Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing of Proposed Rule Change Relating to CDS Pricing Policy, 73126-73128 [2014-28772]

Download as PDF 73126 Federal Register / Vol. 79, No. 236 / Tuesday, December 9, 2014 / Notices fund deposits to cash and U.S. Treasury Bills, Notes and Bonds with time to maturity of ten years or less. These measures will strengthen CME’s existing default rules and procedures. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others CME has not solicited, and does not intend to solicit, comments regarding this proposed rule change. CME has not received any unsolicited written comments from interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action CME Inc. has filed the proposed rule change pursuant to Section 19(b)(3)(A) 7 of the Act and Rule 19b–4(f)(4)(ii) 8 thereunder. CME asserts that this proposal constitutes a change in an existing service of CME that (a) primarily affects the clearing operations of CME with respect to products that are not securities, including futures that are not security futures, and swaps that are not security-based swaps or mixed swaps, and forwards that are not security forwards; and (b) does not significantly affect any securities clearing operations of CME or any rights or obligations of CME with respect to securities clearing or persons using such securities-clearing service, which renders the proposed change effective upon filing. CME believes that the proposal does not significantly affect any securities clearing operations of CME because CME recently filed a proposed rule change that clarified that CME has decided not to clear security-based swaps, except in a very limited set of circumstances.9 The rule filing reflecting CME’s decision not to clear security-based swaps removed any ambiguity concerning CME’s ability or intent to perform the functions of a clearing agency with respect to securitybased swaps. Therefore, this proposal will have no effect on any securities clearing operations of CME. At any time within 60 days of the filing of the proposed change, the Commission summarily may 7 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(4)(ii). 9 See Securities Exchange Act Release No. 34– 73615 (Nov. 17, 2014), 79 FR 69545 (Nov. 21, 2014) (SR–CME–2014–49). The only exception is with regards to Restructuring European Single Name CDS Contracts created following the occurrence of a Restructuring Credit Event in respect of an iTraxx Component Transaction. The clearing of Restructuring European Single Name CDS Contracts will be a necessary byproduct after such time that CME begins clearing iTraxx Europe index CDS. rljohnson on DSK3VPTVN1PROD with NOTICES 8 17 VerDate Sep<11>2014 14:48 Dec 08, 2014 Jkt 235001 temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 10 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. 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 No. SR– CME–2014–15 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–CME–2014–15. 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 CME and of CME’s Web site at https://www.cmegroup.com/marketregulation/rule-filings.html. 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 available publicly. All submissions should refer to File Number SR–CME–2014–15 and should be submitted on or before December 30, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–28768 Filed 12–8–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–73731; File No. SR–ICEEU– 2014–20] Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing of Proposed Rule Change Relating to CDS Pricing Policy December 3, 2014. 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 24, 2014, ICE Clear Europe Limited (‘‘ICE Clear Europe’’ or ‘‘Clearing House’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared primarily by ICE Clear Europe. 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 The principal purpose of the change is to revise ICE Clear Europe’s CDS Endof-Day Price Discovery Policy (the ‘‘CDS Pricing Policy’’) to incorporate enhancements to the price discovery process. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, ICE Clear Europe included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the 11 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 10 15 PO 00000 U.S.C. 78s(b)(2)(B). Frm 00101 Fmt 4703 Sfmt 4703 E:\FR\FM\09DEN1.SGM 09DEN1 Federal Register / Vol. 79, No. 236 / Tuesday, December 9, 2014 / Notices proposed rule change. The text of these statements may be examined at the places specified in Item IV below. ICE Clear Europe has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of these statements. rljohnson on DSK3VPTVN1PROD with NOTICES A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose ICE Clear Europe proposes revising the CDS Pricing Policy to incorporate enhancements to its end-of-day price discovery process for CDS Contracts. The proposed revisions are described in detail as follows: ICE Clear Europe currently uses a ‘‘cross and lock’’ algorithm as part of its price discovery process for CDS Contracts. Under this algorithm, bids and offers derived from Clearing Member submissions are matched by sorting them from highest to lowest and lowest to highest levels, respectively. This sorting process pairs the Clearing Member submitting the highest bid price with the Clearing Member submitting the lowest