Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments to the ICE Clear Europe Clearing Rules, 12234-12237 [2021-04221]
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Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Notices
significant pricing power in the
execution of multiply-listed equity and
ETF options order flow. For the month
of December 2020, the Exchange had a
market share of approximately 3.58% of
executed multiply-listed equity
options 50 and the Exchange believes
that the ever-shifting market share
among exchanges from month to month
demonstrates that market participants
can discontinue or reduce use of certain
categories of products, or shift order
flow, in response to fee changes. In such
an environment, the Exchange must
continually adjust its fees and fee
waivers to remain competitive with
other exchanges and to attract order
flow to the Exchange.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
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)(ii) of the Act,51 and Rule
19b–4(f)(2) 52 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. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
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IV. Solicitation of Comments
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–EMERALD–2021–07. 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 the Exchange. 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–EMERALD–2021–07 and
should be submitted on or before March
23, 2021.
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.53
J. Matthew DeLesDernier,
Assistant Secretary.
Electronic Comments
BILLING CODE 8011–01–P
[FR Doc. 2021–04218 Filed 3–1–21; 8:45 am]
• 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–
EMERALD–2021–07 on the subject line.
supra note 37.
U.S.C. 78s(b)(3)(A)(ii).
52 17 CFR 240.19b–4(f)(2).
53 17
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Self-Regulatory Organizations; ICE
Clear Europe Limited; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change Relating to
Amendments to the ICE Clear Europe
Clearing Rules
February 24, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
17, 2021, ICE Clear Europe Limited
(‘‘ICE Clear Europe’’ or the ‘‘Clearing
House’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule changes described in
Items I and II below, which Items have
been prepared by ICE Clear Europe. ICE
Clear Europe filed the proposed rule
change pursuant to Section 19(b)(3)(A)
of the Act 3 and Rule 19b–4(f)(6) 4
thereunder, such that the proposed rule
change was immediately 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 principal purpose of the
proposed amendments is for ICE Clear
Europe to make certain amendments to
its Clearing Rules (the ‘‘Rules’’) 5
relating to settlement of Euro payments
through the European Union’s
TARGET2 payment system.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, ICE
Clear Europe included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. ICE
Clear Europe has prepared summaries,
set forth in sections (A), (B), and (C)
below, of the most significant aspects of
such statements.
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)(6).
5 Capitalized terms used but not defined herein
have the meanings specified in the Rules.
2 17
51 15
17:11 Mar 01, 2021
[Release No. 34–91204; File No. SR–ICEEU–
2021–004]
1 15
50 See
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COMMISSION
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(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
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(a) Purpose
ICE Clear Europe is proposing to
amend Part 12 of the Rules to
implement certain account and
settlement finality arrangements
applicable to the settlement of Eurodenominated payments by the Clearing
House through the European Union
(‘‘EU’’) TARGET2 payment system.6
Effective as of January 1, 2021, upon the
exit of the United Kingdom from the EU,
ICE Clear Europe has been recognized as
a ‘‘tier 2’’ third-country central
counterparty (‘‘TC–CCP’’) 7 for purposes
of the European Market Infrastructure
Regulation (‘‘EMIR’’).8 Pursuant to
Article 25(2b) of EMIR, a tier 2 TC–CCP
is required, as a condition to such
recognition, to open an overnight
deposit account with the central bank of
issue of the relevant currency. ICE Clear
Europe currently has accounts with the
Dutch component of TARGET2
(‘‘TARGET2–NL’’) operated by De
Nederlandsche Bank (‘‘DNB’’), but will
not be eligible to maintain such
accounts after March 31, 2021. ICE Clear
Europe therefore plans to establish an
account with the European Central Bank
(‘‘ECB’’) component of the TARGET2
system (‘‘TARGET2–ECB’’), which both
ICE Clear Europe and the ECB wish to
do in compliance with, and furtherance
of, EMIR. The proposed changes to Part
12 of the Rules would facilitate the
establishment and use of accounts with
TARGET2 (including TARGET2–ECB) 9
and address settlement finality with
respect to payments made through such
accounts in accordance with TARGET2
terms and conditions of operation.
Specifically, in Rule 1201, several
new definitions would be added. In
6 TARGET2 is the real-time gross settlement
system for Euro payments owned and operated by
the Eurosystem (which consists of the European
Central Bank and the national central banks of those
countries that have adopted the Euro).
7 See European Securities and Markets Authority
(ESMA) Public Statement of 28 September 2020,
available at https://www.esma.europa.eu/pressnews/esma-news/esma-recognise-three-uk-ccps-1january-2021.
