Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing of a Proposed Rule Change Relating to CDS Procedures for CDX North America Index CDS Contracts, 11246-11250 [2015-04188]

Download as PDF 11246 Federal Register / Vol. 80, No. 40 / Monday, March 2, 2015 / Notices offered, and does not now intend to offer, a signature guarantee service. Also, the move towards Medallion Signature Guarantee Programs has rendered traditional card programs as provided for under Exchange Rule 13.4 obsolete. Therefore, the Exchange believes eliminating Rule 13.4 would clarify the Exchange’s rules by eliminating rules that account for services the Exchange does not provide. The Exchange also believes the elimination of unnecessary and obsolete rules removes impediments to the perfection of the mechanisms for a free and open market system consistent with the requirements of Section 6(b)(5) of the Act.13 (B) Self-Regulatory Organization’s Statement on Burden on Competition The proposed rule change does not impose any burden on competition. Rule 17Ad–15 encouraged a movement away from the traditional signature card programs administered by the exchanges towards certain Medallion Signature Guarantee Programs. In response, certain exchanges have decommissioned or amended their rules to no longer provide for a traditional signature card program.14 An investor may still obtain a signature guarantee from a financial institution that participates in one of the Medallion Signature Guarantee Programs. The Exchange has never offered, and does not intend to offer, a signature guarantee service. Also, the move towards Medallion Signature Guarantee Programs has rendered traditional card programs as provided for under Exchange Rule 13.4 obsolete. Therefore, the Exchange believes eliminating Rule 13.4 would not impose any burden on competition. (C) Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others asabaliauskas on DSK5VPTVN1PROD with NOTICES The Exchange has neither solicited nor received written comments on the proposed rule change. approving SR–PHLX–92–39 eliminating the PHLX’s signature guarantee program in light of Rule 17Ad– 15). 13 15 U.S.C. 78f(b)(5). 14 See Securities Exchange Act Release No. 34188 (June 9, 1994), 59 FR 30820 (June 15, 1994) (SR– MSTC–93–13) (order approving the elimination of MSTC’s signature guarantee program stating that Rule 17Ad–15 rendered it obsolete); Securities Exchange Act Release No. 32590 (July 7, 1993), 58 FR 37978 (July 14, 1993) (SR–PHLX–92–39) (order approving SR–PHLX–92–39 eliminating the PHLX’s signature guarantee program in light of Rule 17Ad– 15). VerDate Sep<11>2014 16:55 Feb 27, 2015 Jkt 235001 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 15 and paragraph of Rule 19b–4(f)(6) thereunder.16 At any time within 60 days of the filing of the 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. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rules 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– BYX–2015–11 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File No. SR–BYX–2015–11. 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 the 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 available publicly. All submissions should refer to File No. SR–BYX–2015– 11 and should be submitted on or before March 23, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Jill M. Peterson, Assistant Secretary. [FR Doc. 2015–04183 Filed 2–27–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74362; File No. SR–ICEEU– 2015–005] Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing of a Proposed Rule Change Relating to CDS Procedures for CDX North America Index CDS Contracts February 24, 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 February 12, 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The principal purpose of the proposed rule change is to amend the ICE Clear Europe CDS Procedures (the ‘‘CDS Procedures’’) to incorporate contract terms for the CDX North America index CDS contracts (the 17 17 15 15 U.S.C. 78s(b)(3)(A). 16 17 CFR 240.19b–4(f)(6). PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\02MRN1.SGM 02MRN1 Federal Register / Vol. 80, No. 40 / Monday, March 2, 2015 / Notices ‘‘CDX.NA Contracts’’) to be cleared by ICE Clear Europe. 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. 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 such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change asabaliauskas on DSK5VPTVN1PROD with NOTICES 1. Purpose ICE Clear Europe submits proposed amendments to its CDS Procedures to (i) revise the CDS Procedures to add a new section containing contract terms applicable to the CDX.NA Contracts that ICE Clear Europe proposes to accept for clearing; (ii) make conforming changes throughout the CDS Procedures to reference the CDX.NA Contracts; and (iii) make certain other clarifications, corrections and updates to the CDS Procedures (including for iTraxx Contracts and Single Name Contracts), as discussed in more detail herein. ICE Clear Europe also proposes to make certain modifications to its CDS Risk Model Description and CDS End-of-Day Price Discovery Policy (the ‘‘CDS Pricing Policy’’) to accommodate clearing of CDX.NA Contracts, as described herein. ICE Clear Europe proposes to amend Paragraphs 1, 4, 6, 9, 10 and 11 of the CDS Procedures. Each of these changes is described in detail as follows. All capitalized terms not defined herein are defined in the ICE Clear Europe Clearing Rules (the ‘‘Rules’’). In paragraph 1 of the CDS Procedures, references have been added to the defined terms ‘‘iTraxx Contract’’ and ‘‘CDX.NA Contract,’’ as such terms are set out in