Self-Regulatory Organizations; LCH SA; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments to LCH SA's Fee Grid for Non Cash Collateral, 64125-64127 [2019-25105]
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Federal Register / Vol. 84, No. 224 / Wednesday, November 20, 2019 / Notices
SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Rule 602, SEC File No. 270–404, OMB
Control No. 3235–0461
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rule 602 of Regulation NMS (17 CFR
240.602), under the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.).
Rule 602 of Regulation NMS,
Dissemination of Quotations in NMS
securities, contains two related
collections. The first collection of
information is found in Rule 602(a).1
This third-party disclosure requirement
obligates each national securities
exchange and national securities
association to make available to
quotation vendors for dissemination to
the public the best bid, best offer, and
aggregate quotation size for each
‘‘subject security,’’ as defined under the
Rule. The second collection of
information is found in Rule 602(b).2
This disclosure requirement obligates
any exchange member and over-thecounter (‘‘OTC’’) market maker that is a
‘‘responsible broker or dealer,’’ as
defined under the Rule, to communicate
to an exchange or association their best
bids, best offers, and quotation sizes for
subject securities.3
It is anticipated that twenty-three
respondents, consisting of twenty-two
national securities exchanges and one
national securities association, will
collectively respond approximately
CFR 242.602(a).
CFR 242.602(b).
3 Under Rule 602(b)(5), electronic
communications networks (‘‘ECNs’’) have the
option of reporting to an exchange or association for
public dissemination, on behalf of customers that
are OTC market makers or exchange market makers,
the best-priced orders and the full size for such
orders entered by market makers on the ECN, to
satisfy such market makers’ reporting obligation
under Rule 602(b). Since this reporting requirement
is an alternative method of meeting the market
makers’ reporting obligation, and because it is
directed to nine or fewer persons (ECNs), this
collection of information is not subject to OMB
review under the Paperwork Reduction Act
(‘‘PRA’’).
5,780,026,336,314 times per year
pursuant to Rule 602(a) at 18.22
microseconds per response, resulting in
a total annual burden of approximately
30,590 hours. It is anticipated that no
respondents will have a reporting
burden pursuant to Rule 602(b).4
Thus, the aggregate third-party
disclosure burden under Rule 602 is
30,590 hours annually which is
comprised of 30,590 hours relating to
Rule 602(a) and 0 hours relating to Rule
602(b).
Compliance with Rule 602 of
Regulation NMS is mandatory and the
information collected is made available
to the public.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to:
Lindsay.M.Abate@omb.eop.gov; and (ii)
Charles Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner,100 F Street NE, Washington,
DC 20549, or by sending an email to:
PRA_Mailbox@sec.gov. Comments must
be submitted to OMB within 30 days of
this notice.
Dated: November 14, 2019.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–25097 Filed 11–19–19; 8:45 am]
BILLING CODE 8011–01–P
1 17
2 17
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17:21 Nov 19, 2019
Jkt 250001
4 For the reporting obligation under Rule 602(b),
the respondents are exchange members and OTC
market makers. The Commission believes that
communication of quotations through an
exchange’s electronic trading system effectively
means that exchange members currently have no
reporting burden under Rule 602(b) for these
quotations. The Commission also believes that there
are presently no OTC market makers that quote
other than on an exchange.
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
64125
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87536; File No. SR–LCH
SA–2019–010]
Self-Regulatory Organizations; LCH
SA; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to Amendments to
LCH SA’s Fee Grid for Non Cash
Collateral
November 14, 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 October
31, 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, II and III below, which Items
have been prepared primarily by LCH
SA. LCH SA filed the proposed rule
change pursuant to Section 19(b)(3)(A)
of the Act,3 and Rule 19b–4(f)(2) 4
thereunder, so that the proposed rule
change 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
Banque Centrale de Compensation,
which conducts business under the
name LCH SA (‘‘LCH SA’’), is proposing
to review and modify its current fee grid
applied for Non Cash Collateral (NCC)
across all clearing services including
CDSClear.
The text of the proposed rule change
has been annexed as Exhibit 5.5
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 these statements.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(2).
5 All capitalized terms not defined herein have
the same definition as the Rule Book, Supplement
or Procedures, as applicable.
2 17
E:\FR\FM\20NON1.SGM
20NON1
64126
Federal Register / Vol. 84, No. 224 / Wednesday, November 20, 2019 / Notices
A. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change.
1. Purpose
LCH SA is currently applying the
below fee grid for CDSClear members:
FFT
Collateral type
House
(bps)
Government Bonds ..........................................................................................
Supranational Bonds .......................................................................................
Agency Bonds ..................................................................................................
