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Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Notices ICC also proposes changes to Section 7 CDS Default Committee Consultation. The proposed changes reference ICCs ability to convene the CDS Default Committee remotely.
Amended Subsection 7.1 Convening a CDS Default Committee Meeting formalizes the process for convening a CDS Default Committee for Remote Trader Consultation, including the procedure for the CRO to request that ICCs Risk Department will provide the notice via email to CDS Default Committee members and what information is included in the notice.
The changes also specify the particular email contents and other actions that would be taken for convening the CDS
Default Committee at the Secure Trading Facility or by Remote Trader Consultation, respectively, or by either means. Amended Subsection 7.3 Initial CDS Default Committee Meeting specifies that ICCs provision of access to the cleared portfolios of defaulting CPs are conducted where technologically practicable during the initial CDS Default Committee meeting.
Current Subsection 7.3 does not contain the phrase where technologically practicable. In addition, amended Subsection 7.3 makes minor grammatical updates, including adding a parenthetical and updating the sentence structure for clarity.
III. Commission Findings Section 19b2C of the Act directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to the organization presenting it.7 For the reasons given below, the Commission finds that the proposed rule change is consistent with Section 17Ab3F of the Act 8 and Rules 17Ad22e2i, e2v, and e13 thereunder.9
A. Consistency With Section 17Ab3F of the Act Section 17Ab3F of the Act requires, among other things, that the rules of ICC 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 7 15

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responsible, and, in general, to protect investors and the public interest.10
The Commission believes that, by clarifying ICCs process for convening remote meetings of its CDS Default Committee and updating its default notification procedures to regulators and CP trading and compliance personnel, the proposed rule change should enhance ICCs ability to manage the risks associated with a CP default and the timely close-out of the defaulters CDS portfolio. Specifically, the Commission believes that, by including explicit authorization and instructions for the CRO to convene the CDS Default Committee for Remote Trader Consultation via teleconference if circumstances prevent the CDS
Default Committee from meeting in person, the proposed rule change would enhance the ability of ICC to respond promptly to the risks posed by a given CP default situation and would provide particular processes for addressing a default via a Remote Trader Consultation. Likewise, the Commission believes that, by including updated notification procedures related to a CP
default, ICCs relevant stakeholders, such as the CDS Default Committee members, CP trading and compliance personnel, and regulators, would be better informed of the status of a CP
default situation, thus facilitating their ability to participate in the default management process as needed and provide prompt and responsive feedback.
Therefore, the Commission believes that the proposed rule change generally should provide ICC with enhanced clarity, efficiency and flexibility in how it manages and responds to the risks of CP defaults, which in turn should help ICC maintain its resilience in the event of a default. By improving ICCs ability to manage a CP default, the Commission believes that the proposed rule change should also improve ICCs ability to avoid losses that could result from a CP
default. The Commission further believes that such losses, if not properly managed, could hinder ICCs ability to continue operations and therefore clear and settle securities transactions and safeguard securities and funds in its custody or control. Therefore, for these reasons, the Commission finds that the proposed rule change should promote the prompt and accurate clearance and settlement of securities transactions and assure the safeguarding of securities and funds in ICCs custody and control, consistent with the Section 17Ab3F
of the Act.11

B. Consistency With Rules 17Ad 22e2i and v Rules 17Ad22e2i and v require, in relevant part, that ICC
establish, implement, maintain, and enforce written policies and procedures reasonably designed to provide for governance arrangements that are clear and transparent and that specify clear and direct lines of responsibility.12
The Commission believes that the proposed rule changes revisions to assign clear and updated responsibilities to the CRO and CCO
during each phase of the default declaration process in the Default Management Procedures provide for governance arrangements that are clear and transparent and that specify clear and direct lines of responsibility.
Specifically, the proposed rule change would update and clarify the CCOs predeclaration, default declaration, and post-declaration notification responsibilities, so that information is imparted to all relevant stakeholders.
Further, the proposed rule change would update and clarify the CROs post-declaration responsibilities, including documenting the CROs decision-making authority and actions for convening the CDS Default Committee at either an in-person meeting at the Secure Trading Facility or via Remote Trader Consultation by teleconference, depending on the circumstances at the time of the default declaration. In the Commissions view, including these responsibilities should ensure that the relevant stakeholders have clear and transparent information on their respective roles and responsibilities at each phase of the default management process.
Accordingly, the Commission believes that the proposed revisions to the Default Management Procedures are reasonably designed to provide for governance arrangements that are clear and transparent and that specify clear and direct lines of responsibility, consistent with Rules 17Ad22e2i and v.13
C. Consistency With Rule 17Ad 22e13
Rule 17Ad22e13 requires ICC to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure that 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
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