revised paragraphs 9 and 10 of the CDS Procedures, respectively. The definition of ‘‘Original Annex Date’’ has been modified to apply to CDX.NA Contracts in substantially the same manner it applies to iTraxx Contracts. In addition, the definition of ‘‘Protocol Excluded Reference Entity’’ in former paragraph 10.3 has been changed to ‘‘Protocol Excluded Corporate Reference Entity’’ and moved to paragraph 1, to reflect that such term is only used in the context of corporate reference entities. VerDate Sep<11>2014 16:55 Feb 27, 2015 Jkt 235001 Accordingly, the definition has been revised to mean an Eligible Single Name Reference Entity that is a Standard European Corporate (as specified in the List of Eligible Single Name Reference Entities) and is an Excluded Reference Entity (as defined in the 2014 CDD Protocol). (Conforming changes have been made to references to that definition throughout the CDS Procedures.) In addition, a correction has been made to the cross-reference in definition of ‘‘New Trade’’ to properly refer to the definition set out in the applicable Contract Terms for the relevant contract. In addition, amendments were also made to use the defined terms ‘‘Component Transaction’’ and ‘‘Clearing’’ (each as defined in the ICE Clear Europe Rules) throughout the Procedures in lieu of the undefined terms. Finally, various conforming references to the new or revised defined terms have been made throughout the CDS Procedures, various provisions of the CDS Procedures have been renumbered, and certain crossreferences to prior paragraph 1.71 have been corrected. Various clarifications have been made in Paragraph 9 of the CDS Procedures, which sets out the contract terms for iTraxx Contracts. Specifically, paragraph 9.1 was modified to clarify that it specifies the additional Contract Terms applicable to all iTraxx Contracts cleared by the Clearing House. Paragraph 9.2(c)(i), which applies to iTraxx Contracts which are governed by the Standard iTraxx 2014 CDS Supplement, has been modified to make certain additional clarifications relating to initial payments and spun-out trades. Paragraph 9.2(c)(i)(B) has been added to reflect current clearing house (and market) practice that initial payments under cleared iTraxx Contracts (other than those for which a bilateral transaction is already recorded in Deriv/ SERV) are made on the business day following the trade date (or, if later, the business day following the date of acceptance for clearing). New paragraph 9.2(c)(i)(D), which addresses the reference obligation for a spun-out trade following a restructuring credit event, is substantially the same as the corresponding language in paragraph 9.3(c)(i)(D) for contracts subject to the Standard iTraxx Legacy CDS Supplement and was inadvertently omitted from prior amendments. A cross-reference in paragraph 9.2(c)(i)(E) has been updated. New paragraph 9.2(c)(i)(F) provides that paragraph 5.7 of the Standard iTraxx 2014 CDS Supplement, which contains restrictions on delivery of Credit Event Notices and PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 11247 Successor Notices, does not apply to iTraxx Contracts (as the appropriate restrictions in the context of a cleared transaction are already addressed in the Rules and CDS Procedures, including Rule 1505). As set forth in paragraph 9.2(c)(ii), changes have also been made to the terms of the iTraxx 2014 Confirmation with respect to iTraxx Contracts that are governed by the Standard iTraxx 2014 CDS Supplement. These amendments include a clarification that references to the 2014 Credit Derivatives Definitions in the standard supplement and confirmation will be interpreted for cleared contracts as though they have the meaning ascribed to that term in the Rules and Procedures. In addition, a provision that there are no ‘‘Omitted Reference Entities’’ for purposes of the standard confirmation has been removed as that term is not used in the standard supplement and confirmation and is therefore unnecessary. Similar clarifications have been made in paragraph 9.3, which relates to iTraxx Contracts which are governed by the Standard iTraxx Legacy CDS Supplement. Specifically, new paragraph 9.3(c)(i)(B) contains the same clarification discussed above with respect to the initial payment date for a contract. Paragraph 9.3(c)(i)(D) contains a correction that the treatment therein of reference obligations for spun-out trades applies for reference entities subject to both Sections A and B of the Standard iTraxx Legacy CDS Supplement (that is, both protocol-excluded and nonexcluded entities). Subparagraph (F) provides that restrictions under the standard supplement as to delivery of Credit Event Notices and Succession Event Notices do not apply, as the issue is otherwise addressed under the Rules and CDS Procedures, as discussed above. In paragraph 9.3(c)(ii)(E), a reference to there being no ‘‘Omitted Reference Entities’’ has also been removed for the reasons noted above. New paragraph 10 of the CDS Procedures has been added to set out the contract terms for CDX.NA Contracts. Paragraph 10.1 provides that different sub-provisions of paragraph 10 will apply to CDX.NA Contracts depending on whether the Original Annex Date for the relevant index series falls before or after the Protocol Effective Date. New paragraph 10.2 applies to CDX.NA Contracts with an Original Annex Date on or after the Protocol Effective Date (i.e., for transactions in the September 2014 or later versions of the index). New definitions have been added to subparagraph (a), including definitions for ‘‘CDX.NA Contract’’, E:\FR\FM\02MRN1.SGM 02MRN1 asabaliauskas on