Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing and Immediate Effectiveness of Proposed Rule Change, as Modified by Amendment No. 1, Relating to Amendments of the ICE Clear Europe Delivery Procedures, 20595-20597 [2023-07139]
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Federal Register / Vol. 88, No. 66 / Thursday, April 6, 2023 / Notices
certain ICE Futures Europe Deliverable
Carbon Credit Contracts (together the
‘‘Contracts’’), for which delivery will be
made through a registry account of the
Clearing House.6
Applicant’s Address: 175 South
Third, Suite 200, Columbus, Ohio
43215.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–07156 Filed 4–5–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97230; File No. SR–ICEEU–
2023–007]
Self-Regulatory Organizations; ICE
Clear Europe Limited; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change, as Modified by
Amendment No. 1, Relating to
Amendments of the ICE Clear Europe
Delivery Procedures
March 31, 2023.
ddrumheller on DSK120RN23PROD with NOTICES1
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 20,
2023, ICE Clear Europe Limited (‘‘ICE
Clear Europe’’ or the ‘‘Clearing House’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule changes described in
Items I, II and III below, which Items
have been primarily prepared by ICE
Clear Europe. ICE Clear Europe filed the
proposed rule change pursuant to
section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f)(4)(ii) thereunder,4 such that the
proposed rule change was immediately
effective upon filing with the
Commission. On March 27, 2023, ICE
Clear Europe filed Amendment No. 1 to
the proposed rule change. The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as modified by Amendment No.
1 (hereafter the ‘‘proposed rule
change’’),5 from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
ICE Clear Europe Limited (‘‘ICE Clear
Europe’’ or the ‘‘Clearing House’’)
proposes to amend its Delivery
Procedures (‘‘Delivery Procedures’’ or
‘‘Procedures’’) to add a new Part N2
thereto (‘‘Part N2’’), which will apply to
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(4)(ii).
5 Amendment No. 1 amended and restated in its
entirety the Form 19b–4 and Exhibit 1A in order to
correct the narrative description of the proposed
rule change.
2 17
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II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, ICE
Clear Europe included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. ICE
Clear Europe has prepared summaries,
set forth in sections (A), (B), and (C)
below, of the most significant aspects of
such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
(a) Purpose
ICE Clear Europe is proposing to add
a new Part N2 to the Delivery
Procedures. Part N2 would apply to the
Contracts, which are to be traded on ICE
Futures Europe and cleared at ICE Clear
Europe, and would address settlement
that will occur through a Registry
Account of the Clearing House. The
proposed Delivery Procedures are
intended to become operative on March
28, 2023, subject to regulatory approval.
ICE Clear Europe will announce by
Circular the specific Contracts to which
Part N2 of the Delivery Procedures will
apply. ICE Clear Europe currently
expects that Part N2 will apply to all
ICE Futures Europe physically
deliverable carbon credit contracts.
Pursuant to Part N2, delivery under
the Contracts, in the case of the Seller,
would be effected upon the transfer of
the relevant Carbon Credits from the
Registry Account of the Seller into the
Registry Account of the Clearing House
and acceptance of the Carbon Credits by
the Clearing House. In the case of the
Buyer, delivery would be effected upon
transfer of the relevant Carbon Credits
from the relevant Registry Account of
the Clearing House to the relevant
Registry Account of the Buyer, and there
would not be a prerequisite for the
Buyer to accept the Carbon Credits. Part
N2 would set out the Clearing House’s
ability not to accept a transfer from the
Seller in the event the transferred
carbon credits are not in accordance
with the contract specifications.
6 Capitalized terms used but not defined herein
have the meanings specified in the Delivery
Procedures or, if not defined therein, the ICE Clear
Europe Clearing Rules.
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20595
Delivery would take place during the
Delivery Period for the relevant
Contracts in accordance with the
contract specifications, and neither
delivery by Seller nor receipt by Buyer
would require performance by the other
to occur simultaneously. Consistent
with the foregoing, the amendments
would also state that both the Buyer and
Seller would deal directly with the
Clearing House in the settlement.
The amendments would set out
relevant definitions related to delivery
under the contract, including as to the
underlying deliverable Carbon Credits.
