[Federal Register Volume 78, Number 72 (Monday, April 15, 2013)]
[Notices]
[Pages 22350-22353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-08727]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69356; File No. SR-ICC-2013-05]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing and Order Granting Accelerated Approval of a Proposed Rule
Change, as Modified by Amendment No. 1, Related to Regulatory Reporting
of Swap Data
April 9, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act''),\1\ and Rule 19b-4,\2\ notice is hereby given that
on March 25, 2013, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change, as modified by Amendment No. 1,\3\ and as described in Items I
and II below, which Items have been substantially prepared by the
clearing agency. The Commission is publishing this notice and order to
solicit comments on the proposed rule change from interested persons
and to approve the proposed rule change on an accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ ICC filed Amendment No. 1 to ICC-2013-05 on April 8, 2013.
In Amendment No. 1, ICC amended Form 19b-4 and Exhibit 1 to include
references to Commodity Futures Trading Commission Regulation 45.3.
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
ICC proposes to add, in Chapter 2 of the ICC Rules, Rule 211
(Regulatory Reporting of Swap Data). ICC proposes to add Rule 211 in
order to implement swap data repository (``SDR'') reporting (``SDR
Reporting'') consistent with the Commodity Futures Trading Commission
(``CFTC'') Regulations relating to the regulatory reporting of swap
data, specifically Part 45 of CFTC Regulations (``Part 45'').\4\ ICC
currently complies with the CFTC's Regulations relating to the
regulatory reporting of swap data by reporting to
IntercontinentalExchange, Inc.'s SDR, selected by ICC. In order to
codify ICC's practice of reporting relevant Part 45 data to the SDR
selected by ICC, which is intended to meet ICC's and its Clearing
Participants' swap data reporting obligations under Part 45, ICC
proposes to add, in Chapter 2 of the ICC Rules, Rule 211 (Regulatory
Reporting of Swap Data).
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\4\ 17 CFR 45.
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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, the clearing agency 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 III below. The clearing agency has prepared
summaries, set forth in sections A, B, and C below, of the most
significant aspects of such statements.\5\
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\5\ The Commission has modified the text of the summaries
prepared by the clearing agency.
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(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
ICC proposes to add, in Chapter 2 of the ICC Rules, Rule 211 in
order to implement SDR Reporting consistent with CFTC Regulations
45.3,\6\ 45.4(b),\7\ and 45.9.\8\ Proposed ICC Rule 211 states that for
the purposes of complying with applicable CFTC rules governing the
regulatory reporting of swaps, ICC will report all creation and
continuation data to IntercontinentalExchange, Inc.'s SDR. In addition,
proposed ICC Rule 211 provides that, upon the request of an ICC
Clearing Participant that is a counterparty to a swap cleared at ICC,
ICC shall provide the same creation and continuation data to the SDR
selected by the Clearing Participant.
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\6\ 17 CFR 45.3.
\7\ 17 CFR 45.4(b).
\8\ 17 CFR 45.9.
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Proposed Rule 211 is consistent with the CFTC's Regulation 45.3 \9\
and 45.4(b),\10\ which requires that creation and continuation data
must be reported by both the derivatives clearing organization and the
reporting counterparty. ICC currently complies with the CFTC's
Regulation 45.3 \11\ and 45.4(b) \12\ by reporting swap data to
IntercontinentalExchange, Inc.'s SDR selected by ICC. In order to
codify ICC's practice of reporting relevant Part 45 data to the SDR
selected by ICC, ICC proposes to add, in Chapter 2 of the ICC Rules,
Rule 211 (Regulatory Reporting of Swap Data).
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\9\ 17 CFR 45.3.
\10\ 17 CFR 45.4(b).
\11\ 17 CFR 45.3.
\12\ 17 CFR 45.4(b).
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The addition of ICC Rule 211 also is in response to swap dealers'
mandatory compliance with CFTC Regulation 45.3 \13\ and 45.4,\14\ which
was required by February 28, 2013. ICC believes that proposed ICC Rule
211 is also consistent
[[Page 22351]]
with the CFTC's Regulation 45.9,\15\ which provides that swap
counterparties required by Part 45 to report swap creation or
continuation data may contract with third-party service providers to
facilitate reporting. Proposed ICC Rule 211 ensures that ICC, in the
capacity of a third-party service provider, will be able to report
required swap creation and continuation data on behalf of ICC's
Clearing Participants, in compliance with the Clearing Participants'
reporting obligations under CFTC's swap data reporting Regulations.
