Self-Regulatory Organizations; ICE Clear Europe Limited; Order Approving Proposed Rule Change To Provide for the Clearance of Additional Sovereign Contracts, 73372 [2014-28875]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 79, Number 237 (Wednesday, December 10, 2014)]
[Notices]
[Page 73372]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-28875]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73737; File No. SR-ICEEU-2014-18]


Self-Regulatory Organizations; ICE Clear Europe Limited; Order 
Approving Proposed Rule Change To Provide for the Clearance of 
Additional Sovereign Contracts

December 4, 2014.

I. Introduction

    On October 20, 2014, 2014, ICE Clear Europe Limited (``ICE Clear 
Europe'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change SR-ICEEU-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 4, 2014.\3\ The 
Commission did not receive comments on the proposed rule change. For 
the reasons discussed below, the Commission is approving the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-73459 (Oct. 29, 
2014), 79 FR 65443 (Nov. 4, 2014) (SR-ICEEU-2014-18).
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II. Description of the Proposed Rule Change

    ICE Clear Europe proposes to clear additional CDS contracts that 
are Western European sovereign CDS contracts referencing the Kingdom of 
Belgium and the Republic of Austria (the ``Additional WE Sovereign 
Contracts''). ICE Clear Europe currently clears CDS contracts 
referencing four other Western European sovereigns: Ireland, the 
Republic of Italy, the Portuguese Republic and the Kingdom of Spain.\4\ 
ICE Clear Europe believes clearance of the Additional WE Sovereign 
Contracts will benefit the markets for credit default swaps on Western 
European sovereigns by offering to market participants the benefits of 
clearing, including reduction in counterparty risk and safeguarding of 
margin assets pursuant to ICE Clear Europe's rules.
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    \4\ See Exchange Act Release No. 34-71920 (Apr. 9, 2014) 79 FR 
21331 (Apr. 15, 2015) (SR-ICEEU-2014-04); (order approving rule 
change to clear other Western European sovereign CDS contracts) (the 
``Prior WE Sovereigns Order'').
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    ICE Clear Europe represents that the Additional WE Sovereign 
Contracts will constitute ``Non-STEC Single Name Contracts'' for 
purposes of the CDS Procedures and accordingly will be governed by 
Paragraph 10 of the CDS Procedures, consistent with treatment of the 
Western European sovereign CDS contracts currently cleared by ICE Clear 
Europe. Moreover, ICE Clear Europe states that clearing of the 
Additional WE Sovereign Contracts will not require any changes to ICE 
Clear Europe's existing Clearing Rules and Procedures, risk management 
framework (including relevant policies) or margin model.\5\
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    \5\ For a description of previously approved changes to ICE 
Clear Europe's risk management framework to accommodate clearing of 
Western European sovereign CDS contracts, see the Prior WE 
Sovereigns Order. ICE Clear Europe represents that it has performed 
a variety of empirical analyses related to clearing of the 
Additional WE Sovereign Contracts under its margin methodology, 
including back tests and stress tests.
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III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \6\ 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 \7\ 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.
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    \6\ 15 U.S.C. 78s(b)(2)(C).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds that clearing of the proposed Additional WE 
Sovereign Contracts is consistent with the requirements of Section 17A 
of the Act \8\ and regulations thereunder applicable to it, including 
the standards under Rule 17Ad-22.\9\ Specifically, the Commission 
believes that the proposal to clear the Additional WE Sovereign 
Contracts in the same manner as other Western European sovereign CDS 
contracts, consistent with ICE Clear Europe's existing clearing 
arrangements and related financial safeguards, protections, risk 
management policies and procedures and margin methodology, is designed 
to promote the prompt and accurate clearance and settlement of 
securities transactions, consistent with Section 17A(b)(3)(F) of the 
Act.\10\
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    \8\ 15 U.S.C. 78q-1.
    \9\ 17 CFR 240.17Ad-22.
    \10\ 15 U.S.C. 78q-1(b)(3)(F).
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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 \11\ and the 
rules and regulations thereunder.
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    \11\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-ICEEU-2014-18) be, and 
hereby is, approved.\13\
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    \12\ 15 U.S.C. 78s(b)(2).
    \13\ 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.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-28875 Filed 12-9-14; 8:45 am]
BILLING CODE 8011-01-P