The amendments provide that the
Carbon Credits must conform to the
specification described in the Contract
and the specifications of the Registry to
and from which delivery may be made
under the relevant Contract. In cases
where the Seller effected the transfer of
carbon credits that are not in accordance
with the relevant Contract
specifications, the Clearing House
would reserve the right to reject the
transfer and return the respective carbon
credits. In such scenario the Seller
would remain under an obligation to
deliver the Carbon Credits of the
specified quantity along with the
Contract within the appropriate
timeline. The amendments would
further specify certain details of the
delivery process for the Contracts
including quantity, settlement price,
and timing of cessation of trading.
The amendments would state that the
Contracts would be based on Open
Contract Positions after expiration of the
relevant Contract Set and the delivery
process would occur over a three
consecutive Business Day period. In
addition, the amendments would
include delivery timetables with
detailed timeframes and descriptions of
the processes for delivery under
Contracts. Such timetables would set
out, among other processes, the time for
cessation of trading, submission of
delivery intentions, confirmation
reports, confirmations of delivery
position/expiry, payment by the Buyer,
payment and return of delivery margin,
Seller’s delivery to the Clearing House,
payment to Seller, and Clearing House
delivery to the Buyer.
The amendments would also address
the responsibilities of the Clearing
House and relevant parties for delivery
under Contracts, as well as certain
limitations of liability for the Clearing
House. Specifically, the Clearing House
would not be responsible for the
performance or non-performance of, or
any delay or error in performance by
any Registry or Registry Operator; the
compliance or lack of compliance of any
Seller or Buyer or their respective
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ddrumheller on DSK120RN23PROD with NOTICES1
20596
Federal Register / Vol. 88, No. 66 / Thursday, April 6, 2023 / Notices
Transferors or Transferees with any
rules of the relevant Registry or any
laws applicable to it; any errors in the
Registry Account details entered into
the relevant Registry systems or
provided to the Clearing House by a
Seller, Transferor, Buyer or Transferee
in respect of a delivery; closure of any
Registry Accounts; or the compliance
with the contractual obligations owed to
the Registry in respect of any Clearing
House Registry Accounts, among other
matters. Additionally, neither the Buyer
or Seller would have any claim against
the Clearing House for any loss, cost,
damage or expense incurred or suffered
as a result of the condition or operation
of any Registry Operator or the
performance or non-performance of any
Registry Operator. The amendments
would state that the section on liability
would be without prejudice to the
generality of and subject to the
provisions of the Rules relating to
liability and would be in addition to the
general requirements of the Delivery
Procedures. Furthermore, the Clearing
House would not make any
representation regarding the
authenticity, validity or accuracy of any
delivery tender notice, description of a
Registry, market tracking system or any
other Registry instructions,
confirmations of transfer or any other
notice, document, file, record or
instrument used or delivered pursuant
to the Contract Terms or pursuant to the
procedures of any Registry.
The amendments would provide
details related to delivery contract
security, which is the delivery margin to
be provided by Buyer and Seller, and
which would take into account the
Finance Procedures. The Clearing House
would retain the Seller’s security until
the full contract value is released to the
Seller following the delivery timetables.
The amendments would outline the
use of the relevant Registry. Clearing
Members would have to ensure their
Transferors/Transferees have
established the appropriate Registry
Accounts at the relevant Registry for the
Contracts in question and provide
necessary instructions or confirmations
to the Registry. Furthermore, Clearing
Members making or taking delivery of
the Contracts for their own account
would be required to have established
Registry Accounts in the relevant
Registry for the Contract in question. In
addition, it would be the responsibility
of the Clearing Members to comply, and
ensure their Transferors/Transferees
also comply, with the rules, regulations
and laws applicable to the Registry. The
Clearing Members would also have to
provide, and ensure their respective
Transferors/Transferees also provide,
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correct Registry account details at all
times.
The amendments would also provide
for the use of an Alternative Delivery
Procedure (‘‘ADP’’) in the event of a
failure to transfer carbon credits in the
manner and on the terms specified in
the Contract. In such case, a Clearing
Member may request agreement of the
Clearing House to enter into an ADP to
provide for delivery outside the terms of
the Contract. In such case, settlement of
the Contract would be dealt with in the
manner specified in the ADP, and the
affected parties and the Clearing House
would be released from their rights and
obligations in respect of the existing
Contract. If the existing Contract would
be liquidated under the ADP
Agreement, it would be on the basis of
the Exchange Delivery Settlement Price.