8 Regulation (EU) No 648/2012 of the European
Parliament and of the Council of 4 July 2012 on
OTC derivatives, central counterparties and trade
repositories; Commission Delegated Regulation (EU)
2020/1301 of 14 July 2020 Supplementing
Regulation (EU) No 648/2012 of the European
Parliament and of the council with respect to the
criteria that ESMA should take into account to
determine whether a central counterparty
established in a third country is systemically
important or likely to become systemically
important for the financial stability of the Union or
of one or more of its Member States.
9 For such time as the TARGET2–NL accounts
remain in operation, the proposed changes to Part
12 would apply to such accounts as well.
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addition to a definition for ‘‘TARGET2’’
(referencing the real-time gross
settlement system owned and operated
by the Eurosystem), new definitions
would be added for ‘‘TARGET2
Component System’’ (referencing the
real-time gross settlement system of any
central bank that is part of the
TARGET2 system where the operator of
such system is a Concentration Bank
under the Rules), ‘‘TARGET2
Concentration Bank’’ (referencing a
Concentration Bank under the Rules
that is the operator of a TARGET2
Component System), ‘‘TARGET2 PM
Account’’ (referencing a cash account of
the Clearing House in TARGET2), and
‘‘TARGET2 Terms and Conditions’’
(referencing the terms and conditions
that apply to participation in the
relevant TARGET2 Component System).
The definition of ‘‘Payment Transfer
Order’’ would be amended to add
TARGET2 Payment Transfer Orders, as
discussed below. Subsequent provisions
of Rule 1201 would be renumbered
accordingly. It is contemplated that ICE
Clear Europe’s account with TARGET2–
ECB would constitute a TARGET2 PM
Account and that the ECB would
constitute a TARGET2 Concentration
Bank for purposes of these Rules as
proposed to be amended.10 ICE Clear
Europe intends to designate the ECB as
a Concentration Bank under the Rules
for these purposes.
In Rule 1202(a), a new clause (v)
would be added to provide that a
Payment Transfer Order will arise and
enter ICE Clear Europe’s designated
system at the moment ICE Clear
Europe’s TARGET2 PM Account is
debited or credited with funds, pursuant
to the Clearing House sending a SWIFT
instruction to the TARGET2
Concentration Bank. Such a Payment
Transfer Order would be defined as a
‘‘TARGET2 Payment Transfer Order.’’
Rule 1202(a)(iv), which addresses
Payment Transfer Orders involving
Clearing House bank accounts, would be
amended to exclude TARGET2
Concentration Banks (which would be
covered instead by the new clause (v)).
Rule 1202(e)(ii), which addresses the
amounts subject to a Payment Transfer
Order, would be amended to cover
TARGET2 Payment Transfer Orders.
Rule 1202(m), which specifies the
parties subject to a Payment Transfer
Order, would be amended to add a new
10 Similarly, while they remain operational, ICE
Clear Europe’s existing accounts with TARGET2–
NL will constitute a TARGET2 PM Accounts and
DNB will constitute a TARGET2 Concentration
Bank. It is expected that after the TARGET2–ECB
account has been opened, the TARGET2–NL
account of ICE Clear Europe would be closed and
DNB would cease to be a Concentration Bank.
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clause (iv) specifying that a TARGET2
Payment Transfer Order would have
effect between the relevant TARGET2
Concentration Bank and the Clearing
House. Subsequent provisions of Rule
1202(m) would be renumbered
accordingly.
In Rule 1203, a new paragraph (c)
would be added to provide that a
TARGET2 Payment Transfer Order will
become irrevocable at the earlier of (i)
the moment the TARGET2 Payment
Account is credited or debited or (ii)
when or during the period in which any
relevant payment settlement algorithm
used in TARGET2 commences or is
running. The approach is intended to be
consistent with the point at which
payment order becomes irrevocable
under the TARGET2 Terms and
Conditions. Subsequent provisions of
Rule 1203 would be renumbered
accordingly.
(b) Statutory Basis
ICE Clear Europe believes that the
proposed amendments to the Clearing
Rules are consistent with the
requirements of Section 17A of the
Act 11 and the regulations thereunder
applicable to it including the standards
under Rule 17Ad–22.12 In particular,
Section 17A(b)(3)(F) of the Act 13
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, the
safeguarding of securities and funds in
the custody or control of the clearing
agency or for which it is responsible,
and the protection of investors and the
public interest. The amendments are
intended to accommodate the Clearing
House’s use of TARGET2–ECB accounts
(and would also apply to the Clearing
House’s use of TARGET2–NL accounts
whilst they remain operational) for
purposes of settling Euro payments
through the TARGET2 system in central
bank funds, consistent with the
conditions of recognition for a tier 2
TC–CCP under EMIR. As such, the
amendments will facilitate settlement
by the Clearing House of Euro payments
and provide for settlement finality of
such payments in accordance with the
TARGET2 Terms and Conditions. In ICE
Clear Europe’s view, the amendments
will thus promote the prompt and
accurate clearance and settlement of
transactions and the protections of
investors and the public interest, within
11 15
U.S.C. 78q–1.
