Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change To Revise End-of-Day Price Discovery Policies and Procedures, 41710-41711 [2014-16785]
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Federal Register / Vol. 79, No. 137 / Thursday, July 17, 2014 / Notices
pmangrum on DSK3VPTVN1PROD with NOTICES
deposit may include an LC issued by
any one of these non-U.S. institutions.5
Pursuant to review and analysis
performed by OCC’s Risk Committee,
OCC is applying the existing
concentration limits related to the
deposit of LCs, as set forth in OCC Rule
604, Interpretation and Policy .02,
applicable to all margin deposits of LCs
regardless of issuer. As a result of this
change, no more than 50% of a clearing
member’s margin on deposit may
include LCs and no more than 20% of
a clearing member’s margin may include
an LC from a single issuer. This change
is intended to reduce OCC’s overall
credit risk exposure to LCs deposited as
margin by a single clearing member and
the potential adverse consequences
should an LC issuer not perform upon
its payment commitment after receiving
a demand for payment.
OCC believes that the rule change will
have a minimal impact on its clearing
members because LCs comprise less
than one percent of OCC’s total margin
deposits and are currently used by only
13 clearing members. OCC estimates
that the proposal will impact three
clearing members and .13% of OCC’s
total margin deposits. Each of these
three clearing members has been
advised by OCC of the proposed change
and OCC stated that all of the affected
clearing members have indicated that
they will be able to modify its margin
deposit practices to reduce its LC
deposits without undue difficulty.
OCC has indicated that prior to
implementation of this rule change it
will publish an information
memorandum to inform all clearing
members of the rule change. In addition,
OCC stated that it contacted clearing
members with LCs on deposit that are
directly affected by the filing and all
clearing members will have access to
information, as necessary, to better
understand any potential impact the
proposed rule change may have on their
margin deposits at OCC.
III. Discussion
Section 19(b)(2)(C) of the Act 6 directs
the Commission to approve a selfregulatory organization’s proposed rule
change if the Commission finds that
such proposed rule change is consistent
with the requirements of the Act and the
rules and regulations thereunder
applicable to such organization. Section
17A(b)(3)(F) of the Act 7 requires, among
other things, that the rules of a clearing
agency are designed to promote the
prompt and accurate clearance and
5 Id.
6 15
7 15
U.S.C. 78s(b)(2)(C).
U.S.C. 78q–1(b)(3)(F).
VerDate Mar<15>2010
15:01 Jul 16, 2014
Jkt 232001
settlement of securities transactions and
to the extent applicable derivative
agreements, contracts and transactions,
and to assure the safeguarding of
securities and funds which are in the
custody or control of the clearing agency
or for which it is responsible.
The Commission finds that the
proposed rule change to enhance
concentration limits related to deposits
of LC and making those limits
applicable to all LC is consistent with
Section 17A(b)(3)(F) of the Act.8 The
Commission believes the limitations on
the concentration of LC as margin
deposits generally and the concentration
of LCs by a particular issuer should
reduce the credit risk and settlement
risk to OCC associated with LCs as
margin deposits by reducing the risk
that an LC issuer would not be able to
provide funds to OCC to close out a
defaulting clearing member’s positions.
By reducing the risk that OCC will not
be able to use the deposited LC in the
event of a clearing member default, the
limitations promote the prompt and
accurate clearance and settlement of
securities transactions and other
transactions by OCC and help OCC
assure the safeguarding of securities and
funds which are in its custody or
control or for which it is responsible.9
IV. Conclusion
On the basis of the foregoing, the
Commission concludes that the
proposal is consistent with the
requirements of the Act, particularly the
requirements of Section 17A of the
Act,10 and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,11 that the
proposed rule change (File No. SR–
OCC–2014–12) be and hereby is
APPROVED.12
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–16786 Filed 7–16–14; 8:45 am]
BILLING CODE 8011–01–P
U.S.C. 78q–1(b)(3)(F).
id.
10 15 U.S.C. 78q–1.
11 15 U.S.C. 78s(b)(2).
12 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).
13 17 CFR 200.30–3(a)(12).
PO 00000
8 15
9 See
Frm 00041
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72596; File No. SR–ICC–
2014–07]
Self-Regulatory Organizations; ICE
Clear Credit LLC; Order Approving
Proposed Rule Change To Revise Endof-Day Price Discovery Policies and
Procedures
July 11, 2014.
I. Introduction
On May 22, 2014, ICE Clear Credit
LLC (‘‘ICC’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change SR–ICC–2014–07 pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder.2 The proposed rule
change was published for comment in
the Federal Register on June 10, 2014.3
The Commission received no comment
letters regarding the proposed change.
For the reasons discussed below, the
Commission is granting approval of the
proposed rule change.