DSK5VPTVN1PROD with NOTICES 11248 Federal Register / Vol. 80, No. 40 / Monday, March 2, 2015 / Notices ‘‘CDX.NA Publisher’’, ‘‘CDX.NA Terms Supplement’’, ‘‘Eligible CDX.NA Index’’, ‘‘List of Eligible CDX.NA Indices’’, and ‘‘Relevant CDX.NA Terms Supplement’’, which largely track the analogous definitions in paragraph 9 with respect to iTraxx Europe Contracts. Paragraph 10.2(b) incorporates defined terms from the Relevant CDX.NA Terms Supplement and also contains an inconsistency provision which provides that paragraph 10.2 governs over the CDX.NA 2014 CDS Supplement and CDX.NA 2014 Confirmation. Paragraph 10.2(c) contains certain amendments to the Standard CDX.NA 2014 CDS Supplement and CDX.NA 2014 Confirmation, which are generally consistent with the amendments to the iTraxx 2014 Terms Supplement and iTraxx 2014 Confirmation in paragraph 9.2(c) and are generally designed to accommodate the requirements of clearing and make the standard contract terms consistent with the Rules and Procedures. In addition, paragraph 10.2(c)(i)(E) addresses the application of the defined term ‘‘Index Party’’ in the standard supplement in the context of a cleared transaction, and paragraphs 10.2(c)(ii)(E)–(F) have been added to refer to certain transaction terms specified in the List of Eligible CDX.NA Indices for the relevant index and tenor. Paragraph 10.2(c)(i)(G) clarifies that as with iTraxx Contracts, de minimis cash settlement under the standard supplement does not apply. Paragraph 10.2(c) also indicates the transaction terms that must be specified in the submission of a trade for clearing. New paragraph 10.3 applies to CDX.NA Contracts with an Original Annex Date before the Protocol Effective Date (i.e., for transactions in older versions of the index). Paragraph 10.3 contains definitions and provisions generally similar to those in paragraph 10.2, and makes comparable amendments to the Standard CDX.NA Legacy CDS Supplement and the CDX.NA Legacy Confirmation. New paragraph 10.4 contains procedures for updating the CDX.NA index version following a Credit Event or Succession Event. These provisions are generally consistent with the comparable provisions for iTraxx contracts in paragraph 9.8. New paragraph 10.4(b) adds a similar procedure for implementing a new version of the CDX.NA standard terms supplement, if and when published, where contracts referencing the old and new versions of the supplement are determined by the Clearing House to be fungible. Existing paragraph 10, which contains contract terms for Single Name VerDate Sep<11>2014 16:55 Feb 27, 2015 Jkt 235001 Contracts, has been renumbered as paragraph 11 and cross references have been updated accordingly. In addition, various clarifying amendments have been made to this paragraph. The definitions of ‘‘STEC Contract’’ and ‘‘Non-STEC Single Name Contract’’ have been amended to clarify that the relevant Reference Entity type will be specified in the List of Eligible Single Name Reference Entities. The definition of ‘‘Single Name Contract Reference Obligations’’ has been amended to clarify that the applicable reference obligation will be specified in the List of Eligible Single Name Reference Entities and may differ between 2003type CDS Contracts and 2014-type CDS Contracts. For 2014-type CDS Contracts, the reference obligation may be designated as the Senior Level Standard Reference Obligation that is specified from time to time on the SRO List published under the 2014 ISDA Definitions. Paragraph 11.6(a)(i)(C) is amended by adding a subsection (2) that makes a clarification as to the initial payment date for Single Name Contracts that corresponds to the change in payment date discussed above for iTraxx Contracts. A change is made in paragraph 11.6(a)(ii) to conform to the changes made to the definition of Single Name Contract Reference Obligation discussed above. In general, the Clearing House’s existing risk methodology applicable to index CDS will also apply to the CDX.NA Contracts. However, ICE Clear Europe proposes to make certain amendments to its CDS Risk Model Description and CDS Pricing Policy to address CDX.NA Contracts. In the CDS Risk Model Description, the index decomposition offset methodology, which is used to determine portfolio margin benefits from correlated long and short positions, is proposed to be modified to address multi-region risk factors. Under the revised methodology, portfolio margin benefits are provided first for risk factors within the same region. After the same-region risk analysis is completed, any cross-region benefits for index risk factors are determined. Crossregion benefits apply only to index risk factors. The revised description thus addresses scenarios in which margin offsets may be provided between appropriately correlated positions in iTraxx Contracts and positions in CDX.NA Contracts. The revisions also provide that where risk factor profits and losses are calculated in different currencies, they will be converted into the same base currency (Euro) for PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 purposes of calculation of portfolio margin benefits. ICE Clear Europe also proposes to amend its CDS Pricing Policy to cover the CDX.NA Contracts. The amendments include submission requirements with respect to CDX.NA Contracts and changes to reflect that certain determinations with respect to firm trades for CDX.NA Contracts are made as of the North American end-ofday. 