Self-Regulatory Organizations; LCH SA; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fees on Extension of Eligible Collateral, 62573-62575 [2021-24528]
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Federal Register / Vol. 86, No. 215 / Wednesday, November 10, 2021 / Notices
instructions may be obtained without
charge by contacting the NRC’s
Clearance Officer, David C. Cullison,
Office of the Chief Information Officer,
U.S. Nuclear Regulatory Commission,
Washington, DC 20555–0001; telephone:
301–415–2084; email:
Infocollects.Resource@nrc.gov.
B. Submitting Comments
Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice to https://www.reginfo.gov/
public/do/PRAMain. Find this
particular information collection by
selecting ‘‘Currently under Review—
Open for Public Comments’’ or by using
the search function.
The NRC cautions you not to include
identifying or contact information in
comment submissions that you do not
want to be publicly disclosed in your
comment submission. All comment
submissions are posted at https://
www.regulations.gov/ and entered into
ADAMS. Comment submissions are not
routinely edited to remove identifying
or contact information.
If you are requesting or aggregating
comments from other persons for
submission to the OMB, then you
should inform those persons not to
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submission. Your request should state
that comment submissions are not
routinely edited to remove such
information before making the comment
submissions available to the public or
entering the comment into ADAMS.
National Security Information and
Restricted Data.’’
2. OMB approval number: 3150–0047.
3. Type of submission: Extension.
4. The form number, if applicable:
NRC Form 405F.
5. How often the collection is required
or requested: When new facility
clearance requests are received, existing
facility clearances are terminated, when
respondents make changes reportable
under the rule, including a mandatory
submission every 5 years.
6. Who will be required or asked to
respond: NRC-regulated facilities and
their contractors who require access to,
and possession of NRC classified
information.
7. The estimated number of annual
responses: 172 (144 reporting + 28
Recordkeepers).
8. The estimated number of annual
respondents: 28.
9. The estimated number of hours
needed annually to comply with the
information collection requirement or
request: 664 (490 Reporting + 174
Recordkeeping).
10. Abstract: The NRC-regulated
facilities and their contractors who are
authorized to access and possess
classified matter are required to provide
information and maintain records to
ensure an adequate level of protection is
provided to NRC classified information
and material.
Dated: November 4, 2021.
For the Nuclear Regulatory Commission.
David C. Cullison,
NRC Clearance Officer, Office of the Chief
Information Officer.
[FR Doc. 2021–24524 Filed 11–9–21; 8:45 am]
BILLING CODE 7590–01–P
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II. Background
Under the provisions of the
Paperwork Reduction Act of 1995 (44
U.S.C. Chapter 35), the NRC recently
submitted a request for renewal of an
existing collection of information to
OMB for review entitled, ‘‘Facility
Security Clearance and Safeguarding of
National Security Information and
Restricted Data.’’ The NRC hereby
informs potential respondents that an
agency may not conduct or sponsor, and
that a person is not required to respond
to, a collection of information unless it
displays a currently valid OMB control
number.
The NRC published a Federal
Register notice with a 60-day comment
period on this information collection on
August 23, 2021, 86 FR 47165.
1. The title of the information
collection: Part 95 of title 10 of the Code
of Federal Regulations, ‘‘Facility
Security Clearance and Safeguarding of
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93522; File No. SR–LCH
SA–2021–003]
Self-Regulatory Organizations; LCH
SA; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to Fees on Extension
of Eligible Collateral
November 4, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
22, 2021, Banque Centrale de
Compensation, which conducts
business under the name LCH SA (‘‘LCH
SA’’), filed with the Securities and
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00066
Fmt 4703
Sfmt 4703
62573
Exchange Commission (‘‘Commission’’)
the proposed rule change (‘‘Proposed
Rule Change’’) described in Items I, II
and III below, which Items have been
prepared primarily by LCH SA. LCH SA
filed the proposed rule change pursuant
to Section 19(b)(3)(A) of the Act,3 and
Rule 19b–4(f)(2) 4 thereunder, so that the
proposed rule change was effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the Proposed Rule
Change from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
(a) Banque Centrale de Compensation,
which conducts business under the
name LCH SA, is proposing to update
the current fee grid to be applied by
LCH SA for the new scope of eligible
securities collateral to be extended to
government bonds issued by the
following states and denominated in
their domestic currencies: Australia,
Canada, Denmark, Japan, Norway,
Sweden and Switzerland 5 (the
‘‘Proposed Rule Change’’).