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\13\ 17 CFR 45.3.
\14\ 17 CFR 45.4.
\15\ 17 CFR 45.9.
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ICC believes that proposed ICC Rule 211 is consistent with the
requirements of Section 17A of the Exchange Act \16\ and the rules and
regulations thereunder applicable to it. Specifically, ICC believes the
proposed rule is consistent with Section 17A(b)(3)(F) of the Exchange
Act,\17\ which 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, to
assure the safeguarding of securities and funds which are in the
custody or control of the clearing agency or for which it is
responsible, and to protect investors and the public interest. As a
derivatives clearing organization registered with the CFTC, ICC must
comply with CFTC Regulations, including CFTC Regulation 45.3 \18\ and
45.4.\19\ ICC believes this proposed rule change will facilitate its
own and its Clearing Participants' mandatory compliance with CFTC
Regulation 45.3 \20\ and 45.4.\21\ ICC believes that the proposed rule
change is consistent with the requirements of the Exchange Act and the
rules and regulations thereunder applicable to ICC, in particular with
Section 17A(b)(3)(F), because facilitating clearing members' reporting
obligations promotes the prompt and accurate clearance and settlement
of securities transactions and the safeguarding of securities and
funds, and compliance with the CFTC's regulations facilitates the
protection of investors and the public interest. In addition, ICC notes
that the proposed change is limited to ICC's business as a derivatives
clearing organization and therefore does not significantly affect any
securities clearing operations of the clearing agency or any related
rights or obligations of the clearing agency or persons using such
service. For these reasons, ICC believes the proposed rule is
consistent with the requirements of Section 17A(b)(3)(F) of the
Exchange Act.\22\
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\16\ 15 U.S.C. 78q-1.
\17\ 15 U.S.C. 78q-1(b)(3)(F).
\18\ 17 CFR 45.3.
\19\ 17 CFR 45.4.
\20\ 17 CFR 45.3.
\21\ 17 CFR 45.4.
\22\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Clearing Agency's Statement on Burden on Competition
ICC does not believe the proposed rule change would have any
impact, or impose any burden, on competition.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received from Members, Participants, or Others
Written comments relating to the proposed rule change have not been
solicited or received. ICC will notify the Commission of any written
comments received by ICC.
III. 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 Exchange Act. Comments may be submitted
by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form
(http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-ICC-2013-05 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ICC-2013-05. 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 Web site (http://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 Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of ICC.
All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-ICC-2013-05
and should be submitted on or before May 6, 2013.
IV. Commission's Findings and Order Granting Accelerated Approval of
the Proposed Rule Change
Section 19(b)(2)(C) of the Exchange Act \23\ 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 Exchange Act and the rules and regulations
thereunder applicable to such organization. The Commission finds that
the proposed rule change is consistent with the requirements of the
Exchange Act, in particular, the requirements of Section 17A of the
Exchange Act, and the rules and regulations thereunder applicable to
ICC.\24\ Specifically, the Commission finds that the proposed rule
change is consistent with Section 17A(b)(3)(F) of the Exchange Act,\25\
which 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, to assure the safeguarding of
securities and funds which are in the custody or control of the
clearing agency or for which it is responsible, and to protect
investors and the public interest.
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\23\ 15 U.S.C. 78s(b)(2)(C).
\24\ 15 U.S.C. 78q-1.
\25\ 15 U.S.C. 78q-1(b)(3)(F).
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Based on ICC's representations, the Commission understands that the
proposed rule change is designed to codify in ICC's Rules the way in
which ICC intends to comply with certain of the CFTC's swap data
reporting rules and to facilitate its Clearing Participants' compliance
with the same. The Commission finds that, by facilitating compliance
with the swap data reporting requirements of another
[[Page 22352]]
regulator, the proposed rule change is consistent with promoting the
prompt and accurate clearance and settlement of derivative agreements,
contracts, and transactions, assuring the safeguarding of securities
and funds which are in the custody or control of the clearing agency or
for which it is responsible, and protecting investors and the public
interest.
