Self-Regulatory Organizations; LCH SA; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the CDS and Options Fee Grid for CDSClear Clearing Members Effective Retroactively From January 1st, 2019, 15025-15027 [2019-07327]
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Federal Register / Vol. 84, No. 71 / Friday, April 12, 2019 / Notices
SECURITIES AND EXCHANGE
COMMISSION
A. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
[Release No. 34–85554; File No. SR–LCH
SA–2019–001]
1. Purpose
The purpose of this proposed rule
change is for LCH SA to (1) modify the
annual fixed fee that covers all Index
and Single Name CDS self-clearing
activity for a General Clearing Member
and its affiliates under the Unlimited
Tariff, and (2) establish a new Unlimited
Tariff to cover all Options self-clearing
activity for Clearing Members as well as
slightly increase the cap in the existing
fee grid for the options clearing service.
The proposed CDSClear fee changes
will be retroactive from January 1st,
2019.
The need to apply the fees
retroactively results from the long year
end 2018 shutdown of the U.S. federal
government (the ‘‘Shutdown’’) and the
subsequent closure of the Securities and
Exchange Commission (‘‘SEC’’) past
December 26th. As a result of the
Shutdown, beginning on December 27,
2018, the SEC was closed and SEC
employees were out of the office until
an appropriation was enacted and the
SEC reopened on January 28, 2019.
Because the SEC was closed, any filing
submitted to the SEC during the
Shutdown was not considered
‘‘received’’ (i.e., legally filed) until the
SEC reopened in January 2019.
Accordingly, when filing no. LCH SA–
2018–006 was formally submitted to the
SEC on December 27th, 2018 through
the Electronic Form 19b–4 Filing
System (‘‘EFFS’’) operated by the SEC,
the filing was not considered as duly
‘‘received,’’ and therefore did not
receive an official ‘‘filing date’’ until the
SEC reopened end of January 2019, at
which point the filing was rejected on
technical grounds because the year
indicated in the file number was no
longer accurate.
As discussed and agreed with its
clearing members and because LCH SA
had also intended the fee change to
become effective from January 1st, 2019,
LCH SA’s national competent
authorities had been duly advised of the
proposed fee change that was also rule
certified with the Commodity Futures
Trading Commission (‘‘CFTC’’) on
Self-Regulatory Organizations; LCH
SA; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Amend the CDS and
Options Fee Grid for CDSClear
Clearing Members Effective
Retroactively From January 1st, 2019
April 8, 2019.
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 March 25,
2019, Banque Centrale de
Compensation, which conducts
business under the name LCH SA (‘‘LCH
SA’’), filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change described in
Items I and II below, which Items have
been prepared primarily by LCH SA.
LCH SA filed the proposal pursuant to
Section 19(b)(3)(A) of the Act,3 and Rule
19b–4(f)(2) 4 thereunder, so that the
proposal was effective upon filing with
the Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change will modify
both CDS and Options fee grid for
CDSClear activities applicable from
January 1st, 2019.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission,
LCH SA 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. LCH SA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
jbell on DSK30RV082PROD with NOTICES
General Member:
Onboarding Fees .................................................................
Clearing Fees ......................................................................
Ö30k
$15
Ö15
Ö150k
Ö500k
Floor on clearing fees ...................................................
Cap on Clearing fees ...................................................
Select Member:
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
VerDate Sep<11>2014
18:18 Apr 11, 2019
3 15
4 17
Jkt 247001
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
Frm 00115
Fmt 4703
15025
December 20, 2018 5 in a manner that
would have permitted the fee change to
take effect early January 2019.