A new Contract or Contracts would then
be formed for purposes of the Rules, and
delivery under an ADP Agreement
would be subject to the specified
requirements of the Delivery
Procedures, the same Contract Terms as
the Contracts replaced by the ADP
Agreement (subject to the terms agreed
in the ADP), the directions by the
Clearing House that it may issue under
its discretion, and the terms of the ADP
Agreement. Any Clearing Member that
enters into an ADP agreement would be
deemed to have agreed to indemnify the
Clearing House in respect of all and any
of the Clearing House’s costs, losses,
charges and expenses incurred by the
Clearing House in connection with the
ADP. If a Clearing Member and the
Clearing House are unable to enter into
an ADP Agreement or effect delivery
under an ADP within a reasonable time
period after the failed delivery, the
Clearing House may refer the matter to
ICE Futures Europe and it will consider
in its discretion what other reasonable
next steps it should take, if any, under
applicable exchange rules.
(b) Statutory Basis
ICE Clear Europe believes that the
proposed amendments to the Delivery
Procedures are consistent with the
requirements of Section 17A of the Act 7
and the regulations thereunder
applicable to it. In particular, Section
17A(b)(3)(F) of the Act 8 requires, among
other things, that the rules of a clearing
agency be designed to promote the
prompt and accurate clearance and
settlement of securities transactions
and, to the extent applicable, derivative
agreements, contracts, and transactions,
the safeguarding of securities and funds
in the custody or control of the clearing
agency or for which it is responsible,
and the protection of investors and the
public interest. The proposed changes to
the Delivery Procedures are designed to
establish delivery procedures relating to
ICE Futures Europe Deliverable Carbon
Credit Contracts under which delivery
will be made through a Registry
Account of the Clearing House. The
amendments would set out the role,
responsibilities and liabilities of the
Clearing House, Clearing Members and
designated transferors and transferees in
the delivery process, in line with
Delivery Procedures for other types of
carbon credit futures contracts.
Contracts providing for delivery under
Part N2 will be cleared by the Clearing
House in the substantially same manner
as other types of deliverable carbon
credit contracts that have been settled
bilaterally rather than through a
Clearing House Registry Account, and
will be supported by ICE Clear Europe’s
existing F&O financial resources, risk
management, systems and operational
arrangements. Accordingly, ICE Clear
Europe believes that its financial
resources, risk management, systems
and operational arrangements are
sufficient to support clearing of such
contracts and to manage the risks
associated with such contracts. As a
result, in ICE Clear Europe’s view, the
amendments would be consistent with
the prompt and accurate clearance and
settlement of the contracts, and the
protection of investors and the public
interest consistent with the
requirements of Section 17A(b)(3)(F) of
the Act.9 (In ICE Clear Europe’s view,
the amendments would not affect the
safeguarding of funds or securities in
the custody or control of the clearing
agency or for which it is responsible,
within the meaning of Section
17A(b)(3)(F).10)
In addition, Rule 17Ad–22(e)(10) 11
provides that ‘‘[e]ach covered clearing
agency shall establish, implement,
maintain and enforce written policies
and procedures reasonably designed to,
as applicable [. . .] 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.’’ As discussed
above, the amendments would establish
a new set of procedures applicable to
the delivery and settlement of ICE
Futures Europe Deliverable Carbon
Credit Contracts that are to be settled by
9 15
7 15
U.S.C. 78q–1.
8 15 U.S.C. 78q–1(b)(3)(F).
PO 00000
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U.S.C. 78q–1(b)(3)(F).
U.S.C. 78q–1(b)(3)(F).
11 17 CFR 240.17Ad–22(e)(10).
10 15
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Federal Register / Vol. 88, No. 66 / Thursday, April 6, 2023 / Notices
delivery through the Clearing House’s
Registry Account. The procedures
would address, among other matters,
delivery specifications for such
contracts, the obligations and roles of
Clearing Members and the Clearing
House, certain limitations of liability for
the Clearing House, and certain other
documentation and timing matters.
