Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing of Proposed Rule Change Relating to Additional European Sovereign CDS Contracts, 7661-7663 [2015-02751]

Download as PDF Federal Register / Vol. 80, No. 28 / Wednesday, February 11, 2015 / Notices compliance is comparable, though not identical, to the approach used by the New York Stock Exchange. Thus the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.12 At any time within 60 days of the filing of such proposed rule change, the Commission summarily may 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) 13 of the Act to determine whether the proposed rule change should be approved or disapproved. 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 the filing also will be available for inspection and copying at the NYSE’s principal office and on its Internet Web site at www.nyse.com. 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– NYSEMKT–2015–09 and should be submitted on or before March 4, 2015. 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Brent J. Fields, Secretary. tkelley on DSK3SPTVN1PROD with NOTICES 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– NYSEMKT–2015–09 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–NYSEMKT–2015–09. 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 12 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 13 15 U.S.C. 78s(b)(2)(B). VerDate Sep<11>2014 17:07 Feb 10, 2015 Jkt 235001 [FR Doc. 2015–02747 Filed 2–10–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 74213; File No. SR–ICEEU– 2015–004] Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing of Proposed Rule Change Relating to Additional European Sovereign CDS Contracts February 5, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 27, 2015, ICE Clear Europe Limited (‘‘ICE Clear Europe’’) 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. 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 7661 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The principal purpose of the change is to provide for the clearance of additional CDS contracts that are Western European sovereign CDS contracts referencing the Kingdom of the Netherlands, the Republic of Finland, the Kingdom of Sweden and the Kingdom of Denmark (the ‘‘Additional WE Sovereign Contracts’’). 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 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 The purpose of the proposed rule change is for ICE Clear Europe to offer clearing of Western European sovereign CDS contracts referencing four additional reference entities: the Kingdom of the Netherlands, the Republic of Finland, the Kingdom of Sweden and the Kingdom of Denmark. ICE Clear Europe currently clears CDS contracts referencing six other Western European sovereigns: Ireland, the Republic of Italy, the Portuguese Republic, the Kingdom of Spain, the Kingdom of Belgium and the Republic of Austria.3 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 3 See Securities Exchange Act Release No. 34– 71920 (April 9, 2014), 79 FR 21331 (April 15, 2015) (File No. SR–ICEEU–2014–04) (order approving rule changes to clear Western European sovereign CDS contracts); Securities Exchange Act Release No. 34– 73737 (December 4, 2014), 79 FR 73372 (December 10, 2014) (File No. SR–ICEEU–2014–18) (order approving rule changes to clear additional Western European sovereign CDS contracts) (the ‘‘Prior WE Sovereigns Orders’’). E:\FR\FM\11FEN1.SGM 11FEN1 7662 Federal Register / Vol. 80, No. 28 / Wednesday, February 11, 2015 / Notices margin assets pursuant to clearing house rules. 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. Clearing of the Additional WE Sovereign Contracts will not require any changes to ICE Clear Europe’s existing Clearing Rules and Procedures. In addition, clearing of the Additional WE Sovereign Contracts will not require any changes in ICE Clear Europe’s risk management framework (including relevant policies) or margin model.4 tkelley on DSK3SPTVN1PROD with NOTICES 2. Statutory Basis ICE Clear Europe believes that clearing of the proposed Additional WE Sovereign Contracts is consistent with the requirements of Section 17A of the Act 5 and regulations thereunder applicable to it, including the standards under Rule 17Ad–22.6 The Additional WE Sovereign Contracts are substantially similar to the other Western European sovereign CDS contracts currently cleared by ICE Clear Europe. The additional contracts will be cleared in the same manner as such 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 (including those enhancements for Western European sovereign contracts previously adopted and approved in the Prior WE Sovereigns Orders). In ICE Clear Europe’s view, clearing of the Additional WE Sovereign CDS contracts, under such terms and arrangements, is consistent with the prompt and accurate clearance of and settlement of securities transactions and derivative agreements, contracts and transactions cleared by ICE Clear Europe, the safeguarding of securities and funds in the custody or control of ICE Clear Europe and the protection of investors and the public interest, within the meaning of Section 17A(b)(3)(F) of 4 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 Orders. ICE Clear Europe 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. 