Given the termination on December
31st, 2018 of the previous CDSClear
annual fixed fee amount applicable to
General members under the Unlimited
Tariff and any other alternative solution,
the absence of the retroactive
application of the new proposed and
agreed fee grid would cause a potential
harm to the LCH SA CDSClear business
because CDSClear would have been
without a regulatory approved fee grid
including the new annual clearing fixed
fee amount under the General Member
Unlimited Tariff and would thus not
have been in a position to collect the
relevant revenues throughout its entire
fee grid. Further, as described below,
the annual fixed fee for the CDS
Unlimited Tariff for General Members is
supposed to decrease and no change has
been made to the General Member
Introductory Tariff and the Select
Member Tariff so that none of them
would be caught unaware if retroactive
approval is granted.
(1) Annual Clearing Fixed Fee (General
Member Unlimited Tariff)
Until December 31st, 2018, CDSClear
was offering an all you can eat type of
tariff called the ‘‘CDS Unlimited Tariff’’
for General Members that covers all selfclearing CDS Index and Single Name
activity for a Clearing Member (‘‘CM’’)
and its affiliates for an annual fixed fee
of Ö2,000,000 (no variable fee).The
proposed change will modify the annual
fixed fee of the CDS Unlimited Tariff for
General Members from Ö2,000,000 per
year to Ö1,700,000 per year from January
1st, 2019. This fixed fee will cover all
clearing fees for Index and Single Name
CDS house activity excluding Sovereign
CDS for all affiliates of a given CM
group.
(2) Options Clearing Service Fee Grid
In addition, LCH SA is proposing to
modify the CDSClear fee grid set up for
the Options clearing service. Currently,
Clearing Members and Clients that
participate in the CDSClear Options
clearing service are charged the clearing
fees as follows:
one-off fee per Legal Entity waived until 31–Mar–18.
per million of option notional on U.S. Indices.*
per million of option notional on European Indices.
Per calendar year (no pro-rating).
Per calendar year (no pro-rating).
5 See https://www.lch.com/system/files/media_
root/Fee%20grid%20changes__20%
20Dec%202018.pdf.
Sfmt 4703
E:\FR\FM\12APN1.SGM
12APN1
15026
Federal Register / Vol. 84, No. 71 / Friday, April 12, 2019 / Notices
Ö30k
$18
Ö18
Ö500k
Onboarding Fees .................................................................
Clearing Fees ......................................................................
Cap on Clearing fees ...................................................
Client:
Clearing Fees ......................................................................
one-off fee per Legal Entity waived until 31–Mar–18.
per million of option notional on U.S. Indices.*
per million of option notional on European Indices.
Per calendar year (no pro-rating).
$20 per million of option notional on U.S. Indices.
Ö20 per million of option notional on European Indices.
Clearing fee holiday from launch until 31–Dec–2017 for all Members and Clients.
* Subject to regulatory approval.
As specified in the new LCH
CDSClear options fee grid attached
below under Exhibit 5, effective from
1st January 2019, it is proposed to:
(a) Rename the current Options
clearing service tariff the Options
Introductory Tariff;
(b) Increase the annual cap in the
Options Introductory Tariff from Ö500k
to Ö600k for both General Members and
Select Members;
(c) Introduce a new tariff called the
Options Unlimited Tariff available to
both General Members and Select
Members and in which Members would
pay an annual fixed fee to cover all the
self-clearing fees for Credit Index
Options of all affiliated entities of a
given Clearing Member Group. The level
of this annual fixed fee (no pro-rating)
would be set to:
➢ Ö375k for General Members
➢ Ö400k for Select Members
(d) Maintain the one-off onboarding
fee of Ö30k to the Options clearing
service under the following terms and
conditions:
(i) The onboarding fee will be waived
for all General and Select Members until
31–Mar–2019;
(ii) Under the Options Introductory
Tariff, an onboarding fee will be charged
for each legal entity (even if of the same
Group) onboarding the service; and
(iii) Under the Options Unlimited
Tariff, only one single onboarding fee
will be charged for all affiliated entities
of a given Clearing Member Group
onboarding the service.
jbell on DSK30RV082PROD with NOTICES
2. Statutory Basis
Section 17A(b)(3)(D) of the Act
requires that the rules of a clearing
agency provide for the equitable
allocation of reasonable dues, fees, and
other charges.6
With respect to the change of the CDS
Unlimited Tariff, LCH SA has
determined in consultation with its
clearing members that the reduction in
the annual fixed fee for General
Members covering their Index and
Single Name CDS self-clearing activity
is reasonable and appropriate given the
costs and expenses to LCH SA in
providing the CDSClear service as well
6 15
U.S.C. 78q–1(b)(3)(D).