2. Statutory Basis ICE Clear Europe believes that the proposed rule change, and in particular the proposed clearing of the proposed CDX.NA Contracts, is consistent with the requirements of Section 17A of the Act 3 and regulations thereunder applicable to it, including the standards under Rule 17Ad–22.4 The proposed change is principally designed to permit the clearing of CDX.NA index CDS Contracts, as well as make certain clarifications and other amendments to the CDS Procedures applicable to other CDS Contracts. The CDX.NA Contract is a broad-based index CDS contract generally similar to the iTraxx Contract currently cleared by the Clearing House, with similar terms and conditions. The new index CDS contracts will be cleared in the same manner as the iTraxx Contracts, consistent with ICE Clear Europe’s existing clearing arrangements and related financial safeguards and protections. In ICE Clear Europe’s view, clearing of the CDX.NA Contracts, under such terms and arrangements, is consistent with the prompt and accurate clearance 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.5 The additional changes set forth in the proposed amendments, which generally make clarifications and corrections to the CDS Procedures for existing iTraxx and Single Name Contracts, are also consistent with this standard. The proposed amendments to the CDS Procedures, including clearing of the CDX.NA Contracts, will also satisfy the relevant requirements of Rule 17Ad– 22,6 as discussed below. Financial Resources. ICE Clear Europe will apply its existing margin methodology for index CDS contracts to 3 15 U.S.C. 78q–1. CFR 240.17Ad–22. 5 15 U.S.C. 78q–1(b)(3)(F). 6 17 CFR 240.17Ad–22. 4 17 E:\FR\FM\02MRN1.SGM 02MRN1 Federal Register / Vol. 80, No. 40 / Monday, March 2, 2015 / Notices asabaliauskas on DSK5VPTVN1PROD with NOTICES the CDX.NA Contracts, with the modifications described herein to the CDS Risk Model Description. In ICE Clear Europe’s view, the Clearing House’s margin requirements, as revised, 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).7 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 CDX.NA Contracts, consistent with the requirements of Rule 17Ad–22(b)(3).8 Operational Resources. ICE Clear Europe will have the operational and managerial capacity to clear the CDX.NA Contracts as of the commencement of clearing, consistent with the requirements of Rule 17Ad– 22(d)(4).9 ICE Clear Europe believes that its existing systems used for index CDS contracts are appropriately scalable to handle the clearing of the CDX.NA 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 index CDS for the CDX.NA Contracts. Although CDX.NA Contracts will be denominated in US dollars, ICE Clear Europe’s existing settlement systems are sufficient to handle such settlements in such currency. ICE Clear Europe believes that clearing of such contracts will therefore be consistent with the requirements of Rule 17Ad–22(d)(5), (12) and (15).10 Default Procedures. ICE Clear Europe’s existing Rules and default management policies and procedures for CDS will apply to the CDX.NA 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 CDX.NA Contracts, in accordance with Rule 17Ad–22(d)(11).11 B. Self-Regulatory Organization’s Statement on Burden on Competition ICE Clear Europe does not believe the proposed rule change, including the clearing of the CDX.NA Contracts, 7 17 CFR 240.17Ad–22(b)(2), (d)(14). CFR 240.17Ad–22(b)(3). 9 17 CFR 240.17Ad–22(d)(4). 10 17 CFR 240.17Ad–22(d)(5), (12) and (15). 11 17 CFR 240.17Ad–22(d)(11). 8 17 VerDate Sep<11>2014 16:55 Feb 27, 2015 Jkt 235001 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 CDX.NA Contracts, or the other amendments with respect to its other CDS contracts, will adversely affect the trading market for those contracts or for CDS more generally. Specifically, allowing clearing of the CDX.NA 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. ICE Clear Europe does not believe that the other amendments will materially affect the cost of clearing for the relevant contracts or adversely affect access to clearing in those contracts for Clearing Members or their customers. Moreover, ICE Clear Europe will apply its existing fair and objective criteria for eligibility to clear CDS to clearing of the CDX.NA Contracts. Accordingly ICE Clear Europe does not believe that the amendments 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 rule change 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. PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 11249 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– SR–ICEEU–2015–005 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–2015–005. 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–2015–005 and should be submitted on or before March 23, 2015. E:\FR\FM\02MRN1.SGM 02MRN1 11250 Federal Register / Vol. 80, No. 40 / Monday, March 2, 2015 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Jill M. Peterson, Assistant Secretary. [FR Doc. 2015–04188 Filed 2–27–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74359; File No. SR–BATS– 2015–14] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Eliminate Rule 13.4, ‘‘Assigning of Registered Securities in the Name of a Member or Member Organization’’ February 24, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 12, 2015, BATS Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BATS’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ‘‘noncontroversial’’ proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) thereunder,4 which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. asabaliauskas on DSK5VPTVN1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to eliminate Rule 13.4, ‘‘Assigning of Registered Securities in the Name of a Member or Member Organization.’’ The text of the proposed rule change is available at the Exchange’s Web site at www.batstrading.