Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change Related to the ICC Rule Enforcement Process for Missed Submissions, 73852-73853 [2015-29927]

Download as PDF 73852 Federal Register / Vol. 80, No. 227 / Wednesday, November 25, 2015 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76479; File No. SR–ICC– 2015–015] Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change Related to the ICC Rule Enforcement Process for Missed Submissions November 19, 2015. tkelley on DSK3SPTVN1PROD with NOTICES I. Introduction On September 30, 2015, 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 (SR–ICC–2015–015) to the ICC Clearing Rules (the ‘‘Rules’’) related to the ICC rule enforcement process for Missed Submissions. The proposed rule change was published for comment in the Federal Register on October 16, 2015.3 The Commission did not receive comments on the proposed rule change. For the reasons discussed below, the Commission is approving the proposed rule change. II. Description of the Proposed Rule Change As part of ICC’s end-of-day price discovery process, ICC Clearing Participants (‘‘CPs’’) are required to submit end-of-day prices for specific instruments related to their open interest at ICC, in accordance with Rule 404(b) and ICC Procedures. Failure of a CP to provide submissions required by ICC pursuant to Rule 404(b) and ICC Procedures constitute a Missed Submission. In order to provide incentive against Missed Submissions, ICC has adopted a summary assessment approach described in Rule 702(e) and Schedule 702 of the Rules. Currently, under Rule 702(e)(ii)(2), a CP may be eligible for a once-in-alifetime conditional waiver from such assessments if one or more Missed Submissions are the first instance(s) of a Missed Submission for the type of instrument (index or single name) and the CP provides adequate explanation of the cause and plans for remedial actions. Given the increased automation of price submissions, ICC recognizes that there may be circumstances, due to technological failures, which may result 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Securities Exchange Act Release No. 34–76122 (Oct. 9, 2015), 80 FR 62593 (Oct. 16, 2015) (SR– ICC–2015–015). 2 17 VerDate Sep<11>2014 19:15 Nov 24, 2015 Jkt 238001 in Missed Submissions. ICC also notes that, due to the significant length of time since the inception of the end-ofday process, many CPs have utilized their once-in-a-lifetime waiver. As such, ICC believes it is reasonable to provide, under limited circumstances, a conditional once-a-year waiver for such Missed Submissions caused by technical failures, as described below. ICC believes that such Rule changes will not affect the integrity and effectiveness of the end-of-day price discovery process. ICC believes such Rule changes provide a valuable and practical balance between the technicalities of the price discovery process and appropriate penalization for Missed Submissions. The proposed Rule text provides for the replacement of ICC’s current oncein-a-lifetime waiver for Missed Submissions with a conditional once-ayear waiver for Missed Submissions caused by technical failures. Under revised Rule 702(e)(ii)(2), a CP would be eligible for one waiver per year for single name Missed Submissions, and one waiver per year for index Missed Submissions. A CP may request such wavier(s) be applied against all Missed Submissions for a given instrument class on a given day. CPs would be required to provide documentation with a waiver request, explaining that the root-cause of the Missed Submission was a technology issue and including a remediation plan to fix the cause of the Missed Submission. ICC states that it would review and evaluate the waiver request and accept unless it had legitimate concerns that the root-cause of the Missed Submission had not been adequately identified, was not due to a technical issue, and/or would not be corrected by the provided remediation plan. ICC would maintain its current ability to provide waivers for Missed Submissions deemed to be due to extraordinary circumstances outside of a CP’s control, as set forth in Rule 702(e)(ii)(3). Pending regulatory approval, ICC plans to implement these changes on January 1, 2016, and apply the once-a-year waiver to the 2016 calendar year, and each calendar year going forward. ICC represents that there are no changes to ICC policies and procedures as a result of the Rule changes. 