VerDate Sep<11>2014
18:18 Apr 11, 2019
Jkt 247001
as the fact that the business is now
reaching a more mature stage in its
development and therefore requires less
investment in the future.
As explained above and as agreed
with the clearing members, applying the
fees retroactively is also reasonable.
Absent the Shutdown and subsequent
closure of the Commission, as duly
expected by the CDSClear members
pursuant to the consultation process,
the proposed fee changes including the
new annual fixed fee amount for the
General Members would have been
immediately applicable from January
1st, 2019 pursuant to Section
19(b)(3)(A) 7 of the Act and Rule 19b–
4(f)(2).8
The proposed changes to the Options
clearing service fee grid in consultation
with CDSClear members aim at:
—Offer CDSClear Clearing Members a
true ‘‘all you can eat’’ tariff that covers
all their self-clearing activities across
the whole scope of products eligible
at CDSClear
—Incentivize additional clearing
members to onboard and use the
Options clearing service by providing
a more attractive tariff in which the
marginal cost of clearing options
reduces as more volumes are cleared.
—Building enough interdealer liquidity
on the Options clearing service such
that buy-side clients can also get
comfortable with clearing credit index
options at LCH SA CDSClear service,
which is key for the market
participants to get the full benefits of
clearing options from a multilateral
netting and the associated operational
risk decrease perspective.
The proposed fee grid will apply
equally to all General Members, Select
Members and clients that will voluntary
join this CDSClear offering and LCH SA
believes that it is reasonable and
appropriate.
LCH SA believes that imposing such
clearing fees is consistent with the
requirements of Section 17A of the Act 9
and the regulations thereunder
applicable to it, and in particular
provides for the equitable allocation of
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
9 15 U.S.C. 78q–1.
reasonable fees, dues, and other charges
among clearing members and market
participants by ensuring that Members
pay reasonable fees and dues for the
services provided by LCH SA, within
the meaning of Section 17A(b)(3)(D) of
the Act.
B. Clearing Agency’s Statement on
Burden on Competition
Section 17A(b)(3)(I) of the Act
requires that the rules of a clearing
agency not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.10 LCH SA does not
believe that the proposed rule change
would impose any burden on
competition.
As noted above, LCH SA believes that
the fees and any related discount have
been set up at an appropriate level given
the costs and expenses to LCH SA in
offering and maintaining the relevant
CDSClear services.
Additionally, the fees and related
discounts will apply equally to all
Clearing Members of CDSClear.
Further, LCH SA does not believe that
the proposed rule change would have a
burden on competition because it does
not adversely affect the ability of such
Clearing Members or other market
participants generally to engage in
cleared transactions or to access clearing
services.
C. Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants or Others
Written comments relating to the
proposed rule change have not been
solicited or received. LCH SA will
notify the Commission of any written
comments received by LCH SA.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
(a) The foregoing rule change has
become effective pursuant to Section
19(b)(3)(A) of the Act 11 and paragraph
(f) of Rule 19b–4 12 thereunder. At any
time within 60 days of the filing of the
7 15
10 15
8 17
11 15
PO 00000
Frm 00116
Fmt 4703
U.S.C. 78q–1(b)(3)(I).
U.S.C. 78s(b)(3)(A).
12 17 CFR 240.19b–4(f).
