Self-Regulatory Organizations; ICE Clear Europe Limited; Order Granting Approval of Proposed Rule Change, as Modified by Partial Amendment No. 1, Relating to the Clearing Rules, Clearing Procedures, Finance Procedures, Delivery Procedures, CDS Procedures, Membership Procedures, Complaint Resolution Procedures, and General Contract Terms, 49367-49384 [2021-18941]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 86, Number 168 (Thursday, September 2, 2021)]
[Notices]
[Pages 49367-49384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-18941]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92786; File No. SR-ICEEU-2021-010]


Self-Regulatory Organizations; ICE Clear Europe Limited; Order 
Granting Approval of Proposed Rule Change, as Modified by Partial 
Amendment No. 1, Relating to the Clearing Rules, Clearing Procedures, 
Finance Procedures, Delivery Procedures, CDS Procedures, Membership 
Procedures, Complaint Resolution Procedures, and General Contract Terms

August 27, 2021.

I. Introduction

    On May 13, 2021, ICE Clear Europe Limited (``ICE Clear Europe'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities

[[Page 49368]]

Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend its Clearing Rules (the ``Rules''),\3\ 
Clearing Procedures, Finance Procedures, Delivery Procedures, CDS 
Procedures, Membership Procedures, Complaint Resolution Procedures, and 
General Contract Terms (collectively, the ``Amended Documents'') to 
make various updates and enhancements. The proposed rule change was 
published for comment in the Federal Register on June 2, 2021.\4\ The 
Commission did not receive comments regarding the proposed rule change. 
On June 16, 2021, ICE Clear Europe filed Partial Amendment No. 1 to the 
proposed rule change.\5\ Partial Amendment No. 1 to the proposed rule 
change was published for comment in the Federal Register on July 21, 
2021.\6\ The Commission did not receive comments regarding Partial 
Amendment No. 1 to the proposed rule change. For the reasons discussed 
below, the Commission is approving the proposed rule change, as 
modified by Partial Amendment No. 1 (hereinafter the ``proposed rule 
change'').
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Capitalized terms used but not defined herein have the 
meanings specified in the Rules.
    \4\ Self-Regulatory Organizations; ICE Clear Europe Limited; 
Notice of Filing of Proposed Rule Change Relating to the Clearing 
Rules, Clearing Procedures, Finance Procedures, Delivery Procedures, 
CDS Procedures, Membership Procedures, Complaint Resolution 
Procedures and General Contract Terms, Exchange Act Release No. 
92020 (May 26, 2021), 86 FR 29612 (June 2, 2021) (SR-ICEEU-2021-010) 
(``Notice'').
    \5\ ICE Clear Europe filed Partial Amendment No. 1 to update 
Exhibit 5D, the Delivery Procedures, to correct a formatting error 
that resulted in the omission of several proposed definitions to 
update references to ICE Clear Europe systems.
    \6\ Self-Regulatory Organizations; ICE Clear Europe Limited; 
Notice of Partial Amendment No. 1 and Designation of Longer Period 
for Commission Action on Proposed Rule Change Relating to the 
Clearing Rules, Clearing Procedures, Finance Procedures, Delivery 
Procedures, CDS Procedures, Membership Procedures, Complaint 
Resolution Procedures, and General Contract Terms, Exchange Act 
Release No. 92418 (July 15, 2021), 86 FR 38521 (July 21, 2021) (SR-
ICEEU-2021-010).
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II. Description of the Proposed Rule Change

    ICE Clear Europe proposes specific changes to the Amended Documents 
that would generally make various drafting improvements, 
clarifications, and updates, in each case as described below.\7\ These 
changes are organized below according to each Amended Document.
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    \7\ The following description of the proposed rule change is 
substantially excerpted from the Notice.
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A. The Rules

i. Removal of ``Default Portability Preference'' in the Rules
    ICE Clear Europe proposes to remove the process by which Non-FCM/BD 
Clearing Members may deliver a ``Default Portability Preference,'' with 
advance, pre-default, porting information to ICE Clear Europe. 
Currently, the Default Portability Preference allows a Customer or 
Specified Principal (i.e., a principal-client for an Individually 
Segregated Sponsored Account) to specify, in advance of a default, one 
of more preferred Transferee Clearing Members to receive its Customer-
CM Transactions under ICE Clear Europe's Default Portability Rules. ICE 
Clear Europe represents that it developed this process and preference 
mechanism as part of its default planning processes prior to post-
financial crisis legislation coming into effect, such as the European 
Market Infrastructure Regulation (``EMIR'').\8\ Given that EMIR 
requires post-default porting notices to be served as a pre-condition 
to porting, ICE Clear Europe proposes to replace its current pre-
default portability preference structure with a post-default 
portability preference structure using ``Porting Notices,'' as 
discussed below.
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    \8\ Notice, 86 FR 29612.
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    To implement this change, ICE Clear Europe proposes to delete the 
existing definitions of ``Default Portability Preference'' and ``Non-
Transfer Positions'' in Rule 101 (Definitions), and to add a new 
definition of ``Porting Notice'' in Rule 101, which would cross-
reference the existing definition of the term in the relevant Standard 
Terms of the Rules. The existing definition of ``Porting Notice'' would 
not change, and is generally defined in the Standard Terms as a post-
default notification to ICE Clear Europe from a Customer or Sponsored 
Principal of a porting preference to a designated Transferee Clearing 
Member.
    In Rule 904 (Transfer of Contracts and Margin on a Clearing Member 
Event of Default), the proposed rule change would amend Rules 904(g) 
and 904(j) to remove the existing references to Default Portability 
Preference and replace them with references to Porting Notices. In 
addition, the proposed rule change also would amend Rule 904(g) to 
provide that a Transferee Clearing Member's consent can only be 
evidenced in a Porting Notice that is countersigned by such Clearing 
Member or otherwise agreed in writing. ICE Clear Europe represents that 
this change would clarify that simply being named by a customer as a 
potential Transferee Clearing Member is not sufficient to evidence a 
Clearing Member's consent to being named a Transferee Clearing Member 
by the Clearing Member's customer.\9\ ICE Clear Europe proposes 
additional changes in Rules 904(m), 904(p), 904(u) and 904(w) to 
reflect the proposed deletion of Default Portability Preference.
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    \9\ Notice, 86 FR 29613.
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    In Rule 907(d), the proposed rule change would delete existing 
references to Default Portability Preference and Non-Transfer 
Positions, and would instead provide that in connection with porting, 
ICE Clear Europe will be entitled to rely on any information provided 
to it by a Defaulter prior to declaration of default in respect of 
Contracts, Customer-CM Transactions, Margin, and the Accounts in which 
Contracts and Margin were recorded or which relate to particular 
Customers or particular groups of Customers. ICE Clear Europe 
represents that this proposed change would allow it to continue to be 
able to act efficiently in default scenarios, and rely on more of the 
relevant information available to it in relation to the Defaulter.\10\ 
The proposed rule change to Rule 907(b) would also clarify that ICE 
Clear Europe has no obligation to inquire of any person as to any 
Porting Notice.
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    \10\ Notice, 86 FR 29613.
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    The proposed rule change would also remove references to Default 
Portability Preferences and include reference to Porting Notices in the 
CDS Standard Terms (paragraph 6), F&O Standard Terms (paragraph 6) and 
FX Standard Terms (paragraph 6) annexed to the Rules.
ii. Amendments to the Definitions Relating to Energy Transactions
    The proposed rule change would amend certain definitions relating 
to Energy transactions to simplify and make such terms consistent with 
previous amendments to definitions for other F&O Products.\11\ 
Specifically, in Rule 101, the proposed rule change would shorten the 
existing definition of the term ``Energy'' to refer to the term 
``Market'' rather than naming all specific ICE markets. The proposed 
rule change would also introduce new definitions of the terms ``Energy 
Matched Transaction'' (referencing an energy transaction conducted on a 
Market) and ``Energy Transaction'' (covering an Energy Matched 
Transaction or an

[[Page 49369]]

Energy Block Transaction meeting specified criteria).
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    \11\ See Exchange Act Release No. 34-87275 (File No. SR-ICEEU-
2019-020) (Oct. 10, 2019), 84 FR 55649 (Oct. 17, 2019) (changes to 
definitions using the term Market).
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iii. EFRP (Exchange for Related Positions) Definition Amendments
    ICE Clear Europe proposes several changes to the Rules to address 
more clearly exchange for related position transactions, referred to as 
EFRPs, under applicable Market rules, including to revise defined terms 
and clarify that such transactions are available on exchanges for 
products other than soft commodities.
    In Rule 101, the proposed rule change would add a new ``EFRP'' 
definition using a similar drafting structure to that for EFP (exchange 
for physicals) and EFS (exchange for swaps) transactions by including 
the phrase ``or any similar transaction under any Market Rules.'' Also, 
the proposed rule change would clarify the current definition of 
``EFS'' in Rule 101 to refer only to exchange for swaps or similar 
transactions under Market Rules and to remove an existing reference to 
exchange for related positions, which would instead be covered by the 
proposed EFRP definition. In the ``Financials & Softs Block 
Transaction'' definition, the proposed rule change would broaden the 
reference to ``Soft Commodity EFRPs'' to include all EFRPs under all 
Market Rules, as Soft Commodity EFRPs are specific to ICE Futures 
Europe. Accordingly, the proposed rule change would delete the ``Soft 
Commodity EFRP'' definition which is not otherwise used.
iv. Amendments to Product Termination Rules
    The proposed rule change would amend Rule 105(a) to shorten the 
termination period (generally from four months to one month) for a 
service withdrawal for a product in circumstances in which there is no 
open interest in the relevant Set. ICE Clear Europe represents that a 
longer termination period is unnecessary in such circumstances, since 
no action is required by Clearing Members to close out their 
positions.\12\ The proposed amendments to Rule 105(a) would also 
clarify that where a product termination occurs following actions of 
the relevant exchange (e.g., a de-listing), the notice period required 
under the exchange's rules would instead apply and the exchange would 
be responsible for providing such notice.
---------------------------------------------------------------------------

    \12\ Notice, 86 FR 29613.
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v. Amendments to the Termination Rules for Clearing Members
    ICE Clear Europe proposes amendments to Rule 209(d) to facilitate 
membership terminations in the context of a corporate group 
reorganization where a new Clearing Member that is an Affiliate will be 
receiving the terminating Clearing Member's Open Contract Positions. In 
such context, the proposed amendment would establish an exception to 
the requirement for terminating Clearing Members to immediately pay to 
ICE Clear Europe, upon service of a Termination Notice, Assessment 
Contributions equal to three times the required relevant guaranty fund 
contribution. ICE Clear Europe represents that such an exception is 
warranted since all positions would be received by an affiliated 
Clearing Member in good standing that would remain liable with respect 
to any obligations arising from or related to the holding of such 
positions under the Rules (including as to future Assessment 
Contributions).\13\
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    \13\ Notice, 86 FR 29613.
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    The proposed rule change would further amend Rule 209(d) to clarify 
that references in the Clearing Rules to Assessment Contributions being 
called or to Guaranty Fund Contributions being replenished or applied, 
where the Clearing Member has provided Permitted Cover to ICE Clear 
Europe (whether under Rule 209(d) or prior to the Clearing Member 
serving its termination notice or the Termination Date), would be 
interpreted as a reference to that Permitted Cover being applied. The 
proposed rule change would also clarify that the Permitted Cover which 
has been provided by the Clearing Member prior to the serving of a 
termination notice or a Termination Date could, as is currently 
intended, also be included as part of, for example, any applications of 
Guaranty Fund by ICE Clear Europe under Part 9 or Part 11.
    The proposed amendments to Rule 209(d) would further clarify for 
the avoidance of doubt that the following obligations would apply to a 
terminating Clearing Member until Open Contract Positions have been 
closed, the Termination Date has passed, and all Guaranty Fund 
Contributions have been returned under Rule 1102(g): Application of 
Guaranty Fund Contributions, application of Assessment Contributions 
(to the extent paid under Rule 209(d) or otherwise prior to the 
Termination Date), position limits under Part 6, disciplinary actions 
under Part 10, and the declaration and consequences of an Event of 
Default under Part 9 of the Rules.
    ICE Clear Europe represents that the foregoing proposed amendments 
to Rule 209(d) reflect its experience with both default planning and 
recent Clearing Member terminations involving group 
reorganizations.\14\
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    \14\ Notice, 86 FR 29614.
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vi. Amendments to Notice Provisions
    ICE Clear Europe represents that the proposed changes regarding the 
delivery of notices under the Rules have been informed by default 
simulation planning and, in particular, the requirements around default 
notices under Rule 901, but are not limited to that context.\15\ 
Specifically, the proposed rule change would amend Rules 113(a) and 
113(a)(i) to delete the current references to telephone as a valid mode 
of service of notices (since ICE Clear Europe represents that this is 
not supported operationally) and to replace such references with 
email.\16\ Accordingly, under the proposed rule change, the email 
address last notified to ICE Clear Europe by a Clearing Member would 
become an option for service of notices. The proposed addition of new 
Rule 113(a)(ii) would clarify that ICE Clear Europe may also validly 
deliver notices to a process agent nominated by the Clearing Member to 
act as its agent. Rule 113(e) currently refers to such agents for 
service of process, and would be expanded under the proposed rule 
change to explicitly refer to service of other contractual notices and 
communications. The proposed amendments to Rule 113(a) would further 
clarify that delivery in accordance with this section would be deemed 
made to the Clearing Member or Sponsored Principal, as well as to an 
agent appointed by the Clearing Member or Sponsored Principal.
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    \15\ Notice, 86 FR 29614.
    \16\ Notice, 86 FR 29614.
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    The proposed rule change would also amend Rules 113(c) and 113(d) 
to clarify the precise time when effective service is deemed to be made 
for communications by fax, email, and courier, and that effective 
service and delivery can be achieved outside of opening hours on a 
business day, consistent with current operational practices.
    Similarly, the proposed rule change would amend Rule 1901(n) to 
clarify that process agents for Sponsored Principals will act as agents 
for service of process of any notice, order, or other communication 
under the Rules and the Sponsored Principal Agreement.

