Self-Regulatory Organizations; ICE Clear Europe Limited; Order Granting Accelerated Approval of Proposed Rule Change Relating to EMIR Requirements, 46477-46479 [2014-18750]
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Federal Register / Vol. 79, No. 153 / Friday, August 8, 2014 / Notices
The Commission believes that
questions are raised as to whether the
Proposal, as modified by Amendment
No. 1, is consistent with: (1) The
requirements of Section 6(b)(5) of the
Act, including whether the Exchange’s
proposed revisions to its rules regarding
the order of priority in open outcry are
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system and, in general, to protect
investors and the public interest; and
are not designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers; and (2) the
requirements of Section 6(b)(8) of the
Act, including whether the Exchange’s
proposed revisions to its rules regarding
the order or priority in open outcry
impose any unnecessary or
inappropriate burden on competition.
The Commission believes that the issues
raised by the Proposal can benefit from
additional consideration and evaluation.
mstockstill on DSK4VPTVN1PROD with NOTICES
V. Request for Written Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the concerns
identified above, as well as any others
they may have with the Proposal, as
modified by Amendment No. 1. In
particular, the Commission invites the
written views of interested persons
concerning whether the proposed rule
change, as modified by Amendment No.
1, is inconsistent with Sections 6(b)(5)
and 6(b)(8) or any other provision of the
Act, or the rules and regulations
thereunder. Although there do not
appear to be any issues relevant to
approval or disapproval that would be
facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b–4, any request for an
opportunity to make an oral
presentation.54
Interested persons are invited to
submit written views, data, and
arguments concerning Amendment No.
1 and regarding whether the proposed
rule change, as modified by Amendment
No. 1, should be approved or
disapproved by August 29, 2014. Any
person who wishes to file a rebuttal to
54 Section 19(b)(2) of the Act, as amended by the
Securities Act Amendments of 1975, Pub. L. 94–29
(June 4, 1975), grants the Commission flexibility to
determine what type of proceeding—either oral or
notice and opportunity for written comments—is
appropriate for consideration of a particular
proposal by a self-regulatory organization. See
Securities Act Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).
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any other person’s submission must file
that rebuttal by September 12, 2014.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
Phlx–2014–23 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–Phlx–2014–23. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method.
The Commission will post all
comments on the Commission’s Internet
Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all
subsequent amendments, all written
statements with respect to the proposed
rule change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
publicly available. All submissions
should refer to File Number SR–Phlx–
2014–23 and should be submitted on or
before August 29, 2014. If comments are
received, any rebuttal comments should
be submitted by September 12, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.55
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–18748 Filed 8–7–14; 8:45 am]
BILLING CODE 8011–01–P
55 17 CFR 200.30–3(a)(12); 17 CFR 200.30–
3(a)(57).
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46477
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72754; File No. SR–ICEEU–
2014–11]
Self-Regulatory Organizations; ICE
Clear Europe Limited; Order Granting
Accelerated Approval of Proposed
Rule Change Relating to EMIR
Requirements
August 4, 2014.
I. Introduction
On July 7, 2014, ICE Clear Europe
Limited (‘‘ICE Clear Europe’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change SR–ICEEU–2014–
11 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 July 15, 2014.3 The
Commission did not receive comments
on the proposed rule change. For the
reasons discussed below, the
Commission is granting approval of the
proposed rule change on an accelerated
basis.
II. Description of the Proposed Rule
Change
ICE Clear Europe has stated that the
principal purpose of the proposed rule
change is to amend certain ICE Clear
Europe procedural rules (‘‘Procedures’’)
in order to comply with requirements
under the European Market
Infrastructure Regulation (including
regulations and implementing technical
standards thereunder, ‘‘EMIR’’) 4 that
will apply to ICE Clear Europe as an
authorized central counterparty and to
further implement proposed changes to
its Clearing Rules (the ‘‘Clearing Rules’’)
relating to EMIR implementation and
certain other matters as proposed in rule
filing SR–ICEEU–2014–09 (the ‘‘Rule
Submission’’).5
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Securities Exchange Act Release No. 34–72582
(July 10, 2014), 79 FR 41320 (July 15, 2014) (SR–
ICEEU–2014–11) (This rule filing is hereinafter
referred to as the ‘‘Procedures Submission’’).