Sfmt 4703
E:\FR\FM\12APN1.SGM
12APN1
Federal Register / Vol. 84, No. 71 / Friday, April 12, 2019 / Notices
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 rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
jbell on DSK30RV082PROD 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–
LCH SA–2019–001 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–LCH SA–2019–001. 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 website (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 website 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 LCH SA and on LCH SA’s
website at https://www.lch.com/
resources/rules-and-regulations/
proposed-rule-changes-0. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
VerDate Sep<11>2014
18:18 Apr 11, 2019
Jkt 247001
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–LCH SA–2019–001 and
should be submitted on or before May
3,2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–07327 Filed 4–11–19; 8:45 am]
BILLING CODE 8011–01–P
[Public Notice: 10731]
Notice of Determinations; Culturally
Significant Objects Imported for
Exhibition—Determinations: ‘‘Art and
Empire: The Golden Age of Spain’’
Exhibition
Notice is hereby given of the
following determinations: I hereby
determine that the objects to be
exhibited in the exhibition ‘‘Art and
Empire: The Golden Age of Spain,’’
imported from abroad for temporary
exhibition within the United States, are
of cultural significance. The objects are
imported pursuant to loan agreements
with the foreign owners or custodians.
I also determine that the exhibition or
display of the exhibit objects at The San
Diego Museum of Art, in San Diego,
California, from on or about May 18,
2019, until on or about September 2,
2019, and at possible additional
exhibitions or venues yet to be
determined, is in the national interest.
I have ordered that Public Notice of
these determinations be published in
the Federal Register.
SUMMARY:
Julie
Simpson, Attorney-Adviser, Office of
the Legal Adviser, U.S. Department of
State (telephone: 202–632–6471; email:
section2459@state.gov). The mailing
address is U.S. Department of State, L/
PD, SA–5, Suite 5H03, Washington, DC
20522–0505.
FOR FURTHER INFORMATION CONTACT:
The
foregoing determinations were made
pursuant to the authority vested in me
by the Act of October 19, 1965 (79 Stat.
985; 22 U.S.C. 2459), Executive Order
12047 of March 27, 1978, the Foreign
Affairs Reform and Restructuring Act of
1998 (112 Stat. 2681, et seq.; 22 U.S.C.
6501 note, et seq.), Delegation of
Authority No. 234 of October 1, 1999,
SUPPLEMENTARY INFORMATION:
PO 00000
CFR 200.30–3(a)(12).
Frm 00117
Fmt 4703
and Delegation of Authority No. 236–3
of August 28, 2000.
Marie Therese Porter Royce,
Assistant Secretary, Educational and Cultural
Affairs, Department of State.
[FR Doc. 2019–07229 Filed 4–11–19; 8:45 am]
BILLING CODE 4710–05–P
SURFACE TRANSPORTATION BOARD
[Docket No. FD 36233]
Herrin Railroad, LLC—Acquisition &
Operation Exemption—City of Herrin,
Ill
DEPARTMENT OF STATE
13 17
15027
Sfmt 4703
Herrin Railroad, LLC (HR), a
noncarrier, has filed a verified notice of
exemption under 49 CFR 1150.31 to
lease from the City of Herrin, Ill. (the
City), and operate approximately 3.7
miles of rail lines, between milepost
10.7 and milepost 13.4, and north from
the wye track between milepost C94 and
milepost C93 at and near Herrin, in
Williamson County, Ill. (the Lines).
According to HR, an agreement has
been reached whereby HR will lease the
Lines from the City and operate them,
contingent upon HR’s obtaining all
necessary regulatory approvals. HR
states that it will become a Class III rail
carrier and will provide common carrier
rail service to shippers on the Lines. HR
states that the lease between HR and the
City does not contain an interchange
commitment.
HR certifies that its projected annual
revenues as a result of the proposed
transaction will not result in HR’s
becoming a Class II or Class I rail carrier
and will not exceed $5 million.