The text of the Proposed Rule Change
has been annexed [sic] hereto as Exhibit
5.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission,
LCH SA included statements concerning
the purpose of and basis for the
Proposed Rule Change and discussed
any comments it received on the
Proposed Rule Change. The text of these
statements may be examined at the
places specified in Item IV below. LCH
SA has prepared summaries, set forth in
sections A, B, and C below, of the most
significant aspects of such statements.
A. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
LCH SA charges fees on collateral
posted by its clearing members to cover
the CCP margin requirements. The level
of fees is defined based on a
combination of various factors such as
operational costs to manage a given type
of collateral, ability to generate liquidity
from a given type of collateral (and thus
the associated impact on the CCP
3 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
5 Self-Regulatory Organizations; LCH SA; Order
Approving Proposed Rule Change Relating to
Eligible Collateral and Liquidity Risk Management,
Exchange Act Release No. 34–93176 (Sept. 29,
2021); 86 FR 55061 (Oct. 5, 2021). File No. SR–LCH
SA–2021–002.
4 17
E:\FR\FM\10NON1.SGM
10NON1
62574
Federal Register / Vol. 86, No. 215 / Wednesday, November 10, 2021 / Notices
liquidity profile) and commercial
considerations such as competitive
landscape. The extension of eligible
collateral addresses members’ demand
for more flexibility and consistency
with industry standards and market
practices. This extension was designed
in coherence with the clearing services
offered by LCH SA, the profile of the
membership and the risk policies,
regulatory constraints and operational
capacity LCH SA operates under.
As per CDSClear current collateral fee
grid (copied below), LCH SA already
charges different fees depending on the
type of securities, the way that such
securities are deposited at the CCP as
well as the type of activity these cover.
For instance, for securities deposited
under Full Title Transfer (FTT) by a
clearing Member to meet the margin
liabilities of its House account (selfclearing activity), LCH SA charges an
11bps fee on the notional of government
bond securities whereas the charge is
13bps for Agencies and Supranational
securities.6 Similarly, LCH SA charges a
10bps fee for both Government Bonds
and Agencies/Supranational securities
deposited under FTT by a clearing
member covering its Clients’ accounts
activity.
House
Denominated
in
Securities
Government Securities (as listed in
Haircut Schedule).
Supranationals & Agencies ...............
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Equities ..............................................
France .................
Germany .............
Belgium ...............
Netherlands .........
Italy ......................
Portugal ...............
Spain ...................
Austria .................
Finland ................
USA .....................
UK .......................
EFSB ...................
ESM ....................
EIB ......................
EU .......................
IBRD ....................
KfW .....................
Rentenbank .........
As listed in Haircut Schedule.
From November 1st, 2021, LCH SA is
proposing to extend the scope of
instruments eligible as collateral to the
government bonds issued by the
following countries and denominated in
their domestic currencies: Australia,
Canada, Denmark, Japan, Norway,
Sweden and Switzerland.
As such, LCH SA needs to update its
existing non-cash collateral fee grid for
both House and Client clearing
activities. As mentioned before, various
factors are taken into consideration
when defining the fee to be charged for
a given security. For this initiative, LCH
SA has considered a combination of
elements such as the impossibility to
use these securities as collateral with
the European Central Bank (ECB) for
liquidity management purposes, the
relative appetite of the membership for
this new collateral and the operational
costs and constraints that the
management of those securities create
for the CCP (incl. their impact on LCH
SA Liquidity Coverage Ratio).
6 Self-Regulatory Organizations; LCH SA; Notice
of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to Amendments to LCH SA’s
Fee Grid for Non Cash Collateral, Exchange Act
Release No. 34–87536 (Nov. 14, 2019); 84 FR 64125
(Nov. 20, 2019) (File No. SR–LCH SA–2019–010).