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 4 15 PO 00000 U.S.C. 78s(b)(2)(C). Frm 00155 Fmt 4703 Sfmt 4703 consistent with the requirements of the Act and the rules and regulations thereunder applicable to such selfregulatory 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. Section 17A(b)(3)(G) of the Act 6 requires that rules the of the clearing agency provide that its participants shall be appropriately disciplined for violation of any provision of the rules of the clearing agency, including through the use of fines or any other fitting sanctions. Furthermore, Section 17A(b)(3)(H) of the Act 7 requires, among other things, that rules the of the clearing agency, in general, provide a fair procedure with respect to the disciplining of participants. The Commission finds that the proposed rule change is consistent with the requirements of Section 17A of the Act 8 and the rules and regulations thereunder applicable to ICC. The proposed rule change would replace ICC’s current once-in-a-lifetime waiver for Missed Submissions, which has already been utilized by many of ICC’s CPs, with a conditional once-a-year waiver for Missed Submissions (one waiver each for single name and index Missed Submissions) caused by technical failures. The proposed rule change also provides details surrounding the process by which CPs can request such conditional waivers and ICC’s review and evaluation of each request. The Commission believes that allowing for a once-per-year waiver for technical failures causing Missed Submissions is appropriate given the increased automation of end-of-day price submissions and is reasonably designed to maintain the integrity of ICC’s end-of-day pricing process, thereby promoting the prompt and accurate clearance and settlement of securities transactions and, to the extent applicable, derivative agreements, contracts, and transactions in accordance with Section 17A(b)(3)(F) of the Act.9 Additionally, the Commission believes that allowing for a once-peryear conditional waiver for technical failures in the summary assessment process for Missed Submissions is designed to ensure that CPs are 5 15 U.S.C. 78q–1(b)(3)(F). U.S.C. 78q–1(b)(3)(G). 7 15 U.S.C. 78q–1(b)(3)(H). 8 15 U.S.C. 78q–1. 9 15 U.S.C. 78q–1(b)(3)(F). 6 15 E:\FR\FM\25NON1.SGM 25NON1 Federal Register / Vol. 80, No. 227 / Wednesday, November 25, 2015 / Notices appropriately disciplined for violations of ICC’s rules consistent with Section 17A(b)(3)(G) of the Act.10 The Commission also finds that the proposed process for the requesting and review of the conditional waivers is reasonably designed to provide for a fair procedure with respect to the disciplining of CPs for Missed Submissions in accordance with Section 17A(b)(3)(H) of the Act.11 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. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,13 that the proposed rule change (File No. SR–ICC– 2015–015) be, and hereby is, approved.14 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Brent J. Fields, Secretary. [FR Doc. 2015–29927 Filed 11–24–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76483; File No. SR–FINRA– 2015–047] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change To Adopt FINRA Rule 6191(a) To Implement the Quoting and Trading Requirements of the Regulation NMS Plan To Implement a Tick Size Pilot Program November 19, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 13, 2015, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, 10 15 U.S.C. 78q–1(b)(3)(G). U.S.C. 78q–1(b)(3)(H). 12 15 U.S.C. 78q–1. 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). 15 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. and III below, which Items have been prepared by FINRA. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to adopt FINRA Rule 6191 to implement the quoting and trading requirements of the Regulation NMS Plan to Implement a Tick Size Pilot Program (‘‘Plan’’). The text of the proposed rule change is available on FINRA’s Web site at https://www.finra.org, at the principal office of FINRA and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On August 25, 2014, NYSE Group, Inc., on behalf of Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’), BATS Exchange, Inc., BATS YExchange, Inc., Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, the Nasdaq Stock Market LLC, New York Stock Exchange LLC (‘‘NYSE’’), NYSE MKT LLC, and NYSE Arca, Inc. (collectively ‘‘Participants’’), filed with the Commission, pursuant to Section 11A of the Act 3 and Rule 608 of Regulation NMS thereunder, the Plan to implement a tick size pilot program (‘‘Pilot’’).4 The Participants filed the Plan to comply with an order issued by the Commission on June 24, 2014.5 The Plan 6 was tkelley on DSK3SPTVN1PROD with NOTICES 11 15 VerDate Sep<11>2014 19:15 Nov 24, 2015 Jkt 238001 3 15 U.S.C. 78k–1. Letter from Brendon J. Weiss, Vice President, Intercontinental Exchange, Inc., to Secretary, Commission, dated August 25, 2014. 5 See Securities Exchange Act Release No. 72460 (June 24, 2014), 79 FR 36840 (June 30, 2014). 6 Unless otherwise specified, capitalized terms used in this rule filing are defined as set forth in the Plan. FINRA also proposes supplementary 4 See PO 00000 Frm 00156 Fmt 4703 Sfmt 4703 73853 published for comment in the Federal Register on November 7, 2014, and approved by the Commission, as modified, on May 6, 2015.7 The Plan is designed to allow the Commission, market participants, and the public to study and assess the impact of increment conventions on the liquidity and trading of the common stocks of small-capitalization companies. Each Participant is required to comply with, and to enforce compliance by its members, as applicable, with the provisions of the Plan. As is described more fully below, the proposed rules would require members to comply with the applicable quoting and trading increments for Pilot Securities.8 The Pilot Securities will include stocks of companies with $3 billion or less in market capitalization, an average daily trading volume of one million shares or less, and a volume weighted average price of at least $2.00 for every trading day. The Pilot will consist of a Control Group of approximately 1400 Pilot Securities and three test groups with 400 Pilot Securities in each selected by a stratified sampling.9 During the pilot, Pilot securities in the Control Group will be quoted and traded at the currently permissible increments. Pilot Securities in the first test group (‘‘Test Group One’’) will be quoted in $0.05 minimum increments but will continue to trade at any price increment that is currently permitted.10 Pilot Securities in the second test group (‘‘Test Group Two’’) will be quoted in $0.05 minimum increments and will trade at $0.05 minimum increments subject to a midpoint exception, a retail investor order exception, and a negotiated trade exception.11 Pilot Securities in the third test group (‘‘Test Group Three’’) will be subject to the same restrictions as Test Group Two and also will be subject to the ‘‘Tradeat’’ requirement to prevent price matching by a market participant that is not displaying at the price of a Trading material as part of this proposed rule change to, among other things, provide that the terms used in proposed Rule 6191 shall have the same meaning as provided in the Plan, unless otherwise specified. 7 See Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27514 (May 13, 2015) (‘‘Approval Order’’). 8 Proposed Rule 6191 shall be in effect during a pilot period to coincide with the pilot period for the Plan (including any extensions to the pilot period for the Plan). 9 See Section V of the Plan for identification of Pilot Securities, including criteria for selection and grouping. 10 See Section VI(B) of the Plan. 11 See Section VI(C) of the Plan. E:\FR\FM\25NON1.SGM 25NON1