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). 1 15 VerDate Sep<11>2014 16:55 Feb 27, 2015 Jkt 235001 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. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to eliminate Rule 13.4, ‘‘Assigning of Registered Securities in the Name of a Member or Member Organization,’’ which permits the Exchange to establish a signature guarantee program. In sum, a signature guarantee program allows an investor who seeks to transfer or sell securities held in physical certificate form to have their signature on the certificate ‘‘guaranteed.’’ Rule 13.4 permits Members to guarantee their signatures by authorizing one or more of their employees to assign registered securities in the Member’s name and to guarantee assignments of registered securities on behalf of the Member where the security had been signed by one of the partners of the Member or by one of the authorized officers of the Member by executing and filing with the Exchange a separate Power of Attorney, also known as a traditional signature card program. Transfer agents often insist that a signature be guaranteed before they accept the transaction because it limits their liability and losses if a signature turns out to be forged. Rule 17Ad–15 under the Act permits transfer agents to reject signature guarantees from eligible guarantor institutions that are not part of a signature guarantee program.5 The rule encouraged a movement away from the traditional signature card programs administered by the exchanges towards signature guarantee programs that use a medallion imprint or stamp which evidences their participation in the program and is an acceptable signature guarantee (‘‘Medallion Signature Guarantee Program’’).6 The Commission has also noted that: 5 See 17 CFR 240.17Ad–15; Securities Exchange Act Release No. 30146 (January 10, 1992), 57 FR 1082 (February 24, 1992) (adopting Rule 17Ad–15). 6 See, e.g., Securities Exchange Act Release No. 33669 (February 23, 1994), 59 FR 10189 (March 3, 1994) (SR–MSTC–93–13) (‘‘[t]his newly adopted Rule 17Ad-15 rule rendered [Midwest Securities Trust Company’s (‘‘MSTC’’)] Signature Distribution Program and Signature Guarantee Program obsolete. Therefore, to avoid costs that produce no benefits, PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 [a]n investor can obtain a signature guarantee from a financial institution—such as a commercial bank, savings bank, credit union, or broker dealer—that participates in one of the Medallion signature guarantee programs. . . . If a financial institution is not a member of a recognized Medallion Signature Guarantee Program, it would not be able to provide signature guarantees. Also, if [an investor is] not a customer of a participating financial institution, it is likely the financial institution will not guarantee [the investor’s] signature. Therefore, the best source of a Medallion Guarantee would be a bank, savings and loan association, brokerage firm, or credit union with which [the investor does] business.7 In response to Rule 17Ad-15, certain exchanges have decommissioned or amended their rules to no longer provide for traditional signature card program.8 While the Exchange adopted Rule 13.4 as part of its Form 1 exchange application,9 it has never offered, and does not now intend to offer, a signature guarantee service. The move towards Medallion Signature Guarantee Programs has also rendered traditional card programs as provided for under Exchange Rule 13.4 obsolete. Therefore, MSTC eliminated its Signature Distribution and Signature Guarantee Programs and deleted MSTC Rule 5, Sections 1 and 2 which govern these programs’’). 7 See ‘‘Signature Guarantees: Preventing the Unauthorized Transfer of Securities,’’ https:// www.sec.gov/answers/sigguar.htm. 8 See Securities Exchange Act Release No. 34188 (June 9, 1994), 59 FR 30820 (June 15, 1994) (SR– MSTC–93–13) (order approving the elimination of MSTC’s signature guarantee program stating that Rule 17Ad-15 rendered it obsolete); Securities Exchange Act Release No. 32590 (July 7, 1993), 58 FR 37978 (July 14, 1993) (order approving SR– PHLX–92–39 eliminating the PHLX’s signature guarantee program in light of Rule 17Ad-15) (noting that ‘‘[b]y eliminating its signature guarantee program, PHLX will streamline the signature guarantee process. In place of the cumbersome signature card system, PHLX will require participation in a Rule 17Ad-15 Signature Guarantee Program’’). In 2006, the Philadelphia Stock Exchange, Inc. (currently Nasdaq OMX PHLX LLC) (‘‘PHLX’’) eliminated Rules 327—340 regarding signature guarantees in their entirety from its rulebook, noting that they are ‘‘being deleted as obsolete because they refer to the delivery and settlement of securities, which is not done by the Exchange, but by registered clearing agencies.’’ Securities Exchange Act Release No. 54329 (August 17, 2006), 71 FR 504538 (August 25, 2006) (SR– PHLX–2006–43); Securities Exchange Act Release No. 54538 (September 28, 2006), 71 FR 59184 (October 6, 2006 (order approving SR–PHLX–2006– 43). 9 See Securities Exchange Act Release Nos. 58375 (August 18, 2008), 73 FR 49498 (August 21, 2008) (File No. 10–182) (In the Matter of the Application of the BATS Exchange, Inc. for Registration as a National Securities Exchange, Findings, Opinion, and Order of the Commission); 62716 (August 13, 2010), 75 FR 51295 (August 19, 2010) (File No. 10– 198) (In the Matter of the Application of the BATS Y-Exchange, Inc. for Registration as a National Securities Exchange, Findings, Opinion, and Order of the Commission). E:\FR\FM\02MRN1.SGM 02MRN1