5 15 U.S.C. 78q–1. 6 17 CFR 240.17Ad–22. VerDate Sep<11>2014 17:07 Feb 10, 2015 Jkt 235001 the Act.7 Clearing of the Additional WE Sovereign Contracts will also satisfy the relevant requirements of Rule 17Ad– 22,8 as discussed below. Financial Resources. ICE Clear Europe will apply its existing margin methodology for Western European sovereign CDS contracts to the Additional WE Sovereign Contracts. ICE Clear Europe believes that this model will provide sufficient margin to cover its credit exposure to its clearing members from clearing such contracts, consistent with the requirements of Rule 17Ad–22(b)(2) and Rule 17Ad– 22(d)(14).9 In addition, ICE Clear Europe believes the CDS Guaranty Fund, under its existing methodology, will, together with the required margin, provide sufficient financial resources to support the clearing of Additional WE Sovereign Contracts consistent with the requirements of Rule 17Ad–22(b)(3).10 Operational Resources. ICE Clear Europe will have the operational and managerial capacity to clear the Additional WE Sovereign Contracts as of the commencement of clearing, consistent with the requirements of Rule 17Ad–22(d)(4).11 ICE Clear Europe believes that its existing systems used for sovereign CDS contracts are appropriately scalable to handle the clearing of the Additional WE Sovereign Contracts. Settlement. ICE Clear Europe will use its existing settlement procedures (including for physical settlements), account structures and approved financial institutions as used in other sovereign CDS clearing for the Additional WE Sovereign Contracts. ICE Clear Europe believes that clearing of the Additional WE Sovereign Contracts will therefore be consistent with the requirements of Rule 17Ad–22(d)(5), (12) and (15).12 Default Procedures. ICE Clear Europe’s existing Rules and default management policies and procedures for CDS will apply to the Additional WE Sovereign Contracts. ICE Clear Europe believes that the Rules and procedures allow for it to take timely action to contain losses and liquidity pressures and to continue meeting its obligations in the event of clearing member insolvencies or defaults, including in respect of Additional WE Sovereign Contracts, in accordance with Rule 17Ad–22(d)(11).13 7 15 U.S.C. 78q–1(b)(3)(F). CFR 240.17Ad–22. 9 17 CFR 240.17Ad–22(b)(2), (d)(14). 10 17 CFR 240.17Ad–22(b)(3). 11 17 CFR 240.17Ad–22(d)(4). 12 17 CFR 240.17Ad–22(d)(5), (12) and (15). 13 17 CFR 240.17Ad–22(d)(11). 8 17 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 Governance. As discussed in further detail in the Prior WE Sovereigns Orders, although the margin model applicable to Western European sovereign CDS contracts, including the Additional WE Sovereign Contracts, may result in clearing members being subject to different margin charges based on their domicile and correlation with the underlying sovereign, ICE Clear Europe believes that the margin model properly aligns the margin requirements to the risks presented by particular clearing members. Moreover, the model operates without the need for ICE Clear Europe (or its management, Board or CDS Risk Committee) to exercise discretion concerning particular clearing members or the margin levels applicable to them. As a result, in ICE Clear Europe’s view, the clearing of such contracts does not result in unfair discrimination among clearing members within the meaning of Section 17A(b)(3)(F) of the Act and Rule 17Ad– 22(d)(8).14 B. Self-Regulatory Organization’s Statement on Burden on Competition ICE Clear Europe does not believe the proposed Additional WE Sovereign Contracts would have any impact, or impose any burden, on competition not necessary or appropriate in furtherance of the purpose of the Act. ICE Clear Europe does not anticipate that its commencement of clearing for the Additional WE Sovereign Contracts will adversely affect the trading market for those contracts or for CDS more generally. Specifically, allowing clearing of the Additional WE Sovereign Contracts will provide market participants with