[[Page 49370]]

    ICE Clear Europe proposes to amend Part E of the summary table at 
paragraph 4.2 of the Membership Procedures to provide that the 
termination of a Clearing Membership Agreement or membership as a 
Clearing Member would become effective no less than 30 Business Days 
after the date of the Termination Notice Time or pursuant to Rule 
917(c) instead of the current notice period of no less than three 
months' advance notice if termination is not for cause and otherwise as 
specified in and allowed pursuant to the Rules. This change would make 
the summary table consistent with current Rule 209. Finally, throughout 
the summary table at paragraph 4.2 of the Membership Procedures, the 
proposed rule change would update the email address to which Clearing 
Members should send certain notifications.
vii. Clarifying Clearing Membership Criteria and Clearing Member 
Obligations
    The proposed rule change would amend Rule 201(a)(ix) to reference 
existing Rule 201(b), under which ICE Clear Europe may require that 
potential Clearing Members enter into additional annexes or agreements 
to the Clearing Membership Agreement in order to be, and remain, 
eligible for Clearing Membership. ICE Clear Europe represents that it 
had to develop certain annexes to cater for local law issues arising in 
certain EU member states as part of Clearing Members' post-Brexit group 
legal structuring.\17\ By specifically referencing Rule 201(b), the 
proposed amendments to Rule 201(a)(ix) would clarify the basis in the 
Rules for ICE Clear Europe to require such additional documentation to 
be executed, where necessary.
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    \17\ Notice, 86 FR 29614.
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    The proposed rule change would also amend Rule 202(a)(xxii), which 
currently requires Clearing Members to have competent persons 
accessible to ICE Clear Europe during opening hours and for two hours 
immediately after the business day. Under the proposed amendment, 
Clearing Members would be required to have competent persons accessible 
to ICE Clear Europe for two hours prior to the start of the business 
day as well. ICE Clear Europe represents that this change is consistent 
with current operational practice and necessary to ensure that staff 
are available to process and deal with questions relating to morning 
margin calls.\18\
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    \18\ Notice, 86 FR 29614.
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    ICE Clear Europe proposes to add a new Rule 301(o) that would allow 
it to request information on account balances of nominated accounts of 
the Clearing Member at financial institutions when needed, including 
for the purpose of calling on available cash where the Clearing Member 
has failed to meet a payment obligation or determining whether the 
Clearing Member is, or is likely to be, in default. ICE Clear Europe 
represents that this change would address issues that have arisen in 
practice where payment banks have refused to provide such information 
to ICE Clear Europe.\19\
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    \19\ Notice, 86 FR 29614.
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viii. Greater Flexibility in Financial Reporting by Clearing Members
    The proposed rule change would amend Rule 205(a)(ii) to give ICE 
Clear Europe greater flexibility to accept different kinds of financial 
statements (for example, semi-annual accounts) from Clearing Members as 
part of their financial reporting obligations, in circumstances where 
that Clearing Member does not produce a quarterly financial statement 
for its regulators. This amendment would also result in a conforming 
change to Part A of the summary table at paragraph 4.2 of the 
Membership Procedures. ICE Clear Europe represents that these proposed 
amendments would formalize current operational practice for those 
Clearing Members who do not prepare regulatory quarterly 
financials.\20\
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    \20\ Notice, 86 FR 29614.
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ix. Clarifying CDS Contract Formation
    The proposed rule change would amend Rule 401(o) to clarify that, 
where a CDS Contract of a Non-FCM/BD Clearing Member for a customer 
account arises pursuant to Rule 401, a Customer-CM CDS Transaction 
arises between the Customer and the Non-FCM/BD Clearing Member at the 
same time as the Contract. The current rule does not specify the timing 
of the Customer-CM CDS Transaction. The proposed amendment would 
reflect the equivalent rule for a Customer-CM F&O Transaction in Rule 
401(n).
x. Clarifying How Open Contract Positions Are Aggregated and Netted
    The proposed rule change would amend Rules 406(b) and (c) to 
address contractual netting for F&O contracts by aligning the 
provisions for F&O Contracts more closely with the corresponding rule 
provisions on contractual netting for CDS contracts in Rule 406(d), et 
seq. In particular, the proposed changes would expressly address 
aggregation of open contract positions of an F&O Clearing Member in 
addition to netting of such positions, and would clarify that the 
process for aggregation or netting takes place via contractual 
novation.
xi. Clarifying How the Clearing House May Amend Contract Terms
    The proposed rule change would amend Rule 409(a) so that ICE Clear 
Europe can evidence its consent to amendments, waivers, and variations 
of the Contract Terms by a Circular. ICE Clear Europe represents that a 
Circular has been the usual way of issuing such amendments, waivers, 
and variations, and the proposed change would conform the Rules to 
operational practice.\21\
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    \21\ Notice, 86 FR 29615.
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xii. Pledged Collateral Not for Settlement Payments
    The proposed rule change would amend Rule 1603(c) to clarify that 
only ``original'' or ``initial'' types of Margin payments shall be 
provided in the form of Pledged Collateral, and that such collateral 
excludes Variation Margin, Mark-to-Market Margin, and FX Mark-to-Market 
Margin, which is provided to or by ICE Clear Europe by outright 
transfer of cash as a settlement payment. ICE Clear Europe represents 
that this proposed change is intended to be consistent with amendments 
previously made to the Rules to clarify that such variation and mark-
to-market margin are settlement payments rather than collateral, and 
was inadvertently omitted from such prior amendments.\22\
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    \22\ See Notice, 86 FR 29615. See also Exchange Act Release No. 
34-88665 (File No. SR-ICEEU-2020-003) (Apr. 16, 2020), 85 FR 22892 
(Apr. 23, 2020).
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xiii. Hedging Following an Event of Default
    The proposed rule change would amend Rule 903(c) to clarify that 
ICE Clear Europe's right to authorize hedging transactions in a Default 
scenario would include transactions on a Market, any other Exchange, or 
over the counter. The proposed amendments would also provide that such 
transactions taking place on an exchange which is not a Market, or 
where requested or directed otherwise by ICE Clear Europe, need not 
themselves be cleared.
xiv. Affiliate Cross-Defaults
    The proposed rule change would amend Rule 901(a)(iv) to clarify 
that the declaration of an Event of Default in respect of one Clearing 
Member is a circumstance in which ICE Clear Europe can declare an Event 
of Default in respect of another Clearing Member that

[[Page 49371]]

is a Group Company, i.e., a parent or a subsidiary entity of such 
Clearing Member. ICE Clear Europe represents that this proposed 
clarification addresses questions raised in default planning 
exercises.\23\
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    \23\ Notice, 86 FR 29615.
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xv. ``Eligible Contract Participant'' Status
    The proposed rule change would amend Rule 201(a)(xx) to provide 
that the requirement for a Clearing Member to be an ``eligible contract 
participant'' \24\ only applies if it is to be a CDS Clearing member or 
an FX Clearing member. The amendment reflects that such status is 
required under applicable U.S. law for persons that trade swaps and 
security-based swaps (such as CDS), but not for futures.\25\ Similarly, 
the proposed rule change would amend Section 10 of the F&O Standard 
Terms to remove a requirement that an F&O Clearing Member and Customer 
be an eligible contract participant. The proposed rule change would 
also amend Rule 1901(b)(xv) and Rule 1901(d)(ix) to provide that the 
requirement for a Sponsored Principal to be an eligible contract 
participant only applies in relation to CDS Contracts and FX Contracts.
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    \24\ Commodity Exchange Act Section 1a(18), 7 U.S.C. 1a(18).
    \25\ See Section 6(l) of the Act, 15 U.S.C. 78f(l); Commodity 
Exchange Act Section 2(e), 7 U.S.C. 2(e).
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xvi. Corrected Names of Internal Risk Committees
    The proposed rule change would amend Rule 916(d) to change the term 
``Risk Committee'' to ``relevant product risk committee.'' ICE Clear 
Europe represents that this change reflects that there are different 
product risk committees addressing topics specific to F&O and CDS.\26\
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    \26\ Notice, 86 FR 29615.
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xvii. Clarifications Relating to Negative EDSP
    The proposed rule change would amend the definition of ``Exchange 
Delivery Settlement Price'' or ``EDSP'' in Rule 101 (Definitions) to 
clarify, for the avoidance of doubt, that the EDSP can be a positive or 
negative number, or zero. The proposed rule change would amend Rule 
703(b) (Delivery) by adding new language to clarify the process for 
payment obligations if the EDSP is a negative number. In such event, 
amended Rule 703(b) would provide that the roles of the Buyer and 
Seller as set forth in the Rules, Delivery Procedures, Contract Terms, 
and Market Rules shall be reversed solely in respect of the payment 
obligation related to that EDSP.
xviii. Prospectus Directive
    The proposed rule change would amend Rule 1501 (Definitions) in 
Part 15 (Credit Default Swaps) of the Rules to change the definition of 
``Prospectus Directive'' to ``Prospectus Regulation,'' because the EU 
Prospectus Directive has been repealed and replaced with the Prospectus 
Regulation. The proposed rule change would also make conforming changes 
to the following definitions: ``Offer to the Public,'' by replacing the 
obsolete term ``Prospectus Directive'' with ``Prospectus Regulation''; 
``Relevant Member State,'' by using a new defined term ``Relevant 
State'' that would remove the current reference to the Prospectus 
Directive and add the phrase ``or the United Kingdom''; and 
``Securities,'' by replacing the current references to the Prospectus 
Directive with a reference to the Prospectus Regulation. Similarly, the 
proposed rule change would delete the definition of ``2010 PD Amending 
Directive'' (and references thereto) as this directive is also no 
longer in force. Additional conforming changes would be made in Rule 
1503 to remove obsolete legislative references to the Prospectus 
Directive.
xix. Updates for Changes to Applicable Anti-Money Laundering Law
    The proposed rule change would amend Rule 101 (Definitions) by 
updating the definition of the term ``Money Laundering Directive'' to 
reflect the implementation of the fifth EU Anti-Money Laundering 
Directive. The proposed rule change would also add a new definition of 
``Money Laundering Regulations'' to reference the applicable UK 
regulations corresponding to that Directive, including after its exit 
from the European Union.
    In Rule 201(a)(xxix) (Clearing Membership Criteria) and Rule 
1901(d)(xi) (Attaining status of a Sponsored Principal), the proposed 
rule change would remove the existing references to ``simplified due 
diligence.'' ICE Clear Europe represents that this change reflects the 
repeal and restatement of the U.K.'s former Money Laundering 
Regulations 2007 pursuant to the Money Laundering, Terrorist Financing 
and Transfer of Funds (Information on the Payer) Regulations 2017, 
which removed simplified due diligence as the default option for a 
defined list of entities and replaced it with discretionary risk-based 
levels of due diligence.\27\
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    \27\ Notice, 86 FR 29617.
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    The proposed rule change also would amend Rule 201(a)(xxxi) to add 
anti-money laundering laws to the existing list of applicable laws that 
are required to be acceptable to ICE Clear Europe in the respective 
jurisdictions of Clearing Members. The proposed rule change would add a 
new Rule 201(a)(xxxiii) to require Clearing Members to have adequate 
policies, procedures, systems, and controls relating to Applicable 
Laws, including relating to anti-money laundering and the prevention of 
financial crime. The proposed rule change would make similar amendments 
to Rules 202(a)(xii) and 1901(m) to update references to relevant laws, 
clarify that the Clearing Member is required to make certain 
representations and warranties to ICE Clear Europe with respect to the 
matters in those subsections, require the Clearing Member to have the 
necessary authority from customers and others to disclose the necessary 
information about beneficial owners in order to comply with 
requirements under Applicable Laws, and to retain copies of documents 
required to be retained under anti-money laundering laws.
    Similarly, the proposed rule change would amend Rule 1607 
(Additional FCM/BD Requirements for Customer Transactions) by adding a 
new clause (g) to require FCM/BD Customers to obtain the authority from 
``beneficial owners'' to disclose information necessary for anti-money 
laundering due diligence to the Clearing Member and ICE Clear Europe. 
The proposed rule change would add similar new requirements to the CDS 
Standard Terms in clause 3(q), F&O Standard Terms in clause 3(r), and 
FX Standard Terms in clause 3(q).
xx. Introduction of a Summary Disciplinary Process and Other 
Disciplinary Process Updates
    The proposed rule change would amend the Rules to introduce new 
Rule 1008, which would provide ICE Clear Europe with the authority to 
issue a summary fine to a Clearing Member under certain conditions, and 
to make certain minor drafting improvements to the disciplinary process 
provisions of the Rules. ICE Clear Europe represents that the new 
authority to issue a summary fine would be consistent with the 
authority to issue summary fines provided under the rules of other ICE 
exchanges for which ICE Clear Europe provides clearing services. ICE 
Clear Europe further represents that it intends to introduce a more 
streamlined