4 Regulation (EU) No 648/2012 of the European
Parliament and of the Council of 4 July 2012 on
OTC derivatives, central counterparties and trade
repositories, as well as various implementing
regulations and technical standards.
5 Securities Exchange Act Release No. 34–72540
(July 3, 2014), 79 FR 39429 (July 10, 2014) (SR–
ICEEU–2014–09).
2 17
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46478
Federal Register / Vol. 79, No. 153 / Friday, August 8, 2014 / Notices
As described in more detail in the
Rule Submission, in order to comply
with EMIR, ICE Clear Europe is
proposing changes to the structure of
customer accounts for cleared
transactions. The amendments to the
Clearing Rules would establish two new
types of individually segregated
accounts, Individually Segregated
Margin-flow Co-mingled Accounts and
Individually Segregated Sponsored
Accounts. The proposed changes to the
Clearing Rules would also establish
multiple new types of omnibus
accounts, Segregated Customer
Omnibus Accounts (separately for each
product: FX, F&O and CDS) and
Segregated TTFCA Customer Omnibus
Accounts (separately for each product:
FX, F&O and CDS) as well as Omnibus
Margin-flow Co-mingled Accounts. The
amendments to the Procedures
described herein are intended to further
implement these changes to the Clearing
Rules, as well as make various other
consolidating, conforming and
clarifying changes and drafting
improvements to the existing
Procedures.
ICE Clear Europe proposes to make
amendments to the following
Procedures: The Clearing Procedures,
Finance Procedures, Membership
Procedures, Business Continuity
Procedures, Complaint Resolution
Procedures, General Contract Terms,
CDS Procedures, FX Procedures, OTC
FX Product Guide and Published Terms
for FX Contracts, Auction Terms for FX
Default Auctions, Auction Terms for
F&O Default Auctions and Delivery
Procedures. The CDS Operational
Procedures are being eliminated as they
are no longer applicable. The proposed
Procedure amendments are described as
follows.6
ICE Clear Europe proposes to make
certain common changes to all relevant
sections of the Procedures. In each such
section of the Procedures, ICE Clear
Europe would add provisions
addressing governing law, arbitration
and submission to jurisdiction that are
substantially the same as those set forth
in the Clearing Rules (specifically, Rules
117 and 1608). In addition, various
references to Sponsored Principals
would be added throughout, as well as
conforming changes to reflect changes
in defined terms in the Clearing Rules,
such as the use of ‘‘Buying
Counterparty’’ and ‘‘Selling
Counterparty’’.
ICE Clear Europe proposes revisions
to its Clearing Procedures to incorporate
6 The proposed rule change is described in further
detail in the Procedures Submission. See supra note
3.
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the additional categories of customer
accounts and relevant defined terms and
other clarifications for margin for the
relevant product categories (F&O, CDS
and FX). The proposed revisions also
include conforming changes,
implementing changes and drafting
improvements related to the transfer
and close out of customer positions. In
addition, the revisions would addresses
certain matters with respect to
Customer-CM Collateral provided to
Non-FCM/BD Clearing Members,
establish certain recordkeeping
requirements for Clearing Members with
respect to Customers (including as to
the identity and default portability
preferences thereof), and adopt certain
additional defined terms and
procedures relating to position transfers
made under Rule 408(a)(i) and Part 12
of the Clearing Rules, as well as
paragraph 6 of the Clearing Procedures.
ICE Clear Europe proposes to revise
the Finance Procedures to incorporate
the new account categories (and in
particular Sponsored Principals),
accommodate the use of pledged
collateral arrangements as well as title
transfer collateral, make certain
revisions concerning margin
requirements for F&O and FX contracts,
and make other conforming and
clarifying changes. The Finance
Procedures would also be revised to
incorporate certain parameters for the
FX guaranty fund and to allow the
Clearing House to allow different
currencies to be used for the guaranty
fund contributions for any product
category. In addition, Revised Paragraph
15 of the Finance Procedures would
specify additional parameters for the
Clearing House contributions to the
three guaranty funds, as described in
further detail in the Procedures
Submission.
The Membership Procedures, which
set out various aspects of the clearing
membership application process, would
be modified to also cover Sponsors and
Sponsored Principals, in substantially
the same manner as for Clearing
Members. Other proposed revisions
include various updates to defined
terms and drafting clarifications as
further described in the Procedures
Submission.
