October 6, 2025

Ms. Vanessa Countryman
Secretary
US Securities and Exchange Commission
100 F Street NE
Washington, D.C. 20549-1090

Re: SEC “Notice of Filing of an Application for Registration as a Clearing Agency Under Section 17A of the Securities Exchange Act of 1934” [Release No. 34-103727; File No. 600-45]

Dear Ms. Countryman:

The Asset Management Group of the Securities Industry and Financial Markets Association (“SIFMA AMG”)¹, the Securities Industry and Financial Markets Association (“SIFMA”)² and the Investment Company Institute (“ICI”³ and collectively, the “Associations”) appreciate the opportunity to provide comments to the Securities and Exchange Commission (“SEC”) in response to the above-referenced application (the “Application”) from ICE Clear Credit LLC (“ICC”).⁴ The Associations have been active in commenting on the various aspects of the initiative to enhance the overall resilience of the U.S. Treasury securities market and wish to continue their engagement with the SEC and market participants to forge the best path forward for the industry. The addition of new covered clearing agencies (“CCAs”) will facilitate access for a broader range of participants and trades and should help address the requirement that direct participants of CCAs submit their eligible secondary market transactions in U.S. Treasury securities for clearing and settlement.⁵

While the Associations strongly support the entry of new CCAs and believe the addition of ICC as a CCA will provide market access for more participants, they have certain concerns with the Application and believe that key issues in the rules proposed thereunder (the “Proposed Rules”) should be addressed. When it is suggested that the “Proposed Rules” incorporate or change certain terms, it is intended that these changes be incorporated into the next iteration of the rules submitted in the Application. Terms used but not defined herein shall have the meaning given to such terms in the Proposed Rules.

Executive Summary

In many instances, the gaps or areas requiring clarification that the Associations flag below are due to the fact that, as expressed to the Associations in discussions with ICC, the Proposed Rules are still under development with respect to repurchase transactions (as opposed to cash trades).

While it is understood that this is an evolving space, the Associations strongly believe that the issues addressed in this letter are critical for risk, regulatory and operational management and do need to be more thoroughly considered before clearing through the ICC service can begin. Broadly, the key areas of concern include treatment of and calculation of margin, rights of Non-Participant Parties (“NPPs”) in a structure where they are not ICC members and have no privity of contract, and more clarity on the rights granted to NPPs in the event of a Treasury Participant (“Participant”) default or failure.

The Associations note that they reserve the right to provide further comments as the Proposed Rules continue to be developed by ICC, and that they encourage ICC to continue its engagement with the Associations as ICC builds out its offering.

Discussion

I. Margin

a. The Proposed Rules should implement a collateral-in-lieu structure

The Associations strongly support the implementation of a collateral-in-lieu model similar to the one proposed by Fixed Income Clearing Corporation (“FICC”).⁶ This type of structure would leverage the haircut typically posted by Participants to registered money market fund NPPs and other cash investors in tri-party arrangements via a lien in favor of ICC that is applied instead of a guaranty of the NPP’s performance and instead of an NPP’s posting of margin directly to ICC. This would allow compliance by registered fund NPPs with the collateralization requirements they are subject to under the Investment Company Act of 1940, as amended (the “1940 Act”), as applicable, and would solve for the risk that Participants would be “double-margining” when they post initial margin for the trades on behalf of NPPs in addition to satisfying the over-collateralization requirement for the relevant NPP.

While ICC has indicated to the Associations that the ICC is in favor of and plan to implement such a structure, this has not been incorporated into the Proposed Rules (in relation to the Gross IM Accounts) and the Associations encourage doing so to provide a clearer framework for market participants.

b. The Proposed Rules should have clearer account structure provisions

It will be critical for market participants to understand where Pledged Items will be held, how any third-party custodian or clearing bank will play a role in holding such Pledged Items, and how such Pledged Items will be treated in the event of a Participant default. Details on the account structure are also necessary to determine whether ICC acts as a securities intermediary, and how perfection of security interests over such accounts will take place. These details are not currently addressed in the Proposed Rules and is critical to ensure that security interests are set up appropriately and minimal disruption in the event of a Participant default. The Associations note that ICC has conducted an accounting study addressing many of these points⁷ ; however, there are several points in this study that are not reflected in the Proposed Rules at this time.