Agencies

[Federal Register Volume 80, Number 40 (Monday, March 2, 2015)]
[Notices]
[Pages 11246-11250]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-04188]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74362; File No. SR-ICEEU-2015-005]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of a Proposed Rule Change Relating to CDS Procedures for CDX 
North America Index CDS Contracts

February 24, 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 February 12, 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 proposed rule change is to amend the 
ICE Clear Europe CDS Procedures (the ``CDS Procedures'') to incorporate 
contract terms for the CDX North America index CDS contracts (the

[[Page 11247]]

``CDX.NA Contracts'') to be cleared by ICE Clear Europe.

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. 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 such statements.

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

1. Purpose
    ICE Clear Europe submits proposed amendments to its CDS Procedures 
to (i) revise the CDS Procedures to add a new section containing 
contract terms applicable to the CDX.NA Contracts that ICE Clear Europe 
proposes to accept for clearing; (ii) make conforming changes 
throughout the CDS Procedures to reference the CDX.NA Contracts; and 
(iii) make certain other clarifications, corrections and updates to the 
CDS Procedures (including for iTraxx Contracts and Single Name 
Contracts), as discussed in more detail herein. ICE Clear Europe also 
proposes to make certain modifications to its CDS Risk Model 
Description and CDS End-of-Day Price Discovery Policy (the ``CDS 
Pricing Policy'') to accommodate clearing of CDX.NA Contracts, as 
described herein.
    ICE Clear Europe proposes to amend Paragraphs 1, 4, 6, 9, 10 and 11 
of the CDS Procedures. Each of these changes is described in detail as 
follows. All capitalized terms not defined herein are defined in the 
ICE Clear Europe Clearing Rules (the ``Rules'').
    In paragraph 1 of the CDS Procedures, references have been added to 
the defined terms ``iTraxx Contract'' and ``CDX.NA Contract,'' as such 
terms are set out in revised paragraphs 9 and 10 of the CDS Procedures, 
respectively. The definition of ``Original Annex Date'' has been 
modified to apply to CDX.NA Contracts in substantially the same manner 
it applies to iTraxx Contracts. In addition, the definition of 
``Protocol Excluded Reference Entity'' in former paragraph 10.3 has 
been changed to ``Protocol Excluded Corporate Reference Entity'' and 
moved to paragraph 1, to reflect that such term is only used in the 
context of corporate reference entities. Accordingly, the definition 
has been revised to mean an Eligible Single Name Reference Entity that 
is a Standard European Corporate (as specified in the List of Eligible 
Single Name Reference Entities) and is an Excluded Reference Entity (as 
defined in the 2014 CDD Protocol). (Conforming changes have been made 
to references to that definition throughout the CDS Procedures.) In 
addition, a correction has been made to the cross-reference in 
definition of ``New Trade'' to properly refer to the definition set out 
in the applicable Contract Terms for the relevant contract.
    In addition, amendments were also made to use the defined terms 
``Component Transaction'' and ``Clearing'' (each as defined in the ICE 
Clear Europe Rules) throughout the Procedures in lieu of the undefined 
terms. Finally, various conforming references to the new or revised 
defined terms have been made throughout the CDS Procedures, various 
provisions of the CDS Procedures have been renumbered, and certain 
cross-references to prior paragraph 1.71 have been corrected.
    Various clarifications have been made in Paragraph 9 of the CDS 
Procedures, which sets out the contract terms for iTraxx Contracts. 
Specifically, paragraph 9.1 was modified to clarify that it specifies 
the additional Contract Terms applicable to all iTraxx Contracts 
cleared by the Clearing House. Paragraph 9.2(c)(i), which applies to 
iTraxx Contracts which are governed by the Standard iTraxx 2014 CDS 
Supplement, has been modified to make certain additional clarifications 
relating to initial payments and spun-out trades. Paragraph 
9.2(c)(i)(B) has been added to reflect current clearing house (and 
market) practice that initial payments under cleared iTraxx Contracts 
(other than those for which a bilateral transaction is already recorded 
in Deriv/SERV) are made on the business day following the trade date 
(or, if later, the business day following the date of acceptance for 
clearing). New paragraph 9.2(c)(i)(D), which addresses the reference 
obligation for a spun-out trade following a restructuring credit event, 
is substantially the same as the corresponding language in paragraph 
9.3(c)(i)(D) for contracts subject to the Standard iTraxx Legacy CDS 
Supplement and was inadvertently omitted from prior amendments. A 
cross-reference in paragraph 9.2(c)(i)(E) has been updated. New 
paragraph 9.2(c)(i)(F) provides that paragraph 5.7 of the Standard 
iTraxx 2014 CDS Supplement, which contains restrictions on delivery of 
Credit Event Notices and Successor Notices, does not apply to iTraxx 
Contracts (as the appropriate restrictions in the context of a cleared 
transaction are already addressed in the Rules and CDS Procedures, 
including Rule 1505).
    As set forth in paragraph 9.2(c)(ii), changes have also been made 
to the terms of the iTraxx 2014 Confirmation with respect to iTraxx 
Contracts that are governed by the Standard iTraxx 2014 CDS Supplement. 
These amendments include a clarification that references to the 2014 
Credit Derivatives Definitions in the standard supplement and 
confirmation will be interpreted for cleared contracts as though they 
have the meaning ascribed to that term in the Rules and Procedures. In 
addition, a provision that there are no ``Omitted Reference Entities'' 
for purposes of the standard confirmation has been removed as that term 
is not used in the standard supplement and confirmation and is 
therefore unnecessary.
    Similar clarifications have been made in paragraph 9.3, which 
relates to iTraxx Contracts which are governed by the Standard iTraxx 
Legacy CDS Supplement. Specifically, new paragraph 9.3(c)(i)(B) 
contains the same clarification discussed above with respect to the 
initial payment date for a contract. Paragraph 9.3(c)(i)(D) contains a 
correction that the treatment therein of reference obligations for 
spun-out trades applies for reference entities subject to both Sections 
A and B of the Standard iTraxx Legacy CDS Supplement (that is, both 
protocol-excluded and non-excluded entities). Subparagraph (F) provides 
that restrictions under the standard supplement as to delivery of 
Credit Event Notices and Succession Event Notices do not apply, as the 
issue is otherwise addressed under the Rules and CDS Procedures, as 
discussed above. In paragraph 9.3(c)(ii)(E), a reference to there being 
no ``Omitted Reference Entities'' has also been removed for the reasons 
noted above.
    New paragraph 10 of the CDS Procedures has been added to set out 
the contract terms for CDX.NA Contracts. Paragraph 10.1 provides that 
different sub-provisions of paragraph 10 will apply to CDX.NA Contracts 
depending on whether the Original Annex Date for the relevant index 
series falls before or after the Protocol Effective Date.
    New paragraph 10.2 applies to CDX.NA Contracts with an Original 
Annex Date on or after the Protocol Effective Date (i.e., for 
transactions in the September 2014 or later versions of the index). New 
definitions have been added to subparagraph (a), including definitions 
for ``CDX.NA Contract'',