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Triparty
(bps)
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
USD
GBP
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
FTT
(bps)
9.5
9.5
9.5
9.5
9.5
9.5
9.5
9.5
9.5
9.5
9.5
9.5
9.5
9.5
9.5
9.5
9.5
9.5
N/A
As specified in the fee grid attached
[sic] as Exhibit 5, the purpose of the
Proposed Rule Change is to define the
fee to be charged for the new scope of
eligible collateral (13bps for House and
10 bps for Client clearing activities). The
difference between the fee charged for
House versus Client collateral is mainly
driven by commercial reasons in
consultation with CDSClear clearing
members. Client clearing of CDS is
reasonably recent in Europe. Given the
limited scope of CDS instruments and
categories of buy-side counterparties
included in the scope of the European
Clearing Obligation for CDS, LCH SA
believes that expanding the list of
eligible collateral as well as setting a
more attractive collateral fee for Clients
of the CDSClear service will incentivise
further buy-side firms to clear a bigger
share of their Credit Derivatives
portfolio.
No amendments to the LCH SA CDS
Clearing Rules are required for these
changes to become effective.
7 15
U.S.C. 78q–1(b)(3)(D).
U.S.C. 78q–1.
9 Self-Regulatory Organizations; LCH SA; Order
Approving Proposed Rule Change Relating to
Eligible Collateral and Liquidity Risk Management,
8 15
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
Client
Pledge
(bps)
11
11
11
11
11
11
11
11
11
11
11
13
13
13
13
13
13
13
13
(bps)
15
15
15
15
15
15
15
15
15
15
15
15
15
15
15
15
15
15
N/A
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
N/A
2. Statutory Basis
Section 17A(b)(3)(D) of the Act
requires that the rules of a clearing
agency provide for the equitable
allocation of reasonable dues, fees, and
other charges.7
LCH SA believes that its clearing fee
change proposal is consistent with the
requirements of Section 17A of the Act 8
and the regulations thereunder
applicable to it, and in particular
provides for the equitable allocation of
reasonable fees, dues, and other charges
among clearing members and market
participants by ensuring that clearing
members and clients pay reasonable fees
and dues for the services provided by
LCH SA, within the meaning of Section
17A(b)(3)(D) of the Act.
As explained in our approved filing
LCH SA–2021–002,9 contrary to
European government bonds, the new
collateral scope is not eligible at the
ECB to be used as collateral against cash
in Euros, which in turn impacts how
LCH SA monitors and manages its
Exchange Act Release No. 34–93176 (Sept. 29,
2021); 86 FR 55061 (Oct. 5, 2021). File No. SR–LCH
SA–2021–002.
E:\FR\FM\10NON1.SGM
10NON1
Federal Register / Vol. 86, No. 215 / Wednesday, November 10, 2021 / Notices
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liquidity resources. It therefore
represents additional operational costs
that are amongst other things captured
in the pricing difference. That is why,
the proposed fee change balances
appropriately commercial conditions
and the impacts on the liquidity of the
CCP induced by additional non-euro
denominated securities.
The fee charged to clients of LCH SA
CDSClear service is unchanged
compared to existing securities as LCH
SA wanted to preserve consistency in
the pricing for clients of LCH SA
CDSClear service.
Additionally, today, CDSClear
members and their clients mainly post
cash collateral currently and LCH SA
does not foresee that the proposed fee
changes will alter current market
practice amongst CDSClear’s members
and clients or will have any material
impact on CDSClear’s revenues. Indeed,
the initiative is simply widening the list
of eligible collateral as well as setting
the associated fee for the new securities.
It does not make any change to the fees
charged on the existing list of eligible
collateral and as such won’t impact at
all any of the current clearing members.
Any clearing member wishing to deposit
newly added securities as collateral for
LCH SA will be able to do so knowing
in advance the associated fee. Any
clearing member not wishing to use the
new range of eligible collateral for
whatever reason will remain perfectly
free to do so as well.
For all the reasons stated above, LCH
SA believes that the proposed fee rates
are reasonable and have been set up at
an appropriate level given the costs,
expenses and revenues generated to
LCH SA in providing these expanded
collateral management services.