CFR 240.17Ad–22.
13 15 U.S.C. 78q–1(b)(3)(F).
12 17
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the meaning of Section 17A(b)(3)(F) of
the Act. (ICE Clear Europe does not
believe the amendments would affect
the safeguarding of securities and funds
in the custody or control of the clearing
agency or for which it is responsible,
within the meaning of that section.)
Moreover, the amendments are
consistent with Rule 17Ad–22(e)(9),14
which requires that each covered
clearing agency ‘‘conduct its money
settlements in central bank money,
where available and determined to be
practical by the board of directors of the
covered clearing agency’’. The
amendments will facilitate ICE Clear
Europe’s opening accounts in
TARGET2, and thereby permit it to
conduct money settlements in Euro in
central bank funds and to reduce the
potential for conflicts between the rules
governing ICE Clear Europe’s settlement
system and those governing the
TARGET2 System where ICE Clear
Europe holds and uses accounts in the
TARGET2 System. As a result, the
amendments would be consistent with
the requirements of Rule 17Ad–22(e)(9).
Rule 17Ad–22(e)(8) 15 requires the
covered clearing agency to ‘‘define the
point at which settlement is final to be
no later than the end of the day on
which the payment or obligation is due
and, where necessary or appropriate,
intraday or in real time.’’ The
amendments to Part 12 of the Rules will
establish the time at which Payment
Transfer Orders are effective and
irrevocable for Euro payments made
through the TARGET2 System. In
accordance with the TARGET2 Terms
and Conditions, such payments will be
effected, and become final, on a realtime basis. The amendments are thus
consistent with the requirements of Rule
17Ad–22(e)(8).
Rule 17Ad–22(e)(1) requires that the
covered clearing agency ‘‘provide for a
well-founded, clear, transparent and
enforceable legal basis for each aspects
of its activities in all relevant
jurisdictions.’’ As discussed above, the
amendments are being made to permit
ICE Clear Europe to have a central bank
account for Euro payments in
accordance with Article 25(2b) of EMIR,
as applicable to ICE Clear Europe as a
tier 2 TC–CCP. The amendments are,
therefore, necessary and desirable to
maintain ICE Clear Europe’s status as a
recognized TC–CCP under EMIR. The
amendments also reduce the potential
for conflicts between the settlement
finality rules governing ICE Clear
Europe’s settlement system and those
governing relevant TARGET2
14 17
CFR 240.17Ad–22(e)(9).
15 17 CFR 270.17Ad–22(e)(8).
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components. The amendments will
therefore further compliance with
article 5(4) of EU Regulation 153/2013,
as on-shored in the United Kingdom
and as applicable in the EU, which
requires a CCP to ‘‘identify and analyse
potential conflicts of law issues and
develop rules and procedures to
mitigate legal risk resulting from such
issues’’. As a result, the amendments
enhance the legal framework of the
Clearing House in the UK and EU, and
as such are consistent with the
requirements of Rule 17Ad–22(e)(1).
(B) Clearing Agency’s Statement on
Burden on Competition
ICE Clear Europe does not believe the
proposed rule changes would have any
impact, or impose any burden, on
competition not necessary or
appropriate in furtherance of the
purpose of the Act. The amendments
will not affect the rights or obligations
of Clearing Members or the terms of
cleared Contracts. The amendments are
designed to facilitate establishment and
use by the Clearing House of a
TARGET2–ECB payment account to
permit real-time settlement of Eurobased payments as between the Clearing
House’s own accounts, and would not
affect significantly the rights of Clearing
Members. As a result, ICE Clear Europe
does not expect that the proposed
changes will adversely affect access to
clearing or the ability of Clearing
Members, their customers or other
market participants to continue to clear
contracts. ICE Clear Europe also does
not believe the amendments would
materially affect the cost of clearing or
otherwise limit market participants’
choices for selecting clearing services.
As a result, ICE Clear Europe does not
believe the proposed rule changes
impose any burden on competition that
is inappropriate in furtherance of the
purposes of the Act.