From November 1st, 2019, LCH SA is
proposing to extend the scope of
instruments eligible to margin collateral
to EUR denominated bonds issued by a
number of supranational and agency
institutions. LCH SA is also proposing
to extend the possibility to use the
pledge solution in Euroclear Bank for
the other LCH SA clearing services
(namely RepoClear and EquityClear the
‘‘Non US Business’’ 6). In this context,
LCH SA is moving to apply more
differentiation in its collateral fee grid
and thus CDSClear has decided to
harmonize its existing non-cash
collateral fee grid for house collateral
with that of the other LCH SA clearing
services.
The objective of the proposed fee
change is to differentiate the pricing by
type of non-cash collateral accepted by
LCH SA and deposit facility. These
changes will be applicable across all
LCH SA clearing services with the
exception of CDSClear’s client collateral
fees that will differ from house fees and
remain at their current level for all noncash securities.
No amendments to the LCH SA CDS
Clearing Rules are required to effect
these changes.
As specified in the fee grid attached
under Exhibit 5, the proposed house
collateral fee change is for CDSClear to:
(i) Increase the fee rate from 10 bps to
11 bps for full title transfer of
Government issued bonds; 7
(ii) introduce a fee rate of 13 bps for
full title transfer of Supranational issued
bonds;
(iii) increase the fee rate from 10bps
to 13bps for full title transfer of Agency
issued bonds;
6 See the definition under Order Granting
Application for Registration as a Clearing Agency
and Request for Exemptive Relief, Order, Securities
Exchange Act Release No. 34–79707; File No. 600–
36 (Dec. 29, 2016), 82 FR 1398 (Jan. 5, 2017)
(available at https://www.federalregister.gov/
documents/2017/01/05/2016-31940/self-regulatoryorganizations-lch-sa-order-granting-application-forregistration-as-a-clearing).
7 To become effective on April 1st, 2020
VerDate Sep<11>2014
17:21 Nov 19, 2019
Jkt 250001
Client
(bps)
10
N/A
10
(iv) increase the fee rate from 10bps
to 15bps for all pledged securities.
For CDSClear clients, a fee rate of 10
bps will be introduced for full title
transfer of Supranational bonds. No
other changes will be made to
CDSClear’s client collateral fees.
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.8
LCH SA believes that its clearing fee
change proposal 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 clearing
members and clients pay reasonable fees
and dues for the services provided by
LCH SA, within the meaning of Section
17A(b)(3)(D) of the Act.
The extension of the non-cash eligible
securities along with the extension of
the pledge facility is an improvement of
service that offers all LCH SA’s
members and clients more choice and
therefore more opportunities to better
tailor their collateral management to
their needs but it also does bear
consequences on LCH SA’s balance
sheet as a whole and therefore on its
liquidity ratio management.
Currently the pledge facility is only
available to CDSClear members and
clients with a very limited use.
However, as a result of the broadening
of the pledge facility to Non USBusiness, the expected overall impact
on LCH SA’s liquidity ratio now needs
to be carefully monitored and managed.
Further, in order to offer this enhanced
collateral management service, LCH SA
has also invested in the development of
8 15
9 15
PO 00000
U.S.C. 78q–1(b)(3)(D).
U.S.C. 78q–1.
Frm 00089
Fmt 4703
Sfmt 4703
Pledge
House
(bps)
10
N/A
10
Client
(bps)
10
N/A
10
10
N/A
10
a number of additional systems and
controls leading to the review and
changes of the applicable fee grid.
Additionally, today, CDSClear
members mainly post cash collateral
and we do not foresee that the fee
changes will alter current market
practice amongst CDSClear’s members
and clients.
As an illustration, from January 2018
to September 2019, the percentage of
collateral posted in securities was less
than 20% on average for house activity,
supporting the assessment that these fee
changes will not have any material
impact on CDSClear’s revenues.
For all the reasons stated above, LCH
SA believes that the proposed fee rates
are reasonable and have been set up at
an appropriate level given the costs,
expenses and revenues generated to
LCH SA in providing these improved
collateral management services.
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 that are not
necessary or appropriate in furtherance
of the purposes of the Act.
LCH SA is offering the possibility for
CDSClear members and clients to post a
greater scope of instruments as eligible
margin collateral. Additionally, the
proposed fee change will apply equally
to all CDSClear clearing members.
Finally, the fee rate changes will not
adversely affect the ability of such
members or other market participants
generally to engage in cleared
transactions or to access LCH SA’s
clearing services.
10 15
E:\FR\FM\20NON1.SGM
U.S.C. 78q–1(b)(3)(I).