Clearance of the Contracts would
otherwise be supported by ICE Clear
Europe’s existing financial resources,
risk management, systems and
operational arrangements. The
amendments thus appropriately clarify
the role and responsibilities of the
Clearing House and Clearing Members
with respect to physical delivery. As a
result, ICE Clear Europe believes the
amendments are consistent with the
requirements of Rule 17Ad–22(e)(10).12
ddrumheller on DSK120RN23PROD with NOTICES1
(B) Clearing Agency’s Statement on
Burden on Competition
ICE Clear Europe does not believe the
proposed amendments would have any
impact, or impose any burden, on
competition not necessary or
appropriate in furtherance of the
purposes of the Act. The proposed
amendments to the Delivery Procedures
are intended to establish a new set of
procedures applicable to the delivery
and settlement of ICE Futures Europe
Deliverable Carbon Credit Contracts
under which delivery will be made
through a Registry Account of the
Clearing House. In ICE Clear Europe’s
view, the amendments will thus
enhance the settlement process, and
would not otherwise materially affect
the terms of the contract. ICE Clear
Europe does not believe the
amendments would adversely affect
competition among Clearing Members,
materially affect the cost of clearing,
adversely affect access to clearing for
Clearing Members or their customers, or
otherwise adversely affect competition
in clearing services. Accordingly, ICE
Clear Europe does not believe that the
amendments would impose any impact
or burden on competition that is not
appropriate in furtherance of the
purpose of the Act.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants or Others
Written comments relating to the
proposed amendment have not been
solicited or received by ICE Clear
Europe. ICE Clear Europe will notify the
Commission of any comments received
with respect to the proposed rule
change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 13 and paragraph (f) of Rule
19b–4 14 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml) or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
ICEEU–2023–007 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–ICEEU–2023–007. 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
13 15
12 17
CFR 240.17Ad–22(e)(10).
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21:13 Apr 05, 2023
14 17
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PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
Frm 00132
Fmt 4703
20597
inspection and copying at the principal
office of ICE Clear Europe and on ICE
Clear Europe’s website at https://
www.theice.com/clear-europe/
regulation.
All comments received will be posted
without change. Persons submitting
comments are cautioned that we do not
redact or edit personal identifying
information from comment submissions.
You should submit only information
that you wish to make available
publicly. All submissions should refer
to File Number SR–ICEEU–2023–007
and should be submitted on or before
April 27, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–07139 Filed 4–5–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97236; File No. SR–
PEARL–2023–15]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Exchange
Rules 2617 and 2626 Regarding Retail
Orders Routed Pursuant to the Route
to Primary Auction Routing Option
March 31, 2023.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 28,
2023, MIAX PEARL, LLC (‘‘MIAX Pearl’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Exchange Rules 2617(b)(5) and 2626(f)
related to Retail Orders 3 routed
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 A ‘‘Retail Order’’ is an agency or riskless
principal order that meets the criteria of FINRA
Rule 5320.03 that originates from a natural person
and is submitted to the Exchange by a Retail
Member Organization, provided that no change is
1 15
Continued
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]]>Agencies
[Federal Register Volume 88, Number 66 (Thursday, April 6, 2023)]
[Notices]
[Pages 20595-20597]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07139]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97230; File No. SR-ICEEU-2023-007]
Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change, as
Modified by Amendment No. 1, Relating to Amendments of the ICE Clear
Europe Delivery Procedures
March 31, 2023.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 20, 2023, ICE Clear Europe Limited (``ICE Clear Europe'' or
the ``Clearing House'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule changes described in
Items I, II and III below, which Items have been primarily prepared by
ICE Clear Europe. ICE Clear Europe filed the proposed rule change
pursuant to section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(4)(ii)
thereunder,\4\ such that the proposed rule change was immediately
effective upon filing with the Commission. On March 27, 2023, ICE Clear
Europe filed Amendment No. 1 to the proposed rule change. The
Commission is publishing this notice to solicit comments on the
proposed rule change, as modified by Amendment No. 1 (hereafter the
``proposed rule change''),\5\ 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)(4)(ii).
\5\ Amendment No. 1 amended and restated in its entirety the
Form 19b-4 and Exhibit 1A in order to correct the narrative
description of the proposed rule change.