offer price, the Clearing Member submitting the second highest bid price with the Clearing Member submitting the second-lowest offer price, and so on. The algorithm then identifies crossed and/or locked pairs (or ‘‘markets’’). Crossed markets are the Clearing Member pairs generated by the sorting process for which the bid price of one Clearing Member is above the offer price of the matched Clearing Member. Locked markets are the Clearing Member pairs where the bid and the offer are equal. The mid-point of the bid and offer of the first noncrossed, non-locked matched market is the final end-of-day level (with additional steps taken to remove offmarket submissions from influencing the final level). This process captures the market dynamics of trading; however, final pricing levels are ultimately determined by a single bid and a single offer, which results in the ability for one submission to influence the outcome. ICE Clear Europe proposes enhancements to this methodology to improve the consistency of prices and reduce the sensitivity of the final endof-day level to a single Clearing Member’s submission. Under the new ‘‘cross and lock’’ methodology, the average of the mid-points of all noncrossed, non-locked matched markets for which the difference between the matched market bid and matched market offer is less than or equal to one VerDate Sep<11>2014 14:48 Dec 08, 2014 Jkt 235001 bid-offer width is used as the final level (with additional steps taken to remove off-market submissions from influencing the final level). Under this approach, the end-of-day prices determined are less sensitive to outlying submissions. An additional clarification is made to the calculation of a Clearing Member’s open interest for purposes of the end-ofday price submission process to take into account the aggregate of both house and client positions carried by the Clearing Member. A correction is made in the policy to the minimum number of Clearing Members that need to have open interest in a particular instrument; this change conforms to current practice by the Clearing House. The amendments also clarify that notional limits applicable to firm trades that may be assigned to Clearing Members as a result of the end-of-day price submission process will be established at risk sub-factor and sector levels. The revised policy also clarifies the sequencing of firm trades in relation to the determination of breaches of those limits, including to take into account the applicable risk sub-factor and to address sequencing within a particular instrument that is part of a particular risk sub-factor, if necessary. The amendments also revise certain requirements applicable to the unwinding of firm trades entered into by Clearing Members. Although the existing policy does not require that firm trades be maintained for any particular period of time, it currently requires Clearing Members that elect to unwind a firm trade to do so at the thencurrent market price. There are practical difficulties with objectively determining whether an unwind transaction was executed at the then-current market price and therefore this requirement can be difficult to enforce. ICE Clear Europe proposes revising the policy to replace the requirement that unwind be executed at the then-current market price with the requirement that any unwind must be executed in a competitive manner. Further, ICE Clear Europe proposes adding the requirement that, upon request, Clearing Members be able to demonstrate to the Clearing House’s reasonable satisfaction that such unwind transaction was executed in a competitive manner. ICE Clear Europe proposes adding a nonexclusive list of examples of how Clearing Members may be able to demonstrate competitive execution of unwind transactions. Specifically, such examples include: (i) Execution on an available trading venue; (ii) multiple dealer quotes received and execution of the unwind transaction at the best quoted price; or (iii) placement of the PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 73127 unwind transaction with an interdealer broker with price terms and instructions commensurate with a competitive execution. In addition, the amendments make certain clarifications with respect to permissible reversing transactions with respect to firm trades, and the manner in which that Clearing House designates that actively traded benchmark instruments are not eligible for reversing transactions. Certain other changes are made in the CDS Pricing Policy in order to conform to changes that have recently been made to the CDS Risk Policy.3 Specifically, references to risk sub-factors, as that term is described in the CDS Risk Policy, have been added throughout the CDS Pricing Policy, as well as conforming changes to various references to risk factors. Various nonsubstantive drafting clarifications have also been made throughout the CDS Pricing Policy. The proposed changes are solely to the CDS Pricing Policy. No changes are proposed to ICE Clear Europe’s Clearing Rules or Procedures as a result of these enhancements. 