II. Description
ICC is proposing to amend the ICC
End-of-Day Price Discovery Policies and
Procedures (‘‘EOD Pricing Policy’’) to
revise the expectations surrounding the
unwind of any Firm Trade transaction.
ICC contends that the proposed
revision to ICC’s EOD Pricing Policy is
intended to make the policy more
readily enforceable, while maintaining
the same or similar level of incentive for
ICC Clearing Participants to provide
quality price submissions.
ICC contends that ICC Clearing
Participants (‘‘CPs’’) may be required
from time to time, under the ICC EOD
Pricing Policy, to enter into trades with
other CPs as part of the ICC end-of-day
price discovery process (‘‘Firm Trade’’).
ICC contends that it does not require
CPs to maintain Firm Trades as
outstanding positions for any particular
length of time. Prior to the operation of
this proposed rule change, ICC has
stated that the ICC EOD Pricing Policy
requires CPs that elect to unwind a Firm
Trade to do so ‘‘at the then-current
market price.’’ ICC contends that there
are practical difficulties with objectively
determining whether an unwind
transaction was executed at the ‘‘thencurrent market price’’ and therefore
such policy is difficult to enforce. ICC
proposes via this rule change to revise
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Securities Exchange Act Release No. 34–72306
(June 4, 2014), 79 FR 33243 (June 10, 2014) (SR–
ICC–2014–07).
2 17
E:\FR\FM\17JYN1.SGM
17JYN1
Federal Register / Vol. 79, No. 137 / Thursday, July 17, 2014 / Notices
pmangrum on DSK3VPTVN1PROD with NOTICES
the ICC EOD Pricing Policy to replace
references to the ‘‘then-current market
price’’ with the requirement that
unwind transactions be executed in a
competitive manner. Further, ICC
proposes via this rule change to add the
requirement that, upon request, CPs be
able to demonstrate to ICC’s satisfaction
that such unwind transaction was
executed in a competitive manner.
Additionally, ICC proposes to add a
non-exclusive list of examples of how
CPs may be able to demonstrate
competitive execution of unwind
transactions, for example: (i) Execution
on an available trading venue (e.g., a
SEF or DCM); (ii) multiple dealer quotes
received and execution of the unwind
transaction at the best quoted price; or
(iii) placement of the unwind
transaction with an interdealer broker
with price terms and instructions
commensurate with a competitive
execution.
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 such proposed rule change is
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,
to assure the safeguarding of securities
and funds which are in the custody or
control of the clearing agency or for
which it is responsible and, in general,
to protect investors and the public
interest.
The Commission finds that the
proposed revision to ICC’s EOD Pricing
Policy is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
ICC, in particular, to Section
17(A)(b)(3)(F).6 The Commission finds
that the update to ICC’s EOD Pricing
Policy regarding Firm Trade unwind
transactions clarifies the policy while
maintaining the same or similar level of
incentive for CPs to provide quality
price submissions. Because of the
clarification of the Firm Trade unwind
requirements and the potential increase
in the enforceability thereof, CPs may
4 15
5 15
U.S.C. 78s(b)(2)(C).
U.S.C. 78q–1(b)(3)(F).
6 Id.
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15:01 Jul 16, 2014
Jkt 232001
have a greater incentive to submit
quality price submissions. Since quality
price submissions are an integral part of
the end-of-day pricing process, the
Commission finds that the proposed
rule change therefore promotes the
prompt and accurate clearance and
settlement of securities transactions
and, to the extent applicable, derivative
agreements, contracts and transactions
and contributes to the safeguarding of
securities and funds which are in the
custody or control of ICC or for which
it is responsible in a manner consistent
with the Act and the regulations
thereunder applicable to ICC.
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 7
and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,8 that the
proposed rule change (File No. SR–ICC–
2014–07) be, and hereby is, approved.9
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–16785 Filed 7–16–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72595; File No. SR–FINRA–
2014–032]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 7710
Relating to Fees for the OTC Reporting
Facility and Delete Rule 7740 Relating
to Historical Research and
Administrative Reports
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 July 2,
2014, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
7 15
U.S.C. 78q–1.
U.S.C. 78s(b)(2).
9 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).
10 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
8 15
Frm 00042
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by FINRA. FINRA has
designated the proposed rule change as
constituting a ‘‘non-controversial’’ rule
change under paragraph (f)(6) of Rule
19b–4 under the Act,3 which renders
the proposal effective upon receipt of
this filing by the Commission. 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 amend Rule
7710 (OTC Reporting Facility) relating
to fees for the OTC Reporting Facility
(‘‘ORF’’) and delete Rule 7740
(Historical Research and Administrative
Reports) upon migration of the ORF to
FINRA’s Multi-Product Platform
(‘‘MPP’’).
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
July 11, 2014.