The proposed transaction may be
consummated on or after April 28, 2019,
the effective date of the exemption (30
days after the verified notice was filed).1
If the verified notice contains false or
misleading information, the exemption
is void ab initio. Petitions to revoke the
exemption under 49 U.S.C. 10502(d)
may be filed at any time. The filing of
a petition to revoke will not
automatically stay the effectiveness of
the exemption. Petitions for stay must
be filed no later than April 19, 2019 (at
1 HR originally filed its verified notice on
February 21, 2019, and supplemented it on
February 28, 2019. In response to a subsequent
Board order, HR further supplemented its verified
notice on March 29, 2019, by clarifying that the City
retains ownership of the Lines and stating that
‘‘[t]he City has never conveyed ownership of the
subject lines in its dealings with [Crab Orchard &
Egyptian Railroad Company (COER) or [Progressive
Railroad Incorporated (PGR)].’’ (HR Suppl. 1, Mar.
29, 2019.) In light of HR’s supplement, the verified
notice is deemed to have been filed on March 29,
2019. The Board will serve this notice on COER and
PGR.
E:\FR\FM\12APN1.SGM
12APN1
]]>Agencies
[Federal Register Volume 84, Number 71 (Friday, April 12, 2019)]
[Notices]
[Pages 15025-15027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07327]
[[Page 15025]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85554; File No. SR-LCH SA-2019-001]
Self-Regulatory Organizations; LCH SA; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Amend the CDS and
Options Fee Grid for CDSClear Clearing Members Effective Retroactively
From January 1st, 2019
April 8, 2019.
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 March 25, 2019, Banque Centrale de Compensation, which conducts
business under the name LCH SA (``LCH SA''), filed with the Securities
and Exchange Commission (``Commission'') the proposed rule change
described in Items I and II below, which Items have been prepared
primarily by LCH SA. LCH SA filed the proposal pursuant to Section
19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(2) \4\ thereunder, so that
the proposal was effective upon filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change will modify both CDS and Options fee grid
for CDSClear activities applicable from January 1st, 2019.
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, LCH SA 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. LCH SA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is for LCH SA to (1)
modify the annual fixed fee that covers all Index and Single Name CDS
self-clearing activity for a General Clearing Member and its affiliates
under the Unlimited Tariff, and (2) establish a new Unlimited Tariff to
cover all Options self-clearing activity for Clearing Members as well
as slightly increase the cap in the existing fee grid for the options
clearing service.
The proposed CDSClear fee changes will be retroactive from January
1st, 2019.
The need to apply the fees retroactively results from the long year
end 2018 shutdown of the U.S. federal government (the ``Shutdown'') and
the subsequent closure of the Securities and Exchange Commission
(``SEC'') past December 26th. As a result of the Shutdown, beginning on
December 27, 2018, the SEC was closed and SEC employees were out of the
office until an appropriation was enacted and the SEC reopened on
January 28, 2019. Because the SEC was closed, any filing submitted to
the SEC during the Shutdown was not considered ``received'' (i.e.,
legally filed) until the SEC reopened in January 2019. Accordingly,
when filing no. LCH SA-2018-006 was formally submitted to the SEC on
December 27th, 2018 through the Electronic Form 19b-4 Filing System
(``EFFS'') operated by the SEC, the filing was not considered as duly
``received,'' and therefore did not receive an official ``filing date''
until the SEC reopened end of January 2019, at which point the filing
was rejected on technical grounds because the year indicated in the
file number was no longer accurate.
As discussed and agreed with its clearing members and because LCH
SA had also intended the fee change to become effective from January
1st, 2019, LCH SA's national competent authorities had been duly
advised of the proposed fee change that was also rule certified with
the Commodity Futures Trading Commission (``CFTC'') on December 20,
2018 \5\ in a manner that would have permitted the fee change to take
effect early January 2019.
---------------------------------------------------------------------------
\5\ See https://www.lch.com/system/files/media_root/Fee%20grid%20changes__20%20Dec%202018.pdf.
