Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change To Provide for the Clearance of Additional Credit Default Swap Contracts, 76987-76988 [2016-26644]

Download as PDF Federal Register / Vol. 81, No. 214 / Friday, November 4, 2016 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79197; File No. SR–ICC– 2016–012] Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change To Provide for the Clearance of Additional Credit Default Swap Contracts October 31, 2016. asabaliauskas on DSK3SPTVN1PROD with NOTICES I. Introduction On August 29, 2016, ICE Clear Credit LLC (‘‘ICC’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to provide for the clearance of additional Standard Emerging Market Sovereign CDS contracts (collectively, ‘‘EM Contracts’’), 2003 ISDA Definitions of Standard Western European Sovereign CDS contracts (collectively, ‘‘SWES Contracts’’), and an additional Asia/ Pacific Sovereign CDS contract (the ‘‘Asia/Pacific Contract’’). The proposed rule change was published for comment in the Federal Register on September 16, 2016.3 The Commission did not receive comments on the proposed rule change. For the reasons discussed below, the Commission is approving the proposed rule change. II. Description of the Proposed Rule Change The purpose of the proposed rule change is to adopt rules that will provide the basis for ICC to clear additional credit default swap contracts. ICC has proposed amending Subchapter 26D of its Rules to provide for the clearance of additional EM Contracts, specifically the Republic of Panama, Abu Dhabi, Dubai, the State of Israel and the State of Qatar. ICC plans to offer these additional EM Contracts on the 2003 and 2014 ISDA Credit Derivatives Definitions. ICC represents that these additional EM Contracts have terms consistent with the other EM Contracts approved for clearing at ICC and governed by Subchapter 26D of the Rules. Minor revisions to Subchapter 26D (Standard Emerging Market Sovereign (‘‘SES’’) Single Name) will also be made to provide for clearing the additional EM Contracts. Specifically, in Rule 26D–102 (Definitions), ‘‘Eligible SES Reference 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Securities Exchange Act Release No. 34–78818 (Sept. 12, 2016), 81 FR 63831 (Sept. 19, 2016) (SR– ICC–2016–012). 2 17 VerDate Sep<11>2014 17:52 Nov 03, 2016 Jkt 241001 Entities’’ will be modified to include the Republic of Panama, Abu Dhabi, Dubai, the State of Israel and the State of Qatar in the list of specific Eligible SES Reference Entities to be cleared by ICC. Additionally, ICC has proposed amending Subchapter 26I of its Rules to provide for the clearance of 2003 ISDA Definitions of SWES Contracts. ICC currently clears the 2014 ISDA Definitions of ten SWES Contracts, namely the Republic of Ireland, the Italian Republic, the Portuguese Republic, the Kingdom of Spain, the Kingdom of Belgium, the Republic of Austria, the Kingdom of the Netherlands, the Federal Republic of Germany, the French Republic and the United Kingdom of Great Britain and Northern Ireland. The proposed changes to Subchapter 26I will allow ICC to offer clearing for the 2003 ISDA Definitions of these SWES Contracts. Minor revisions to Subchapter 26I (Standard Western European (‘‘SWES’’) Single Name) will be made to provide for clearing the 2003 ISDA Definitions of SWES Contracts. Specifically, in Rule 26I–102 (Definitions), the definitions of ‘‘Eligible SWES Reference Obligations’’, ‘‘List of Eligible SWES Reference Entities’’ and ‘‘SWES Contract Reference Obligations’’ will be updated to distinguish between the 2003- and 2014Type CDS Contracts, and the corresponding Applicable Credit Derivatives Definitions.4 Rule 26I–309 (Acceptance of SWES Contracts by ICE Clear Credit) will be revised in part (c) to note that a CDS Participant may not submit a Trade for clearance as a SWES contract, and any such Trade shall not be a Confirming Trade, if the acceptance would be at a time when the CDS Participant (or any Non-Participant Party for whom such CDS Participant is acting) is, or is an Affiliate of, the Eligible SWES Reference Entity for such SWES Contract or is subject to an agreement under which it is reasonably likely that the CDS Participant (or any such Non-Participant Party) will become, or will become an Affiliate of, the Eligible SWES Reference Entity for such SWES Contract. Rule 26I–309 will also be revised in part (e) to address and