[Federal Register Volume 79, Number 111 (Tuesday, June 10, 2014)]
[Notices]
[Pages 33243-33244]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-13451]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72306; File No. SR-ICC-2014-07]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change to Revise End-of-Day Price Discovery
Policies and Procedures
June 4, 2014.
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 May 22, 2014, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared primarily by ICC. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The purpose of the proposed rule change is to revise the ICC End-
of-Day Price Discovery Policies and Procedures (``EOD Pricing Policy'')
to revise the expectations surrounding the unwind of any Firm Trade
transaction. This revision does not require any changes to the ICC
Rules.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, ICC 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. ICC has prepared summaries, set forth in sections A, B,
and C below, of the most significant aspects of these statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The proposed revision to ICC's EOD Pricing Policy is intended to
make the policy more readily enforceable, while maintaining the same or
similar level of incentive for ICC Clearing Participants to provide
quality price submissions.
ICC believes such revision will facilitate the prompt and accurate
clearance and settlement of securities transactions and derivative
agreements, contracts, and transactions for which it is responsible.
The proposed revision is described in detail as follows.
ICC Clearing Participants (``CPs'') may be required from time to
time, under the ICC EOD Pricing Policy, to enter into trades with other
CPs as part of the ICC end-of-day price discovery process (``Firm
Trade''). ICC does not require CPs to maintain Firm Trades as
outstanding positions for any particular length of time. Currently, the
ICC EOD Pricing Policy requires CPs that elect to unwind a Firm Trade
to do so ``at the then-current market price.'' There are practical
difficulties with objectively determining whether an unwind transaction
was executed at the ``then-current market price'' and therefore such
policy is difficult to enforce. ICC proposes revising the ICC EOD
Pricing Policy to replace references to the ``then-current market
price'' with the requirement that unwind transactions be executed in a
competitive manner. Further, ICC proposes adding the requirement that,
upon request, CPs be able to demonstrate to ICC's satisfaction that
such unwind transaction was executed in a competitive manner.
Additionally, ICC proposes adding a non-exclusive list of examples of
how CPs may be able to demonstrate competitive execution of unwind
transactions. Specifically, such examples include: (i) Execution on an
available trading venue (e.g., a SEF or DCM); (ii) multiple dealer
quotes received and execution of the unwind transaction at the best
quoted price; or (iii) placement of the unwind transaction with an
interdealer broker with price terms and instructions commensurate with
a competitive execution.
Section 17A(b)(3)(F) of the Act \3\ 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 and to comply with the provisions of the Act and the rules
and regulations thereunder. ICC believes that the proposed revision to
the EOD Pricing Policy is consistent with the requirements of the Act
and the rules and regulations thereunder applicable to ICC, in
particular, to Section 17(A)(b)(3)(F),\4\ because ICC believes that the
proposed rule changes will facilitate the prompt and accurate
settlement of swaps and contribute to the safeguarding of securities
and funds associated with swap transactions which are in the custody or
control of ICC or for which it is responsible. The update to ICC's EOD
Pricing Policy regarding Firm Trade unwind transactions makes the
policy more readily enforceable, while maintaining the same or similar
level of incentive for CPs to provide quality price submissions. ICC
considers the proposed revision to be an enhancement of its consistent
underlying intention to assure that CPs unwind Firm Trades
competitively. The inclusion of Firm Trades in ICC's end-of-day price
discovery process provides incentive for CPs to submit quality price
submissions. If CPs unwound Firm Trades non-competitively at the
original Firm Trade Price, thereby alleviating the Firm Trade's impact
to their portfolio, the incentive to provide quality price submissions
would be diminished. Receiving quality prices from its CPs is paramount
to the pricing process and ICC believes the proposed revision both
clarifies and enhances its EOD Pricing Policy. As such, the proposed
revision will facilitate the prompt and accurate settlement of swaps
and contribute to the safeguarding of securities and funds associated
with swap transactions which are in the custody or control of ICC or
for which it is responsible within the meaning of Section 17A(b)(3)(F)
\5\ of the Act.
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\3\ 15 U.S.C. 78q-1(b)(3)(F).
\4\ Id.
\5\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition
ICC does not believe the proposed rule changes would have any
impact, or impose any burden, on competition. The revision to ICC's EOD
Pricing Policy regarding the unwinding of Firm Trades apply uniformly
across all CPs. Therefore, ICC does not believe the proposed revision
imposes any burden on competition that is inappropriate in furtherance
of the purposes of the Act.
[[Page 33244]]
C. Self-Regulatory Organization'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. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-ICC-2014-07 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-ICC-2014-07. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet 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 such filings will also be available
for inspection and copying at the principal office of ICE Clear Credit
and on ICE Clear Credit's Web site at https://www.theice.com/notices/Notices.shtml?regulatoryFilings.
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-2014-07
and should be submitted on or before July 1, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-13451 Filed 6-9-14; 8:45 am]
BILLING CODE 8011-01-P