B. Clearing Agency’s Statement on
Burden on Competition
Section 17A(b)(3)(I) of the Act
requires that the rules of a clearing
agency not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.10
LCH SA does not believe that the
proposed rule change would impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
LCH SA is offering the possibility for
CDSClear members and clients to post a
greater scope of instruments as eligible
margin collateral. Additionally, the
proposed fee change will apply equally
to all CDSClear clearing members and is
not expected to have any potential
disparate outcomes on any of them.
Finally, the fee rate changes will not
adversely affect the ability of such
members or other market participants
generally to engage in cleared
transactions or to access LCH SA’s
clearing services.
Further, as explained above, LCH SA
believes that the fee rates have been set
up at an appropriate level given the
costs and expenses to LCH SA in
offering the relevant clearing services.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change
has become effective upon filing
pursuant to Section 19(b)(3)(A) 11 of the
Act and Rule 19b–4(f)(2) 12 thereunder
because it establishes a fee or other
charge imposed by LCH SA on its
Clearing Members. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such proposed rule
change if it appears to the Commission
that such action is necessary or
appropriate in the public interest, for
the protection of investors, or otherwise
in furtherance of the purposes of the
Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml) or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
LCH SA–2021–003 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–LCH SA–2021–003. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
U.S.C. 78q–1(b)(3)(I).
VerDate Sep<11>2014
16:41 Nov 09, 2021
12 17
Jkt 256001
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filings will also be available for
inspection and copying at the principal
office of LCH SA and on LCH SA’s
website at https://www.lch.com/
resources/rulebooks/proposed-rulechanges. All comments received will be
posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
identifying information from comment
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–LCH
SA–2021–003 and should be submitted
on or before December 1, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–24528 Filed 11–9–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93520; No. SR–NYSEArca–
2021–94]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Modify the NYSE Arca
Options Fee Schedule
November 4, 2021.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
November 1, 2021, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
11 15
10 15
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
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]]>Agencies
[Federal Register Volume 86, Number 215 (Wednesday, November 10, 2021)]
[Notices]
[Pages 62573-62575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-24528]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93522; File No. SR-LCH SA-2021-003]
Self-Regulatory Organizations; LCH SA; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Relating to Fees on
Extension of Eligible Collateral
November 4, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 22, 2021, Banque Centrale de Compensation, which conducts
business under the name LCH SA (``LCH SA''), filed with the Securities
and Exchange Commission (``Commission'') the proposed rule change
(``Proposed Rule Change'') described in Items I, II and III below,
which Items have been prepared primarily by LCH SA. LCH SA filed the
proposed rule change pursuant to Section 19(b)(3)(A) of the Act,\3\ and
Rule 19b-4(f)(2) \4\ thereunder, so that the proposed rule change was
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the Proposed Rule Change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
(a) Banque Centrale de Compensation, which conducts business under
the name LCH SA, is proposing to update the current fee grid to be
applied by LCH SA for the new scope of eligible securities collateral
to be extended to government bonds issued by the following states and
denominated in their domestic currencies: Australia, Canada, Denmark,
Japan, Norway, Sweden and Switzerland \5\ (the ``Proposed Rule
Change'').
---------------------------------------------------------------------------
\5\ Self-Regulatory Organizations; LCH SA; Order Approving
Proposed Rule Change Relating to Eligible Collateral and Liquidity
Risk Management, Exchange Act Release No. 34-93176 (Sept. 29, 2021);
86 FR 55061 (Oct. 5, 2021). File No. SR-LCH SA-2021-002.
---------------------------------------------------------------------------
The text of the Proposed Rule Change has been annexed [sic] hereto
as Exhibit 5.
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, LCH SA included statements
concerning the purpose of and basis for the Proposed Rule Change and
discussed any comments it received on the Proposed Rule Change. The
text of these statements may be examined at the places specified in
Item IV below. LCH SA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
LCH SA charges fees on collateral posted by its clearing members to
cover the CCP margin requirements. The level of fees is defined based
on a combination of various factors such as operational costs to manage
a given type of collateral, ability to generate liquidity from a given
type of collateral (and thus the associated impact on the CCP
[[Page 62574]]
liquidity profile) and commercial considerations such as competitive
landscape. The extension of eligible collateral addresses members'
demand for more flexibility and consistency with industry standards and
market practices. This extension was designed in coherence with the
clearing services offered by LCH SA, the profile of the membership and
the risk policies, regulatory constraints and operational capacity LCH
SA operates under.