---------------------------------------------------------------------------
Given the termination on December 31st, 2018 of the previous
CDSClear annual fixed fee amount applicable to General members under
the Unlimited Tariff and any other alternative solution, the absence of
the retroactive application of the new proposed and agreed fee grid
would cause a potential harm to the LCH SA CDSClear business because
CDSClear would have been without a regulatory approved fee grid
including the new annual clearing fixed fee amount under the General
Member Unlimited Tariff and would thus not have been in a position to
collect the relevant revenues throughout its entire fee grid. Further,
as described below, the annual fixed fee for the CDS Unlimited Tariff
for General Members is supposed to decrease and no change has been made
to the General Member Introductory Tariff and the Select Member Tariff
so that none of them would be caught unaware if retroactive approval is
granted.
(1) Annual Clearing Fixed Fee (General Member Unlimited Tariff)
Until December 31st, 2018, CDSClear was offering an all you can eat
type of tariff called the ``CDS Unlimited Tariff'' for General Members
that covers all self-clearing CDS Index and Single Name activity for a
Clearing Member (``CM'') and its affiliates for an annual fixed fee of
[euro]2,000,000 (no variable fee).The proposed change will modify the
annual fixed fee of the CDS Unlimited Tariff for General Members from
[euro]2,000,000 per year to [euro]1,700,000 per year from January 1st,
2019. This fixed fee will cover all clearing fees for Index and Single
Name CDS house activity excluding Sovereign CDS for all affiliates of a
given CM group.
(2) Options Clearing Service Fee Grid
In addition, LCH SA is proposing to modify the CDSClear fee grid
set up for the Options clearing service. Currently, Clearing Members
and Clients that participate in the CDSClear Options clearing service
are charged the clearing fees as follows:
------------------------------------------------------------------------
------------------------------------------------------------------------
General Member:
Onboarding Fees............ [euro]30k one-off fee per Legal
Entity waived until 31-
Mar-18.
Clearing Fees.............. $15 per million of option
[euro]15 notional on U.S.
Indices.*
per million of option
notional on European
Indices.
Floor on clearing fees. [euro]150k Per calendar year (no
pro-rating).
Cap on Clearing fees... [euro]500k Per calendar year (no
pro-rating).
Select Member:
[[Page 15026]]
Onboarding Fees............ [euro]30k one-off fee per Legal
Entity waived until 31-
Mar-18.
Clearing Fees.............. $18 per million of option
[euro]18 notional on U.S.
Indices.*
per million of option
notional on European
Indices.
Cap on Clearing fees... [euro]500k Per calendar year (no
pro-rating).
Client:
Clearing Fees.............. $20 per million of option
[euro]20 notional on U.S.
Indices.
per million of option
notional on European
Indices.
Clearing fee holiday from launch until 31-Dec-2017 for all Members and
Clients.
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* Subject to regulatory approval.
As specified in the new LCH CDSClear options fee grid attached
below under Exhibit 5, effective from 1st January 2019, it is proposed
to:
(a) Rename the current Options clearing service tariff the Options
Introductory Tariff;
(b) Increase the annual cap in the Options Introductory Tariff from
[euro]500k to [euro]600k for both General Members and Select Members;
(c) Introduce a new tariff called the Options Unlimited Tariff
available to both General Members and Select Members and in which
Members would pay an annual fixed fee to cover all the self-clearing
fees for Credit Index Options of all affiliated entities of a given
Clearing Member Group. The level of this annual fixed fee (no pro-
rating) would be set to:
[rtarr8] [euro]375k for General Members
[rtarr8] [euro]400k for Select Members
(d) Maintain the one-off onboarding fee of [euro]30k to the Options
clearing service under the following terms and conditions:
(i) The onboarding fee will be waived for all General and Select
Members until 31-Mar-2019;
(ii) Under the Options Introductory Tariff, an onboarding fee will
be charged for each legal entity (even if of the same Group) onboarding
the service; and
(iii) Under the Options Unlimited Tariff, only one single
onboarding fee will be charged for all affiliated entities of a given
Clearing Member Group onboarding the service.
