procedural changes.

Overall, these proposed adjustments seem likely to enhance ICC's operational resilience and maintain the integrity of its default management procedures in line with regulatory requirements, though additional clarifications may be necessary to fully eliminate stakeholder concerns.