2. Statutory Basis ICE Clear Europe believes that the proposed changes are consistent with the requirements of Section 17A of the Act 4 and regulations thereunder applicable to it.5 Section 17A(b)(3)(F) of the Act 6 requires, among other things, that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions, and to the extent applicable, derivative agreements, contracts and transactions, the safeguarding of securities and funds in the custody or control of ICE Clear Europe and the protection of investors and the public interest. The proposed rule change is principally designed to enhance the Clearing House’s end-ofday price discovery process for CDS Contracts, and in particular to result in more consistent day-over-day end-ofday price levels, as well as to make various other improvements to the policy as discussed above. The amendments regarding the unwind of firm trades are intended to make this aspect of the CDS Pricing Policy more readily enforceable, while maintaining the same or similar level of incentive for Clearing Members to provide accurate price submissions. ICE 3 See Exchange Act Release No. 34–73156 (Sept. 19, 2014), 79 FR 57629 (Sept. 25, 2014) (SR–ICEEU– 2014–13). 4 15 U.S.C. 78q–1. 5 17 CFR 240.17Ad–22. 6 15 U.S.C. 78q–1(b)(3)(F). E:\FR\FM\09DEN1.SGM 09DEN1 73128 Federal Register / Vol. 79, No. 236 / Tuesday, December 9, 2014 / Notices Clear Europe considers the proposed revision to further its goal in the existing policy of assuring that Clearing Members unwind firm trades on a competitive basis. If Clearing Members were permitted to unwind firm trades non-competitively at the original firm trade price, thereby alleviating the firm trade’s impact to their portfolio, the incentive to provide accurate price submissions would be diminished. Given the significance of accurate submission to the end-of-day pricing process, ICE Clear Europe believes the proposed revision both clarifies and enhances its CDS Pricing Policy. As such, the amendments will facilitate the prompt and accurate clearance and settlement of the CDS Contracts cleared by the Clearing House, and are therefore consistent with the requirements of 17A(b)(3)(F) of the Act and the rules thereunder. rljohnson on DSK3VPTVN1PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition ICE Clear Europe does not believe the proposed amendments would have any impact, or impose any burden, on competition not necessary or appropriate in furtherance of the purpose of the Act. The enhancements to the end-of-day price discovery process apply uniformly across all CDS Clearing Members. ICE Clear Europe does not anticipate that these enhancements will materially affect the cost of clearing or adversely affect the ability of Clearing Members or other market participants to continue to clear CDS Contracts. ICE Clear Europe also does not believe the enhancements will limit the availability of clearing in CDS products for Clearing Members or their customers or otherwise limit market participants’ choices for selecting clearing services in CDS. Therefore, ICE Clear Europe does not believe the proposed rule change imposes any burden on competition that is not appropriate in furtherance of the purpose of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments relating to the amendments to the CDS Pricing Policy have not been solicited or received. ICE Clear Europe will notify the Commission of any written comments received by ICE Clear Europe. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal VerDate Sep<11>2014 14:48 Dec 08, 2014 Jkt 235001 Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change; or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. 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– ICEEU–2014–20 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–ICEEU–2014–20. 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 filings will also be available for inspection and copying at the principal office of ICE Clear Europe and on ICE Clear Europe’s Web site at https:// www.theice.com/clear-europe/ regulation. PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 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 available publicly. All submissions should refer to File Number SR–ICEEU–2014–20 and should be submitted on or before December 30, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–28772 Filed 12–8–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–73725; File No. SR–OCC– 2014–19] Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change To Permit the Executive Chairman, the President or a Delegate of Such Officer To Approve Requests by a Hedge Clearing Member To Become a Market Loan Clearing Member December 3, 2014. On October 24, 2014, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change SR–OCC–2014–19 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 November 3, 2014.3 The Commission did not receive any comments on the proposed rule change. This order approves the proposed rule change. I. Description The purpose of OCC’s rule change is permit OCC’s Executive Chairman, the President or their delegate to approve business expansion requests of Hedge Clearing Members 4 to become Market Loan Clearing Members.5 Delegates of 7 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Securities Exchange Act Release No. 73449 (October 28, 2014), 79 FR 65277 (November 3, 2014) (SR–OCC–2014–19). 4 See OCC By-Laws, Article 1.H(1). See also, OCC By-Laws, Article V, Section 1, Interpretation and Policy .07. 5 See OCC By-Laws, Article 1.M(4). See also, OCC By-Laws, Article V, Section 1, Interpretation and Policy .07A. 1 15 E:\FR\FM\09DEN1.SGM 09DEN1