PO 00000
41711
Fmt 4703
Sfmt 4703
The ORF is the FINRA facility used by
members to report transactions in OTC
Equity Securities, as defined in Rule
6420 (i.e., equity securities that are not
NMS stocks), and transactions in
Restricted Equity Securities, as defined
in Rule 6420, effected pursuant to
Securities Act Rule 144A.4 Currently,
the ORF utilizes technology provided by
The NASDAQ OMX Group, Inc.
(‘‘NASDAQ’’) that is based on
NASDAQ’s proprietary Automated
3 17
4 17
E:\FR\FM\17JYN1.SGM
CFR 240.19b–4(f)(6).
CFR 230.144A.
17JYN1
]]>Agencies
[Federal Register Volume 79, Number 137 (Thursday, July 17, 2014)]
[Notices]
[Pages 41710-41711]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16785]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72596; File No. SR-ICC-2014-07]
Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change To Revise End-of-Day Price Discovery
Policies and Procedures
July 11, 2014.
I. Introduction
On May 22, 2014, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change SR-ICC-2014-07 pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder.\2\ The
proposed rule change was published for comment in the Federal Register
on June 10, 2014.\3\ The Commission received no comment letters
regarding the proposed change. For the reasons discussed below, the
Commission is granting approval of the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 34-72306 (June 4, 2014),
79 FR 33243 (June 10, 2014) (SR-ICC-2014-07).
---------------------------------------------------------------------------
II. Description
ICC is proposing to amend the ICC End-of-Day Price Discovery
Policies and Procedures (``EOD Pricing Policy'') to revise the
expectations surrounding the unwind of any Firm Trade transaction.
ICC contends that the proposed revision to ICC's EOD Pricing Policy
is intended to make the policy more readily enforceable, while
maintaining the same or similar level of incentive for ICC Clearing
Participants to provide quality price submissions.
ICC contends that ICC Clearing Participants (``CPs'') may be
required from time to time, under the ICC EOD Pricing Policy, to enter
into trades with other CPs as part of the ICC end-of-day price
discovery process (``Firm Trade''). ICC contends that it does not
require CPs to maintain Firm Trades as outstanding positions for any
particular length of time. Prior to the operation of this proposed rule
change, ICC has stated that the ICC EOD Pricing Policy requires CPs
that elect to unwind a Firm Trade to do so ``at the then-current market
price.'' ICC contends that there are practical difficulties with
objectively determining whether an unwind transaction was executed at
the ``then-current market price'' and therefore such policy is
difficult to enforce. ICC proposes via this rule change to revise
[[Page 41711]]
the ICC EOD Pricing Policy to replace references to the ``then-current
market price'' with the requirement that unwind transactions be
executed in a competitive manner. Further, ICC proposes via this rule
change to add the requirement that, upon request, CPs be able to
demonstrate to ICC's satisfaction that such unwind transaction was
executed in a competitive manner. Additionally, ICC proposes to add a
non-exclusive list of examples of how CPs may be able to demonstrate
competitive execution of unwind transactions, for example: (i)
Execution on an available trading venue (e.g., a SEF or DCM); (ii)
multiple dealer quotes received and execution of the unwind transaction
at the best quoted price; or (iii) placement of the unwind transaction
with an interdealer broker with price terms and instructions
commensurate with a competitive execution.
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 such 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, to
assure the safeguarding of securities and funds which are in the
custody or control of the clearing agency or for which it is
responsible and, in general, to protect investors and the public
interest.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(2)(C).
\5\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
The Commission finds that the proposed revision to ICC's EOD
Pricing Policy is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to ICC, in particular, to
Section 17(A)(b)(3)(F).\6\ The Commission finds that the update to
ICC's EOD Pricing Policy regarding Firm Trade unwind transactions
clarifies the policy while maintaining the same or similar level of
incentive for CPs to provide quality price submissions. Because of the
clarification of the Firm Trade unwind requirements and the potential
increase in the enforceability thereof, CPs may have a greater
incentive to submit quality price submissions. Since quality price
submissions are an integral part of the end-of-day pricing process, the
Commission finds that the proposed rule change therefore promotes the
prompt and accurate clearance and settlement of securities transactions
and, to the extent applicable, derivative agreements, contracts and
transactions and contributes to the safeguarding of securities and
funds which are in the custody or control of ICC or for which it is
responsible in a manner consistent with the Act and the regulations
thereunder applicable to ICC.
---------------------------------------------------------------------------
\6\ Id.
---------------------------------------------------------------------------
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 \7\ and the
rules and regulations thereunder.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the proposed rule change (File No. SR-ICC-2014-07) be, and
hereby is, approved.\9\
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78s(b)(2).
\9\ 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.\10\
---------------------------------------------------------------------------
\10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16785 Filed 7-16-14; 8:45 am]
BILLING CODE 8011-01-P