The Commission is mindful of the CFTC's jurisdiction respecting
swap data reporting and swap data repositories under the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010 (``Dodd-Frank
Act'').\26\ The proposed rule change, which is limited to ICC's
business as a derivatives clearing organization and does not
significantly affect any securities clearing operations of the clearing
agency or any rights or obligations of the clearing agency with respect
to securities clearing or persons using such securities-clearing
service,\27\ applies only to swaps, which are regulated by the CFTC
under the CEA. In this regard, the Commission notes that section
5b(c)(2)(N) of the CEA requires that ``[u]nless necessary or
appropriate to achieve the purposes of [the CEA], a derivatives
clearing organization shall not--(i) adopt any rule or take any action
that results in any unreasonable restraint of trade; or (ii) impose any
material anticompetitive burden.'' \28\ Section 17A(b)(3)(I) of the
Exchange Act, by contrast, requires that ``[t]he rules of the clearing
agency do not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of [the Exchange Act].''
\29\ To the extent that the Exchange Act provisions on competition
apply to swaps-related activity, the Commission finds that the proposed
rule change does not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Exchange Act.\30\ In
making this determination, the Commission is mindful of the CFTC's
jurisdiction over swap activities, and the Commission could draw a
different conclusion about a similar proposal if it applied to
security-based swap activity instead of swap activity.
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\26\ Public Law 111-203, 124 Stat. 1376 (2010). Title VII of the
Dodd-Frank Act gives the CFTC regulatory authority over swaps,
including the authority to adopt rules governing SDRs and swap
reporting. See, e.g., Pub. L. No. 111-203, Sec. 727. Similarly,
Title VII gives the SEC regulatory authority over security-based
swaps and the authority to adopt rules governing security-based swap
data repositories and security-based swap reporting. See, e.g., Pub.
L. No. 111-203, Sec. 763(i).
\27\ Cf. Amendment to Rule Filing Requirements for Dually-
Registered Clearing Agencies, Securities Exchange Act Rel. No. 69284
(Apr. 3, 2013), 78 FR 21046 (Apr. 9, 2013) (amending the
Commission's rule filing process in connection with proposed rule
changes that primarily affect a registered clearing agency's
clearing operations with respect to products that are not securities
and that do not significantly affect any securities clearing
operations or any rights or obligations of the clearing agency with
respect to securities clearing or persons using such securities
service; effective 60 days from forthcoming publication in the
Federal Register).
\28\ 7 U.S.C. 7a-1(c)(2)(N).
\29\ 15 U.S.C. 78q-1(b)(3)(I).
\30\ In approving these proposed rule changes, the Commission
has considered the proposed rule change's impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
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In its filing, ICC requested that the Commission grant accelerated
approval of the proposed rule change under Section 19(b)(2)(C)(iii) of
the Exchange Act.\31\ Under Section 19(b)(2)(C)(iii) of the Exchange
Act,\32\ the Commission may grant accelerated approval of a proposed
rule change if the Commission finds good cause for doing so. ICC
believes that accelerated approval is warranted because the proposed
rule change will assist swap dealers' mandatory compliance with CFTC
Regulation 45.3 \33\ and 45.4,\34\ which was required by February 28,
2013. ICC states that the proposed rule change does not require any
operational changes, as ICC currently complies with the CFTC's
Regulations relating to the regulatory reporting of swap data by
reporting to IntercontinentalExchange, Inc.'s SDR, selected by ICC. ICC
notes that the proposed change is limited to ICC's business as a
derivatives clearing organization and therefore does not significantly
affect any securities clearing operations of the clearing agency or any
related rights or obligations of the clearing agency or persons using
such service. ICC has stated that, in its view, the proposed changes do
not raise any issues that would require a lengthier review process
under Section 19(b) of the Exchange Act,\35\ and ICC does not believe
the market would benefit from delaying implementation of the proposed
rule changes.
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\31\ 15 U.S.C. 78s(b)(2)(C)(iii).
\32\ 15 U.S.C. 78s(b)(2)(C)(iii).
\33\ 17 CFR 45.3.
\34\ 17 CFR 45.4.