(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 changes have not been
solicited or received by ICE Clear
Europe. ICE Clear Europe will notify the
Commission of any written comments
received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
(i) Significantly affect the protection
of investors or the public interest;
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(ii) impose any significant burden on
competition; and
(iii) become operative for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 16 and Rule 19b–4(f)(6) 17
thereunder.
ICE Clear Europe has requested that
the Commission waive both the five-day
pre-filing requirement and the 30-day
delayed operative date under Rule 19b–
4(f)(6)(iii) 18 so that the proposed rule
change may become effective and
operative upon filing with the
Commission. ICE Clear Europe has
satisfied the five-day pre-filing
requirement already, so the Commission
only considers whether to waive the 30day delayed operative date.
ICE Clear Europe believes that waiver
of the 30-day delayed operative date is
warranted because the proposed rule
change would not (i) significantly affect
the protection of investors or the public
interest and (ii) impose any significant
burden on competition.
With respect to (i), ICE Clear Europe
maintains that the proposed rule change
would in practice affect transfers
between different bank accounts of ICE
Clear Europe (including TARGET2 PM
Accounts), which are not transfers
involving payments to or from Clearing
Members. Accordingly, ICE Clear
Europe states that the proposed rule
change would have no effect on the
safeguarding of funds or securities in
the custody or control of ICE Clear
Europe, nor significantly affect any
other rights or obligations of ICE Clear
Europe, Clearing Members, Sponsored
Principals or other persons using the
clearing service. ICE Clear Europe
further maintains that the proposed rule
change would not affect the terms of
contracts it clears or ICE Clear Europe’s
financial resources or risk models. As a
result, ICE Clear Europe does not
believe the proposed rule change would
significantly affect the protection of
investors or the public interest.
With respect to (ii), ICE Clear Europe
maintains that the proposed rule change
would not impose any new obligations
on Clearing Members, affect
significantly the rights of Clearing
Members, or affect the cost of clearing
or access to clearing for market
participants. As a result, in ICE Clear
Europe’s view, the proposed rule change
would not impose any significant
burden on competition.
16 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
18 17 CFR 240.19b–4(f)(6)(iii).
17 17
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The Commission believes that the
proposed rule change would only affect
transfers between different bank
accounts of ICE Clear Europe (including
TARGET2 PM Accounts), not transfers
involving payments to or from Clearing
Members. As a result, the Commission
does not believe the proposed rule
change would have any effect on the
safeguarding of funds or securities in
the custody or control of ICE Clear
Europe or any other rights or obligations
of ICE Clear Europe, Clearing Members,
Sponsored Principals or other persons
using the clearing service. Accordingly,
the Commission believes the proposed
rule change would not significantly
affect the protection of investors or the
public interest.
Moreover, the Commission believes
the proposed rule change would not
impose any new obligations on Clearing
Members, affect significantly the rights
of Clearing Members, or affect the cost
of clearing or access to clearing for
market participants. Accordingly, the
Commission believes the proposed rule
change would not impose any
significant burden on competition.
Because the Commission believes the
proposed rule change would not (i)
significantly affect the protection of
investors or the public interest and (ii)
impose any significant burden on
competition, the Commission believes
that waiver of the 30-day operative
delay would not itself significantly
affect the protection of investors or the
public interest and impose any
significant burden on competition.
Moreover, the Commission believes that
the delay of the operation of the
proposed rule change through the 30day operative delay could impede ICE
Clear Europe’s compliance with its
requirements under EMIR. As ICE Clear
Europe notes, the proposed rule change
would allow ICE Clear Europe to
establish a TARGET2–ECB account,
which is necessary in order to further
compliance by ICE Clear Europe with
the policy underlying Article 25(2b) of
EMIR applicable to a tier 2 TC–CCP in
light of the United Kingdom’s exit from
the European Union. ICE Clear Europe
seeks to establish such an account to
replace its existing TARGET2–NL
account by the end of March 2021. Any
delay in implementing the amendments,
and establishing the TARGET2–ECB
account, could affect ICE Clear Europe’s
ability to comply with applicable EU
requirements and maintain recognition.
Thus, the Commission believes that
waiving the 30-day operative delay
would allow ICE Clear Europe to
comply with applicable EU
requirements and maintain recognition,
thus providing certainty to ICE Clear
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Europe and its Clearing Members, while
not significantly affecting the protection
of investors or the public interest and
imposing any significant burden on
competition. Therefore, the Commission
designates the proposed rule change as
operative upon filing.19
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–
ICEEU–2021–004 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–ICEEU–2021–004. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet 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, 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
19 As noted, ICE Clear Europe satisfied the fiveday pre-filing requirement. For purposes only of
waiving the 30-day operative delay, the
Commission has considered the proposed rule
change’s impact on efficiency, competition, and
capital formation. See 15 U.S.C. 78c(f).