[[Page 49372]]

sanctioning process for clear-cut and minor rules violations, rather 
than subjecting such violations to the formal and more cumbersome 
proceedings of a disciplinary committee.\28\ To implement such changes, 
ICE Clear Europe proposes a number of specific changes as described 
below.
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    \28\ Notice, 86 FR 29618.
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    In Rule 101 (Definitions), the proposed rule change would amend the 
definition of ``Appeal Panel'' to include a reference to the new 
Summary Disciplinary Process, and would add a new definition of 
``Summary Disciplinary Process.'' In Rule 102 (Interpretation), the 
proposed rule change would amend Rule 102(j) to refer to new Rule 1008 
in the context of disciplinary proceedings under the Rules. The 
proposed rule change would amend Rule 102(p) to add language that any 
Disciplinary Panel, Summary Disciplinary Committee, or Appeal Panel 
appointed pursuant to Part 10 of the Rules (Disciplinary Proceedings) 
would be able to exercise discretion in the same way as ICE Clear 
Europe under Rule 102(p). In Rule 1005(c), the proposed rule change 
would make a related amendment to delete the word ``exclusive'' before 
the word ``discretion'' with respect to the Appeal Panel given the 
proposed changes to Rule 102(p).
    ICE Clear Europe proposes other amendments in the Rules to 
implement the new Summary Disciplinary Process. Specifically, the 
proposed rule change would amend Rule 1002(i) (Investigations) to 
replace existing language with a new reference to the proposed Summary 
Disciplinary Process under Rule 1008. Current Rule 1002(i) provides 
that ICE Clear Europe may order that a Clearing Member pay a fine which 
ICE Clear Europe decides in its discretion is commensurate with a 
breach of the Rules, which fine is appealable directly to the Appeal 
Panel. As revised, Rule 1002(i) would provide that ICE Clear Europe may 
impose sanctions pursuant to the Summary Disciplinary Process under 
Rule 1008. The proposed rule change would amend Rule 1003(b) 
(Disciplinary Proceedings) to add a new sentence that ICE Clear Europe 
must also establish a Disciplinary Panel where so required by an Appeal 
Panel pursuant to Rule 1005(a)(iii)(Appeals) or Rule 1008(h) (Summary 
Disciplinary Process). Proposed new Rule 1005(g) would be added to 
state that Rule 1005 applies as the appeal process concerning an 
imposed sanction pursuant to the Summary Disciplinary Process under 
Rule 1008.
    The proposed rule change would add new Rule 1008 (Summary 
Disciplinary Process) to set out the summary disciplinary process that 
ICE Clear Europe may adopt against a Clearing Member, which process 
would clarify the situations in which the new process may apply, the 
sanctioning power of the Summary Disciplinary Process, and the process 
by which ICE Clear Europe would conduct the Summary Disciplinary 
Process. Specifically, ICE Clear Europe may apply the proposed Summary 
Disciplinary Process in relation to: The late filing or submission of 
any document, notice or information; the late making of any payment; 
any failure to record a Contract in the correct Account; the late 
making or taking of any delivery; any breach of Rule 202(a)(xix) 
(participation in default management simulations, new technology 
testing and other exercises); any breach of Rule 503(g) (the submission 
of end-of-day prices relating to Sets of CDS Contracts required of 
Clearing Members to aid in the establishment of Mark-to-Market Prices); 
any breach of a position limit under Part 6 of the Rules; any breach of 
any provision of the Rules or Procedures that ICE Clear Europe 
considers to be of a factual nature where ICE Clear Europe holds 
sufficient evidence of such facts; any breach of any provision of the 
Rules or Procedures that ICE Clear Europe considers to be minor in 
nature; or any breach of the Rules or Procedures which ICE Clear Europe 
considers would be appropriately addressed by the Summary Disciplinary 
Process.
    Proposed Rule 1008 would limit sanctions to the following: Issuance 
of a private warning or reprimand naming the Clearing Member or a 
Clearing Member Customer, client or Representative; a fine of up to 
[pound]50,000; or any combination of the foregoing. Proposed Rule 1008 
would also specify the process of imposing any sanction, including the 
notice process by ICE Clear Europe, the opportunity for a Clearing 
Member to appeal, the grounds for appeal and the actions the appeal 
panel may take (i.e., to affirm, vary or revoke a sanction). Proposed 
Rule 1008 also would allow ICE Clear Europe to provide further guidance 
by way of Circular in relation to the operation of, or procedures for, 
the Summary Disciplinary Process.
xxi. Other Updates
    The proposed rule change would make a number of other drafting 
enhancements, clarifications, and improvements throughout the Rules, 
primarily in the definitions.
    In Rule 101 (Definitions), the proposed rule change would add a new 
definition of ``Acceptance Time,'' which is defined to mean: ``(i) in 
relation to a CDS Contract, the `Acceptance Time' (as defined in the 
CDS Procedures); or (ii) in relation to an FX Contract, the `FX 
Acceptance Time' (as defined in the FX Procedures).'' The proposed 
definition would ensure definitional consistency with respect to 
specifying the applicable time for the acceptance of such Contracts for 
clearing by ICE Clear Europe, and clarify the meaning of certain 
undefined references to such term in the Rules, e.g., in Rule 1204 
(Variations to or Cancellation of Transfer Orders) and in paragraph 10 
(Reliance on CDS Trade Particulars and submissions to Deriv/SERV) of 
the Standard Terms exhibits annexed to the Rules. In the definition of 
``Applicable Law,'' the proposed rule change would add ``direction'' to 
the list of included types of Applicable Law, and also would add a 
reference to the ``FSMA,'' which is an existing defined term that means 
the UK's Financial Services and Markets Act 2000 that ICE Clear Europe 
unintentionally omitted from the existing ``Applicable Law'' 
definition. In the ``Clearing Organisation'' definition, the proposed 
rule change would add a reference to ``securities clearing agency'' to 
ensure that the defined term includes securities clearing agencies 
regulated by the Commission. In the definition of ``Defaulter,'' the 
proposed rule change would clarify that the defined term refers to a 
person in respect of whom an Event of Default has occurred, rather than 
a person in respect of whom a Default Notice has been issued. The 
proposed rule change would add a new definition of ``FINRA,'' to mean 
the U.S. Financial Industry Regulatory Authority, Inc., or any 
successor thereto, as the term FINRA is currently used in the existing 
definition of ``Regulatory Authority'' without clear definition. In the 
definition of ``Regulatory Authority,'' the proposed rule change would 
add a reference to the ``National Futures Association.'' The proposed 
rule change would amend the definition of ``Original Margin'' to 
clarify that buyer's security, seller's security and delivery Margin 
would all be included within the scope of the term. The proposed rule 
change would amend the definition of ``Rule Change'' expressly to 
include changes to Contract Terms, and would revise the existing cross-
reference to Rule 109 (Alteration of Rules, Procedures, Guidance and 
Circulars) to reflect that it is not the sole provision governing the 
process for Rule Changes. In the definition of

[[Page 49373]]

``Segregated Customer,'' the proposed rule change would make 
typographical corrections. The proposed rule change also would amend 
the definitions of ``Transferee'' and ``Transferor'' to clarify that 
the subject of a transfer or delivery is a Deliverable, as such term is 
currently defined in the Rules.
    The proposed rule change would amend Rule 201(a)(v) (Clearing 
Membership Criteria) to change an erroneous singular phrase ``Contract 
is'' to the plural ``Contracts are.'' The proposed rule change would 
amend Rules 304(a)(ii)(A), 304(a)(ii)(B), and 1901(e) regarding 
Sponsored Principals to correctly reference the term ``Nominated Bank 
Account'' in place of the current term ``Nominated Account.''
    The proposed rule change would amend Rule 401(g) (Formation of 
Contracts) to reflect that under existing practice and as stated and 
assumed elsewhere in the Rules (e.g., Rule 906, Clearing Procedures), 
Clearing Members can have multiple Proprietary Position Accounts. The 
proposed rule change would amend Rule 406(a) (Open Contract Positions) 
to remove an erroneous reference to the legacy term ``Clearing 
Processing System'' and replace it with the correct defined term ``ICE 
System.''
    The proposed rule change would amend Rule 904(b) (Transfer of 
Contracts and Margin on a Clearing Member Default) to change an 
incorrect term ``Market-to-Market Value'' to the correct defined term 
``Mark-to-Market Price.'' Similarly, the proposed rule change would 
amend Rule 905(g) (Termination and close out of Contracts on a Clearing 
Member Event of Default) to delete a reference to ``Market-to-Market 
Value'' as well as the unused term Reference Price. In Rule 905(b)(ix), 
the proposed rule change would make a grammatical change to reflect 
that there may be multiple Defaulters rather than just one. The 
proposed rule change would amend Rule 908(i) (Application of Assets 
upon an Event of Default) to correct existing typographical errors and 
an incorrect cross-reference. The proposed rule change would amend 
clause (ii) of Rule 908(i) to reflect that the applicable modifications 
would be set out in the Default Auction Procedures as opposed to a 
Circular. In the definition of ``MTM/VM'' in Rule 913(a)(xxxi), the 
proposed rule change would amend the existing language to reflect that 
MTM/VM is transferred to, rather than held as a deposit by, the 
Clearing House. The proposed rule change would delete the definition of 
``Product Termination Amount'' in Rule 913(a)(xxxviii) as this term is 
already defined in existing Rule 916. The proposed rule change would 
amend Rule 913(a)(lviii) to clarify, for the avoidance of doubt, that 
amounts payable in respect of transfers are included in the definition 
of ``Transfer Cost.'' The proposed rule change would amend Rule 915(e) 
(Partial Tear-Up) to correctly reference all categories of mark-to-
market or variation margin for all product categories. The proposed 
rule change would amend Rule 916(i) to clarify that Guaranty Fund and 
Assessment contributions due pursuant to Rule 916(i) are subject to the 
provisions of Rule 917 (Cooling-off period and Clearing Member 
termination rights), including the limitations thereon during a 
Cooling-off Period. The proposed rule change would amend Rule 918(d) to 
refer to any Event of Default rather than multiple Events of Default. 
The proposed rule change would also incorporate references to Rules 916 
(Contract Termination following Certain Conditions or Under-priced 
Auction) and 918 (Termination of membership) into Rule 1102(g) 
(Clearing Members' Contributions) to reflect that these Rules could 
apply in certain cases to determine the return of Guaranty Fund 
Contributions.
    The proposed rule change would delete Rule 1901(d)(vi), because the 
referenced Council Directive has been repealed. As a result, the 
proposed rule change would renumber subsequent provisions and update 
cross-references in other provisions.
    The proposed rule change would correct a typographical error in the 
title of Part 23, Rules for Market Transactions. The proposed rule 
change would make other typographical and drafting corrections in 
various provisions of the Rules, including 102(q), 202(a)(xxi), 
203(a)(xx) and 504(c)(vi).
    The proposed rule change would amend Part 3(b) of the F&O Standard 
Terms to more clearly state that Customer-CM F&O Transactions would 
arise in accordance with Part 4 of the Rules. This change would align 
with the drafting used in the other Standard Terms.
    The proposed rule change would amend Rule 1607(d)(iii), CDS 
Standard Terms 7(iii), F&O Standard Terms 7(iii) and FX Standard Terms 
7(iii) to refer to ``Personal Data'' rather than ``Personal Data of its 
Data Subjects.'' This change would eliminate unnecessary language.

B. Clearing Procedures

    The proposed rule change would amend paragraph 1.1(a) of the 
Clearing Procedures to remove existing references to the PTMS/ACT 
systems, because they are legacy systems that ICE Clear Europe 
represents that it no longer uses.\29\ ICE Clear Europe proposes to 
replace them with a reference to ICE FEC, which is a new defined term 
in the Delivery Procedures that means ``the single user interface used 
by the Clearing House offering functions to view and manage trades, 
transfers, allocations and claims.'' The proposed rule change would 
amend paragraphs 1.1(f) and 3.1(c) of the Clearing Procedures to remove 
the definitions of MFT and ECS, respectively, as these terms would now 
be defined in the Delivery Procedures.
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    \29\ Notice, 86 FR 29617.
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C. Finance Procedures

    The proposed rule change would amend the Finance Procedures in Part 
4 (Assured Payment System: Accounts), paragraphs 4.1(a)(i) and (iv) and 
4.4(a)(i) and (iv), concerning the account requirements for members to 
reflect that ICE Clear Europe clears both EUR and USD denominated CDS 
contracts; accordingly, all CDS Clearing Members are required to have 
both EUR and USD accounts and would no longer be required to have a GBP 
account.
    The proposed rule change would amend paragraph 6.1(i)(ix) of the 
Finance Procedures to clarify that the additional margin requirement 
that applies where payment of variation or mark-to-market margin is 
made in a currency other than the contractual currency would apply on a 
Currency Holiday. ICE Clear Europe represents that this reflects 
current practice.\30\
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    \30\ Notice, 86 FR 29617.
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    The proposed rule change would also update and correct the 
committee references in the Finance Procedures. Specifically, ICE Clear 
Europe proposes to change the references in paragraph 14(2) and 14(3) 
from the CDS Risk Committee and FX Risk Committee to ``CDS Product Risk 
Committee'' and ``FX Product Risk Committee,'' respectively. The 
proposed rule change would also make similar changes throughout the CDS 
Procedures where ``CDS Risk Committee'' is currently used.
    The proposed rule change would make amendments to paragraphs 3.10, 
3.11, 3.21 and 4.5 in the Finance Procedures to remove clarify that the 
terms MFT and ECS would now be defined in the Delivery Procedures.
    The proposed rule change would amend paragraph 15.4(b) of the 
Finance Procedures by deleting an outdated reference to the Continuing 
CDS Rule Provisions, which are no longer in effect.