distinguish between relevant successor or other events under both 2003- and 2014-Type CDS Contracts, and the corresponding Applicable Credit Derivatives Definitions. Rule 26I–315 (Terms of the Cleared SWES Contract) will be revised to provide reference to provisions of the proper ISDA Definitions, and corresponding changes to provision 4 As defined in Rule 20–102 (Applicable Credit Derivatives Definitions). PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 76987 numbering will be made as necessary. Rule 26I–315(h) will be revised to refer to the Applicable Credit Derivatives Definitions and eligible Seniority Level, as appropriate. Defined terms in Rule 26I–316 (Physical Settlement Matrix Updates) will be updated to refer specifically to SWES contracts. Rule 26I–616 (Contract Modification) will be revised to note that it shall not constitute a Contract Modification if the Board (or its designee) updates the List of Eligible SWES Reference Entities (and modifies the terms and conditions of related SWES Contracts) to give effect to determinations of Succession Events. Finally, ICC has proposed amending Subchapter 26L of its rules to provide for the clearance of an additional Asia/ Pacific Contract, namely the Kingdom of Thailand. ICC plans to offer this contract on the 2003 and 2014 ISDA Credit Derivatives Definitions. ICC represents that the additional Asia/Pacific Contract has terms consistent with the other Asia/Pacific Contracts approved for clearing at ICC and governed by Subchapter 26L of the Rules. Minor revisions to Subchapter 26L (Asia/Pacific Sovereign (‘‘SAS’’) Single Name) will be made to provide for clearing the additional Asia/Pacific Contract. Specifically, in Rule 26L–102 (Definitions), ‘‘Eligible SAS Reference Entities’’ will be modified to include the Kingdom of Thailand in the list of specific Eligible SAS Reference Entities to be cleared by ICC. III. Discussion and Commission Findings Section 19(b)(2)(C) of the Act 5 directs the Commission to approve a proposed rule change of a self-regulatory organization if the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to such selfregulatory organization. Section 17A(b)(3)(F) of the Act 6 requires, among other things, that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions, and to the extent applicable, derivative agreements, contracts and transactions, to assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible and, in general, to protect investors and the public interest. ICC has represented that the additional EM Contracts, Asia/Pacific 5 15 6 15 U.S.C. 78s(b)(2)(C). U.S.C. 78q–1(b)(3)(F). E:\FR\FM\04NON1.SGM 04NON1 76988 Federal Register / Vol. 81, No. 214 / Friday, November 4, 2016 / Notices Contract and the 2003 ISDA Definitions of SWES Contracts proposed for clearing are similar to the EM, SWES and Asia/ Pacific Contracts that are currently cleared by ICC. ICC also represents that these contracts will be cleared pursuant to ICC’s existing clearing arrangements and related financial safeguards, protections and risk management procedures. The Commission therefore finds that the proposed rule change is designed to promote the prompt and accurate clearance and settlement of securities transactions and, to the extent applicable, derivative agreements, contracts, and transactions, and to assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible and, in general, to protect investors and the public interest. IV. Conclusion On the basis of the foregoing, the Commission finds that the proposal is consistent with the requirements of the Act 7 and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,8 that the proposed rule change (File No. SR–ICC– 2016–012) be, and hereby is, approved.9 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Brent J. Fields, Secretary. [FR Doc. 2016–26644 Filed 11–3–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79198; File No. SR–MIAX– 2016–37] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule October 31, 2016. asabaliauskas on DSK3SPTVN1PROD with NOTICES Pursuant to the provisions of 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 October 17, 2016, Miami International Securities Exchange LLC 7 15 U.S.C. 78q–1. 8 15 U.S.C. 78s(b)(2). 9 In approving the proposed rule change, the Commission considered the proposal’s impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). 