2. Statutory Basis
Section 17A(b)(3)(D) of the Act requires that the rules of a
clearing agency provide for the equitable allocation of reasonable
dues, fees, and other charges.\6\
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\6\ 15 U.S.C. 78q-1(b)(3)(D).
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With respect to the change of the CDS Unlimited Tariff, LCH SA has
determined in consultation with its clearing members that the reduction
in the annual fixed fee for General Members covering their Index and
Single Name CDS self-clearing activity is reasonable and appropriate
given the costs and expenses to LCH SA in providing the CDSClear
service as well as the fact that the business is now reaching a more
mature stage in its development and therefore requires less investment
in the future.
As explained above and as agreed with the clearing members,
applying the fees retroactively is also reasonable. Absent the Shutdown
and subsequent closure of the Commission, as duly expected by the
CDSClear members pursuant to the consultation process, the proposed fee
changes including the new annual fixed fee amount for the General
Members would have been immediately applicable from January 1st, 2019
pursuant to Section 19(b)(3)(A) \7\ of the Act and Rule 19b-4(f)(2).\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(2).
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The proposed changes to the Options clearing service fee grid in
consultation with CDSClear members aim at:
--Offer CDSClear Clearing Members a true ``all you can eat'' tariff
that covers all their self-clearing activities across the whole scope
of products eligible at CDSClear
--Incentivize additional clearing members to onboard and use the
Options clearing service by providing a more attractive tariff in which
the marginal cost of clearing options reduces as more volumes are
cleared.
--Building enough interdealer liquidity on the Options clearing service
such that buy-side clients can also get comfortable with clearing
credit index options at LCH SA CDSClear service, which is key for the
market participants to get the full benefits of clearing options from a
multilateral netting and the associated operational risk decrease
perspective.
The proposed fee grid will apply equally to all General Members,
Select Members and clients that will voluntary join this CDSClear
offering and LCH SA believes that it is reasonable and appropriate.
LCH SA believes that imposing such clearing fees is consistent with
the requirements of Section 17A of the Act \9\ and the regulations
thereunder applicable to it, and in particular provides for the
equitable allocation of reasonable fees, dues, and other charges among
clearing members and market participants by ensuring that Members pay
reasonable fees and dues for the services provided by LCH SA, within
the meaning of Section 17A(b)(3)(D) of the Act.
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\9\ 15 U.S.C. 78q-1.
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B. Clearing Agency's Statement on Burden on Competition
Section 17A(b)(3)(I) of the Act requires that the rules of a
clearing agency not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.\10\ LCH SA does
not believe that the proposed rule change would impose any burden on
competition.
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\10\ 15 U.S.C. 78q-1(b)(3)(I).
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As noted above, LCH SA believes that the fees and any related
discount have been set up at an appropriate level given the costs and
expenses to LCH SA in offering and maintaining the relevant CDSClear
services.
Additionally, the fees and related discounts will apply equally to
all Clearing Members of CDSClear.
Further, LCH SA does not believe that the proposed rule change
would have a burden on competition because it does not adversely affect
the ability of such Clearing Members or other market participants
generally to engage in cleared transactions or to access clearing
services.
C. Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants or Others
Written comments relating to the proposed rule change have not been
solicited or received. LCH SA will notify the Commission of any written
comments received by LCH SA.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
(a) The foregoing rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \11\ and paragraph (f) of Rule 19b-4
\12\ thereunder. At any time within 60 days of the filing of the
[[Page 15027]]
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.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f).
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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 [email protected]. Please include
File Number SR-LCH SA-2019-001 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-LCH SA-2019-001. 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 website (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 website 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 LCH SA and on LCH SA's website
at https://www.lch.com/resources/rules-and-regulations/proposed-rule-changes-0. All comments received will be posted without change. Persons
submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-LCH SA-2019-001 and should
be submitted on or before May 3,2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-07327 Filed 4-11-19; 8:45 am]
BILLING CODE 8011-01-P