ICE Clear Europe proposes to revise
the CDS Procedures to implement the
Sponsored Principal model and make
various updates to defined terms (and
conforming references to terms) and
make drafting improvements for clarity
and conformity, as discussed in more
detail in the Procedures Submission. As
noted in the Rule Submission, various
membership requirements in Paragraph
2 have been moved to Part 2 of the
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Frm 00084
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Sfmt 4703
Clearing Rules, and Paragraph 6, which
addresses the Clearing House’s
contributions to the CDS guaranty fund,
has been removed and moved to the
Finance Procedures. Paragraph 13,
which addresses certain aspects of
customer transactions, including
transfer of customer positions, has been
moved to paragraph 6 of the Clearing
Procedures (and generalized to apply all
product categories, not just CDS).
Finally, ICE Clear Europe proposes to
make clarifying, conforming and
implementing changes to a number of
other Procedures. Specifically, the FX
Procedures would be revised to update
various definitions, conform to new
defined terms and other provisions of
the updated Clearing Rules, incorporate
the Sponsored Principal model, and
make various other conforming and
clarifying revisions as discussed in more
detail in the Procedures Submission.
The Auction Terms for F&O Default
Auctions would be revised to
incorporate participation by Sponsored
Principals as well as a number of other
conforming and clarifying revisions to
the auction and bidding process as
further described in the Procedures
Submission. In addition, ICE Clear
Europe proposes various amendments to
the Delivery Procedures. In many cases
these revisions do not strictly relate to
EMIR implementation but reflect other
general updates and conforming
changes. ICE Clear Europe also proposes
to make various non-substantive
conforming changes and drafting
clarifications to the Business Continuity
Procedures and Complaint Resolution
Procedures.
III. Discussion and Commission
Findings
Section 19(b)(2)(C) of the Act 7 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 8 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
7 15
8 15
E:\FR\FM\08AUN1.SGM
U.S.C. 78s(b)(2)(C).
U.S.C. 78q–1(b)(3)(F).
08AUN1
Federal Register / Vol. 79, No. 153 / Friday, August 8, 2014 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
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 amendments to the
Procedures are consistent with the
requirements of Section 17A of the Act 9
and the rules and regulations
thereunder applicable to ICE Clear
Europe. In particular, the Commission
believes that the proposed amendments
to the ICE Clear Europe Procedures,
which are principally designed to
further implement proposed changes to
its Clearing Rules as contained in the
Rule Submission, are designed to
promote the prompt and accurate
clearance and 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, consistent with
Section 17A(b)(3)(F) of the Act.10
Section 19(b)(2)(C)(iii) of the Act 11
allows the Commission to approve a
proposed rule change earlier than 30
days after the date of publication of the
notice of the proposed rule change in
the Federal Register where the
Commission finds good cause for so
doing and publishes the reason for the
finding. In its filing, ICE Clear Europe
requested that the Commission approve
the proposed rule change on an
accelerated basis for good cause shown.
ICE Clear Europe has represented that
the proposed Procedures changes are
necessary to further implement the rule
changes contained in the Rule
Submission in order to comply with
requirements under EMIR in connection
with its authorization as a central
counterparty under EMIR. ICE Clear
Europe further notes that failure to have
the amendments in effect, and to be in
compliance with the EMIR
requirements, may adversely affect the
approval of its authorization application
and therefore its ability to do business
as a recognised central counterparty.
Accordingly, the Commission finds that
good cause exists to approve the
proposed rule change on an accelerated
basis pursuant to Section 19(b)(2)(C)(iii)
of the Act.12
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposal is
9 15
U.S.C. 78q–1.
U.S.C. 78q–1(b)(3)(F).
11 15 U.S.C. 78s(b)(2)(C)(iii).
12 15 U.S.C. 78s(b)(2)(C)(iii).
10 15
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16:51 Aug 07, 2014
Jkt 232001
consistent with the requirements of the
Act and in particular with the
requirements of Section 17A of the
Act 13 and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,14 that the
proposed rule change (SR–ICEEU–2014–
11) be, and hereby is, approved on an
accelerated basis.15
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–18750 Filed 8–7–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72756; File No. SR–ICEEU–
2014–10]
Self-Regulatory Organizations; ICE
Clear Europe Limited; Order Granting
Accelerated Approval of Proposed
Rule Change to CDS Policies Relating
to EMIR
August 4, 2014.