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12237
hours of 10:00 a.m. and 3:00 p.m.
Copies of such filings will also be
available for inspection and copying at
the principal office of ICE Clear Europe
and on ICE Clear Europe’s website at
https://www.theice.com/clear-europe/
regulation. 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–ICEEU–
2021–004 and should be submitted on
or before March 23, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–04221 Filed 3–1–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91199; File No. SR–OCC–
2021–003]
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Filing of Proposed Rule Change To
Establish OCC’s Persistent Minimum
Skin-in-the-Game
February 24, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule
19b–4 thereunder,2 notice is hereby
given that on February 10, 2021, the
Options Clearing Corporation (‘‘OCC’’ or
‘‘Corporation’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by OCC. 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 would
amend OCC’s Rules, Capital
Management Policy, and certain other
OCC policies to establish a persistent
minimum level of OCC’s own prefunded financial resources (commonly
referred to as ‘‘skin-in-the-game’’) that
OCC would contribute to cover default
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\02MRN1.SGM
02MRN1
]]>Agencies
[Federal Register Volume 86, Number 39 (Tuesday, March 2, 2021)]
[Notices]
[Pages 12234-12237]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04221]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91204; File No. SR-ICEEU-2021-004]
Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change Relating
to Amendments to the ICE Clear Europe Clearing Rules
February 24, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 17, 2021, ICE Clear Europe Limited (``ICE Clear Europe'' or
the ``Clearing House'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule changes described in
Items I and II below, which Items have been prepared by ICE Clear
Europe. ICE Clear Europe filed the proposed rule change pursuant to
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) \4\ thereunder,
such that the proposed rule change was immediately effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\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)(6).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The principal purpose of the proposed amendments is for ICE Clear
Europe to make certain amendments to its Clearing Rules (the ``Rules'')
\5\ relating to settlement of Euro payments through the European
Union's TARGET2 payment system.
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\5\ Capitalized terms used but not defined herein have the
meanings specified in the Rules.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, ICE Clear Europe included
statements concerning the purpose of and basis for the proposed rule
change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. ICE Clear Europe has prepared summaries,
set forth in sections (A), (B), and (C) below, of the most significant
aspects of such statements.
[[Page 12235]]
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
(a) Purpose
ICE Clear Europe is proposing to amend Part 12 of the Rules to
implement certain account and settlement finality arrangements
applicable to the settlement of Euro-denominated payments by the
Clearing House through the European Union (``EU'') TARGET2 payment
system.\6\ Effective as of January 1, 2021, upon the exit of the United
Kingdom from the EU, ICE Clear Europe has been recognized as a ``tier
2'' third-country central counterparty (``TC-CCP'') \7\ for purposes of
the European Market Infrastructure Regulation (``EMIR'').\8\ Pursuant
to Article 25(2b) of EMIR, a tier 2 TC-CCP is required, as a condition
to such recognition, to open an overnight deposit account with the
central bank of issue of the relevant currency. ICE Clear Europe
currently has accounts with the Dutch component of TARGET2 (``TARGET2-
NL'') operated by De Nederlandsche Bank (``DNB''), but will not be
eligible to maintain such accounts after March 31, 2021. ICE Clear
Europe therefore plans to establish an account with the European
Central Bank (``ECB'') component of the TARGET2 system (``TARGET2-
ECB''), which both ICE Clear Europe and the ECB wish to do in
compliance with, and furtherance of, EMIR. The proposed changes to Part
12 of the Rules would facilitate the establishment and use of accounts
with TARGET2 (including TARGET2-ECB) \9\ and address settlement
finality with respect to payments made through such accounts in
accordance with TARGET2 terms and conditions of operation.
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\6\ TARGET2 is the real-time gross settlement system for Euro
payments owned and operated by the Eurosystem (which consists of the
European Central Bank and the national central banks of those
countries that have adopted the Euro).
\7\ See European Securities and Markets Authority (ESMA) Public
Statement of 28 September 2020, available at https://www.esma.europa.eu/press-news/esma-news/esma-recognise-three-uk-ccps-1-january-2021.