As per CDSClear current collateral fee grid (copied below), LCH SA
already charges different fees depending on the type of securities, the
way that such securities are deposited at the CCP as well as the type
of activity these cover. For instance, for securities deposited under
Full Title Transfer (FTT) by a clearing Member to meet the margin
liabilities of its House account (self-clearing activity), LCH SA
charges an 11bps fee on the notional of government bond securities
whereas the charge is 13bps for Agencies and Supranational
securities.\6\ Similarly, LCH SA charges a 10bps fee for both
Government Bonds and Agencies/Supranational securities deposited under
FTT by a clearing member covering its Clients' accounts activity.
---------------------------------------------------------------------------
\6\ Self-Regulatory Organizations; LCH SA; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Relating to
Amendments to LCH SA's Fee Grid for Non Cash Collateral, Exchange
Act Release No. 34-87536 (Nov. 14, 2019); 84 FR 64125 (Nov. 20,
2019) (File No. SR-LCH SA-2019-010).
--------------------------------------------------------------------------------------------------------------------------------------------------------
House Client
Securities Denominated in ---------------------------------------------------------------
Triparty (bps) FTT (bps) Pledge (bps) (bps)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Government Securities (as listed in France................. EUR 9.5 11 15 10
Haircut Schedule). Germany................ EUR 9.5 11 15 10
Belgium................ EUR 9.5 11 15 10
Netherlands............ EUR 9.5 11 15 10
Italy.................. EUR 9.5 11 15 10
Portugal............... EUR 9.5 11 15 10
Spain.................. EUR 9.5 11 15 10
Austria................ EUR 9.5 11 15 10
Finland................ EUR 9.5 11 15 10
USA.................... USD 9.5 11 15 10
UK..................... GBP 9.5 11 15 10
Supranationals & Agencies........... EFSB................... EUR 9.5 13 15 10
ESM.................... EUR 9.5 13 15 10
EIB.................... EUR 9.5 13 15 10
EU..................... EUR 9.5 13 15 10
IBRD................... EUR 9.5 13 15 10
KfW.................... EUR 9.5 13 15 10
Rentenbank............. EUR 9.5 13 15 10
Equities............................ As listed in Haircut EUR N/A 13 N/A N/A
Schedule.
--------------------------------------------------------------------------------------------------------------------------------------------------------
From November 1st, 2021, LCH SA is proposing to extend the scope of
instruments eligible as collateral to the government bonds issued by
the following countries and denominated in their domestic currencies:
Australia, Canada, Denmark, Japan, Norway, Sweden and Switzerland.
As such, LCH SA needs to update its existing non-cash collateral
fee grid for both House and Client clearing activities. As mentioned
before, various factors are taken into consideration when defining the
fee to be charged for a given security. For this initiative, LCH SA has
considered a combination of elements such as the impossibility to use
these securities as collateral with the European Central Bank (ECB) for
liquidity management purposes, the relative appetite of the membership
for this new collateral and the operational costs and constraints that
the management of those securities create for the CCP (incl. their
impact on LCH SA Liquidity Coverage Ratio).
As specified in the fee grid attached [sic] as Exhibit 5, the
purpose of the Proposed Rule Change is to define the fee to be charged
for the new scope of eligible collateral (13bps for House and 10 bps
for Client clearing activities). The difference between the fee charged
for House versus Client collateral is mainly driven by commercial
reasons in consultation with CDSClear clearing members. Client clearing
of CDS is reasonably recent in Europe. Given the limited scope of CDS
instruments and categories of buy-side counterparties included in the
scope of the European Clearing Obligation for CDS, LCH SA believes that
expanding the list of eligible collateral as well as setting a more
attractive collateral fee for Clients of the CDSClear service will
incentivise further buy-side firms to clear a bigger share of their
Credit Derivatives portfolio.
No amendments to the LCH SA CDS Clearing Rules are required for
these changes to become effective.