[[Page 49374]]

D. Delivery Procedures

i. Anti-Money Laundering
    The proposed rule change would add new paragraph 1.1(d) to the 
Delivery Procedures to obligate Clearing Members to conduct appropriate 
anti-money laundering due diligence for any transferors and transferees 
and provide relevant documentation to ICE Clear Europe and/or the 
Clearing Member. The proposed amendments to paragraphs 5.4 and 5.5 of 
the Delivery Procedures would add language to clarify that transferors 
and transferees that are customers would be bound by the F&O Standard 
Terms, including with respect to delivery of information, and also to 
clarify that transferors and transferees are not customers of ICE Clear 
Europe for purposes of relevant anti-money laundering laws and other 
Applicable Law.
ii. Updates to ICE Clear Europe Systems
    The proposed rule change would add new definitions in the Delivery 
Procedures to ``ECS,'' ``MFT,'' ``ICE FEC,'' and ``MPFE'' to ensure 
there are consistent references to ICE Clear Europe systems in the 
various Amended Documents. The proposed rule change would define the 
term ``ECS'' to mean ``the extensible clearing system that provides 
functionality for position maintenance (including close-outs), options 
exercise and delivery, in addition to cash and collateral management 
for the Clearing House (or any successor system).'' The proposed rule 
change would define the term ``MFT'' to mean ``the managed file 
transfer system through which the Clearing House provides access to all 
clearing reports and data files.'' The proposed rule change would 
define the term ``ICE FEC'' to mean ``the single user interface used by 
the Clearing House, offering functions to view and manage trades, 
transfers, allocations and claims.'' The proposed rule change also 
would define the term ``MPFE'' to mean ``the futures expiry report 
generated by the Clearing House.''
    Similarly, the proposed rule change would remove existing 
references to the legacy ICE System Crystal throughout the Delivery 
Procedures and replace them with new references to ECS, MFT, and ICE 
FEC, which are the systems that ICE Clear Europe now uses. Similarly, 
the proposed rule change would delete Delivery Documentation Summaries 
and form references throughout the Delivery Procedures where ECS has 
replaced the manual submission of forms to ICE Clear Europe. 
Specifically, these changes would be made in Part B (ICE Gasoil 
Futures), Part D (ICE Futures UK Natural Gas Contracts), Part F (ICE 
Endex TTF Natural Gas Contracts), Part G (ICE Endex Gaspool Natural Gas 
Contracts), Part H (ICE Endex NCG Natural Gas), Part I (ICE Endex ZTP 
Natural Gas Contracts), Part N (ICE Deliverable US Emissions 
Contracts), Part Q (Financials & Softs White Sugar Contracts), Part U 
(Financials & Softs Gilt Contract) and Part Z (Equity Futures/Options).
iii. Other Updates
    ICE Clear Europe proposes changes to the Delivery Procedures to 
update various operational practices and to make other updates and 
drafting improvements.
    The proposed rule change would add a new paragraph 7 to the 
Delivery Procedures to reference the alternative delivery procedure for 
Emission Contracts as set out in paragraph 7 of Part A of the Delivery 
Procedures (ICE Endex Deliverable EU Emissions Contracts). Subsequent 
paragraphs would be renumbered and conforming amendments to cross-
references would be made.
    The proposed rule change would amend Part A (ICE Endex Deliverable 
EU Emissions Contracts) of the Delivery Procedures to change existing 
references to ``Account,'' which is no longer a defined term in the 
Delivery Procedures, to the defined term ``Registry Account.'' The 
proposed rule change would amend the defined term ``Contract Date.'' 
Under the current definition, ``Contract Date'' means, for an ICE Endex 
EUA, an individual Business Day on which (a) trading commences, (b) 
trading ceases, and (c) the Delivery Period commences for those trades 
executed on that Business Day. The proposed rule change would delete 
clause (c) of the current definition because ICE Clear Europe found it 
was redundant in light of clauses (a) and (b). ICE Clear Europe 
represents that the term ``Contract Date'' is only used in connection 
with daily contracts, and in that context, only one daily contract is 
available at a time, and so the date on which trading commences and 
trading ceases sufficiently defines the Contract Date. The proposed 
rule change also would delete Section 9.3 (ICE EUA and EUAA Auction 
Contracts), because Part A no longer references auction contracts.
    The proposed rule change would also amend paragraph 7 (Emissions 
Alternative Delivery Procedure (``EADP'')) in Part A following the 
entry into an EADP Agreement (i.e., an agreement to adopt an EADP) by a 
Clearing Member and ICE Clear Europe. In such event, paragraph 7.3 
currently provides that the existing Contract would be liquidated on 
the basis of the Exchange Delivery Settlement Price. Under paragraph 
7.3 as revised, the existing Contract would no longer be liquidated, 
but instead would be dealt with in the manner specified in the EADP. If 
the existing Contract were to be liquidated under the EADP, this would 
be done on the basis of the Exchange Delivery Settlement Price. 
Delivery under the EADP Agreement would be subject to the requirements 
set out in the entirety of paragraph 7 instead of just paragraph 7.3. 
The proposed rule change also would amend paragraph 7.5 with respect to 
the timing and process for addressing a Failed Delivery. Current 
paragraph 7.5 provides that in the event that the Clearing Member and 
ICE Clear Europe are unable to enter into an EADP Agreement or effect 
delivery under EADP by the close of business on the Business Day 
following the day of the Failed Delivery, ICE Clear Europe will refer 
the matter to ICE Endex and Invoice Back affected Contracts and may 
itself, begin disciplinary proceedings, levy a fine, call additional 
Margin or declare an Event of Default. The proposed amendments to 
paragraph 7.5 would provide that the Clearing Member and ICE Clear 
Europe would have a reasonable period of time after the Failed Delivery 
to enter into an EADP Agreement or effect delivery under the EADP, 
rather than by the close of business on the Business Day following the 
day of the Failed Delivery, before ICE Clear Europe may refer the 
matter to the relevant exchange. The proposed amendments to paragraph 
7.5 also would provide that ICE Clear Europe will consider in its 
discretion what other reasonable next steps it should take, if any. As 
an example, ICE Clear Europe may decide to take one of the currently 
listed actions, but would not be limited by such list and would not be 
required to Invoice Back affected Contracts.
    The proposed rule change would delete Part M (ICE Endex German 
Power Futures), because these contracts have been delisted from the 
relevant exchange. The proposed rule change also would delete outdated 
references to ICE OTC Contracts in Part N (ICE Deliverable US Emissions 
Contracts (Bilateral Delivery)), as revised.
    In Part U (Financials & Softs Gilt Contracts), the proposed rule 
change would add a new paragraph 2 (Failed Settlement and Non-Delivery 
of Stock) to establish a procedure to address the Seller's non-delivery 
of securities under a Financials & Softs Gilt Contract, including the 
actions ICE Clear Europe may take to promote settlement in

[[Page 49375]]

accordance with the contract terms and the requirements of the CREST 
central securities depository, as well as the express allocation of the 
costs of such steps to the Clearing Member who failed to make delivery. 
New paragraph 2.1 in amended Part U would address ICE Clear Europe's 
procedure to address the Seller's partial delivery of available Gilts 
and the resulting partial settlement between the Buying Clearing Member 
and the Selling Clearing Member. ICE Clear Europe represents that these 
proposed provisions are intended to reflect existing practices and to 
provide consistency with the corresponding provisions of the Delivery 
Procedures for other contracts, including Part Z (Equity Futures/
Options).
    In Part Z, the proposed rule change would make various updates to 
reference the correct settlement facilities and relevant settlement 
details and settlement procedures for Equity Futures/Options Contracts. 
Specifically, the proposed rule change would amend paragraph 1.4 
(Deliverable Equities) to clarify the treatment of corporate events 
relating to underlying securities by reference to the relevant Exchange 
corporate action policy and the relevant contract terms. The proposed 
rule change also would amend the provisions in paragraph 2.3 
(Partialling) and paragraph 3 (Failed Settlements and Non-Delivery of 
Stock) to clarify the processes for dealing with partial deliveries and 
failed deliveries, including the steps that ICE Clear Europe may take 
to facilitate delivery, the rights and responsibilities of the buying 
clearing member with respect to onward deliveries under other 
contracts, and the allocation of costs to clearing members. The 
proposed rule change would amend paragraph 2.4 (Daylight Indicator) to 
clarify that ICE Clear Europe may in its discretion decide to accept, 
or not to accept, any request for daylight settlement. In paragraph 3.1 
(Buying In Summary Timetable), the proposed rule change would make 
various drafting clarifications and improvements.
    In Part FF (ICE Futures New York Harbour Ultra Low Sulphur Diesel 
Futures, ICE Futures Europe New York Harbour Ultra Low Sulphur Heating 
Oil Futures), the proposed rule change would amend the first table with 
respect to the receipt of documents by ICE Clear Europe by removing the 
statement that in the event of non-availability of any of the listed 
delivery documents, Seller may substitute a letter of indemnity in 
favor of the Buyer.
    Finally, the proposed rule change would make various drafting 
clarifications, typographical corrections, and updates to defined terms 
and cross-references throughout the Delivery Procedures.

E. CDS Procedures

i. List of Eligible Single Name Reference Entities
    The proposed rule change would amend paragraph 11.4 of the CDS 
Procedures (Modifications to List of Eligible Single Name Reference 
Entities). Paragraph 11.4 gives ICE Clear Europe the ability to make 
certain modifications to its list of Eligible Single Name Reference 
Entities, subject to consultation with the CDS Product Risk Committee. 
Currently, upon making any such modifications, ICE Clear Europe must 
give notice by Circular. The proposed rule change would amend this 
provision such that upon making any changes, ICE Clear Europe would be 
required to update certain relevant information relating to CDS 
Contracts on its website, rather than giving notice by Circular of such 
actions. ICE Clear Europe represents that it discusses changes to the 
list of eligible reference entities prior to implementation with the 
Trading Advisory Group, which has weekly meetings to which trader 
representatives of CDS Clearing Members are invited. Members of the 
Trading Advisory Group are also notified by email of changes to 
reference obligations. In addition, ICE Clear Europe represents that 
its Operations Working Group discusses changes to clearing reference 
obligations prior to implementation, and the Operations Working Group 
has weekly meetings to which operational personnel of CDS Clearing 
Members are invited. Once agreed, ICE Clear Europe would reflect the 
changes on the cleared product website on the date they are made 
eligible or modified, in accordance with amended paragraph 11.4. Given 
these procedures, ICE Clear Europe believes that CDS Clearing Members 
will have sufficient information about changes in reference obligations 
and that the current requirement of a circular is unnecessary.
ii. Allow Clearing Members To Nominate Affiliates
    ICE Clear Europe proposes to amend paragraph 4.4(f) of the CDS 
Procedures by adding a new sentence to specify that a CDS Clearing 
Member could designate an Affiliate that is also a CDS Clearing Member 
to accept CDS Contracts in lieu of the designating Clearing Member for 
CDS Contracts arising as a result of the existing CDS end-of-day 
pricing process pursuant to Rule 401(a)(xi). Similarly, the proposed 
rule change would amend paragraph 11.5 of the CDS Procedures (Self-
referencing CDS) to allow a CDS Clearing Member to designate an 
Affiliate to accept transactions arising out of the existing auction 
process to be used in the case of self-referencing CDS transactions. 
ICE Clear Europe represents that this change reflects existing practice 
for CDS Clearing Members, as documented in certain arrangements between 
ICE Clear Europe and certain CDS Clearing Members allowing this to take 
place, but was unintentionally omitted from the CDS Procedures.\31\
---------------------------------------------------------------------------

    \31\ Notice, 86 FR 29616.
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iii. CDS Clearing Member Sign-Off of Weekly Cycles
    The proposed rule change would amend Section 3 of the CDS 
Procedures regarding margin. Specifically, ICE Clear Europe proposes to 
add a new paragraph 3.5 to the CDS Procedures to require CDS Clearing 
Members to provide sign-off via email on weekly cycles by a specified 
time and day. This change would document existing operational 
processes.\32\
---------------------------------------------------------------------------

    \32\ Notice, 86 FR 29616.
---------------------------------------------------------------------------

F. Membership Procedures

i. Deadlines for Financial Statements
    The proposed rule change would amend the summary table at paragraph 
4.2 of the Membership Procedures to extend the deadline for submitting 
financial statements from 30 to 45 days after the relevant period so 
that the deadline aligns with other regulatory reporting deadlines, 
such as the UK's Financial Conduct Authority (FCA) deadlines.
ii. Adjustments to Clearing Member Capital Requirements
    The proposed rule change would make a number of changes to the 
Membership Procedures to implement the Basel III standard for Clearing 
Member capital. First, the proposed rule change would amend paragraph 
3.3. Paragraph 3.3 provides a definition of the term ``Capital'' with 
respect to a Non-FCM/BD Clearing Member. This definition currently 
provides that capital, as a general matter, includes fully-paid 
ordinary and preference share capital, retained reserves and, for some 
purposes and subject to limits, subordinated debt that is perpetual or 
repayable on 5 years or more notice. The proposed rule change would 
amend this definition to instead provide that capital, as a general 
matter, includes fully-paid ordinary and preference share capital, 
retained reserves and, for some purposes and subject to limits,