\8\ Regulation (EU) No 648/2012 of the European Parliament and
of the Council of 4 July 2012 on OTC derivatives, central
counterparties and trade repositories; Commission Delegated
Regulation (EU) 2020/1301 of 14 July 2020 Supplementing Regulation
(EU) No 648/2012 of the European Parliament and of the council with
respect to the criteria that ESMA should take into account to
determine whether a central counterparty established in a third
country is systemically important or likely to become systemically
important for the financial stability of the Union or of one or more
of its Member States.
\9\ For such time as the TARGET2-NL accounts remain in
operation, the proposed changes to Part 12 would apply to such
accounts as well.
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Specifically, in Rule 1201, several new definitions would be added.
In addition to a definition for ``TARGET2'' (referencing the real-time
gross settlement system owned and operated by the Eurosystem), new
definitions would be added for ``TARGET2 Component System''
(referencing the real-time gross settlement system of any central bank
that is part of the TARGET2 system where the operator of such system is
a Concentration Bank under the Rules), ``TARGET2 Concentration Bank''
(referencing a Concentration Bank under the Rules that is the operator
of a TARGET2 Component System), ``TARGET2 PM Account'' (referencing a
cash account of the Clearing House in TARGET2), and ``TARGET2 Terms and
Conditions'' (referencing the terms and conditions that apply to
participation in the relevant TARGET2 Component System). The definition
of ``Payment Transfer Order'' would be amended to add TARGET2 Payment
Transfer Orders, as discussed below. Subsequent provisions of Rule 1201
would be renumbered accordingly. It is contemplated that ICE Clear
Europe's account with TARGET2-ECB would constitute a TARGET2 PM Account
and that the ECB would constitute a TARGET2 Concentration Bank for
purposes of these Rules as proposed to be amended.\10\ ICE Clear Europe
intends to designate the ECB as a Concentration Bank under the Rules
for these purposes.
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\10\ Similarly, while they remain operational, ICE Clear
Europe's existing accounts with TARGET2-NL will constitute a TARGET2
PM Accounts and DNB will constitute a TARGET2 Concentration Bank. It
is expected that after the TARGET2-ECB account has been opened, the
TARGET2-NL account of ICE Clear Europe would be closed and DNB would
cease to be a Concentration Bank.
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In Rule 1202(a), a new clause (v) would be added to provide that a
Payment Transfer Order will arise and enter ICE Clear Europe's
designated system at the moment ICE Clear Europe's TARGET2 PM Account
is debited or credited with funds, pursuant to the Clearing House
sending a SWIFT instruction to the TARGET2 Concentration Bank. Such a
Payment Transfer Order would be defined as a ``TARGET2 Payment Transfer
Order.'' Rule 1202(a)(iv), which addresses Payment Transfer Orders
involving Clearing House bank accounts, would be amended to exclude
TARGET2 Concentration Banks (which would be covered instead by the new
clause (v)). Rule 1202(e)(ii), which addresses the amounts subject to a
Payment Transfer Order, would be amended to cover TARGET2 Payment
Transfer Orders. Rule 1202(m), which specifies the parties subject to a
Payment Transfer Order, would be amended to add a new clause (iv)
specifying that a TARGET2 Payment Transfer Order would have effect
between the relevant TARGET2 Concentration Bank and the Clearing House.
Subsequent provisions of Rule 1202(m) would be renumbered accordingly.
In Rule 1203, a new paragraph (c) would be added to provide that a
TARGET2 Payment Transfer Order will become irrevocable at the earlier
of (i) the moment the TARGET2 Payment Account is credited or debited or
(ii) when or during the period in which any relevant payment settlement
algorithm used in TARGET2 commences or is running. The approach is
intended to be consistent with the point at which payment order becomes
irrevocable under the TARGET2 Terms and Conditions. Subsequent
provisions of Rule 1203 would be renumbered accordingly.
(b) Statutory Basis
ICE Clear Europe believes that the proposed amendments to the
Clearing Rules are consistent with the requirements of Section 17A of
the Act \11\ and the regulations thereunder applicable to it including
the standards under Rule 17Ad-22.\12\ In particular, Section
17A(b)(3)(F) of the Act \13\ 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, the safeguarding of securities and funds in the custody
or control of the clearing agency or for which it is responsible, and
the protection of investors and the public interest. The amendments are
intended to accommodate the Clearing House's use of TARGET2-ECB
accounts (and would also apply to the Clearing House's use of TARGET2-
NL accounts whilst they remain operational) for purposes of settling
Euro payments through the TARGET2 system in central bank funds,
consistent with the conditions of recognition for a tier 2 TC-CCP under
EMIR. As such, the amendments will facilitate settlement by the
Clearing House of Euro payments and provide for settlement finality of
such payments in accordance with the TARGET2 Terms and Conditions. In
ICE Clear Europe's view, the amendments will thus promote the prompt
and accurate clearance and settlement of transactions and the
protections of investors and the public interest, within
[[Page 12236]]
the meaning of Section 17A(b)(3)(F) of the Act. (ICE Clear Europe does
not believe the amendments would affect the safeguarding of securities
and funds in the custody or control of the clearing agency or for which
it is responsible, within the meaning of that section.)