20NON1
Federal Register / Vol. 84, No. 224 / Wednesday, November 20, 2019 / Notices
Further, as explained above, LCH SA
believes that the fee rates have been set
up at an appropriate level given the
costs and expenses to LCH SA in
offering the relevant 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
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and paragraph (f) of Rule
19b–4 thereunder. 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 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–
LCH SA–2019–010 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–2019–010. 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
VerDate Sep<11>2014
17:21 Nov 19, 2019
Jkt 250001
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 the
filing also will 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–2019–010 and
should be submitted on or before
December 11, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–25105 Filed 11–19–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Rule 6a–4, Form 1–N, SEC File No. 270–
496, OMB Control No. 3235–0554
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for extension of the
previously approved collection of
information provided for in Rule 6a–4
and Form 1–N (17 CFR 240.6a–4 and 17
CFR 249.10) under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.) (‘‘Exchange Act’’).
11 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00090
Fmt 4703
Sfmt 4703
64127
Section 6 of the Exchange Act 1 sets
out a framework for the registration and
regulation of national securities
exchanges. Under the Commodity
Futures Modernization Act of 2000, a
futures market may trade security
futures products by registering as a
national securities exchange. Rule 6a–
4 2 sets forth these registration
procedures and directs futures markets
to submit a notice registration on Form
1–N.3 Form 1–N calls for information
regarding how the futures market
operates, its rules and procedures,
corporate governance, its criteria for
membership, its subsidiaries and
affiliates, and the security futures
products it intends to trade. Rule 6a–4
also requires entities that have
submitted an initial Form 1–N to file: (1)
Amendments to Form 1–N in the event
of material changes to the information
provided in the initial Form 1–N; (2)
periodic updates of certain information
provided in the initial Form 1–N; (3)
certain information that is provided to
the futures market’s members; and (4) a
monthly report summarizing the futures
market’s trading of security futures
products. The information required to
be filed with the Commission pursuant
to Rule 6a–4 is designed to enable the
Commission to carry out its statutorily
mandated oversight functions and to
ensure that registered and exempt
exchanges continue to be in compliance
with the Act.
The respondents to the collection of
information are futures markets.
The Commission estimates that the
total annual burden of compliance with
the requirements of Rule 6a–4 and Form
1–N is 171 hours per year and $1,216
per year, calculated as detailed below.
The Commission estimates that the total
annual burden for all respondents to
provide periodic amendments 4 to keep
the Form 1–N accurate and up to date
as required under Rule 6a–4(b)(1) would
be 60 hours (15 hours/respondent per
year × 4 respondents 5 to provide annual
amendments under Rule 6a–4(b)(3)
would be 60 hours (15 hours/
respondent/year × 4 respondents) and
$400 of miscellaneous clerical expenses.
The Commission estimates that the total
annual burden for all respondents to
provide three-year amendments 6 under
Rule 6a–4(b)(4) would be 27 hours (20
hours/respondent × 1.33 respondents
per year) and $176 ($44 per year × 4
1 15
U.S.C. 78f.
CFR 240.6a–4.
3 17 CFR 249.10.
4 17 CFR 240.6a–4(b)(1).
5 The Commission estimates that four exchanges
will file amendments with the Commission in order
to keep their Form 1–N current.
6 17 CFR 240.6a–4(b)(3) and (4).
2 17
E:\FR\FM\20NON1.SGM
20NON1
]]>Agencies
[Federal Register Volume 84, Number 224 (Wednesday, November 20, 2019)]
[Notices]
[Pages 64125-64127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25105]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87536; File No. SR-LCH SA-2019-010]
Self-Regulatory Organizations; LCH SA; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Relating to Amendments
to LCH SA's Fee Grid for Non Cash Collateral
November 14, 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 October 31, 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, II and III below, which Items have been prepared
primarily by LCH SA. LCH SA filed the proposed rule change pursuant to
Section 19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(2) \4\ thereunder,
so that the proposed rule change 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
Banque Centrale de Compensation, which conducts business under the
name LCH SA (``LCH SA''), is proposing to review and modify its current
fee grid applied for Non Cash Collateral (NCC) across all clearing
services including CDSClear.
The text of the proposed rule change has been annexed as Exhibit
5.\5\
---------------------------------------------------------------------------
\5\ All capitalized terms not defined herein have the same
definition as the Rule Book, Supplement or Procedures, as
applicable.
---------------------------------------------------------------------------
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 these statements.
[[Page 64126]]
A. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change.