10 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. VerDate Sep<11>2014 17:52 Nov 03, 2016 Jkt 241001 (‘‘MIAX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. 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 Exchange is filing a proposal to amend the MIAX Options Fee Schedule (the ‘‘Fee Schedule’’). While changes to the Fee Schedule pursuant to this proposal are effective upon filing, the Exchange has designated these changes to be operative on October 17, 2016. The text of the proposed rule change is available on the Exchange’s Web site at https://www.miaxoptions.com/filter/ wotitle/rule_filing, at MIAX’s principal office, 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 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 aspects 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 amend the MIAX Options Fee Schedule (the ‘‘Fee Schedule’’) to offer two (2) additional Limited Service MIAX Express Interface (‘‘MEI’’) Ports to Market Makers.3 Currently, MIAX assesses monthly MEI Port Fees on Market Makers based upon the number of MIAX matching engines 4 used by the Market Maker. 3 The term ‘‘Market Makers’’ refers to Lead Market Makers (‘‘LMMs’’), Primary Lead Market Makers (‘‘PLMMs’’), and Registered Market Makers (‘‘RMMs’’) collectively. See Exchange Rule 100. 4 A ‘‘matching engine’’ is a part of the MIAX electronic system that processes options quotes and trades on a symbol-by-symbol basis. Some matching engines will process option classes with multiple root symbols, and other matching engines will be dedicated to one single option root symbol (for example, options on SPY will be processed by one PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 Market Makers are allocated two (2) Full Service MEI Ports 5 and two (2) Limited Service MEI Ports 6 per matching engine to which they connect. The Exchange currently assesses the following MEI Port fees: (i) $5,000 for Market Maker Assignments in up to 5 option classes or up to 10% of option classes by volume; (ii) $10,000 for Market Maker Assignments in up to 10 option classes or up to 20% of option classes by volume; (iii) $14,000 for Market Maker Assignments in up to 40 option classes or up to 35% of option classes by volume; (iv) $17,500 for Market Maker Assignments in up to 100 option classes or up to 50% of option classes by volume; and (v) $20,500.00 for Market Maker Assignments in over 100 option classes or over 50% of option classes by volume up to all option classes listed on MIAX.7 In each of the foregoing categories, the stated fee applies if the less of the two applicable measurements is met. For example, a Market Maker that wishes to make markets in just one symbol would require the two (2) MEI Ports in a single matching engine; a Market Maker wishing to make markets in all symbols traded on MIAX would require the two (2) MEI Ports in each of the Exchange’s matching engines. The Exchange also currently charges $50 per month for each additional Limited Service MEI Port per matching engine for Market Makers over and above the two (2) Limited Service MEI Ports per matching engine that are allocated with the Full Service MEI Ports. The Full Service MEI Ports, Limited Service MEI Ports, and the additional Limited Service MEI Ports all include access to MIAX’s primary and secondary data centers and its disaster recovery center. The Exchange originally added the Limited Service MEI Ports to enhance the MEI Port connectivity made available to Market Makers, and has subsequently made additional Limited Service MEI Ports available to Market single matching engine that is dedicated only to SPY). A particular root symbol may only be assigned to a single designated matching engine. A particular root symbol may not be assigned to multiple matching engines. 5 Full Service MEI Ports provide Market Makers with the ability to send Market Maker quotes, eQuotes, and quote purge messages to the MIAX System. Full Service MEI Ports are also capable of receiving administrative information. Market Makers are limited to two Full Service MEI Ports per matching engine. 6 Limited Service MEI Ports provide Market Makers with the ability to send eQuotes and quote purge messages only, but not Market Maker Quotes, to the MIAX System. Limited Service MEI Ports are also capable of receiving administrative information. Market Makers initially receive two Limited Service MEI Ports per matching engine. 7 See MIAX Fee Schedule, Section 5)d)ii). E:\FR\FM\04NON1.SGM 04NON1