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\11\ 15 U.S.C. 78q-1.
\12\ 17 CFR 240.17Ad-22.
\13\ 15 U.S.C. 78q-1(b)(3)(F).
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Moreover, the amendments are consistent with Rule 17Ad-
22(e)(9),\14\ which requires that each covered clearing agency
``conduct its money settlements in central bank money, where available
and determined to be practical by the board of directors of the covered
clearing agency''. The amendments will facilitate ICE Clear Europe's
opening accounts in TARGET2, and thereby permit it to conduct money
settlements in Euro in central bank funds and to reduce the potential
for conflicts between the rules governing ICE Clear Europe's settlement
system and those governing the TARGET2 System where ICE Clear Europe
holds and uses accounts in the TARGET2 System. As a result, the
amendments would be consistent with the requirements of Rule 17Ad-
22(e)(9).
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\14\ 17 CFR 240.17Ad-22(e)(9).
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Rule 17Ad-22(e)(8) \15\ requires the covered clearing agency to
``define the point at which settlement is final to be no later than the
end of the day on which the payment or obligation is due and, where
necessary or appropriate, intraday or in real time.'' The amendments to
Part 12 of the Rules will establish the time at which Payment Transfer
Orders are effective and irrevocable for Euro payments made through the
TARGET2 System. In accordance with the TARGET2 Terms and Conditions,
such payments will be effected, and become final, on a real-time basis.
The amendments are thus consistent with the requirements of Rule 17Ad-
22(e)(8).
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\15\ 17 CFR 270.17Ad-22(e)(8).
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Rule 17Ad-22(e)(1) requires that the covered clearing agency
``provide for a well-founded, clear, transparent and enforceable legal
basis for each aspects of its activities in all relevant
jurisdictions.'' As discussed above, the amendments are being made to
permit ICE Clear Europe to have a central bank account for Euro
payments in accordance with Article 25(2b) of EMIR, as applicable to
ICE Clear Europe as a tier 2 TC-CCP. The amendments are, therefore,
necessary and desirable to maintain ICE Clear Europe's status as a
recognized TC-CCP under EMIR. The amendments also reduce the potential
for conflicts between the settlement finality rules governing ICE Clear
Europe's settlement system and those governing relevant TARGET2
components. The amendments will therefore further compliance with
article 5(4) of EU Regulation 153/2013, as on-shored in the United
Kingdom and as applicable in the EU, which requires a CCP to ``identify
and analyse potential conflicts of law issues and develop rules and
procedures to mitigate legal risk resulting from such issues''. As a
result, the amendments enhance the legal framework of the Clearing
House in the UK and EU, and as such are consistent with the
requirements of Rule 17Ad-22(e)(1).
(B) Clearing Agency's Statement on Burden on Competition
ICE Clear Europe does not believe the proposed rule changes would
have any impact, or impose any burden, on competition not necessary or
appropriate in furtherance of the purpose of the Act. The amendments
will not affect the rights or obligations of Clearing Members or the
terms of cleared Contracts. The amendments are designed to facilitate
establishment and use by the Clearing House of a TARGET2-ECB payment
account to permit real-time settlement of Euro-based payments as
between the Clearing House's own accounts, and would not affect
significantly the rights of Clearing Members. As a result, ICE Clear
Europe does not expect that the proposed changes will adversely affect
access to clearing or the ability of Clearing Members, their customers
or other market participants to continue to clear contracts. ICE Clear
Europe also does not believe the amendments would materially affect the
cost of clearing or otherwise limit market participants' choices for
selecting clearing services. As a result, ICE Clear Europe does not
believe the proposed rule changes impose any burden on competition that
is inappropriate in furtherance of the purposes of the Act.
(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 changes have not
been solicited or received by ICE Clear Europe. ICE Clear Europe will
notify the Commission of any written comments received with respect to
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not:
(i) Significantly affect the protection of investors or the public
interest;
(ii) impose any significant burden on competition; and
(iii) become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \16\ and
Rule 19b-4(f)(6) \17\ thereunder.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(6).