[[Page 49376]]

subordinated debt that is perpetual or repayable with more than one 
year outstanding.
    The proposed rule change would amend paragraph 3.5(a) of the 
Membership Procedures to lower, from the current 50% to the proposed 
25%, the portion of a Clearing Member's Capital requirement that may be 
covered by subordinated loans before ICE Clear Europe would require a 
written undertaking from the Clearing Member to not repay subordinated 
loans without its consent. ICE Clear Europe represents that this 
proposed change would align the Clearing Member capital requirement 
more closely with Basel III requirements, under which subordinated debt 
may be used, to an upper limit of 25%.\33\
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    \33\ Notice, 86 FR 29616-29617.
---------------------------------------------------------------------------

    The proposed rule change also would amend paragraph 3.5 of the 
Membership Procedures to remove irrevocable letters of credit as a 
potential method that Clearing Members or Sponsored Principals may use 
to satisfy capital requirements, and to add a new paragraph 3.5(c) to 
give ICE Clear Europe authority to, at its discretion, require a 
Clearing Member to post additional cash or collateral in addition to 
the normal margin requirements. ICE Clear Europe represents that these 
proposed changes in capital requirements would promote greater 
consistency with its existing operational implementation of capital 
requirements for Clearing Members.\34\
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    \34\ Notice, 86 FR 29616-29617.
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G. Complaint Resolution Procedures

    ICE Clear Europe proposes to make various clarifications and 
changes throughout the Complaint Resolution Procedures, including to 
address typographical errors and promote consistency with its Rules.
    Specifically, the proposed rule change would amend paragraph 1.1 to 
reframe the Complaint Resolution Procedures based on ICE Clear Europe's 
obligations as a CCP under EMIR.\35\ Throughout the procedures, the 
proposed rule change would replace references to the term ``Complaints 
Resolution Procedure'' with the plural term ``Complaint Resolution 
Procedures'' to correct a typographical error and for consistency with 
the term used in Rule 101.
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    \35\ As a result of ICE Clear Europe Circular C20/163, this 
reference to EMIR is to be interpreted as including a reference to 
EMIR as applicable in the United Kingdom under the European Union 
(Withdrawal) Act 2018. See Exchange Act Release No. 34-90746 (File 
No. SR-ICEEU-2020-016) (Dec. 21, 2020), 85 FR 85704 (Dec. 29, 2020).
---------------------------------------------------------------------------

    The proposed rule change would amend paragraph 1.1 to use the 
defined term ``Person'' (which is defined in Rule 101) rather than 
``person,'' with conforming changes throughout the Complaint Resolution 
Procedures. The proposed rule change also would amend paragraphs 1.1 
and 1.2 to provide for an independent ``Commissioner,'' who is 
responsible for the investigation of complaints generally, and for the 
appointment of an ``Investigator'' to investigate a particular 
complaint. In paragraph 1.3, ICE Clear Europe proposes minor drafting 
updates to improve clarity.
    The amended Complaint Resolution Procedures would refer where 
appropriate to ``Eligible Complaint'' instead of the undefined term 
``complaint'' to clarify that only Eligible Complaints (and not other 
complaints) would be within the scope of the procedures. As a result, 
the proposed rule change would replace the defined term ``Complaint'' 
by the undefined term ``complaint'' to allow a distinction between 
complaints generally speaking and those that qualify as ``Eligible 
Complaints.''
    In paragraph 2.1, the proposed rule change would amend the 
definition of ``Eligible Complaints'' by broadening it to include 
complaints against any Directors, officers, employees or committees (or 
committee members) of ICE Clear Europe, which ICE Clear Europe believes 
is the proper scope for the Complaint Resolution Procedures. The 
amendments would also clarify that Eligible Complaints may relate to 
the manner in which ICE Clear Europe has failed to perform applicable 
regulatory functions. In paragraph 2.2, ICE Clear Europe proposes minor 
drafting amendments to correct typographical errors and use of defined 
terms.
    The proposed rule change would make drafting improvements in 
paragraph 3.6 to include ``investigation of the'' before ``Eligible 
Complaint,'' and in paragraph 4.1 to clarify that acknowledgment of the 
complaint by ICE Clear Europe must be made promptly, and in any case 
within 5 Business Days of receipt.
    ICE Clear Europe proposes to add new paragraph 4.2, which would 
allow ICE Clear Europe to refer complaints to another recognized body 
or authorized person if such entity is entirely or partly responsible 
for handling the subject matter of the complaint, such as an exchange 
for which ICE Clear Europe clears. To establish the process for ICE 
Clear Europe to refer such a complaint, the proposed rule change would 
also add new paragraph 4.3. Such amendments are intended to clarify 
existing procedures, and avoid a situation where ICE Clear Europe would 
be forced to address a duplicative complaint or a complaint better 
handled by another entity. In paragraph 4.4, the proposed rule change 
would correct minor typographical errors.
    The proposed amendments to paragraph 4.5 would clarify that the 
Investigator must be an individual who has no personal interest or 
involvement in the matter of the Eligible Complaint, and would also 
make typographical corrections and similar drafting improvements.
    In paragraph 4.7, the proposed rule change would clarify that the 
Investigator would not be required to disclose any information about 
the Complainant's identity when drafting its report of the Eligible 
Complaint, and also would correct minor typographical errors and update 
cross-references.
    In paragraph 4.8 as revised, the proposed rule change would include 
delivery disputes and appeals in the list of potential ongoing matters 
that could warrant delay in the consideration of an Eligible Complaint. 
Amended paragraph 4.12 would include a similar change and correct 
certain typographical errors.
    In paragraph 4.11 as revised, the proposed rule change would 
clarify that where ICE Clear Europe objects to the referral of a 
complaint to the Commissioner under specified circumstances (such that 
ICE Clear Europe can conclude its own investigation), it must submit to 
the Commissioner the reasons for that determination. The proposed rule 
change would also update several cross-references in paragraph 4.11.
    In paragraph 4.12 as revised, the proposed rule change would expand 
the list of ongoing matters that would justify delay in the 
Commissioner's consideration of an Eligible Complaint to be consistent 
with the list in paragraph 4.8, and also reference other processes 
under Part 10 of the Rules. The proposed rule change would also amend 
paragraph 4.14 to make non-substantive drafting improvements.
    In paragraph 5 as revised, the proposed rule change would clarify 
that the Investigator recommends, rather than takes, remedial action. 
The proposed rule change would amend paragraph 6.3 to add ``appeal 
process'' to the list of dispute resolution procedures that a 
Complainant cannot use if it requires the referral of any Eligible 
Complaint to the Commissioner pursuant to the Complaint Resolution 
Procedures. The proposed rule change would also delete the reference to 
``mediation'' in paragraph 5 as it is no longer necessary in light of 
the other listed types of dispute resolution.

[[Page 49377]]

    The proposed rule change would amend paragraph 7.2 to clarify that 
the Commissioner does not have to continue investigating a complaint if 
the complaint is not an Eligible Complaint. In addition, the proposed 
rule change would amend paragraph 7.3 to clarify that the Commissioner 
would only be required to produce a final response where the complaint 
is an Eligible Complaint.
    The proposed rule change would amend paragraph 7.6 to ensure that 
the Commissioner has access to all relevant personnel (including 
directors, officers and other persons to whom functions have been 
outsourced) that may be needed for the purposes of the Eligible 
Complaint. In addition, the proposed rule change would amend paragraph 
7.8 to obligate ICE Clear Europe to inform the Complainant of an 
alternative Commissioner, when one is appointed, within five Business 
Days of the date of appointment.
    The proposed rule change would also amend paragraph 8.1 to state 
explicitly that ICE Clear Europe is required to consider the 
Commissioner's report and recommendations, in addition to informing the 
Commissioner of any proposed steps it would take in response to the 
report and recommendations. In addition, the proposed rule change would 
also make other non-substantive drafting clarifications in paragraph 
8.1, and correct typographical errors in paragraphs 8.2 and 8.3. 
Lastly, the proposed rule change would amend paragraph 11 to include 
the Investigator as a person subject to the confidentiality obligations 
with respect to the complaint, and make certain drafting 
clarifications.

H. General Contract Terms

    Similar to certain of the changes to Rules described above, the 
proposed rule change would amend the introduction to the General 
Contract Terms by removing references to named ICE markets and, in 
their place, would use the more generic term ``relevant Market.'' The 
proposed rule change would also add the standard term ``Amendments'' to 
the General Contract Terms to clarify that the terms of any Contract 
may be amended in the same way as ICE Clear Europe may amend the Rules 
in accordance with Rule 109 (Alteration of Rules, Procedures, Guidance 
and Circulars).

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act directs the Commission to approve a 
proposed rule change of a self-regulatory organization if it finds that 
such proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to such 
organization.\36\ For the reasons given below, the Commission finds 
that the proposed rule change is consistent with Sections 17A(b)(3)(F), 
17A(b)(3)(G), and 17A(b)(3)(H) of the Act,\37\ and Rules 17Ad-22(e)(1), 
17Ad-22(e)(2)(i), 17Ad-22(e)(6)(ii), 17Ad-22(e)(10), 17Ad-22(e)(13), 
17Ad-22(e)(14), 17Ad-22(e)(17)(i), and 17Ad-22(e)(18).\38\
---------------------------------------------------------------------------

    \36\ 15 U.S.C. 78s(b)(2)(C).
    \37\ 15 U.S.C. 78q-1(b)(3)(F), 15 U.S.C. 78q-1(b)(3)(G), and 15 
U.S.C. 78q-1(b)(3)(H).
    \38\ 17 CFR 240.17Ad-22(e)(1), 17Ad-22(e)(2)(i), 17Ad-
22(e)(6)(ii), 17Ad-22(e)(10), 17Ad-22(e)(13), 17Ad-22(e)(14), 17Ad-
22(e)(17)(i), and 17Ad-22(e)(18).
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A. Consistency With Section 17A(b)(3)(F) of the Act

    Section 17A(b)(3)(F) of the Act requires, among other things, that 
the rules of ICE Clear Europe be designed to promote the prompt and 
accurate clearance and settlement of securities transactions and, to 
the extent applicable, derivative agreements, contracts, and 
transactions, as well as to assure the safeguarding of securities and 
funds which are in the custody or control of ICE Clear Europe or for 
which it is responsible.\39\
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    As discussed above, the proposed rule change would make a number of 
clarifications and drafting improvements to the Amended Documents, to 
ensure that the Amended Documents are clear, consistent, and provide an 
enforceable legal basis for ICE Clear Europe's activities. In the 
Commission's view, a lack of clarity and consistency in ICE Clear 
Europe's Rules and Procedures could hinder ICE Clear Europe's ability 
to promptly and accurately clear and settle transactions and safeguard 
securities and funds, by possibly leading to disputes over the terms of 
transactions. Likewise the Commission believes a lack of enforceable 
legal basis could undermine the legitimacy and finality of ICE Clear 
Europe's actions in clearing and settling transactions. Thus, the 
Commission believes the proposed rule change, in general, should help 
ensure that ICE Clear Europe is able to promptly and accurately clear 
and settle transactions and safeguard securities and funds which are in 
its custody or control or for which it is responsible.
    In particular, the Commission believes all of the proposed changes 
to the Rules, as discussed in Part II.A above, would help ensure that 
ICE Clear Europe is able to promptly and accurately clear and settle 
transactions and safeguard securities and funds which are in its 
custody or control or for which it is responsible. For example, the 
Commission believes the changes to Rule 904 (Transfer of Contracts and 
Margin on a Clearing Member Event of Default), Rule 907 (Administrative 
matters concerning an Event of Default), and to relevant definitions in 
Rule 101 would enhance ICE Clear Europe's default planning and post-
default porting processes by providing an EMIR-compliant post-default 
porting preference structure using Porting Notices that require written 
consent by the designated Transferee Clearing Member. The Commission 
further believes that this aspect of the proposed rule change would 
help facilitate the porting of Customer positions and collateral and 
the settlement of the transactions resulting from such transfers, which 
in turn would help to ensure that ICE Clear Europe is able to promptly 
and accurately clear and settle transactions in the event of a Clearing 
Member's default and safeguard securities and funds which are in its 
custody or control or for which it is responsible. Similarly, the 
Commission believes the changes to Rule 901(a)(iv) to clarify that the 
declaration of an Event of Default in respect of one Clearing Member is 
a circumstance in which ICE Clear Europe can declare an Event of 
Default in respect of another Clearing Member that is a parent or a 
subsidiary of such Clearing Member would better enable ICE Clear Credit 
to invoke such default declaration powers and thereby prevent or reduce 
losses that could result from affiliate cross-defaults. The Commission 
further believes that losses from a default could interfere with ICE 
Clear Europe's ability to clear and settle transactions and safeguard 
securities and funds. Therefore, the Commission believes that these 
aspects of the proposed rule change, in facilitating ICE Clear Europe's 
ability to respond to defaults and thereby prevent or reduce losses, 
would help to ensure that ICE Clear Europe is able to promptly and 
accurately clear and settle transactions and safeguard securities and 
funds which are in its custody or control or for which it is 
responsible. Moreover, the Commission believes the changes to add new 
Rule 301(o), which would allow ICE Clear Europe to request information 
when needed on account balances of nominated accounts of the Clearing 
Member at financial institutions, including for the purpose of calling 
on available cash where the Clearing

[[Page 49378]]