Agencies

[Federal Register Volume 81, Number 214 (Friday, November 4, 2016)]
[Notices]
[Pages 76987-76988]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26644]



[[Page 76987]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79197; File No. SR-ICC-2016-012]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change To Provide for the Clearance of 
Additional Credit Default Swap Contracts

October 31, 2016.

I. Introduction

    On August 29, 2016, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act (``Act'') \1\ and Rule 
19b-4 thereunder,\2\ a proposed rule change to provide for the 
clearance of additional Standard Emerging Market Sovereign CDS 
contracts (collectively, ``EM Contracts''), 2003 ISDA Definitions of 
Standard Western European Sovereign CDS contracts (collectively, ``SWES 
Contracts''), and an additional Asia/Pacific Sovereign CDS contract 
(the ``Asia/Pacific Contract''). The proposed rule change was published 
for comment in the Federal Register on September 16, 2016.\3\ The 
Commission did not receive comments on the proposed rule change. For 
the reasons discussed below, the Commission is approving the proposed 
rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-78818 (Sept. 12, 
2016), 81 FR 63831 (Sept. 19, 2016) (SR-ICC-2016-012).
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The purpose of the proposed rule change is to adopt rules that will 
provide the basis for ICC to clear additional credit default swap 
contracts.
    ICC has proposed amending Subchapter 26D of its Rules to provide 
for the clearance of additional EM Contracts, specifically the Republic 
of Panama, Abu Dhabi, Dubai, the State of Israel and the State of 
Qatar. ICC plans to offer these additional EM Contracts on the 2003 and 
2014 ISDA Credit Derivatives Definitions.
    ICC represents that these additional EM Contracts have terms 
consistent with the other EM Contracts approved for clearing at ICC and 
governed by Subchapter 26D of the Rules. Minor revisions to Subchapter 
26D (Standard Emerging Market Sovereign (``SES'') Single Name) will 
also be made to provide for clearing the additional EM Contracts. 
Specifically, in Rule 26D-102 (Definitions), ``Eligible SES Reference 
Entities'' will be modified to include the Republic of Panama, Abu 
Dhabi, Dubai, the State of Israel and the State of Qatar in the list of 
specific Eligible SES Reference Entities to be cleared by ICC.
    Additionally, ICC has proposed amending Subchapter 26I of its Rules 
to provide for the clearance of 2003 ISDA Definitions of SWES 
Contracts. ICC currently clears the 2014 ISDA Definitions of ten SWES 
Contracts, namely the Republic of Ireland, the Italian Republic, the 
Portuguese Republic, the Kingdom of Spain, the Kingdom of Belgium, the 
Republic of Austria, the Kingdom of the Netherlands, the Federal 
Republic of Germany, the French Republic and the United Kingdom of 
Great Britain and Northern Ireland. The proposed changes to Subchapter 
26I will allow ICC to offer clearing for the 2003 ISDA Definitions of 
these SWES Contracts.
    Minor revisions to Subchapter 26I (Standard Western European 
(``SWES'') Single Name) will be made to provide for clearing the 2003 
ISDA Definitions of SWES Contracts. Specifically, in Rule 26I-102 
(Definitions), the definitions of ``Eligible SWES Reference 
Obligations'', ``List of Eligible SWES Reference Entities'' and ``SWES 
Contract Reference Obligations'' will be updated to distinguish between 
the 2003- and 2014-Type CDS Contracts, and the corresponding Applicable 
Credit Derivatives Definitions.\4\ Rule 26I-309 (Acceptance of SWES 
Contracts by ICE Clear Credit) will be revised in part (c) to note that 
a CDS Participant may not submit a Trade for clearance as a SWES 
contract, and any such Trade shall not be a Confirming Trade, if the 
acceptance would be at a time when the CDS Participant (or any Non-
Participant Party for whom such CDS Participant is acting) is, or is an 
Affiliate of, the Eligible SWES Reference Entity for such SWES Contract 
or is subject to an agreement under which it is reasonably likely that 
the CDS Participant (or any such Non-Participant Party) will become, or 
will become an Affiliate of, the Eligible SWES Reference Entity for 
such SWES Contract. Rule 26I-309 will also be revised in part (e) to 
address and distinguish between relevant successor or other events 
under both 2003- and 2014-Type CDS Contracts, and the corresponding 
Applicable Credit Derivatives Definitions.
---------------------------------------------------------------------------