[[Page 11248]]

``CDX.NA Publisher'', ``CDX.NA Terms Supplement'', ``Eligible CDX.NA 
Index'', ``List of Eligible CDX.NA Indices'', and ``Relevant CDX.NA 
Terms Supplement'', which largely track the analogous definitions in 
paragraph 9 with respect to iTraxx Europe Contracts. Paragraph 10.2(b) 
incorporates defined terms from the Relevant CDX.NA Terms Supplement 
and also contains an inconsistency provision which provides that 
paragraph 10.2 governs over the CDX.NA 2014 CDS Supplement and CDX.NA 
2014 Confirmation. Paragraph 10.2(c) contains certain amendments to the 
Standard CDX.NA 2014 CDS Supplement and CDX.NA 2014 Confirmation, which 
are generally consistent with the amendments to the iTraxx 2014 Terms 
Supplement and iTraxx 2014 Confirmation in paragraph 9.2(c) and are 
generally designed to accommodate the requirements of clearing and make 
the standard contract terms consistent with the Rules and Procedures. 
In addition, paragraph 10.2(c)(i)(E) addresses the application of the 
defined term ``Index Party'' in the standard supplement in the context 
of a cleared transaction, and paragraphs 10.2(c)(ii)(E)-(F) have been 
added to refer to certain transaction terms specified in the List of 
Eligible CDX.NA Indices for the relevant index and tenor. Paragraph 
10.2(c)(i)(G) clarifies that as with iTraxx Contracts, de minimis cash 
settlement under the standard supplement does not apply. Paragraph 
10.2(c) also indicates the transaction terms that must be specified in 
the submission of a trade for clearing.
    New paragraph 10.3 applies to CDX.NA Contracts with an Original 
Annex Date before the Protocol Effective Date (i.e., for transactions 
in older versions of the index). Paragraph 10.3 contains definitions 
and provisions generally similar to those in paragraph 10.2, and makes 
comparable amendments to the Standard CDX.NA Legacy CDS Supplement and 
the CDX.NA Legacy Confirmation.
    New paragraph 10.4 contains procedures for updating the CDX.NA 
index version following a Credit Event or Succession Event. These 
provisions are generally consistent with the comparable provisions for 
iTraxx contracts in paragraph 9.8. New paragraph 10.4(b) adds a similar 
procedure for implementing a new version of the CDX.NA standard terms 
supplement, if and when published, where contracts referencing the old 
and new versions of the supplement are determined by the Clearing House 
to be fungible.
    Existing paragraph 10, which contains contract terms for Single 
Name Contracts, has been renumbered as paragraph 11 and cross 
references have been updated accordingly. In addition, various 
clarifying amendments have been made to this paragraph. The definitions 
of ``STEC Contract'' and ``Non-STEC Single Name Contract'' have been 
amended to clarify that the relevant Reference Entity type will be 
specified in the List of Eligible Single Name Reference Entities. The 
definition of ``Single Name Contract Reference Obligations'' has been 
amended to clarify that the applicable reference obligation will be 
specified in the List of Eligible Single Name Reference Entities and 
may differ between 2003-type CDS Contracts and 2014-type CDS Contracts. 
For 2014-type CDS Contracts, the reference obligation may be designated 
as the Senior Level Standard Reference Obligation that is specified 
from time to time on the SRO List published under the 2014 ISDA 
Definitions.
    Paragraph 11.6(a)(i)(C) is amended by adding a subsection (2) that 
makes a clarification as to the initial payment date for Single Name 
Contracts that corresponds to the change in payment date discussed 
above for iTraxx Contracts. A change is made in paragraph 11.6(a)(ii) 
to conform to the changes made to the definition of Single Name 
Contract Reference Obligation discussed above.
    In general, the Clearing House's existing risk methodology 
applicable to index CDS will also apply to the CDX.NA Contracts. 
However, ICE Clear Europe proposes to make certain amendments to its 
CDS Risk Model Description and CDS Pricing Policy to address CDX.NA 
Contracts.
    In the CDS Risk Model Description, the index decomposition offset 
methodology, which is used to determine portfolio margin benefits from 
correlated long and short positions, is proposed to be modified to 
address multi-region risk factors. Under the revised methodology, 
portfolio margin benefits are provided first for risk factors within 
the same region. After the same-region risk analysis is completed, any 
cross-region benefits for index risk factors are determined. Cross-
region benefits apply only to index risk factors. The revised 
description thus addresses scenarios in which margin offsets may be 
provided between appropriately correlated positions in iTraxx Contracts 
and positions in CDX.NA Contracts. The revisions also provide that 
where risk factor profits and losses are calculated in different 
currencies, they will be converted into the same base currency (Euro) 
for purposes of calculation of portfolio margin benefits.
    ICE Clear Europe also proposes to amend its CDS Pricing Policy to 
cover the CDX.NA Contracts. The amendments include submission 
requirements with respect to CDX.NA Contracts and changes to reflect 
that certain determinations with respect to firm trades for CDX.NA 
Contracts are made as of the North American end-of-day.
2. Statutory Basis
    ICE Clear Europe believes that the proposed rule change, and in 
particular the proposed clearing of the proposed CDX.NA Contracts, is 
consistent with the requirements of Section 17A of the Act \3\ and 
regulations thereunder applicable to it, including the standards under 
Rule 17Ad-22.\4\ The proposed change is principally designed to permit 
the clearing of CDX.NA index CDS Contracts, as well as make certain 
clarifications and other amendments to the CDS Procedures applicable to 
other CDS Contracts. The CDX.NA Contract is a broad-based index CDS 
contract generally similar to the iTraxx Contract currently cleared by 
the Clearing House, with similar terms and conditions. The new index 
CDS contracts will be cleared in the same manner as the iTraxx 
Contracts, consistent with ICE Clear Europe's existing clearing 
arrangements and related financial safeguards and protections. In ICE 
Clear Europe's view, clearing of the CDX.NA Contracts, under such terms 
and arrangements, is consistent with the prompt and accurate clearance 
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.\5\ The 
additional changes set forth in the proposed amendments, which 
generally make clarifications and corrections to the CDS Procedures for 
existing iTraxx and Single Name Contracts, are also consistent with 
this standard.
---------------------------------------------------------------------------