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
ICE Clear Europe Limited (``ICE Clear Europe'' or the ``Clearing
House'') proposes to amend its Delivery Procedures (``Delivery
Procedures'' or ``Procedures'') to add a new Part N2 thereto (``Part
N2''), which will apply to certain ICE Futures Europe Deliverable
Carbon Credit Contracts (together the ``Contracts''), for which
delivery will be made through a registry account of the Clearing
House.\6\
---------------------------------------------------------------------------
\6\ Capitalized terms used but not defined herein have the
meanings specified in the Delivery Procedures or, if not defined
therein, the ICE Clear Europe Clearing Rules.
---------------------------------------------------------------------------
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, ICE Clear Europe included
statements concerning the purpose of and basis for the proposed rule
change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. ICE Clear Europe has prepared summaries,
set forth in sections (A), (B), and (C) below, of the most significant
aspects of such statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
(a) Purpose
ICE Clear Europe is proposing to add a new Part N2 to the Delivery
Procedures. Part N2 would apply to the Contracts, which are to be
traded on ICE Futures Europe and cleared at ICE Clear Europe, and would
address settlement that will occur through a Registry Account of the
Clearing House. The proposed Delivery Procedures are intended to become
operative on March 28, 2023, subject to regulatory approval. ICE Clear
Europe will announce by Circular the specific Contracts to which Part
N2 of the Delivery Procedures will apply. ICE Clear Europe currently
expects that Part N2 will apply to all ICE Futures Europe physically
deliverable carbon credit contracts.
Pursuant to Part N2, delivery under the Contracts, in the case of
the Seller, would be effected upon the transfer of the relevant Carbon
Credits from the Registry Account of the Seller into the Registry
Account of the Clearing House and acceptance of the Carbon Credits by
the Clearing House. In the case of the Buyer, delivery would be
effected upon transfer of the relevant Carbon Credits from the relevant
Registry Account of the Clearing House to the relevant Registry Account
of the Buyer, and there would not be a prerequisite for the Buyer to
accept the Carbon Credits. Part N2 would set out the Clearing House's
ability not to accept a transfer from the Seller in the event the
transferred carbon credits are not in accordance with the contract
specifications. Delivery would take place during the Delivery Period
for the relevant Contracts in accordance with the contract
specifications, and neither delivery by Seller nor receipt by Buyer
would require performance by the other to occur simultaneously.
Consistent with the foregoing, the amendments would also state that
both the Buyer and Seller would deal directly with the Clearing House
in the settlement.
The amendments would set out relevant definitions related to
delivery under the contract, including as to the underlying deliverable
Carbon Credits. The amendments provide that the Carbon Credits must
conform to the specification described in the Contract and the
specifications of the Registry to and from which delivery may be made
under the relevant Contract. In cases where the Seller effected the
transfer of carbon credits that are not in accordance with the relevant
Contract specifications, the Clearing House would reserve the right to
reject the transfer and return the respective carbon credits. In such
scenario the Seller would remain under an obligation to deliver the
Carbon Credits of the specified quantity along with the Contract within
the appropriate timeline. The amendments would further specify certain
details of the delivery process for the Contracts including quantity,
settlement price, and timing of cessation of trading.
The amendments would state that the Contracts would be based on
Open Contract Positions after expiration of the relevant Contract Set
and the delivery process would occur over a three consecutive Business
Day period. In addition, the amendments would include delivery
timetables with detailed timeframes and descriptions of the processes
for delivery under Contracts. Such timetables would set out, among
other processes, the time for cessation of trading, submission of
delivery intentions, confirmation reports, confirmations of delivery
position/expiry, payment by the Buyer, payment and return of delivery
margin, Seller's delivery to the Clearing House, payment to Seller, and
Clearing House delivery to the Buyer.
The amendments would also address the responsibilities of the
Clearing House and relevant parties for delivery under Contracts, as
well as certain limitations of liability for the Clearing House.