    \4\ As defined in Rule 20-102 (Applicable Credit Derivatives 
Definitions).
---------------------------------------------------------------------------

    Rule 26I-315 (Terms of the Cleared SWES Contract) will be revised 
to provide reference to provisions of the proper ISDA Definitions, and 
corresponding changes to provision numbering will be made as necessary. 
Rule 26I-315(h) will be revised to refer to the Applicable Credit 
Derivatives Definitions and eligible Seniority Level, as appropriate.
    Defined terms in Rule 26I-316 (Physical Settlement Matrix Updates) 
will be updated to refer specifically to SWES contracts. Rule 26I-616 
(Contract Modification) will be revised to note that it shall not 
constitute a Contract Modification if the Board (or its designee) 
updates the List of Eligible SWES Reference Entities (and modifies the 
terms and conditions of related SWES Contracts) to give effect to 
determinations of Succession Events.
    Finally, ICC has proposed amending Subchapter 26L of its rules to 
provide for the clearance of an additional Asia/Pacific Contract, 
namely the Kingdom of Thailand. ICC plans to offer this contract on the 
2003 and 2014 ISDA Credit Derivatives Definitions.
    ICC represents that the additional Asia/Pacific Contract has terms 
consistent with the other Asia/Pacific Contracts approved for clearing 
at ICC and governed by Subchapter 26L of the Rules. Minor revisions to 
Subchapter 26L (Asia/Pacific Sovereign (``SAS'') Single Name) will be 
made to provide for clearing the additional Asia/Pacific Contract. 
Specifically, in Rule 26L-102 (Definitions), ``Eligible SAS Reference 
Entities'' will be modified to include the Kingdom of Thailand in the 
list of specific Eligible SAS Reference Entities to be cleared by ICC.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \5\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if the 
Commission finds that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such self-regulatory organization. Section 17A(b)(3)(F) 
of the Act \6\ requires, among other things, that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions, and to the extent 
applicable, derivative agreements, contracts and transactions, to 
assure the safeguarding of securities and funds which are in the 
custody or control of the clearing agency or for which it is 
responsible and, in general, to protect investors and the public 
interest.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(2)(C).
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    ICC has represented that the additional EM Contracts, Asia/Pacific

[[Page 76988]]

Contract and the 2003 ISDA Definitions of SWES Contracts proposed for 
clearing are similar to the EM, SWES and Asia/Pacific Contracts that 
are currently cleared by ICC. ICC also represents that these contracts 
will be cleared pursuant to ICC's existing clearing arrangements and 
related financial safeguards, protections and risk management 
procedures. The Commission therefore finds that the proposed rule 
change is designed to promote the prompt and accurate clearance and 
settlement of securities transactions and, to the extent applicable, 
derivative agreements, contracts, and transactions, and to assure the 
safeguarding of securities and funds which are in the custody or 
control of the clearing agency or for which it is responsible and, in 
general, to protect investors and the public interest.

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act \7\ and the 
rules and regulations thereunder.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-ICC-2016-012) be, 
and hereby is, approved.\9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(2).
    \9\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).
    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Brent J. Fields,
Secretary.
[FR Doc. 2016-26644 Filed 11-3-16; 8:45 am]
 BILLING CODE 8011-01-P
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