I. Introduction
On June 30, 2014, ICE Clear Europe
Limited (‘‘ICE Clear Europe’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change SR–ICEEU–2014–
10 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 July 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 on an accelerated
basis.
II. Description of the Proposed Rule
Change
ICE Clear Europe is proposing this
change to amend certain of the ICE Clear
Europe credit default swaps (‘‘CDS’’)
risk policies (‘‘Risk Policy
13 15
U.S.C. 78q–1.
U.S.C. 78s(b)(2).
15 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).
16 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 34–72544
(July 3, 2014), 79 FR 39421 (July 10, 2014) (SR–
ICEEU–2014–10).
14 15
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46479
Amendments’’) in order to facilitate
compliance with requirements under
the European Market Infrastructure
Regulation (including regulations
thereunder, ‘‘EMIR’’) 4 that will apply to
ICE Clear Europe as an authorized
central counterparty.
ICE Clear Europe states that the
relevant policies being modified by the
proposed change are (i) the CDS Risk
Policy (‘‘Risk Policy’’); (ii) the Risk
Model Description (‘‘Model
Description’’); (iii) the CDS Clearing
Back-Testing Framework (‘‘Back-Testing
Framework’’); (iv) the CDS Clearing
Stress-Testing Framework (‘‘StressTesting Framework’’); and (v) the CDS
Default Management Framework
(‘‘Default Management Framework’’).
ICE Clear Europe states that the
changes to the Risk Policy amend the
calculation of CDS initial margin
requirements to comply with margin
requirements under EMIR Article 41
and Article 24 of the implementing
Regulatory Technical Standards.5 ICE
Clear Europe contends that, as revised,
the initial margin methodology is
designed to provide portfolio risk
coverage against at least 5-day market
realizations that would occur with
probability 99.5% (previously 99.0%),
that is, the estimated requirements
provide risk protection equivalent to at
least a 5-day 99.5% Value-at-Risk
measure. In addition, ICE Clear Europe
states that in order to address
requirements under EMIR related to
procyclicality (Article 28 of the
Regulatory Technical Standards)
changes were made to the maximum
scale used for the initial margin
approach by adding a volatility scale
that assigns a 25% weight to stressed
period observations during the lookback
period from April 2007 to the present
(consistent with Article 28(b) of the
Regulatory Technical Standards). ICE
Clear Europe expects the revised initial
margin requirement, including certain
portfolio benefit assumptions, to result
in more conservative initial margin
requirements than under the previous
approach.
ICE Clear Europe states that similar
amendments to those described above
are also made to the Model Description.
ICE Clear Europe contends that under
the revised Model Description, the
4 Regulation (EU) No 648/2012 of the European
Parliament and of the Council of 4 July 2012 on
OTC derivatives, central counterparties and trade
repositories.
5 Commission Delegated Regulation (EU) No. 153/
2013 of 19 December 2012 Supplementing
Regulation (EU) No. 648/2012 of the European
Parliament and of the Council with regard to
Regulatory Technical Standards on Requirements
for Central Counterparties (the ‘‘Regulatory
Technical Standards’’).
E:\FR\FM\08AUN1.SGM
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Agencies
[Federal Register Volume 79, Number 153 (Friday, August 8, 2014)]
[Notices]
[Pages 46477-46479]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-18750]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72754; File No. SR-ICEEU-2014-11]
Self-Regulatory Organizations; ICE Clear Europe Limited; Order
Granting Accelerated Approval of Proposed Rule Change Relating to EMIR
Requirements
August 4, 2014.
I. Introduction
On July 7, 2014, ICE Clear Europe Limited (``ICE Clear Europe'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change SR-ICEEU-2014-11 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 July 15, 2014.\3\ The Commission did not
receive comments on the proposed rule change. For the reasons discussed
below, the Commission is granting approval of the proposed rule change
on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 34-72582 (July 10,
2014), 79 FR 41320 (July 15, 2014) (SR-ICEEU-2014-11) (This rule
filing is hereinafter referred to as the ``Procedures Submission'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
ICE Clear Europe has stated that the principal purpose of the
proposed rule change is to amend certain ICE Clear Europe procedural
rules (``Procedures'') in order to comply with requirements under the
European Market Infrastructure Regulation (including regulations and
implementing technical standards thereunder, ``EMIR'') \4\ that will
apply to ICE Clear Europe as an authorized central counterparty and to
further implement proposed changes to its Clearing Rules (the
``Clearing Rules'') relating to EMIR implementation and certain other
matters as proposed in rule filing SR-ICEEU-2014-09 (the ``Rule
Submission'').\5\
---------------------------------------------------------------------------
\4\ Regulation (EU) No 648/2012 of the European Parliament and
of the Council of 4 July 2012 on OTC derivatives, central
counterparties and trade repositories, as well as various
implementing regulations and technical standards.