2. Statutory Basis
Section 17A(b)(3)(D) of the Act requires that the rules of a
clearing agency provide for the equitable allocation of reasonable
dues, fees, and other charges.\7\
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\7\ 15 U.S.C. 78q-1(b)(3)(D).
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LCH SA believes that its clearing fee change proposal is consistent
with the requirements of Section 17A of the Act \8\ and the regulations
thereunder applicable to it, and in particular provides for the
equitable allocation of reasonable fees, dues, and other charges among
clearing members and market participants by ensuring that clearing
members and clients pay reasonable fees and dues for the services
provided by LCH SA, within the meaning of Section 17A(b)(3)(D) of the
Act.
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\8\ 15 U.S.C. 78q-1.
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As explained in our approved filing LCH SA-2021-002,\9\ contrary to
European government bonds, the new collateral scope is not eligible at
the ECB to be used as collateral against cash in Euros, which in turn
impacts how LCH SA monitors and manages its
[[Page 62575]]
liquidity resources. It therefore represents additional operational
costs that are amongst other things captured in the pricing difference.
That is why, the proposed fee change balances appropriately commercial
conditions and the impacts on the liquidity of the CCP induced by
additional non-euro denominated securities.
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\9\ Self-Regulatory Organizations; LCH SA; Order Approving
Proposed Rule Change Relating to Eligible Collateral and Liquidity
Risk Management, Exchange Act Release No. 34-93176 (Sept. 29, 2021);
86 FR 55061 (Oct. 5, 2021). File No. SR-LCH SA-2021-002.
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The fee charged to clients of LCH SA CDSClear service is unchanged
compared to existing securities as LCH SA wanted to preserve
consistency in the pricing for clients of LCH SA CDSClear service.
Additionally, today, CDSClear members and their clients mainly post
cash collateral currently and LCH SA does not foresee that the proposed
fee changes will alter current market practice amongst CDSClear's
members and clients or will have any material impact on CDSClear's
revenues. Indeed, the initiative is simply widening the list of
eligible collateral as well as setting the associated fee for the new
securities. It does not make any change to the fees charged on the
existing list of eligible collateral and as such won't impact at all
any of the current clearing members. Any clearing member wishing to
deposit newly added securities as collateral for LCH SA will be able to
do so knowing in advance the associated fee. Any clearing member not
wishing to use the new range of eligible collateral for whatever reason
will remain perfectly free to do so as well.
For all the reasons stated above, LCH SA believes that the proposed
fee rates are reasonable and have been set up at an appropriate level
given the costs, expenses and revenues generated to LCH SA in providing
these expanded collateral management services.
B. Clearing Agency's Statement on Burden on Competition
Section 17A(b)(3)(I) of the Act requires that the rules of a
clearing agency not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.\10\
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\10\ 15 U.S.C. 78q-1(b)(3)(I).
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LCH SA does not believe that the proposed rule change would impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
LCH SA is offering the possibility for CDSClear members and clients
to post a greater scope of instruments as eligible margin collateral.
Additionally, the proposed fee change will apply equally to all
CDSClear clearing members and is not expected to have any potential
disparate outcomes on any of them. Finally, the fee rate changes will
not adversely affect the ability of such members or other market
participants generally to engage in cleared transactions or to access
LCH SA's clearing services.
Further, as explained above, LCH SA believes that the fee rates
have been set up at an appropriate level given the costs and expenses
to LCH SA in offering the relevant clearing services.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has become effective upon filing
pursuant to Section 19(b)(3)(A) \11\ of the Act and Rule 19b-4(f)(2)
\12\ thereunder because it establishes a fee or other charge imposed by
LCH SA on its Clearing Members. At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such proposed rule change if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of the Act.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml) or
Send an email to [email protected]. Please include
File Number SR-LCH SA-2021-003 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-LCH SA-2021-003. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filings will also be available for inspection
and copying at the principal office of LCH SA and on LCH SA's website
at https://www.lch.com/resources/rulebooks/proposed-rule-changes. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-LCH SA-2021-003 and should
be submitted on or before December 1, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-24528 Filed 11-9-21; 8:45 am]
BILLING CODE 8011-01-P