the additional choice to have their transactions in these types of contracts cleared, and should generally promote the further development of the market for these contracts. Moreover, ICE Clear Europe has established fair and objective criteria for eligibility to clear the Additional WE Sovereign Contracts, consistent with its criteria for other cleared CDS. Although clearance of Additional WE Sovereign Contracts may result in higher margin requirements for some clearing members as a result of the general wrong way risk component of the margin model, ICE Clear Europe believes that the model properly aligns margin requirements to the risks presented by such clearing members with respect to the Additional WE Sovereign Contracts. As a result, ICE Clear Europe is of the view that these 14 15 U.S.C. 78q–1(b)(3)(F); 17 CFR 240.17Ad– 22(d)(8). E:\FR\FM\11FEN1.SGM 11FEN1 Federal Register / Vol. 80, No. 28 / Wednesday, February 11, 2015 / Notices changes are necessary and appropriate in furtherance of the purpose of the Act and the Commission’s regulations thereunder, including the financial resources and risk management requirements of Rule 17Ad–22.15 Furthermore, ICE Clear Europe does not believe that any such increase in margin requirements would significantly affect the ability of clearing members or other market participants to continue to clear CDS, consistent with the risk management requirements of the clearing house, or otherwise limit market participants’ choices for selecting clearing services. Accordingly ICE Clear Europe does not believe that clearance of the Additional WE Sovereign Contracts will impose any burden on competition not necessary or appropriate in furtherance of the purposes 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 acceptance of the Additional WE Sovereign Contracts for clearing 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 tkelley on DSK3SPTVN1PROD with NOTICES 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: • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml) or CFR 240.17Ad–22. VerDate Sep<11>2014 17:07 Feb 10, 2015 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–2015–004. 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 also will 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–2015–004 and should be submitted on or before March 4, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Brent J. Fields, Secretary. [FR Doc. 2015–02751 Filed 2–10–15; 8:45 am] Electronic Comments 15 17 • Send an email to rule-comments@ sec.gov. Please include File Number SR– ICEEU–2015–004 on the subject line. 16 17 Jkt 235001 PO 00000 CFR 200.30–3(a)(12). Frm 00100 Fmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74210; File No. SR–BOX– 2014–28] Self-Regulatory Organizations; BOX Options Exchange LLC; Order Approving Proposed Rule Change Adopt BOX Rule 7300 To Allow the Exchange To Trade Preferenced Orders February 5, 2015. I. Introduction On December 8, 2014, BOX Options Exchange LLC (‘‘BOX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) a proposed rule change pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 to permit BOX Options Participants (‘‘Participants’’) to submit orders for which a Market Maker is designated to receive an Preferred allocation on the Exchange (‘‘Preferenced Orders’’). The proposed rule change was published in the Federal Register on December 24, 2014.3 This order approves the proposed rule change. II. Description of the Proposed Rule Change As described in more detail below, the Exchange proposes to adopt new BOX Rule 7300 to establish a program that will permit Participants to submit Preferenced Orders to Market Makers and for Maker Makers to receive Preferred allocations on such orders.4 As proposed, a Preferenced Order is any order, whether on a single options instrument or on a Complex Order Strategy, for which a Preferred Market Maker is designated with respect to such order, upon submission of such order to BOX.5 A Preferred Market Maker is a Market Maker designated as such by a Participant with respect to an order submitted by such Participant to BOX.6 All order types and designations available on BOX will be eligible to be entered as Preferenced Orders, except for Customer Cross Orders (which do not involve market makers) and Directed Orders (which relate to BOX’s PIP and COPIP matching algorithms).7 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 73878 (December 18, 2014), 79 FR 77579 (‘‘Notice’’). 4 See Notice, supra note 3 at 77579. 5 Proposed BOX Rule 7300(a)(1). 6 Proposed BOX Rule 7300(a)(2). 7 Proposed BOX Rule 7300(d). 2 17 BILLING CODE 8011–01–P Sfmt 4703 7663 E:\FR\FM\11FEN1.SGM 11FEN1