Specifically, the Clearing House would not be responsible for the
performance or non-performance of, or any delay or error in performance
by any Registry or Registry Operator; the compliance or lack of
compliance of any Seller or Buyer or their respective
[[Page 20596]]
Transferors or Transferees with any rules of the relevant Registry or
any laws applicable to it; any errors in the Registry Account details
entered into the relevant Registry systems or provided to the Clearing
House by a Seller, Transferor, Buyer or Transferee in respect of a
delivery; closure of any Registry Accounts; or the compliance with the
contractual obligations owed to the Registry in respect of any Clearing
House Registry Accounts, among other matters. Additionally, neither the
Buyer or Seller would have any claim against the Clearing House for any
loss, cost, damage or expense incurred or suffered as a result of the
condition or operation of any Registry Operator or the performance or
non-performance of any Registry Operator. The amendments would state
that the section on liability would be without prejudice to the
generality of and subject to the provisions of the Rules relating to
liability and would be in addition to the general requirements of the
Delivery Procedures. Furthermore, the Clearing House would not make any
representation regarding the authenticity, validity or accuracy of any
delivery tender notice, description of a Registry, market tracking
system or any other Registry instructions, confirmations of transfer or
any other notice, document, file, record or instrument used or
delivered pursuant to the Contract Terms or pursuant to the procedures
of any Registry.
The amendments would provide details related to delivery contract
security, which is the delivery margin to be provided by Buyer and
Seller, and which would take into account the Finance Procedures. The
Clearing House would retain the Seller's security until the full
contract value is released to the Seller following the delivery
timetables.
The amendments would outline the use of the relevant Registry.
Clearing Members would have to ensure their Transferors/Transferees
have established the appropriate Registry Accounts at the relevant
Registry for the Contracts in question and provide necessary
instructions or confirmations to the Registry. Furthermore, Clearing
Members making or taking delivery of the Contracts for their own
account would be required to have established Registry Accounts in the
relevant Registry for the Contract in question. In addition, it would
be the responsibility of the Clearing Members to comply, and ensure
their Transferors/Transferees also comply, with the rules, regulations
and laws applicable to the Registry. The Clearing Members would also
have to provide, and ensure their respective Transferors/Transferees
also provide, correct Registry account details at all times.
The amendments would also provide for the use of an Alternative
Delivery Procedure (``ADP'') in the event of a failure to transfer
carbon credits in the manner and on the terms specified in the
Contract. In such case, a Clearing Member may request agreement of the
Clearing House to enter into an ADP to provide for delivery outside the
terms of the Contract. In such case, settlement of the Contract would
be dealt with in the manner specified in the ADP, and the affected
parties and the Clearing House would be released from their rights and
obligations in respect of the existing Contract. If the existing
Contract would be liquidated under the ADP Agreement, it would be on
the basis of the Exchange Delivery Settlement Price. A new Contract or
Contracts would then be formed for purposes of the Rules, and delivery
under an ADP Agreement would be subject to the specified requirements
of the Delivery Procedures, the same Contract Terms as the Contracts
replaced by the ADP Agreement (subject to the terms agreed in the ADP),
the directions by the Clearing House that it may issue under its
discretion, and the terms of the ADP Agreement. Any Clearing Member
that enters into an ADP agreement would be deemed to have agreed to
indemnify the Clearing House in respect of all and any of the Clearing
House's costs, losses, charges and expenses incurred by the Clearing
House in connection with the ADP. If a Clearing Member and the Clearing
House are unable to enter into an ADP Agreement or effect delivery
under an ADP within a reasonable time period after the failed delivery,
the Clearing House may refer the matter to ICE Futures Europe and it
will consider in its discretion what other reasonable next steps it
should take, if any, under applicable exchange rules.
