[Federal Register Volume 79, Number 137 (Thursday, July 17, 2014)]
[Notices]
[Pages 41710-41711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16785]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72596; File No. SR-ICC-2014-07]
Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change To Revise End-of-Day Price Discovery
Policies and Procedures
July 11, 2014.
I. Introduction
On May 22, 2014, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change SR-ICC-2014-07 pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder.\2\ The
proposed rule change was published for comment in the Federal Register
on June 10, 2014.\3\ The Commission received no comment letters
regarding the proposed change. For the reasons discussed below, the
Commission is granting approval of the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 34-72306 (June 4, 2014),
79 FR 33243 (June 10, 2014) (SR-ICC-2014-07).
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II. Description
ICC is proposing to amend 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.
ICC contends that 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 contends that 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 contends that it does not
require CPs to maintain Firm Trades as outstanding positions for any
particular length of time. Prior to the operation of this proposed rule
change, ICC has stated that the ICC EOD Pricing Policy requires CPs
that elect to unwind a Firm Trade to do so ``at the then-current market
price.'' ICC contends that 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 via this rule change to revise
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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 via this rule
change to add 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 to add a
non-exclusive list of examples of how CPs may be able to demonstrate
competitive execution of unwind transactions, for example: (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.
III. Discussion and Commission Findings
Section 19(b)(2)(C) of the Act \4\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if the
Commission finds that such proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to such self-regulatory organization. Section 17A(b)(3)(F)
of the Act \5\ requires, among other things, that the rules of a
clearing agency are 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, in general, to protect investors and the public
interest.
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\4\ 15 U.S.C. 78s(b)(2)(C).
\5\ 15 U.S.C. 78q-1(b)(3)(F).
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The Commission finds that the proposed revision to ICC's 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).\6\ The Commission finds that the update to
ICC's EOD Pricing Policy regarding Firm Trade unwind transactions
clarifies the policy while maintaining the same or similar level of
incentive for CPs to provide quality price submissions. Because of the
clarification of the Firm Trade unwind requirements and the potential
increase in the enforceability thereof, CPs may have a greater
incentive to submit quality price submissions. Since quality price
submissions are an integral part of the end-of-day pricing process, the
Commission finds that the proposed rule change therefore promotes the
prompt and accurate clearance and settlement of securities transactions
and, to the extent applicable, derivative agreements, contracts and
transactions and contributes to the safeguarding of securities and
funds which are in the custody or control of ICC or for which it is
responsible in a manner consistent with the Act and the regulations
thereunder applicable to ICC.
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\6\ Id.
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IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act and in
particular with the requirements of Section 17A of the Act \7\ and the
rules and regulations thereunder.
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\7\ 15 U.S.C. 78q-1.
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the proposed rule change (File No. SR-ICC-2014-07) be, and
hereby is, approved.\9\
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\8\ 15 U.S.C. 78s(b)(2).
\9\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition and
capital formation. 15 U.S.C. 78c(f).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16785 Filed 7-16-14; 8:45 am]
BILLING CODE 8011-01-P