Agencies

[Federal Register Volume 80, Number 28 (Wednesday, February 11, 2015)]
[Notices]
[Pages 7661-7663]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-02751]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 74213; File No. SR-ICEEU-2015-004]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of Proposed Rule Change Relating to Additional European 
Sovereign CDS Contracts

February 5, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 27, 2015, ICE Clear Europe Limited (``ICE Clear Europe'') 
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 provide for the clearance 
of additional CDS contracts that are Western European sovereign CDS 
contracts referencing the Kingdom of the Netherlands, the Republic of 
Finland, the Kingdom of Sweden and the Kingdom of Denmark (the 
``Additional WE Sovereign Contracts'').

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 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
    The purpose of the proposed rule change is for ICE Clear Europe to 
offer clearing of Western European sovereign CDS contracts referencing 
four additional reference entities: the Kingdom of the Netherlands, the 
Republic of Finland, the Kingdom of Sweden and the Kingdom of Denmark. 
ICE Clear Europe currently clears CDS contracts referencing six other 
Western European sovereigns: Ireland, the Republic of Italy, the 
Portuguese Republic, the Kingdom of Spain, the Kingdom of Belgium and 
the Republic of Austria.\3\ 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

[[Page 7662]]

margin assets pursuant to clearing house rules.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 34-71920 (April 9, 
2014), 79 FR 21331 (April 15, 2015) (File No. SR-ICEEU-2014-04) 
(order approving rule changes to clear Western European sovereign 
CDS contracts); Securities Exchange Act Release No. 34-73737 
(December 4, 2014), 79 FR 73372 (December 10, 2014) (File No. SR-
ICEEU-2014-18) (order approving rule changes to clear additional 
Western European sovereign CDS contracts) (the ``Prior WE Sovereigns 
Orders'').
---------------------------------------------------------------------------

    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. Clearing of the 
Additional WE Sovereign Contracts will not require any changes to ICE 
Clear Europe's existing Clearing Rules and Procedures. In addition, 
clearing of the Additional WE Sovereign Contracts will not require any 
changes in ICE Clear Europe's risk management framework (including 
relevant policies) or margin model.\4\
---------------------------------------------------------------------------

    \4\ 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 Orders. ICE Clear Europe 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.
---------------------------------------------------------------------------

2. Statutory Basis
    ICE Clear Europe believes that clearing of the proposed Additional 
WE Sovereign Contracts is consistent with the requirements of Section 
17A of the Act \5\ and regulations thereunder applicable to it, 
including the standards under Rule 17Ad-22.\6\ The Additional WE 
Sovereign Contracts are substantially similar to the other Western 
European sovereign CDS contracts currently cleared by ICE Clear Europe. 
The additional contracts will be cleared in the same manner as such 
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 (including those enhancements for Western European 
sovereign contracts previously adopted and approved in the Prior WE 
Sovereigns Orders). In ICE Clear Europe's view, clearing of the 
Additional WE Sovereign CDS contracts, under such terms and 
arrangements, is consistent with the prompt and accurate clearance of 
and settlement of securities transactions and derivative agreements, 
contracts and transactions cleared by ICE Clear Europe, the 
safeguarding of securities and funds in the custody or control of ICE 
Clear Europe and the protection of investors and the public interest, 
within the meaning of Section 17A(b)(3)(F) of the Act.\7\ Clearing of 
the Additional WE Sovereign Contracts will also satisfy the relevant 
requirements of Rule 17Ad-22,\8\ as discussed below.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78q-1.
    \6\ 17 CFR 240.17Ad-22.
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
    \8\ 17 CFR 240.17Ad-22.
---------------------------------------------------------------------------

    Financial Resources. ICE Clear Europe will apply its existing 
margin methodology for Western European sovereign CDS contracts to the 
Additional WE Sovereign Contracts. ICE Clear Europe believes that this 
model will provide sufficient margin to cover its credit exposure to 
its clearing members from clearing such contracts, consistent with the 
requirements of Rule 17Ad-22(b)(2) and Rule 17Ad-22(d)(14).\9\ In 
addition, ICE Clear Europe believes the CDS Guaranty Fund, under its 
existing methodology, will, together with the required margin, provide 
sufficient financial resources to support the clearing of Additional WE 
Sovereign Contracts consistent with the requirements of Rule 17Ad-
22(b)(3).\10\
---------------------------------------------------------------------------

    \9\ 17 CFR 240.17Ad-22(b)(2), (d)(14).
    \10\ 17 CFR 240.17Ad-22(b)(3).
---------------------------------------------------------------------------

    Operational Resources. ICE Clear Europe will have the operational 
and managerial capacity to clear the Additional WE Sovereign Contracts 
as of the commencement of clearing, consistent with the requirements of 
Rule 17Ad-22(d)(4).\11\ ICE Clear Europe believes that its existing 
systems used for sovereign CDS contracts are appropriately scalable to 
handle the clearing of the Additional WE Sovereign Contracts.
---------------------------------------------------------------------------