\5\ Securities Exchange Act Release No. 34-72540 (July 3, 2014),
79 FR 39429 (July 10, 2014) (SR-ICEEU-2014-09).
---------------------------------------------------------------------------
[[Page 46478]]
As described in more detail in the Rule Submission, in order to
comply with EMIR, ICE Clear Europe is proposing changes to the
structure of customer accounts for cleared transactions. The amendments
to the Clearing Rules would establish two new types of individually
segregated accounts, Individually Segregated Margin-flow Co-mingled
Accounts and Individually Segregated Sponsored Accounts. The proposed
changes to the Clearing Rules would also establish multiple new types
of omnibus accounts, Segregated Customer Omnibus Accounts (separately
for each product: FX, F&O and CDS) and Segregated TTFCA Customer
Omnibus Accounts (separately for each product: FX, F&O and CDS) as well
as Omnibus Margin-flow Co-mingled Accounts. The amendments to the
Procedures described herein are intended to further implement these
changes to the Clearing Rules, as well as make various other
consolidating, conforming and clarifying changes and drafting
improvements to the existing Procedures.
ICE Clear Europe proposes to make amendments to the following
Procedures: The Clearing Procedures, Finance Procedures, Membership
Procedures, Business Continuity Procedures, Complaint Resolution
Procedures, General Contract Terms, CDS Procedures, FX Procedures, OTC
FX Product Guide and Published Terms for FX Contracts, Auction Terms
for FX Default Auctions, Auction Terms for F&O Default Auctions and
Delivery Procedures. The CDS Operational Procedures are being
eliminated as they are no longer applicable. The proposed Procedure
amendments are described as follows.\6\
---------------------------------------------------------------------------
\6\ The proposed rule change is described in further detail in
the Procedures Submission. See supra note 3.
---------------------------------------------------------------------------
ICE Clear Europe proposes to make certain common changes to all
relevant sections of the Procedures. In each such section of the
Procedures, ICE Clear Europe would add provisions addressing governing
law, arbitration and submission to jurisdiction that are substantially
the same as those set forth in the Clearing Rules (specifically, Rules
117 and 1608). In addition, various references to Sponsored Principals
would be added throughout, as well as conforming changes to reflect
changes in defined terms in the Clearing Rules, such as the use of
``Buying Counterparty'' and ``Selling Counterparty''.
ICE Clear Europe proposes revisions to its Clearing Procedures to
incorporate the additional categories of customer accounts and relevant
defined terms and other clarifications for margin for the relevant
product categories (F&O, CDS and FX). The proposed revisions also
include conforming changes, implementing changes and drafting
improvements related to the transfer and close out of customer
positions. In addition, the revisions would addresses certain matters
with respect to Customer-CM Collateral provided to Non-FCM/BD Clearing
Members, establish certain recordkeeping requirements for Clearing
Members with respect to Customers (including as to the identity and
default portability preferences thereof), and adopt certain additional
defined terms and procedures relating to position transfers made under
Rule 408(a)(i) and Part 12 of the Clearing Rules, as well as paragraph
6 of the Clearing Procedures.
ICE Clear Europe proposes to revise the Finance Procedures to
incorporate the new account categories (and in particular Sponsored
Principals), accommodate the use of pledged collateral arrangements as
well as title transfer collateral, make certain revisions concerning
margin requirements for F&O and FX contracts, and make other conforming
and clarifying changes. The Finance Procedures would also be revised to
incorporate certain parameters for the FX guaranty fund and to allow
the Clearing House to allow different currencies to be used for the
guaranty fund contributions for any product category. In addition,
Revised Paragraph 15 of the Finance Procedures would specify additional
parameters for the Clearing House contributions to the three guaranty
funds, as described in further detail in the Procedures Submission.