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ICE Clear Europe has requested that the Commission waive both the
five-day pre-filing requirement and the 30-day delayed operative date
under Rule 19b-4(f)(6)(iii) \18\ so that the proposed rule change may
become effective and operative upon filing with the Commission. ICE
Clear Europe has satisfied the five-day pre-filing requirement already,
so the Commission only considers whether to waive the 30-day delayed
operative date.
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\18\ 17 CFR 240.19b-4(f)(6)(iii).
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ICE Clear Europe believes that waiver of the 30-day delayed
operative date is warranted because the proposed rule change would not
(i) significantly affect the protection of investors or the public
interest and (ii) impose any significant burden on competition.
With respect to (i), ICE Clear Europe maintains that the proposed
rule change would in practice affect transfers between different bank
accounts of ICE Clear Europe (including TARGET2 PM Accounts), which are
not transfers involving payments to or from Clearing Members.
Accordingly, ICE Clear Europe states that the proposed rule change
would have no effect on the safeguarding of funds or securities in the
custody or control of ICE Clear Europe, nor significantly affect any
other rights or obligations of ICE Clear Europe, Clearing Members,
Sponsored Principals or other persons using the clearing service. ICE
Clear Europe further maintains that the proposed rule change would not
affect the terms of contracts it clears or ICE Clear Europe's financial
resources or risk models. As a result, ICE Clear Europe does not
believe the proposed rule change would significantly affect the
protection of investors or the public interest.
With respect to (ii), ICE Clear Europe maintains that the proposed
rule change would not impose any new obligations on Clearing Members,
affect significantly the rights of Clearing Members, or affect the cost
of clearing or access to clearing for market participants. As a result,
in ICE Clear Europe's view, the proposed rule change would not impose
any significant burden on competition.
[[Page 12237]]
The Commission believes that the proposed rule change would only
affect transfers between different bank accounts of ICE Clear Europe
(including TARGET2 PM Accounts), not transfers involving payments to or
from Clearing Members. As a result, the Commission does not believe the
proposed rule change would have any effect on the safeguarding of funds
or securities in the custody or control of ICE Clear Europe or any
other rights or obligations of ICE Clear Europe, Clearing Members,
Sponsored Principals or other persons using the clearing service.
Accordingly, the Commission believes the proposed rule change would not
significantly affect the protection of investors or the public
interest.
Moreover, the Commission believes the proposed rule change would
not impose any new obligations on Clearing Members, affect
significantly the rights of Clearing Members, or affect the cost of
clearing or access to clearing for market participants. Accordingly,
the Commission believes the proposed rule change would not impose any
significant burden on competition.
Because the Commission believes the proposed rule change would not
(i) significantly affect the protection of investors or the public
interest and (ii) impose any significant burden on competition, the
Commission believes that waiver of the 30-day operative delay would not
itself significantly affect the protection of investors or the public
interest and impose any significant burden on competition. Moreover,
the Commission believes that the delay of the operation of the proposed
rule change through the 30-day operative delay could impede ICE Clear
Europe's compliance with its requirements under EMIR. As ICE Clear
Europe notes, the proposed rule change would allow ICE Clear Europe to
establish a TARGET2-ECB account, which is necessary in order to further
compliance by ICE Clear Europe with the policy underlying Article
25(2b) of EMIR applicable to a tier 2 TC-CCP in light of the United
Kingdom's exit from the European Union. ICE Clear Europe seeks to
establish such an account to replace its existing TARGET2-NL account by
the end of March 2021. Any delay in implementing the amendments, and
establishing the TARGET2-ECB account, could affect ICE Clear Europe's
ability to comply with applicable EU requirements and maintain
recognition. Thus, the Commission believes that waiving the 30-day
operative delay would allow ICE Clear Europe to comply with applicable
EU requirements and maintain recognition, thus providing certainty to
ICE Clear Europe and its Clearing Members, while not significantly
affecting the protection of investors or the public interest and
imposing any significant burden on competition. Therefore, the
Commission designates the proposed rule change as operative upon
filing.\19\
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\19\ As noted, ICE Clear Europe satisfied the five-day pre-
filing requirement. For purposes only of waiving the 30-day
operative delay, the Commission has considered the proposed rule
change's impact on efficiency, competition, and capital formation.
See 15 U.S.C. 78c(f).
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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-ICEEU-2021-004 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-ICEEU-2021-004. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet 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, 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 ICE Clear Europe and on ICE Clear Europe's website at https://www.theice.com/clear-europe/regulation. 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-
ICEEU-2021-004 and should be submitted on or before March 23, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-04221 Filed 3-1-21; 8:45 am]
BILLING CODE 8011-01-P