    \11\ 17 CFR 240.17Ad-22(d)(4).
---------------------------------------------------------------------------

    Settlement. ICE Clear Europe will use its existing settlement 
procedures (including for physical settlements), account structures and 
approved financial institutions as used in other sovereign CDS clearing 
for the Additional WE Sovereign Contracts. ICE Clear Europe believes 
that clearing of the Additional WE Sovereign Contracts will therefore 
be consistent with the requirements of Rule 17Ad-22(d)(5), (12) and 
(15).\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 240.17Ad-22(d)(5), (12) and (15).
---------------------------------------------------------------------------

    Default Procedures. ICE Clear Europe's existing Rules and default 
management policies and procedures for CDS will apply to the Additional 
WE Sovereign Contracts. ICE Clear Europe believes that the Rules and 
procedures allow for it to take timely action to contain losses and 
liquidity pressures and to continue meeting its obligations in the 
event of clearing member insolvencies or defaults, including in respect 
of Additional WE Sovereign Contracts, in accordance with Rule 17Ad-
22(d)(11).\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 240.17Ad-22(d)(11).
---------------------------------------------------------------------------

    Governance. As discussed in further detail in the Prior WE 
Sovereigns Orders, although the margin model applicable to Western 
European sovereign CDS contracts, including the Additional WE Sovereign 
Contracts, may result in clearing members being subject to different 
margin charges based on their domicile and correlation with the 
underlying sovereign, ICE Clear Europe believes that the margin model 
properly aligns the margin requirements to the risks presented by 
particular clearing members. Moreover, the model operates without the 
need for ICE Clear Europe (or its management, Board or CDS Risk 
Committee) to exercise discretion concerning particular clearing 
members or the margin levels applicable to them. As a result, in ICE 
Clear Europe's view, the clearing of such contracts does not result in 
unfair discrimination among clearing members within the meaning of 
Section 17A(b)(3)(F) of the Act and Rule 17Ad-22(d)(8).\14\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78q-1(b)(3)(F); 17 CFR 240.17Ad-22(d)(8).
---------------------------------------------------------------------------

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

    ICE Clear Europe does not believe the proposed Additional WE 
Sovereign Contracts would have any impact, or impose any burden, on 
competition not necessary or appropriate in furtherance of the purpose 
of the Act. ICE Clear Europe does not anticipate that its commencement 
of clearing for the Additional WE Sovereign Contracts will adversely 
affect the trading market for those contracts or for CDS more 
generally. Specifically, allowing clearing of the Additional WE 
Sovereign Contracts will provide market participants with the 
additional choice to have their transactions in these types of 
contracts cleared, and should generally promote the further development 
of the market for these contracts. Moreover, ICE Clear Europe has 
established fair and objective criteria for eligibility to clear the 
Additional WE Sovereign Contracts, consistent with its criteria for 
other cleared CDS.
    Although clearance of Additional WE Sovereign Contracts may result 
in higher margin requirements for some clearing members as a result of 
the general wrong way risk component of the margin model, ICE Clear 
Europe believes that the model properly aligns margin requirements to 
the risks presented by such clearing members with respect to the 
Additional WE Sovereign Contracts. As a result, ICE Clear Europe is of 
the view that these

[[Page 7663]]

changes are necessary and appropriate in furtherance of the purpose of 
the Act and the Commission's regulations thereunder, including the 
financial resources and risk management requirements of Rule 17Ad-
22.\15\ Furthermore, ICE Clear Europe does not believe that any such 
increase in margin requirements would significantly affect the ability 
of clearing members or other market participants to continue to clear 
CDS, consistent with the risk management requirements of the clearing 
house, or otherwise limit market participants' choices for selecting 
clearing services. Accordingly ICE Clear Europe does not believe that 
clearance of the Additional WE Sovereign Contracts will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act.
---------------------------------------------------------------------------

    \15\ 17 CFR 240.17Ad-22.
---------------------------------------------------------------------------

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

    Written comments relating to the acceptance of the Additional WE 
Sovereign Contracts for clearing 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-2015-004 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-2015-004. 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 also will 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-2015-004 
and should be submitted on or before March 4, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-02751 Filed 2-10-15; 8:45 am]
BILLING CODE 8011-01-P
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