1. Purpose
LCH SA is currently applying the below fee grid for CDSClear
members:
----------------------------------------------------------------------------------------------------------------
FFT Pledge
Collateral type ---------------------------------------------------------------
House (bps) Client (bps) House (bps) Client (bps)
----------------------------------------------------------------------------------------------------------------
Government Bonds................................ 10 10 10 10
Supranational Bonds............................. N/A N/A N/A N/A
Agency Bonds.................................... 10 10 10 10
----------------------------------------------------------------------------------------------------------------
From November 1st, 2019, LCH SA is proposing to extend the scope of
instruments eligible to margin collateral to EUR denominated bonds
issued by a number of supranational and agency institutions. LCH SA is
also proposing to extend the possibility to use the pledge solution in
Euroclear Bank for the other LCH SA clearing services (namely RepoClear
and EquityClear the ``Non US Business'' \6\). In this context, LCH SA
is moving to apply more differentiation in its collateral fee grid and
thus CDSClear has decided to harmonize its existing non-cash collateral
fee grid for house collateral with that of the other LCH SA clearing
services.
---------------------------------------------------------------------------
\6\ See the definition under Order Granting Application for
Registration as a Clearing Agency and Request for Exemptive Relief,
Order, Securities Exchange Act Release No. 34-79707; File No. 600-36
(Dec. 29, 2016), 82 FR 1398 (Jan. 5, 2017) (available at https://www.federalregister.gov/documents/2017/01/05/2016-31940/self-regulatory-organizations-lch-sa-order-granting-application-for-registration-as-a-clearing).
---------------------------------------------------------------------------
The objective of the proposed fee change is to differentiate the
pricing by type of non-cash collateral accepted by LCH SA and deposit
facility. These changes will be applicable across all LCH SA clearing
services with the exception of CDSClear's client collateral fees that
will differ from house fees and remain at their current level for all
non-cash securities.
No amendments to the LCH SA CDS Clearing Rules are required to
effect these changes.
As specified in the fee grid attached under Exhibit 5, the proposed
house collateral fee change is for CDSClear to:
(i) Increase the fee rate from 10 bps to 11 bps for full title
transfer of Government issued bonds; \7\
---------------------------------------------------------------------------
\7\ To become effective on April 1st, 2020
---------------------------------------------------------------------------
(ii) introduce a fee rate of 13 bps for full title transfer of
Supranational issued bonds;
(iii) increase the fee rate from 10bps to 13bps for full title
transfer of Agency issued bonds;
(iv) increase the fee rate from 10bps to 15bps for all pledged
securities.
For CDSClear clients, a fee rate of 10 bps will be introduced for
full title transfer of Supranational bonds. No other changes will be
made to CDSClear's client collateral fees.
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.\8\
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------
LCH SA believes that its clearing fee change proposal 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 clearing
members and clients pay reasonable fees and dues for the services
provided by LCH SA, within the meaning of Section 17A(b)(3)(D) of the
Act.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
The extension of the non-cash eligible securities along with the
extension of the pledge facility is an improvement of service that
offers all LCH SA's members and clients more choice and therefore more
opportunities to better tailor their collateral management to their
needs but it also does bear consequences on LCH SA's balance sheet as a
whole and therefore on its liquidity ratio management.
Currently the pledge facility is only available to CDSClear members
and clients with a very limited use. However, as a result of the
broadening of the pledge facility to Non US-Business, the expected
overall impact on LCH SA's liquidity ratio now needs to be carefully
monitored and managed. Further, in order to offer this enhanced
collateral management service, LCH SA has also invested in the
development of a number of additional systems and controls leading to
the review and changes of the applicable fee grid.
Additionally, today, CDSClear members mainly post cash collateral
and we do not foresee that the fee changes will alter current market
practice amongst CDSClear's members and clients.
As an illustration, from January 2018 to September 2019, the
percentage of collateral posted in securities was less than 20% on
average for house activity, supporting the assessment that these fee
changes will not have any material impact on CDSClear's revenues.
For all the reasons stated above, LCH SA believes that the proposed
fee rates are reasonable and have been set up at an appropriate level
given the costs, expenses and revenues generated to LCH SA in providing
these improved collateral management services.
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\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
LCH SA does not believe that the proposed rule change would impose
any burden on competition that are not necessary or appropriate in
furtherance of the purposes of the Act.
LCH SA is offering the possibility for CDSClear members and clients
to post a greater scope of instruments as eligible margin collateral.
Additionally, the proposed fee change will apply equally to all
CDSClear clearing members. Finally, the fee rate changes will not
adversely affect the ability of such members or other market
participants generally to engage in cleared transactions or to access
LCH SA's clearing services.
[[Page 64127]]
Further, as explained above, LCH SA believes that the fee rates
have been set up at an appropriate level given the costs and expenses
to LCH SA in offering the relevant 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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act and paragraph (f) of Rule 19b-4 thereunder. 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 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-2019-010 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-2019-010. 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 the filing also will 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-2019-010 and should
be submitted on or before December 11, 2019.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-25105 Filed 11-19-19; 8:45 am]
BILLING CODE 8011-01-P