(b) Statutory Basis
ICE Clear Europe believes that the proposed amendments to the
Delivery Procedures are consistent with the requirements of Section 17A
of the Act \7\ and the regulations thereunder applicable to it. In
particular, Section 17A(b)(3)(F) of the Act \8\ requires, among other
things, that the rules of a clearing agency be designed to promote the
prompt and accurate clearance and settlement of securities transactions
and, to the extent applicable, derivative agreements, contracts, and
transactions, the safeguarding of securities and funds in the custody
or control of the clearing agency or for which it is responsible, and
the protection of investors and the public interest. The proposed
changes to the Delivery Procedures are designed to establish delivery
procedures relating to ICE Futures Europe Deliverable Carbon Credit
Contracts under which delivery will be made through a Registry Account
of the Clearing House. The amendments would set out the role,
responsibilities and liabilities of the Clearing House, Clearing
Members and designated transferors and transferees in the delivery
process, in line with Delivery Procedures for other types of carbon
credit futures contracts. Contracts providing for delivery under Part
N2 will be cleared by the Clearing House in the substantially same
manner as other types of deliverable carbon credit contracts that have
been settled bilaterally rather than through a Clearing House Registry
Account, and will be supported by ICE Clear Europe's existing F&O
financial resources, risk management, systems and operational
arrangements. Accordingly, ICE Clear Europe believes that its financial
resources, risk management, systems and operational arrangements are
sufficient to support clearing of such contracts and to manage the
risks associated with such contracts. As a result, in ICE Clear
Europe's view, the amendments would be consistent with the prompt and
accurate clearance and settlement of the contracts, and the protection
of investors and the public interest consistent with the requirements
of Section 17A(b)(3)(F) of the Act.\9\ (In ICE Clear Europe's view, the
amendments would not affect the safeguarding of funds or securities in
the custody or control of the clearing agency or for which it is
responsible, within the meaning of Section 17A(b)(3)(F).\10\)
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\7\ 15 U.S.C. 78q-1.
\8\ 15 U.S.C. 78q-1(b)(3)(F).
\9\ 15 U.S.C. 78q-1(b)(3)(F).
\10\ 15 U.S.C. 78q-1(b)(3)(F).
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In addition, Rule 17Ad-22(e)(10) \11\ provides that ``[e]ach
covered clearing agency shall establish, implement, maintain and
enforce written policies and procedures reasonably designed to, as
applicable [. . .] 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.'' As discussed above, the amendments would establish a new
set of procedures applicable to the delivery and settlement of ICE
Futures Europe Deliverable Carbon Credit Contracts that are to be
settled by
[[Page 20597]]
delivery through the Clearing House's Registry Account. The procedures
would address, among other matters, delivery specifications for such
contracts, the obligations and roles of Clearing Members and the
Clearing House, certain limitations of liability for the Clearing
House, and certain other documentation and timing matters. Clearance of
the Contracts would otherwise be supported by ICE Clear Europe's
existing financial resources, risk management, systems and operational
arrangements. The amendments thus appropriately clarify the role and
responsibilities of the Clearing House and Clearing Members with
respect to physical delivery. As a result, ICE Clear Europe believes
the amendments are consistent with the requirements of Rule 17Ad-
22(e)(10).\12\
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\11\ 17 CFR 240.17Ad-22(e)(10).
\12\ 17 CFR 240.17Ad-22(e)(10).
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(B) Clearing Agency's Statement on Burden on Competition
ICE Clear Europe does not believe the proposed amendments would
have any impact, or impose any burden, on competition not necessary or
appropriate in furtherance of the purposes of the Act. The proposed
amendments to the Delivery Procedures are intended to establish a new
set of procedures applicable to the delivery and settlement of ICE
Futures Europe Deliverable Carbon Credit Contracts under which delivery
will be made through a Registry Account of the Clearing House. In ICE
Clear Europe's view, the amendments will thus enhance the settlement
process, and would not otherwise materially affect the terms of the
contract. ICE Clear Europe does not believe the amendments would
adversely affect competition among Clearing Members, materially affect
the cost of clearing, adversely affect access to clearing for Clearing
Members or their customers, or otherwise adversely affect competition
in clearing services. Accordingly, ICE Clear Europe does not believe
that the amendments would impose any impact or burden on competition
that is not appropriate in furtherance of the purpose of the Act.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants or Others
Written comments relating to the proposed amendment have not been
solicited or received by ICE Clear Europe. ICE Clear Europe will notify
the Commission of any comments received with respect to the proposed
rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \13\ and paragraph (f) of Rule 19b-4 \14\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml) or
Send an email to [email protected]. Please include
File Number SR-ICEEU-2023-007 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-ICEEU-2023-007. 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 ICE Clear Europe
and on ICE Clear Europe's website at https://www.theice.com/clear-europe/regulation.
All comments received will be posted without change. Persons
submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-ICEEU-2023-007 and should be
submitted on or before April 27, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-07139 Filed 4-5-23; 8:45 am]
BILLING CODE 8011-01-P