The Associations cannot comment on account structure in the Proposed Rules at this time because sufficient detail has not been provided, but they welcome the opportunity to provide feedback to ICC on these points, including in particular on the structure that SEC-regulated investment company NPPs will require.

c. The Proposed Rules should clarify that any security interest granted to ICC in Pledged Items does not conflict with the requirement that NPPs that are registered funds must have a fallback interest in such securities

This request is being made by the Associations in order to ensure that an NPP that is a registered fund has a security interest in the collateral as required under Rule 5b-3 under the 1940 Act. The Associations note that “applicable law” is referenced in the granting provisions of the Proposed Rules, but it is not made sufficiently clear that this includes the 1940 Act provisions (as “applicable law” does not appear to be defined).

In addition, the Associations recommend that the Proposed Rules structure the grant of the security interest to ICC as a “springing” security interest, similar to the structure of the security interest granted under the Master Repurchase Agreement. This approach has the benefit of only applying the security interest, and avoiding the complications associated with the regulatory overlay of doing so, in the event that a repurchase agreement is characterized as a loan.

d. More clarity is required in the explanation of how Variation Payment requirements are calculated by ICC, with clarification that the marking-to-market is not with respect to Open Positions (that is, the repurchase trade) but rather with respect to the Pledged Items

The Proposed Rules, and in particular Rule 404(a)(i), characterize the Variation Payment Requirement as the “change in value of each Open Position … determined by [ICC] by the comparison of the most recent Mark-to-Market Price for the relevant Continuing Open Position to the Mark-to-Market Price as of the preceding ICE Business Day …”. Although in discussions, ICC has indicated that it intends to follow market practice, the approach in Rule 404(a)(i) does not appear to do so with respect to the tri-party repurchase agreement space, where collateral is transferred to account for changes in the value of posted collateral rather than the trade. The methodology proposed in Rule 404(a)(i) would pose tremendous costs to lenders in the event of a spike in rates, which would be contrary to the goals of the Final Rule.

e. The Associations urge ICC to consider cross-margining models

The Proposed Rules as currently drafted do not appear to contain optional cross-margining provisions either across product types or across clearing agencies. Cross-margining is beneficial to market participants and furthers the policy goals of the Final Rule in reduction of systemic risk, and the Associations urge ICC to consider future implantation of such models as it revises the Proposed Rules.

f. The Associations request two points of clarification with respect to intraday margin

The Proposed Rules require margin to be collected from Participants at business open based on the calculation from the prior ICE Business Day. Rule 401(a)(ii) specifies that intraday margin needs to be delivered by Participants within one hour of notice; however, it is not made clear that margin calls affecting NPPs will similarly need to be satisfied within one hour. Acknowledging that the contractual requirements relating to delivery of margin from the NPP to the Participant will need to be documented outside the Proposed Rules, the Associations nevertheless request clarity on the timing obligations relating to NPP positions.

The Associations also request that the SEC staff confirm that prefunding of intraday margin and repayment of such prefunded amount to a Participant by an NPP is consistent with the no-action relief provided by the SEC staff in the adopting release to the Final Rule.

1. SIFMA AMG brings the asset management community together to provide views on U.S. and global policy and to create industry best practices. SIFMA AMG’s members represent U.S. and global asset management firms whose combined assets under management exceed $45 trillion. The clients of SIFMA AMG member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and private funds, such as hedge funds and private equity funds. [↩]
2. SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association. For more information, visit http://www.sifma.org. [↩]
3. The Investment Company Institute (ICI) is the leading association representing the asset management industry in service of individual investors. ICI’s members include mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts (UITs) in the United States, and UCITS and similar funds offered to investors in other jurisdictions. Its members manage $41.5 trillion invested in funds registered under the US Investment Company Act of 1940, serving more than 120 million investors. Members manage an additional $9.7 trillion in regulated fund assets managed outside the United States. ICI also represents its members in their capacity as investment advisers to collective investment trusts (CITs) and retail separately managed accounts (SMAs). ICI has offices in Washington DC, Brussels, and London. [↩]
4. Notice of Filing of an Application for Registration as a Clearing Agency under Section 17A of the Securities Exchange Act of 1934 (Aug. 18, 2025), available here. [↩]
5. Standards for Covered Clearing Agencies for U.S. Treasury Securities and Application of the Broker-Dealer Customer Protection Rule with Respect to U.S. Treasury Securities, Release No. 34-99149, 89 FR 2714 (December 13, 2023) (available here) (the “Final Rule”). [↩]
6. Filing available here. [↩]
7. The following document was provided to the Associations: Accounting Considerations for Participants of ICE
   Clear Credit U.S. Treasury Security Clearing Services, Version 1, February 26, 2025. [↩]