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

    The proposed amendments to the CDS Procedures, including clearing 
of the CDX.NA Contracts, will also satisfy the relevant requirements of 
Rule 17Ad-22,\6\ as discussed below.
---------------------------------------------------------------------------

    \6\ 17 CFR 240.17Ad-22.
---------------------------------------------------------------------------

    Financial Resources. ICE Clear Europe will apply its existing 
margin methodology for index CDS contracts to

[[Page 11249]]

the CDX.NA Contracts, with the modifications described herein to the 
CDS Risk Model Description. In ICE Clear Europe's view, the Clearing 
House's margin requirements, as revised, 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).\7\ 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 CDX.NA Contracts, consistent with the requirements of Rule 
17Ad-22(b)(3).\8\
---------------------------------------------------------------------------

    \7\ 17 CFR 240.17Ad-22(b)(2), (d)(14).
    \8\ 17 CFR 240.17Ad-22(b)(3).
---------------------------------------------------------------------------

    Operational Resources. ICE Clear Europe will have the operational 
and managerial capacity to clear the CDX.NA Contracts as of the 
commencement of clearing, consistent with the requirements of Rule 
17Ad-22(d)(4).\9\ ICE Clear Europe believes that its existing systems 
used for index CDS contracts are appropriately scalable to handle the 
clearing of the CDX.NA Contracts.
---------------------------------------------------------------------------

    \9\ 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 index CDS for the 
CDX.NA Contracts. Although CDX.NA Contracts will be denominated in US 
dollars, ICE Clear Europe's existing settlement systems are sufficient 
to handle such settlements in such currency. ICE Clear Europe believes 
that clearing of such contracts will therefore be consistent with the 
requirements of Rule 17Ad-22(d)(5), (12) and (15).\10\
---------------------------------------------------------------------------

    \10\ 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 CDX.NA 
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 
CDX.NA Contracts, in accordance with Rule 17Ad-22(d)(11).\11\
---------------------------------------------------------------------------

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

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

    ICE Clear Europe does not believe the proposed rule change, 
including the clearing of the CDX.NA 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 CDX.NA Contracts, 
or the other amendments with respect to its other CDS contracts, will 
adversely affect the trading market for those contracts or for CDS more 
generally. Specifically, allowing clearing of the CDX.NA 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. ICE 
Clear Europe does not believe that the other amendments will materially 
affect the cost of clearing for the relevant contracts or adversely 
affect access to clearing in those contracts for Clearing Members or 
their customers. Moreover, ICE Clear Europe will apply its existing 
fair and objective criteria for eligibility to clear CDS to clearing of 
the CDX.NA Contracts. Accordingly ICE Clear Europe does not believe 
that the amendments 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 rule change 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-SR-ICEEU-2015-005 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-2015-005. 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-2015-005 
and should be submitted on or before March 23, 2015.


[[Page 11250]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Jill M. Peterson,
Assistant Secretary.
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-04188 Filed 2-27-15; 8:45 am]
BILLING CODE 8011-01-P
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