Agencies

[Federal Register Volume 80, Number 227 (Wednesday, November 25, 2015)]
[Notices]
[Pages 73852-73853]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-29927]



[[Page 73852]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76479; File No. SR-ICC-2015-015]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change Related to the ICC Rule Enforcement 
Process for Missed Submissions

November 19, 2015.

I. Introduction

    On September 30, 2015, 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 (SR-ICC-2015-015) 
to the ICC Clearing Rules (the ``Rules'') related to the ICC rule 
enforcement process for Missed Submissions. The proposed rule change 
was published for comment in the Federal Register on October 16, 
2015.\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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-76122 (Oct. 9, 2015), 
80 FR 62593 (Oct. 16, 2015) (SR-ICC-2015-015).
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II. Description of the Proposed Rule Change

    As part of ICC's end-of-day price discovery process, ICC Clearing 
Participants (``CPs'') are required to submit end-of-day prices for 
specific instruments related to their open interest at ICC, in 
accordance with Rule 404(b) and ICC Procedures. Failure of a CP to 
provide submissions required by ICC pursuant to Rule 404(b) and ICC 
Procedures constitute a Missed Submission. In order to provide 
incentive against Missed Submissions, ICC has adopted a summary 
assessment approach described in Rule 702(e) and Schedule 702 of the 
Rules.
    Currently, under Rule 702(e)(ii)(2), a CP may be eligible for a 
once-in-a-lifetime conditional waiver from such assessments if one or 
more Missed Submissions are the first instance(s) of a Missed 
Submission for the type of instrument (index or single name) and the CP 
provides adequate explanation of the cause and plans for remedial 
actions.
    Given the increased automation of price submissions, ICC recognizes 
that there may be circumstances, due to technological failures, which 
may result in Missed Submissions. ICC also notes that, due to the 
significant length of time since the inception of the end-of-day 
process, many CPs have utilized their once-in-a-lifetime waiver. As 
such, ICC believes it is reasonable to provide, under limited 
circumstances, a conditional once-a-year waiver for such Missed 
Submissions caused by technical failures, as described below. ICC 
believes that such Rule changes will not affect the integrity and 
effectiveness of the end-of-day price discovery process. ICC believes 
such Rule changes provide a valuable and practical balance between the 
technicalities of the price discovery process and appropriate 
penalization for Missed Submissions.
    The proposed Rule text provides for the replacement of ICC's 
current once-in-a-lifetime waiver for Missed Submissions with a 
conditional once-a-year waiver for Missed Submissions caused by 
technical failures. Under revised Rule 702(e)(ii)(2), a CP would be 
eligible for one waiver per year for single name Missed Submissions, 
and one waiver per year for index Missed Submissions. A CP may request 
such wavier(s) be applied against all Missed Submissions for a given 
instrument class on a given day. CPs would be required to provide 
documentation with a waiver request, explaining that the root-cause of 
the Missed Submission was a technology issue and including a 
remediation plan to fix the cause of the Missed Submission. ICC states 
that it would review and evaluate the waiver request and accept unless 
it had legitimate concerns that the root-cause of the Missed Submission 
had not been adequately identified, was not due to a technical issue, 
and/or would not be corrected by the provided remediation plan. ICC 
would maintain its current ability to provide waivers for Missed 
Submissions deemed to be due to extraordinary circumstances outside of 
a CP's control, as set forth in Rule 702(e)(ii)(3). Pending regulatory 
approval, ICC plans to implement these changes on January 1, 2016, and 
apply the once-a-year waiver to the 2016 calendar year, and each 
calendar year going forward. ICC represents that there are no changes 
to ICC policies and procedures as a result of the Rule changes.

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. Section 
17A(b)(3)(G) of the Act \6\ requires that rules the of the clearing 
agency provide that its participants shall be appropriately disciplined 
for violation of any provision of the rules of the clearing agency, 
including through the use of fines or any other fitting sanctions. 
Furthermore, Section 17A(b)(3)(H) of the Act \7\ requires, among other 
things, that rules the of the clearing agency, in general, provide a 
fair procedure with respect to the disciplining of participants.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
    \6\ 15 U.S.C. 78q-1(b)(3)(G).
    \7\ 15 U.S.C. 78q-1(b)(3)(H).
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    The Commission finds that the proposed rule change is consistent 
with the requirements of Section 17A of the Act \8\ and the rules and 
regulations thereunder applicable to ICC. The proposed rule change 
would replace ICC's current once-in-a-lifetime waiver for Missed 
Submissions, which has already been utilized by many of ICC's CPs, with 
a conditional once-a-year waiver for Missed Submissions (one waiver 
each for single name and index Missed Submissions) caused by technical 
failures. The proposed rule change also provides details surrounding 
the process by which CPs can request such conditional waivers and ICC's 
review and evaluation of each request. The Commission believes that 
allowing for a once-per-year waiver for technical failures causing 
Missed Submissions is appropriate given the increased automation of 
end-of-day price submissions and is reasonably designed to maintain the 
integrity of ICC's end-of-day pricing process, thereby promoting the 
prompt and accurate clearance and settlement of securities transactions 
and, to the extent applicable, derivative agreements, contracts, and 
transactions in accordance with Section 17A(b)(3)(F) of the Act.\9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78q-1.
    \9\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Additionally, the Commission believes that allowing for a once-per-
year conditional waiver for technical failures in the summary 
assessment process for Missed Submissions is designed to ensure that 
CPs are

[[Page 73853]]

appropriately disciplined for violations of ICC's rules consistent with 
Section 17A(b)(3)(G) of the Act.\10\ The Commission also finds that the 
proposed process for the requesting and review of the conditional 
waivers is reasonably designed to provide for a fair procedure with 
respect to the disciplining of CPs for Missed Submissions in accordance 
with Section 17A(b)(3)(H) of the Act.\11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78q-1(b)(3)(G).
    \11\ 15 U.S.C. 78q-1(b)(3)(H).
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\13\ that the proposed rule change (File No. SR-ICC-2015-015) 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).

    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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Brent J. Fields,
Secretary.
[FR Doc. 2015-29927 Filed 11-24-15; 8:45 am]
BILLING CODE 8011-01-P
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