\35\ 15 U.S.C. 78s(b).
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The Commission finds good cause, pursuant to Section
19(b)(2)(C)(iii) of the Exchange Act,\36\ for approving the proposed
rule change on an accelerated basis, prior to the 30th day after the
date of publication of notice in the Federal Register, because (i) the
proposed rule change is limited to ICC's business as a derivatives
clearing organization and does not significantly affect any securities
clearing operations of the clearing agency or any rights or obligations
of the clearing agency with respect to securities clearing or persons
using such securities-clearing service; and (ii) the activity relating
to the non-securities clearing operations of the clearing agency for
which the clearing agency is seeking approval is subject to regulation
by another federal regulator.\37\
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\36\ 15 U.S.C. 78s(b)(2)(C)(iii).
\37\ See supra note 27.
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The Commission notes that ICC also has submitted ICC Rule 211 to
the CFTC for self-certification pursuant to Section 5c(c)(1) of the
Commodity Exchange Act (``CEA'') \38\ and CFTC Regulation 40.6.\39\ In
connection with ICC's submission, the CFTC received a petition for the
stay of ICC's self-certification of ICC Rule 211 from the Depository
Trust & Clearing Corporation (``DTCC''), in conjunction with DTCC Data
Repository (U.S.) LLC.\40\ In its submission to the CFTC, ICC also made
reference to the CFTC's comment files relating to the submission by the
Chicago Mercantile Exchange Inc. (``CME'') of CME Rule 1001 to the CFTC
and ``relevant references within the Statement of the [CFTC] granting
approval of the CME's Rule 1001 submission.'' \41\
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\38\ 7 U.S.C. 7a-2(c)(5).
\39\ 17 CFR 40.6.
\40\ Letter to Ms. Melissa Jurgens, CFTC, from Larry E.
Thompson, General Counsel, DTCC, dated March 26, 2013, available at
http://www.cftc.gov/stellent/groups/public/@rulesandproducts/documents/ifdocs/dtcccommentltr032613.pdf.
\41\ ICC Rule Submission Re: SDR Reporting Rule Certification
Pursuant to Section 5c(c)(1) of the CEA and [CFTC] Regulation 40.6,
dated March 22, 2013, available at http://www.cftc.gov/stellent/groups/public/@rulesandproducts/documents/ifdocs/rul032213icc001.pdf.
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As noted above, in its consideration and approval of the proposed
rule change, the Commission is mindful of the CFTC's jurisdiction
respecting swap data reporting and swap data repositories under the
Dodd-Frank Act.\42\ The Commission's approval of the proposed rule
change in no way constitutes a determination or finding by the
Commission that the proposed rule change complies with or is not
inconsistent with the CEA or the rules and regulation thereunder, which
are determinations within the purview of the CFTC. The Commission's
approval is limited to findings under the Exchange Act and the rules
and regulations thereunder in effect on the date hereof and represents
neither agreement nor disagreement with the CFTC's analysis and
determinations in connection with its Statement approving CME Rule 1001
or other actions to-date respecting CME's or
[[Page 22353]]
ICC's rules relating to swap data reporting. Furthermore, the
Commission's approval of the proposed rule change in no way limits or
precludes any future actions by the Commission, including pending
rulemakings \43\ or proposed rule changes, in connection with security-
based swaps.
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\42\ See supra note 26.
\43\ See, e.g., Regulation SBSR--Reporting and Dissemination of
Security-Based Swap Information, Securities Exchange Act Rel. No.
63346 (Nov. 19, 2010), 75 FR 75208 (Dec. 2, 2010); Security-Based
Swap Data Repository Registration, Duties, and Core Principles,
Securities Exchange Act Release No. 63347 (Nov. 19, 2010), 75 FR
77306 (Dec. 10, 2010), corrected at 75 FR 79320 (Dec. 20, 2010) and
76 FR 2287 (Jan. 13, 2011).
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V. Conclusion
It is therefore ordered pursuant to Section 19(b)(2) of the
Exchange Act \44\ that the proposed rule change (SR-ICC-2013-05), as
modified by Amendment No. 1, be, and hereby is, approved on an
accelerated basis.
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\44\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\45\
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\45\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-08727 Filed 4-12-13; 8:45 am]
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