Member has failed to meet a payment obligation or determining whether 
the Clearing Member is, or is likely to be, in default, would help to 
ensure that ICE Clear Europe's Clearing Members are able to perform 
their obligations that enable ICE Clear Europe to clear and settle 
transactions, such as transferring margin and contributing to the 
Guaranty Fund. Finally, the Commission believes the changes to add a 
new summary disciplinary process in proposed Rule 1008 to improve and 
streamline ICE Clear Europe's process for disciplining Clearing Members 
for specified violations of the Rules and Procedures, such as the late 
making of a payment or the late making or taking of a delivery, would 
help to ensure that Clearing Members meet their membership obligations 
to ICE Clear Europe and thereby help to ensure that ICE Clear Europe is 
able to clear and settle transactions.
    For these reasons, the Commission believes all of the changes to 
the Rules discussed in Part II.A above would help to ensure that ICE 
Clear Europe is able to promptly and accurately clear and settle 
transactions and safeguard securities and funds which are in the 
custody or control of ICE Clear Europe or for which it is responsible.
    Moreover, the Commission believes the changes to the Clearing 
Procedures discussed in Part II.B above would increase the clarity of 
the Clearing Procedures by removing references to systems no longer 
used by ICE Clear Europe. Similarly, the Commission believes that 
removing the definitions of MFT and ECS, and instead referring to those 
terms as defined in the Delivery Procedures, would help to ensure that 
the Clearing Procedures use the correct definitions of those terms, as 
defined in the Delivery Procedures. The Commission believes that these 
changes would help to ensure the Clearing Procedures are up-to-date and 
use correct terms and references, thus decreasing the possibility for 
error in using and applying the Clearing Procedures, and therefore 
facilitating the prompt and accurate clearance and settlement of 
transactions using the Clearing Procedures.
    The Commission similarly believes the changes to the Finance 
Procedures discussed in Part II.C above would help to ensure the 
Finance Procedures are up-to-date and use correct terms and references. 
As with the Clearing Procedures, the proposed rule change would remove 
the definitions of MFT and ECS, and instead refer to those terms as 
defined in the Delivery Procedures, thus helping to ensure that the 
Finance Procedures use the correct definitions. Moreover, the 
Commission believes that removing a reference to the Continuing CDS 
Rule Provisions, which are no longer in effect, and updating and 
correcting references to certain ICE Clear Europe committees throughout 
the Finance Procedures would help to ensure that the Finance Procedures 
reflect the current documentation and committees in effect at ICE Clear 
Europe. Finally, the Commission believes that amending the account 
requirements for members to reflect that ICE Clear Europe clears both 
EUR and USD denominated CDS contracts, clarifying the effect of 
negative rates on payments of interest and price alignment amounts, and 
clarifying that the additional margin requirement would apply on a 
Currency Holiday would help to ensure that the Finance Procedures are 
consistent with ICE Clear Europe's operational practices. The 
Commission believes that these changes would help to ensure the Finance 
Procedures are up-to-date, clear, and use correct terms and references, 
thus decreasing the possibility for error in using and applying the 
Finance Procedures, and therefore facilitating the prompt and accurate 
clearance and settlement of transactions using the Finance Procedures.
    The Commission further believes the changes to the Delivery 
Procedures discussed in Part II.D above would clarify and update the 
Delivery Procedures. Specifically, the Commission believes that 
clarifying the application of current applicable law regarding anti-
money laundering and the obligation of Clearing Members to conduct 
anti-money laundering due diligence would help to ensure the 
application of relevant and current anti-money laundering obligations 
to ICE Clear Europe and Clearing Members. Similarly, the Commission 
believes that adding definitions for current ICE Clear Europe 
technology systems used in the Delivery Procedures (ECS, MFT, ICE FEC, 
and MPFE), updating references to those technology systems, and 
removing references to systems no longer in use, like Crystal, would 
help reduce the possibility for error in using and applying the 
Delivery Procedures by ensuring they reference the correct and current 
ICE Clear Europe internal systems. The Commission further believes that 
amending Part A of the Delivery Procedures to add a reference to the 
alternative delivery procedure for Emission Contracts, update 
references to certain defined terms, and revise the process for the 
Emissions Alternative Delivery Procedure and a Failed Delivery, would 
help to ensure the correct application and operation of the delivery 
provisions with respect to EU Emissions Contracts. Moreover, the 
Commission believes that deleting Part M and related references to 
those contracts delisted from the relevant exchange, establishing a 
procedure to address the Seller's non-delivery of securities under a 
Financials & Softs Gilt Contract in Part U, correcting references to 
the settlement facilities and relevant settlement details and 
settlement procedures for Equity Futures/Options Contracts in Part Z, 
and updating the table in Part FF regarding the receipt of documents by 
ICE Clear Europe, would help to ensure the Delivery Procedures reflect 
the contracts currently cleared by the relevant exchanges and would 
help to establish effective operational processes for the contracts 
found in Parts U, Z, and FF. Finally, the Commission believes that 
making drafting clarifications and typographical corrections throughout 
the Delivery Procedures would help to reduce the possibility for error 
in applying the Delivery Procedures. Thus, the Commission believes all 
of the changes to the Delivery Procedures discussed in Part II.D would 
clarify and update the Delivery Procedures, thereby facilitating the 
prompt and accurate clearance and settlement of transactions using the 
Delivery Procedures.
    Similarly, the Commission believes that the proposed changes to the 
CDS Procedures discussed in Part II.E above would, in general, promote 
the prompt and accurate clearance and settlement of securities 
transactions and assure the safeguarding of securities and funds in ICE 
Clear Europe's custody or control. Specifically, the Commission 
believes that the changes to the CDS Procedures would enhance the 
flexibility of ICE Clear Europe's operations, benefitting both ICE 
Clear Europe and Clearing Members. For example, the Commission believes 
that adding a new paragraph 3.5 to require CDS Clearing Members to 
provide sign-off via email on weekly cycles by the time specified by 
ICE Clear Europe would provide a flexible and efficient means for sign-
off, via email. Similarly, the Commission believes that allowing a 
Clearing Member to designate an Affiliate that is also a CDS Clearing 
Member to accept CDS Contracts in lieu of it for CDS Contracts arising 
as a result of the existing CDS end-of-day pricing process and to 
accept transactions arising out of the existing auction process to be 
used in the case of self-referencing CDS transactions would give 
Clearing Members flexibility in determining who is best positioned to

[[Page 49379]]

accept transactions in those situations. Moreover, the Commission 
believes that allowing ICE Clear Europe to provide notice of certain 
modifications to its list of Eligible Single Name Reference Entities 
via its website rather than by Circular would provide ICE Clear Europe 
operational efficiency and flexibility in making these changes. 
Finally, the Commission believes that correcting references throughout 
the CDS Procedures to the CDS Product Risk Committee and FX Product 
Risk Committee would help to decrease the possibility for error in 
applying the CDS Procedures by ensuring usage of the current and 
correct committee names. The Commission therefore believes that these 
changes would generally improve the flexibility and efficiency of ICE 
Clear Europe's operations and the application of the CDS Procedures, 
thus promoting ICE Clear Europe's ability to promptly and accurately 
clear and settle securities transactions and assure the safeguarding of 
securities and funds in ICE Clear Europe's possession or control.
    The Commission further believes that the changes to the Membership 
Procedures discussed in Part II.F above would, in general, promote the 
prompt and accurate clearance and settlement of securities transactions 
and assure the safeguarding of securities and funds in ICE Clear 
Europe's custody or control. Specifically, the Commission believes that 
updating the definition of Capital; lowering to 25% the portion of a 
Clearing Member's Capital requirement that may be covered by 
subordinated loans; removing irrevocable letters of credit as a 
potential method that Clearing Members or Sponsored Principals may use 
to satisfy capital requirements; and giving ICE Clear Europe authority 
to, at its discretion, require a Clearing Member to post additional 
cash or collateral in addition to the normal margin requirements would 
help to align ICE Clear Europe's standards for Clearing Member capital 
with the Basel III standard. The Commission believes this in turn would 
help to assure consistent and reasonable capital standards for Clearing 
Members, thereby contributing to the overall financial resiliency of 
ICE Clear Europe and its ability to promptly and accurately clear and 
settle transactions and assure the safeguarding of securities and funds 
in its custody or control.
    Moreover, the Commission believes that amending the summary table 
at paragraph 4.2 to change the deadline for submitting financial 
statements from 30 to 45 days and to allow ICE Clear Europe to accept 
different kinds of financial statements from Clearing Members as part 
of their financial reporting obligations, in circumstances where they 
do not produce quarterly financial statements, consistent with the 
proposed change to Rule 205(a)(ii), would provide additional 
operational flexibility to ICE Clear Europe and Clearing Members. The 
Commission also believes that amending the summary table at paragraph 
4.2 to be consistent with Rule 209 and updating the email address to 
which Clearing Members should send certain notifications would help to 
decrease the possibility for error in submitting such notifications. 
The Commission therefore believes that these changes would generally 
improve the flexibility of ICE Clear Europe's operations and the 
application of the Membership Procedures, thus promoting ICE Clear 
Europe's ability to promptly and accurately clear and settle securities 
transactions and assure the safeguarding of securities and funds in its 
custody or control.
    As noted above in Part II.G, the proposed rule change would make 
various changes to the Complaint Resolution Procedures to correct 
typographical errors and promote consistent use of terminology such as 
replacing the term ``Complaints Resolution Procedure'' with ``Complaint 
Resolution Procedures,'' and using defined terms such as ``Person,'' 
``Commissioner,'' and ``Eligible Complaint.'' The Commission believes 
these changes would help to strengthen ICE Clear Europe's Complaint 
Resolution Procedures by making them easier to reference, which in turn 
supports ICE Clear Europe's ability to carry out the prompt clearance 
and settlement of transactions while addressing this aspect of its 
operations. The Commission similarly believes that the other proposed 
changes to the Complaint Resolution Procedures described in Part II.G 
above, such as the referral of complaints to another recognized body 
and details regarding the handling of Eligible Complaints, support the 
efficient handling of complaints and thus would help to support its 
clearance and settlement functions.
    Finally, as described in Part II.H above, the proposed rule change 
would amend the introduction to the General Contract Terms to remove 
references to named ICE markets and instead use the more generic term 
``relevant Market.'' The proposed rule change would also add the 
standard term ``Amendments'' to the General Contract Terms to clarify 
that the terms of any Contract may be amended in the same way as ICE 
Clear Europe may amend the Rules in accordance with Rule 109 
(Alteration of Rules, Procedures, Guidance and Circulars). The 
Commission believes that these changes to the General Contract Terms 
will generally help clarify and simplify the Rules and Procedures, and 
make it easier for ICE Clear Europe to keep such documents up to date 
notwithstanding potential future changes in the Markets cleared and 
similar events, as well as to enhance the usefulness of the Procedures 
with appropriate cross-references. Further, the Commission believes 
that these proposed changes will in turn help make ICE Clear Europe's 
documents more effective and consistent with current operational 
practices and processes, thereby supporting ICE Clear Europe's ability 
to promptly and accurately clear and settle securities transactions.
    Therefore, for these reasons, the Commission finds that the 
proposed rule change would promote the prompt and accurate clearance 
and settlement of securities transactions and assure the safeguarding 
of securities and funds in ICE Clear Europe's custody and control, 
consistent with the Section 17A(b)(3)(F) of the Act.\40\
---------------------------------------------------------------------------

    \40\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

B. Consistency With Section 17A(b)(3)(G) of the Act

    Section 17A(b)(3)(G) of the Act requires, among other things, that 
ICE Clear Europe's rules provide that Clearing Members shall be 
appropriately disciplined for violation of any provision of ICE Clear 
Europe's rules by fine or other fitting sanction.\41\
---------------------------------------------------------------------------

    \41\ 15 U.S.C. 78q-1(b)(3)(G).
---------------------------------------------------------------------------

    As discussed above, the proposed rule change would add a new 
summary disciplinary process in proposed Rule 1008 to improve and 
streamline ICE Clear Europe's process for disciplining Clearing Members 
for specified violations of the Rules and Procedures, including those 
that ICE Clear Europe considers to be minor in nature. ICE Clear Europe 
would be limited to the following sanctions it could impose against 
Clearing Members for such violations under proposed Rule 1008: The 
issuance of a private warning or reprimand naming the Clearing Member 
or a Clearing Member Customer, client or Representative; a fine of up 
to [pound]50,000; or any combination of the foregoing. The Commission 
believes that such limited sanctions under the proposed summary 
disciplinary process would be appropriate forms of discipline against 
Clearing Members who commit the applicable types of violations under 
new Rule 1008.