The Membership Procedures, which set out various aspects of the
clearing membership application process, would be modified to also
cover Sponsors and Sponsored Principals, in substantially the same
manner as for Clearing Members. Other proposed revisions include
various updates to defined terms and drafting clarifications as further
described in the Procedures Submission.
ICE Clear Europe proposes to revise the CDS Procedures to implement
the Sponsored Principal model and make various updates to defined terms
(and conforming references to terms) and make drafting improvements for
clarity and conformity, as discussed in more detail in the Procedures
Submission. As noted in the Rule Submission, various membership
requirements in Paragraph 2 have been moved to Part 2 of the Clearing
Rules, and Paragraph 6, which addresses the Clearing House's
contributions to the CDS guaranty fund, has been removed and moved to
the Finance Procedures. Paragraph 13, which addresses certain aspects
of customer transactions, including transfer of customer positions, has
been moved to paragraph 6 of the Clearing Procedures (and generalized
to apply all product categories, not just CDS).
Finally, ICE Clear Europe proposes to make clarifying, conforming
and implementing changes to a number of other Procedures. Specifically,
the FX Procedures would be revised to update various definitions,
conform to new defined terms and other provisions of the updated
Clearing Rules, incorporate the Sponsored Principal model, and make
various other conforming and clarifying revisions as discussed in more
detail in the Procedures Submission. The Auction Terms for F&O Default
Auctions would be revised to incorporate participation by Sponsored
Principals as well as a number of other conforming and clarifying
revisions to the auction and bidding process as further described in
the Procedures Submission. In addition, ICE Clear Europe proposes
various amendments to the Delivery Procedures. In many cases these
revisions do not strictly relate to EMIR implementation but reflect
other general updates and conforming changes. ICE Clear Europe also
proposes to make various non-substantive conforming changes and
drafting clarifications to the Business Continuity Procedures and
Complaint Resolution Procedures.
III. Discussion and Commission Findings
Section 19(b)(2)(C) of the Act \7\ 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 \8\ 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
[[Page 46479]]
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.
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\7\ 15 U.S.C. 78s(b)(2)(C).
\8\ 15 U.S.C. 78q-1(b)(3)(F).
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The Commission finds that the proposed amendments to the Procedures
are consistent with the requirements of Section 17A of the Act \9\ and
the rules and regulations thereunder applicable to ICE Clear Europe. In
particular, the Commission believes that the proposed amendments to the
ICE Clear Europe Procedures, which are principally designed to further
implement proposed changes to its Clearing Rules as contained in the
Rule Submission, are designed to promote the prompt and accurate
clearance and 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, consistent with Section 17A(b)(3)(F) of the Act.\10\
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\9\ 15 U.S.C. 78q-1.
\10\ 15 U.S.C. 78q-1(b)(3)(F).
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Section 19(b)(2)(C)(iii) of the Act \11\ allows the Commission to
approve a proposed rule change earlier than 30 days after the date of
publication of the notice of the proposed rule change in the Federal
Register where the Commission finds good cause for so doing and
publishes the reason for the finding. In its filing, ICE Clear Europe
requested that the Commission approve the proposed rule change on an
accelerated basis for good cause shown. ICE Clear Europe has
represented that the proposed Procedures changes are necessary to
further implement the rule changes contained in the Rule Submission in
order to comply with requirements under EMIR in connection with its
authorization as a central counterparty under EMIR. ICE Clear Europe
further notes that failure to have the amendments in effect, and to be
in compliance with the EMIR requirements, may adversely affect the
approval of its authorization application and therefore its ability to
do business as a recognised central counterparty. Accordingly, the
Commission finds that good cause exists to approve the proposed rule
change on an accelerated basis pursuant to Section 19(b)(2)(C)(iii) of
the Act.\12\
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\11\ 15 U.S.C. 78s(b)(2)(C)(iii).
\12\ 15 U.S.C. 78s(b)(2)(C)(iii).
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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 \13\ and the
rules and regulations thereunder.
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\13\ 15 U.S.C. 78q-1.
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\14\ that the proposed rule change (SR-ICEEU-2014-11) be, and
hereby is, approved on an accelerated basis.\15\
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\14\ 15 U.S.C. 78s(b)(2).
\15\ 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.\16\
Kevin M. O'Neill,
Deputy Secretary.
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\16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2014-18750 Filed 8-7-14; 8:45 am]
BILLING CODE 8011-01-P