Agencies

[Federal Register Volume 79, Number 236 (Tuesday, December 9, 2014)]
[Notices]
[Pages 73126-73128]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-28772]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73731; File No. SR-ICEEU-2014-20]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of Proposed Rule Change Relating to CDS Pricing Policy

December 3, 2014.
    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 24, 2014, ICE Clear Europe Limited (``ICE Clear Europe'' or 
``Clearing House'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared primarily by ICE Clear 
Europe. The Commission is publishing this notice to solicit comments on 
the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The principal purpose of the change is to revise ICE Clear Europe's 
CDS End-of-Day Price Discovery Policy (the ``CDS Pricing Policy'') to 
incorporate enhancements to the price discovery process.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, ICE Clear Europe included 
statements concerning the purpose of and basis for the proposed rule 
change and discussed any comments it received on the

[[Page 73127]]

proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. ICE Clear Europe has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant aspects of these statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    ICE Clear Europe proposes revising the CDS Pricing Policy to 
incorporate enhancements to its end-of-day price discovery process for 
CDS Contracts. The proposed revisions are described in detail as 
follows:
    ICE Clear Europe currently uses a ``cross and lock'' algorithm as 
part of its price discovery process for CDS Contracts. Under this 
algorithm, bids and offers derived from Clearing Member submissions are 
matched by sorting them from highest to lowest and lowest to highest 
levels, respectively. This sorting process pairs the Clearing Member 
submitting the highest bid price with the Clearing Member submitting 
the lowest offer price, the Clearing Member submitting the second 
highest bid price with the Clearing Member submitting the second-lowest 
offer price, and so on. The algorithm then identifies crossed and/or 
locked pairs (or ``markets''). Crossed markets are the Clearing Member 
pairs generated by the sorting process for which the bid price of one 
Clearing Member is above the offer price of the matched Clearing 
Member. Locked markets are the Clearing Member pairs where the bid and 
the offer are equal. The mid-point of the bid and offer of the first 
non-crossed, non-locked matched market is the final end-of-day level 
(with additional steps taken to remove off-market submissions from 
influencing the final level). This process captures the market dynamics 
of trading; however, final pricing levels are ultimately determined by 
a single bid and a single offer, which results in the ability for one 
submission to influence the outcome.
    ICE Clear Europe proposes enhancements to this methodology to 
improve the consistency of prices and reduce the sensitivity of the 
final end-of-day level to a single Clearing Member's submission. Under 
the new ``cross and lock'' methodology, the average of the mid-points 
of all non-crossed, non-locked matched markets for which the difference 
between the matched market bid and matched market offer is less than or 
equal to one bid-offer width is used as the final level (with 
additional steps taken to remove off-market submissions from 
influencing the final level). Under this approach, the end-of-day 
prices determined are less sensitive to outlying submissions.
    An additional clarification is made to the calculation of a 
Clearing Member's open interest for purposes of the end-of-day price 
submission process to take into account the aggregate of both house and 
client positions carried by the Clearing Member. A correction is made 
in the policy to the minimum number of Clearing Members that need to 
have open interest in a particular instrument; this change conforms to 
current practice by the Clearing House.
    The amendments also clarify that notional limits applicable to firm 
trades that may be assigned to Clearing Members as a result of the end-
of-day price submission process will be established at risk sub-factor 
and sector levels. The revised policy also clarifies the sequencing of 
firm trades in relation to the determination of breaches of those 
limits, including to take into account the applicable risk sub-factor 
and to address sequencing within a particular instrument that is part 
of a particular risk sub-factor, if necessary.
    The amendments also revise certain requirements applicable to the 
unwinding of firm trades entered into by Clearing Members. Although the 
existing policy does not require that firm trades be maintained for any 
particular period of time, it currently requires Clearing Members that 
elect to unwind a firm trade to do so at the then-current market price. 
There are practical difficulties with objectively determining whether 
an unwind transaction was executed at the then-current market price and 
therefore this requirement can be difficult to enforce. ICE Clear 
Europe proposes revising the policy to replace the requirement that 
unwind be executed at the then-current market price with the 
requirement that any unwind must be executed in a competitive manner. 
Further, ICE Clear Europe proposes adding the requirement that, upon 
request, Clearing Members be able to demonstrate to the Clearing 
House's reasonable satisfaction that such unwind transaction was 
executed in a competitive manner. ICE Clear Europe proposes adding a 
non-exclusive list of examples of how Clearing Members may be able to 
demonstrate competitive execution of unwind transactions. Specifically, 
such examples include: (i) Execution on an available trading venue; 
(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.
    In addition, the amendments make certain clarifications with 
respect to permissible reversing transactions with respect to firm 
trades, and the manner in which that Clearing House designates that 
actively traded benchmark instruments are not eligible for reversing 
transactions.
    Certain other changes are made in the CDS Pricing Policy in order 
to conform to changes that have recently been made to the CDS Risk 
Policy.\3\ Specifically, references to risk sub-factors, as that term 
is described in the CDS Risk Policy, have been added throughout the CDS 
Pricing Policy, as well as conforming changes to various references to 
risk factors. Various non-substantive drafting clarifications have also 
been made throughout the CDS Pricing Policy.
---------------------------------------------------------------------------