[[Page 49380]]

    For these reasons, the Commission finds the proposed rule change is 
consistent with Section 17A(b)(3)(G) of the Act.\42\
---------------------------------------------------------------------------

    \42\ 15 U.S.C. 78q-1(b)(3)(G).
---------------------------------------------------------------------------

C. Consistency With Section 17A(b)(3)(H) of the Act

    Section 17A(b)(3)(H) of the Act \43\ requires, among other things, 
that ICE Clear Europe's rules, in general, provide a fair procedure 
with respect to the disciplining of participants. As discussed above, 
the proposed rule change would add a new summary disciplinary process 
under proposed Rule 1008 for sanctioning Clearing Members that breach 
certain Rules or Procedures, including by specifying the process by 
which ICE Clear Europe may impose any of the specified sanctions, the 
opportunity for a Clearing Member to appeal, the grounds for appeal, 
and the actions the appeal panel may take (i.e., to affirm, vary, or 
revoke a sanction). The Commission believes these aspects of the 
proposed rule change would provide a fair procedure for disciplining 
Clearing Members.
---------------------------------------------------------------------------

    \43\ 15 U.S.C. 78q-1(b)(3)(H).
---------------------------------------------------------------------------

    For these reasons, the Commission finds the proposed rule change is 
consistent with Section 17A(b)(3)(H) of the Act.\44\
---------------------------------------------------------------------------

    \44\ 15 U.S.C. 78q-1(b)(3)(H).
---------------------------------------------------------------------------

D. Consistency With Rule 17Ad-22(e)(1)

    Rule 17Ad-22(e)(1) requires that ICE Clear Europe establish, 
implement, maintain and enforce written policies and procedures 
reasonably designed to provide for a well-founded, clear, transparent, 
and enforceable legal basis for each aspect of its activities in all 
relevant jurisdictions.\45\ As discussed above, the proposed amendments 
to the General Contract Terms would clarify, simplify, and harmonize 
various aspects of the Rules and Procedures, to be consistent with 
current operations, remove outdated references, address changes in 
Markets served, and similar matters. The Commission believes that these 
proposed changes will enhance the clarity of the legal framework 
provided by the Rules and Procedures under which ICE Clear Europe 
operates, and are therefore consistent with Rule 17Ad-22(e)(1).\46\
---------------------------------------------------------------------------

    \45\ 17 CFR 240.17Ad-22(e)(1).
    \46\ 17 CFR 240.17Ad-22(e)(1).
---------------------------------------------------------------------------

    As noted above, the proposed rule change would reframe the 
Complaint Resolution Procedures as based on ICE Clear Europe's 
obligations as a CCP under EMIR; clarify that only certain kinds of 
complaints, ``Eligible Complaints,'' would be part of the complaint 
resolution process; broaden the definition of ``Eligible Complaints'' 
to include complaints against any directors, officers, employees or 
committees; clarify procedural delays and timing in the process; and 
add the ability to refer complaints to other responsible entities. The 
Commission believes that these proposed changes express a well-founded, 
clear, transparent, and enforceable legal basis for how ICE Clear 
Europe manages complaints and is therefore consistent with Rule 17Ad-
22(e)(1).\47\
---------------------------------------------------------------------------

    \47\ 17 CFR 240.17Ad-22(e)(1).
---------------------------------------------------------------------------

    As discussed above, the proposed rule change would update various 
definitions and other provisions in the Rules and Procedures to reflect 
current laws and regulations in the EU and UK governing anti-money 
laundering requirements and the requisite levels of due diligence. 
Proposed new Rule 201(xxxiii) would require Clearing Members to have 
adequate policies, procedures, systems, and controls relating to 
Applicable Laws, including anti-money laundering laws. The proposed 
rule change would amend Rule 1607 (Additional FCM/BD Requirements for 
Customer Transactions) to require FCM/BD Customers to obtain the 
authority from beneficial owners to disclose information necessary for 
anti-money laundering due diligence to the Clearing Member and ICE 
Clear Europe, and add similar new requirements to the Standard Terms 
exhibits to the Rules. Similarly, the proposed amendments to the 
Delivery Procedures would obligate Clearing Members to conduct 
appropriate anti-money laundering due diligence for any transferors and 
transferees and provide relevant documentation to ICE Clear Europe and/
or the Clearing Member. The Commission believes that these proposed 
changes would help to establish and maintain a well-founded legal basis 
for the Rules and Procedures governing ICE Clear Europe's operations 
under applicable anti-money laundering laws, and are therefore 
consistent with Rule 17Ad-22(e)(1).\48\
---------------------------------------------------------------------------

    \48\ 17 CFR 240.17Ad-22(e)(1).
---------------------------------------------------------------------------

    As discussed above, the proposed rule change would amend Rule 201 
to clarify the legal basis in the Rules for ICE Clear Europe to require 
Clearing Members to execute additional documentation in the form of 
annexes or agreements to the Clearing Membership Agreement in order to 
be, and remain, eligible for Clearing Membership. As ICE Clear Europe 
would impose such documentation requirements where necessary to comply 
with, or address post-Brexit local law group structuring issues in 
certain EU member states, the Commission believes these proposed 
amendments provide a well-founded legal basis for ICE Clear Europe to 
impose such additional documentation requirements, and are therefore 
consistent with Rule 17Ad-22(e)(1).\49\
---------------------------------------------------------------------------

    \49\ 17 CFR 240.17Ad-22(e)(1).
---------------------------------------------------------------------------

    As discussed above, the proposed rule change would amend Rule 201 
(Clearing Membership Criteria), Rule 1901 (Attaining status as a 
Sponsored Principal), and Section 10 of the F&O Standard Terms to 
remove the requirement for Clearing Members, Customers, and Sponsored 
Principals to be an ``eligible contract participant'' if they are 
engaging solely in F&O Contracts. As eligible contract participant 
status is required under applicable U.S. law to trade swaps and 
security-based swaps, such as CDS, but is not required to trade 
futures, the Commission believes these proposed amendments provide a 
well-founded legal basis for ICE Clear Europe to remove such status 
requirement, and are therefore consistent with Rule 17Ad-22(e)(1).\50\
---------------------------------------------------------------------------

    \50\ 17 CFR 240.17Ad-22(e)(1).
---------------------------------------------------------------------------

    As discussed above, the proposed rule change would amend paragraph 
3.5(a) of the Membership Procedures to lower the threshold, from 50% to 
25%, at which ICE Clear Europe would require a written undertaking from 
the Clearing Member to not repay subordinated loans without its 
consent. As this proposed change would align the Clearing Member 
capital requirement more closely with Basel III requirements applicable 
to Clearing Members, the Commission believes these proposed amendments 
provide a well-founded legal basis for ICE Clear Europe to lower such 
threshold, and are therefore consistent with Rule 17Ad-22(e)(1).\51\
---------------------------------------------------------------------------

    \51\ 17 CFR 240.17Ad-22(e)(1).
---------------------------------------------------------------------------

    As discussed above, the proposed rule change would make a number of 
clarifications and drafting improvements to the Amended Documents to 
explicitly and correctly reference current law; eliminate discrepancies 
and inconsistencies; comply with applicable legal requirements; use 
consistent terminology; update cross-references and numbering; and 
correct drafting errors. The Commission believes that these changes, 
taken as a whole, would help to ensure that the Amended Documents 
provide for a well-founded, clear, transparent, and enforceable legal 
basis for each aspect of ICE Clear Europe's activities in all relevant 
jurisdictions.

[[Page 49381]]

    For these reasons, the Commission finds that the proposed rule 
change is consistent with Rule 17Ad-22(e)(1).\52\
---------------------------------------------------------------------------

    \52\ 17 CFR 240.17Ad-22(e)(1).
---------------------------------------------------------------------------

E. Consistency With Rule 17Ad-22(e)(2)(i)

    Rule 17Ad-22(e)(2)(i) requires that ICE Clear Europe establish, 
implement, maintain, and enforce written policies and procedures 
reasonably designed to provide for governance arrangements that are 
clear and transparent.\53\ As noted above, the proposed changes to the 
Complaint Resolution Procedures would clarify the roles of those 
investigating complaints, state explicitly that ICE Clear Europe must 
consider the investigative complaint report and recommendations, and 
inform the complaining party. The Commission believes that these 
proposed changes therefore provide for governance arrangements related 
to the complaint resolution process that are clear and transparent and 
are consistent with Rule 17Ad-22(e)(2)(i).\54\
---------------------------------------------------------------------------

    \53\ 17 CFR 240.17Ad-22(e)(2)(i).
    \54\ 17 CFR 240.17Ad-22(e)(2)(i).
---------------------------------------------------------------------------

    As discussed above, the proposed rule change would also amend and 
update committee references in Rule 916(d) to change the term ``Risk 
Committee'' to ``relevant product risk committee'' to clarify that 
there are different product risk committees addressing topics specific 
to F&O and CDS. The proposed rule change would make similar updates to 
the CDS Risk Committee and FX Risk Committee references in the Finance 
Procedures by changing them to ``CDS Product Risk Committee'' and ``FX 
Product Risk Committee,'' respectively, and also throughout the CDS 
Procedures where ``CDS Risk Committee'' is currently used. The 
Commission believes that these changes would help to ensure that ICE 
Clear Europe's governance arrangements are clear and transparent by 
clearly identifying the various product risk committees involved in 
governance at ICE Clear Europe.
    For these reasons, the Commission finds the proposed rule change is 
consistent with Rule 17Ad-22(e)(2)(i).\55\
---------------------------------------------------------------------------

    \55\ 17 CFR 240.17Ad-22(e)(2)(i).
---------------------------------------------------------------------------

F. Consistency With Rule 17Ad-22(e)(6)(ii)

    Rule 17Ad-22(e)(6)(ii) requires that ICE Clear Europe establish, 
implement, maintain, and enforce written policies and procedures 
reasonably designed to cover its credit exposures to its Clearing 
Members by establishing a risk-based margin system that, at a minimum, 
among other matters, marks participant positions to market and collects 
margin, including variation margin or equivalent charges if relevant, 
at least daily and includes the authority and operational capacity to 
make intraday margin calls in defined circumstances.\56\ As discussed 
above, Rule 1603(c) would be amended to clarify that only ``original'' 
or ``initial'' types of Margin payments would be provided in the form 
of Pledged Collateral, and that such collateral excludes Variation 
Margin, Mark-to-Market Margin and FX Mark-to-Market Margin, which are 
provided to or by ICE Clear Europe by outright transfer of cash as a 
settlement payment. This proposed change is intended to be consistent 
with ICE Clear Europe's previous amendments to the Rules to clarify 
that such variation and mark-to-market margin are settlement payments 
rather than collateral. Because, as discussed above, ICE Clear Europe 
inadvertently omitted this proposed amendment from its prior 
amendments, the Commission believes these changes would facilitate ICE 
Clear Europe's consistent treatment and collection of variation and 
mark-to-market margin from Clearing Members.
---------------------------------------------------------------------------

    \56\ 17 CFR 240.17Ad-22(e)(6)(ii).
---------------------------------------------------------------------------

    For this reason, the Commission finds the proposed rule change is 
consistent with Rule 17Ad-22(e)(6)(ii).\57\
---------------------------------------------------------------------------

    \57\ 17 CFR 240.17Ad-22(e)(6)(ii).
---------------------------------------------------------------------------

G. Consistency With Rule 17Ad-22(e)(10)

    Rule 17Ad-22(e)(10) requires that ICE Clear Europe establish, 
implement, maintain, and enforce written policies and procedures 
reasonably designed to establish and maintain transparent written 
standards that state its obligations with respect to the delivery of 
physical instruments, and establish and maintain operational practices 
that identify, monitor, and manage the risks associated with such 
physical deliveries.\58\ As discussed above, the proposed rule change 
would amend the definition of ``Exchange Delivery Settlement Price'' or 
``EDSP'' in Rule 101 (Definitions) to clarify, for the avoidance of 
doubt that the EDSP can be a positive or negative number, or zero. The 
proposed rule change would amend Rule 703(b) (Delivery) to clarify the 
process for payment of the EDSP in a physical settlement if the EDSP is 
a negative number. The Commission believes that these proposed changes 
would increase the clarity and transparency of the physical settlement 
process, which in turn would help ICE Clear Europe avoid the risk of 
settlement discrepancies associated with the delivery of physical 
instruments.
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    \58\ 17 CFR 240.17Ad-22(e)(10).
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    As discussed above, the proposed rule change would amend the 
Delivery Procedures to update various operational practices and to make 
other updates and drafting improvements. Specifically, proposed new 
paragraph 7 would make explicit reference to the alternative delivery 
procedure for Emission Contracts in the event of a failed delivery, as 
set out in paragraph 7 (Emissions Alternative Delivery Procedure 
(``EADP'')) of Part A of the Delivery Procedures (ICE Endex Deliverable 
EU Emissions Contracts). Amended paragraph 7.3 of Part A would update 
the manner of settlement of an existing Contract following the entry 
into an EADP Agreement by a Clearing Member and ICE Clear Europe, so 
that it would no longer be limited to liquidation on the basis of the 
Exchange Delivery Settlement Price, but rather, dealt with in the 
manner specified in the EADP. In addition, amended paragraph 7.5 would 
provide for a longer time period after a failed delivery for the 
Clearing Member and ICE Clear Europe to enter into an EADP Agreement or 
effect delivery under the EADP before ICE Clear Europe may refer the 
matter to the relevant exchange or take other reasonable next steps in 
its discretion. The Commission believes these changes would establish 
and update transparent written procedures for failed deliveries of 
Emissions Contracts, and provide greater flexibility for ICE Clear 
Europe to manage the risks associated with such failed deliveries.
    With respect to Financials & Softs Gilt Contracts, the proposed 
rule change would amend Part U of the Delivery Procedures to add a new 
paragraph 2 (Failed Settlement and Non-Delivery of Stock) to establish 
a procedure to address the Seller's non-delivery of securities under a 
Financials & Softs Gilt Contract, including the actions ICE Clear 
Europe may take to promote settlement in accordance with the contract 
terms and the requirements of the CREST central securities depository, 
as well as the express allocation of the costs of such steps to the 
Clearing Member who failed to make delivery. Proposed new paragraph 2.1 
in amended Part U would establish ICE Clear Europe's procedure to 
address the Seller's partial delivery of available Gilts and the 
resulting partial settlement between the Buying Clearing Member and the 
Selling Clearing Member. The Commission believes these changes in Part 
U would establish transparent written standards and procedures for 
handling failed deliveries and partial deliveries of Financials and 
Softs Gilt

[[Page 49382]]

Contracts and for managing their associated risks.
    The proposed rule change also would amend Part Z of the Delivery 
Procedures to make various updates to reference the correct settlement 
facilities and relevant settlement details and settlement procedures 
for Equity Futures/Options Contracts. Amended paragraph 2.3 
(Partialling) and paragraph 3 (Failed Settlements and Non-Delivery of 
Stock) would clarify the processes for dealing with partial deliveries 
and failed deliveries, including the steps that ICE Clear Europe may 
take to facilitate delivery, the rights and responsibilities of the 
buying clearing member with respect to onward deliveries under other 
contracts, and the allocation of costs to clearing members. Similar to 
the changes in Part U, the Commission believes these changes in Part Z 
would establish transparent written standards and procedures for 
handling partial deliveries and failed deliveries of Equity Futures/
Options Contracts and for managing their associated risks.
    Throughout the Delivery Procedures, the proposed rule change would 
also update and clarify operational processes and ICE Clear Europe 
systems, delivery documentation summaries, timetables, and other 
relevant provisions. The Commission believes these changes would help 
ICE Clear Europe establish and maintain transparent and up-to-date 
operational practices to help manage the risks associated with physical 
deliveries and settlement.
    For these reasons, the Commission finds the proposed rule change is 
consistent with Rule 17Ad-22(e)(10).\59\
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    \59\ 17 CFR 240.17Ad-22(e)(10).
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H. Consistency With Rule 17Ad-22(e)(13)

    Rule 17Ad-22(e)(13) requires that ICE Clear Europe establish, 
implement, maintain, and enforce written policies and procedures 
reasonably designed to ensure it has the authority and operational 
capacity to take timely action to contain losses and liquidity demands 
and continue to meet its obligations by, at a minimum, requiring its 
Clearing Members and, when practicable, other stakeholders to 
participate in the testing and review of its default procedures, 
including any close-out procedures, at least annually and following 
material changes thereto.\60\ As discussed above, the proposed rule 
change would amend ICE Clear Europe's default planning process by 
removing the current pre-default porting preference structure, and 
replacing it with a post-default porting preference structure using 
Porting Notices (which refers to a post-default notification of a 
porting preference) that require written consent by the designated 
Transferee Clearing Member. The proposed rule change also would amend 
Rule 907(b) to clarify that ICE Clear Europe has no obligation to 
inquire of any person as to any Porting Notice. In the interest of 
further enhancing efficiencies in default scenarios, the proposed rule 
change would amend Rule 907(d) to authorize ICE Clear Europe's ability 
to rely on relevant information concerning Contracts, Customer-CM 
Transactions, Margin, and customer accounts that a defaulting Clearing 
Member provided to ICE Clear Europe prior to declaration of default. 
The Commission believes that these aspects of the proposed rule change 
would help ICE Clear Europe continue to take timely action to contain 
losses and liquidity demands in the case of a Clearing Member default.
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    \60\ 17 CFR 240.17Ad-22(e)(13).
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    As discussed above, the proposed rule change would amend Rule 
903(c) to clarify that ICE Clear Europe's right to authorize hedging 
transactions in a default scenario would include transactions on a 
Market, any other Exchange, or over the counter, and that hedging 
transactions need not be cleared if transacted on an exchange which is 
not a Market, or as requested or directed otherwise by ICE Clear 
Europe. The Commission believes such changes would enhance ICE Clear 
Europe's authority to use hedging to help contain losses and liquidity 
demands following an Event of Default.
    As discussed above, the proposed rule change would amend Rule 901 
(Events of Default affecting Clearing Members or Sponsored Principals) 
to clarify that the declaration of a Clearing Member's Event of Default 
would authorize ICE Clear Europe to declare an Event of Default in 
respect of another Clearing Member that is a Group Company, i.e., a 
parent or subsidiary of such defaulting Clearing Member. The Commission 
believes that this change would enhance ICE Clear Europe's authority to 
declare cross-defaults of affiliated Clearing Members to help contain 
losses and liquidity demands in a default scenario.
    Finally, as discussed above, the proposed rule change would make a 
number of drafting improvements to Rule 904(b) (Transfer of Contracts 
and Margin on a Clearing Member Default), Rule 905(g) (Termination and 
close out of Contracts on a Clearing Member Event of Default), and Rule 
908(i) (Application of Assets upon an Event of Default), that would 
enhance the clarity of ICE Clear Europe's default management procedures 
and support ICE Clear Europe's operational capacity to take timely 
action to contain losses and liquidity demands.
    For these reasons, the Commission finds the proposed rule change is 
consistent with Rule 17Ad-22(e)(13).\61\
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    \61\ 17 CFR 240.17Ad-22(e)(13).
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I. Consistency With Rule 17Ad-22(e)(14)

    Rule 17Ad-22(e)(14) requires that ICE Clear Europe establish, 
implement, maintain, and enforce written policies and procedures 
reasonably designed to enable the segregation and portability of 
positions of a Clearing Member's customers and the collateral provided 
to ICE Clear Europe with respect to those positions and effectively 
protect such positions and related collateral from the default or 
insolvency of that Clearing Member.\62\ As discussed above, the 
proposed rule change would remove the current Default Portability 
Preference process by which Non-FCM/BD Clearing Members may deliver 
porting information to ICE Clear Europe in advance of a Clearing Member 
default, which was rarely used in practice, and replace such process 
with a post-default portability preference notification process using 
Porting Notices to designate a customer's preferred Transferee Clearing 
Member. This change is consistent with the EMIR requirement for post-
default notices to be served as a pre-condition to porting. The 
proposed rule change would make conforming amendments to Rules 904 and 
907 to reflect this change and would clarify the process for providing 
post-default Porting Notices. In particular, amended Rule 904(g) would 
require that the Transferee Clearing Member must consent in writing to 
the customer's designation of such Transferee Clearing Member in a 
Porting Notice. The Commission believes these aspects of the proposed 
rule change would clarify and facilitate the process of post-default 
porting that is consistent with EMIR, and effectively protects customer 
positions and collateral in the event of a Clearing Member default.
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    \62\ 17 CFR 240.17Ad-22(e)(14).
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    As discussed above, the proposed rule change would amend Rule 
209(d) to facilitate membership terminations in the context of a 
corporate group reorganization where a new Clearing Member that is an 
Affiliate will be receiving the terminating Clearing Member's Open 
Contract Positions, which include Customer Account Positions. The 
Commission believes these amendments would help to enable the 
portability of a customer's contracts in the specific context of a 
Clearing Member termination.

[[Page 49383]]

    For these reasons, the Commission finds the proposed rule change is 
consistent with Rule 17Ad-22(e)(14).\63\
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    \63\ 17 CFR 240.17Ad-22(e)(14).
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J. Consistency With Rule 17Ad-22(e)(17)(i)

    Rule 17Ad-22(e)(17)(i) requires that ICE Clear Europe establish, 
implement, maintain, and enforce written policies and procedures 
reasonably designed to manage its operational risks by identifying the 
plausible sources of operational risk, both internal and external, and 
mitigating their impact through the use of appropriate systems, 
policies, procedures, and controls.\64\ As discussed above, the 
proposed rule change would amend the provisions for delivery of notices 
in various Rules as part of ICE Clear Europe's default simulation 
planning. The proposed amendments would generally replace telephone 
with email delivery, and clarify the delivery to nominated process 
agents, as well as the timing for effective service and delivery of 
notices. The Commission believes these changes would help to improve 
the efficiencies in the delivery of notices, which in turn would help 
ICE Clear Europe manage the related operational risks associated with 
the delivery and receipt of notices in case of a Clearing Member 
default or termination, among other operational scenarios.
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    \64\ 17 CFR 240.17Ad-22(e)(17)(i).
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    The Commission believes that the proposed amendment to Rule 202 
(Obligations of Clearing Members) to require Clearing Members to have 
competent staff representatives accessible to ICE Clear Europe for two 
hours before the start of the business day would help ICE Clear Europe 
ensure that its operational policies are consistent with its 
operational practices for appropriately managing the risks associated 
with Clearing Members meeting time-sensitive morning margin calls.
    The Commission believes that the proposed addition of new Rule 
301(o), which would allow ICE Clear Europe to request information when 
needed on account balances of nominated accounts of the Clearing Member 
at financial institutions, including for the purpose of calling on 
available cash where the Clearing Member has failed to meet a payment 
obligation or determining whether the Clearing Member is, or is likely 
to be, in default, would help ICE Clear Europe reduce operational risks 
that have arisen in practice when payment banks have refused to provide 
such information to ICE Clear Europe.
    The Commission believes that the proposed new definitions of ICE 
Clear Europe's operational systems in the Delivery Procedures and 
updated references to such systems throughout the Amended Documents 
would help ICE Clear Europe manage operational risks by upgrading 
legacy systems and ensuring that all internal and external stakeholders 
are aware of the new systems and their basic operational purposes and 
functionalities.
    As discussed above, the proposed rule change would make various 
amendments to certain Rules to ensure clear and consistent operational 
practices for Contracts. Amended Rule 401(o) would clarify that a 
Customer-CM CDS Transaction arises at the same time as the Contract for 
consistency with the equivalent rule for a Customer-CM F&O Transaction. 
Amended Rule 406 would clarify how open contract positions in F&O 
Contracts are netted and aggregated. Amended Rule 409 would clarify 
that ICE Clear Europe may evidence its consent to amendments, waivers, 
and variations of Contract Terms by issuing a Circular. The Commission 
believes these changes would help ICE Clear Europe reduce operational 
risks by formalizing appropriate and consistent operational practices 
related to the Contracts it clears.
    Finally, the Commission believes the proposed amendments to Rule 
105(a) to shorten the termination period for ICE Clear Europe's service 
withdrawal as a clearing house for any product where there is no open 
interest in the relevant Set, and to clarify that the relevant 
exchange's notice period and notification responsibility would apply to 
a product termination that follows actions by the exchange, such as a 
de-listing, would help ICE Clear Europe manage and mitigate both 
internal and external sources of operational risks associated with 
product terminations.
    For these reasons, the Commission finds the proposed rule change is 
consistent with Rule 17Ad-22(e)(17)(i).\65\
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    \65\ 17 CFR 240.17Ad-22(e)(17)(i).
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K. Consistency With Rule 17Ad-22(e)(18)

    Rule 17Ad-22(e)(18) requires that ICE Clear Europe establish, 
implement, maintain, and enforce written policies and procedures 
reasonably designed to establish objective, risk-based, and publicly 
disclosed criteria for participation, which permit fair and open access 
by direct and, where relevant, indirect participants and other 
financial market utilities, require participants to have sufficient 
financial resources and robust operational capacity to meet obligations 
arising from participation, and monitor compliance with such 
participation requirements on an ongoing basis.\66\
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    \66\ 17 CFR 240.17Ad-22(e)(18).
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    The Commission believes that the changes to the Membership 
Procedures discussed above would establish objective, risk-based, and 
publicly disclosed criteria for participation, by updating the 
definition of Clearing Member Capital and related requirements 
applicable to Clearing Members to align with the Basel III standard. 
Similarly, the Commission believes that changing the deadline for 
submitting financial statements from 30 to 45 days; allowing ICE Clear 
Europe to accept different kinds of financial statements from Clearing 
Members as part of their financial reporting obligations; and providing 
that termination of a Clearing Membership Agreement or membership as a 
Clearing Member would become effective no less than 30 Business Days 
after the date of the Termination Notice Time or pursuant to Rule 
917(c), would establish objective, risk-based, and publicly disclosed 
criteria for participation, by setting forth clear deadlines and 
standards applicable to Clearing Members. Finally, the Commission 
believes that adding a new paragraph 3.5 to the CDS Procedures to 
require Clearing Members to provide sign-off via email on weekly cycles 
by the time specified by ICE Clear Europe would establish an objective, 
risk-based, and publicly disclosed requirement upon Clearing Members. 
Therefore, the Commission finds these aspects of the proposed rule 
change are consistent with Rule 17Ad-22(e)(18).\67\
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    \67\ 17 CFR 240.17Ad-22(e)(18).
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    Finally, the Commission believes that the proposed amendment to 
Rule 202 (Obligations of Clearing Members) to require Clearing Members 
to have competent staff representatives accessible to ICE Clear Europe 
for two hours before the start of the business day would help ICE Clear 
Europe ensure that its participants have sufficient financial resources 
and operational capacity to meet their morning margin call obligations.
    For these reasons, the Commission finds the proposed rule change is 
consistent with Rule 17Ad-22(e)(18).\68\
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    \68\ 17 CFR 240.17Ad-22(e)(18).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change, as modified by Partial

[[Page 49384]]

Amendment No. 1, is consistent with the requirements of the Act, and in 
particular, with the requirements of Sections 17A(b)(3)(F), 
17A(b)(3)(G), and 17A(b)(3)(H) of the Act, and Rules 17Ad-22(e)(1), 
(e)(2)(i), 17Ad-22(e)(6)(ii), 17Ad-22(e)(10), 17Ad-22(e)(13), 17Ad-
22(e)(14), 17Ad-22(e)(17)(i), and (e)(18).\69\
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    \69\ 15 U.S.C. 78q-1(b)(3)(F); 15 U.S.C. 78q-1(b)(3)(G); 15 
U.S.C. 78q-1(b)(3)(H); 17 CFR 240.17Ad-22(e)(1), (e)(2)(i), 
(e)(6)(ii), (e)(10), (e)(13), (e)(14), (e)(17)(i), and (e)(18).
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    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
\70\ that the proposed rule change, as modified by Partial Amendment 
No. 1 (SR-ICEEU-2021-010), be, and hereby is, approved.\71\
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    \70\ 15 U.S.C. 78s(b)(2).
    \71\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
    \72\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\72\
Vanessa A. Countryman,
Secretary.
[FR Doc. 2021-18941 Filed 9-1-21; 8:45 am]
BILLING CODE 8011-01-P