    \3\ See Exchange Act Release No. 34-73156 (Sept. 19, 2014), 79 
FR 57629 (Sept. 25, 2014) (SR-ICEEU-2014-13).
---------------------------------------------------------------------------

    The proposed changes are solely to the CDS Pricing Policy. No 
changes are proposed to ICE Clear Europe's Clearing Rules or Procedures 
as a result of these enhancements.
2. Statutory Basis
    ICE Clear Europe believes that the proposed changes are consistent 
with the requirements of Section 17A of the Act \4\ and regulations 
thereunder applicable to it.\5\ Section 17A(b)(3)(F) of the Act \6\ 
requires, among other things, that the rules of a clearing agency be 
designed to promote the prompt and accurate clearance and settlement of 
securities transactions, and to the extent applicable, derivative 
agreements, contracts and transactions, the safeguarding of securities 
and funds in the custody or control of ICE Clear Europe and the 
protection of investors and the public interest. The proposed rule 
change is principally designed to enhance the Clearing House's end-of-
day price discovery process for CDS Contracts, and in particular to 
result in more consistent day-over-day end-of-day price levels, as well 
as to make various other improvements to the policy as discussed above.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78q-1.
    \5\ 17 CFR 240.17Ad-22.
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The amendments regarding the unwind of firm trades are intended to 
make this aspect of the CDS Pricing Policy more readily enforceable, 
while maintaining the same or similar level of incentive for Clearing 
Members to provide accurate price submissions. ICE

[[Page 73128]]

Clear Europe considers the proposed revision to further its goal in the 
existing policy of assuring that Clearing Members unwind firm trades on 
a competitive basis. If Clearing Members were permitted to unwind firm 
trades non-competitively at the original firm trade price, thereby 
alleviating the firm trade's impact to their portfolio, the incentive 
to provide accurate price submissions would be diminished. Given the 
significance of accurate submission to the end-of-day pricing process, 
ICE Clear Europe believes the proposed revision both clarifies and 
enhances its CDS Pricing Policy.
    As such, the amendments will facilitate the prompt and accurate 
clearance and settlement of the CDS Contracts cleared by the Clearing 
House, and are therefore consistent with the requirements of 
17A(b)(3)(F) of the Act and the rules thereunder.

B. Self-Regulatory Organization's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed amendments would 
have any impact, or impose any burden, on competition not necessary or 
appropriate in furtherance of the purpose of the Act. The enhancements 
to the end-of-day price discovery process apply uniformly across all 
CDS Clearing Members. ICE Clear Europe does not anticipate that these 
enhancements will materially affect the cost of clearing or adversely 
affect the ability of Clearing Members or other market participants to 
continue to clear CDS Contracts. ICE Clear Europe also does not believe 
the enhancements will limit the availability of clearing in CDS 
products for Clearing Members or their customers or otherwise limit 
market participants' choices for selecting clearing services in CDS. 
Therefore, ICE Clear Europe does not believe the proposed rule change 
imposes any burden on competition that is not appropriate in 
furtherance of the purpose of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments relating to the amendments to the CDS Pricing 
Policy have not been solicited or received. ICE Clear Europe will 
notify the Commission of any written comments received by ICE Clear 
Europe.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change; or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. 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-ICEEU-2014-20 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-ICEEU-2014-20. 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 filings will also be available 
for inspection and copying at the principal office of ICE Clear Europe 
and on ICE Clear Europe's Web site at https://www.theice.com/clear-europe/regulation.
    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 available 
publicly. All submissions should refer to File Number SR-ICEEU-2014-20 
and should be submitted on or before December 30, 2014.
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    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-28772 Filed 12-8-14; 8:45 am]
BILLING CODE 8011-01-P
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