[Federal Register Volume 79, Number 154 (Monday, August 11, 2014)]
[Notices]
[Pages 46896-46898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-18878]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72762; File No. SR-ICC-2014-12]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing and Order Granting Accelerated Approval of Proposed Rule Change
To Revise the ICC Treasury Policies and Procedures
August 5, 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 July 21, 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
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.
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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
Treasury Policies and Procedures to correct an error in order to
properly describe ICC's policy regarding permitted counterparties to
ICC's repurchase agreement transactions (``Repo Transactions'').\3\
This revision does not require any changes to the ICC Clearing Rules.
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\3\ Generally, Repo Transactions are the purchase or sale of
U.S. Treasury securities with the simultaneous agreement to sell or
buy back the securities with the same counterparty on the next
business day.
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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 III 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 Treasury Policies and Procedures is
intended to correct an error in order to properly describe ICC's policy
regarding permitted counterparties to ICC's Repo Transactions.
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.
Currently, the ICC Treasury Policies and Procedures state that ICC
may not enter in Repo Transactions with counterparties that are
affiliates of ICC Clearing Participants. This statement contains an
error, and does not accurately reflect ICC's policy in regards to
prohibited repo counterparties. Such provision in the ICC Treasury
Policies and Procedures was intended to prohibit the use of affiliates
of ICC as repo counterparties, consistent with the prohibition
contained in CFTC Regulation 1.25(d)(3), which states, in
[[Page 46897]]
relevant part, ``A . . . derivatives clearing organization shall not
enter into an agreement to repurchase or resell with a counterparty
that is an affiliate of the . . . derivatives clearing organization.''
However, ICC's policy language inadvertently included the phrase
``affiliates of ICE Clear Credit Clearing Participants'' rather than
the proper language ``affiliates of ICE Clear Credit.'' ICC proposes
revising the ICC Treasury Policies and Procedures to accurately reflect
ICC's policy in regards to prohibited repo counterparties. ICC proposes
amending the policy to clarify that ICC prohibits the use of repo
counterparties that are affiliates of ICC, rather than affiliates of
ICC Clearing Participants. This revision to the Treasury Policies and
Procedures does not require any operational changes.
Section 17A(b)(3)(F) of the Act \4\ 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 is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to ICC, in particular, to Section
17A(b)(3)(F),\5\ 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 revision to the ICC Treasury Policies and
Procedures corrects an error in order to properly describe ICC's policy
regarding permitted counterparties to ICC's Repo Transactions. As such,
the proposed rule changes will facilitate the prompt and accurate
settlement of swaps and contribute to the safeguarding of customer
funds and securities within the control of ICC within the meaning of
Section 17A(b)(3)(F) \6\ of the Act.
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\4\ 15 U.S.C. 78q-1(b)(3)(F).
\5\ Id.
\6\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition
ICC does not believe the proposed revision would have any impact,
or impose any burden, on competition. The revision to ICC's Treasury
Policies and Procedures to correct an error in order to properly
describe ICC's policy regarding permitted counterparties to ICC's Repo
Transactions applies 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.
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. 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-2014-12 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-2014-12. 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 and on ICC's
Web site at https://www.theice.com/clear-credit/regulation.
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-2014-12
and should be submitted on or before September 2, 2014.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
Section 19(b)(2)(C) of the Act \7\ 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 Act and the rules and regulations thereunder
applicable to such organization. Section 17A(b)(3)(F) of the Act \8\
requires, among other things, that the rules of a registered 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, in
general, to protect investors and the public interest.
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\7\ 15 U.S.C. 78s(b)(2)(C).
\8\ 15 U.S.C. 78q-1(b)(3)(F).
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The Commission finds that the proposed revision to ICC's Treasury
Policies and Procedures is consistent with the requirements of the Act,
in particular the requirements of Section 17A(b)(3)(F) of the Act,\9\
and the rules and regulations thereunder applicable to ICC. As
currently written, ICC's Treasury Policies and Procedures prohibit ICC
from engaging in Repo Transactions, including reverse Repo
Transactions, with affiliates of ICC Clearing Participants. The
proposed rule change would allow ICC to engage additional repo
counterparties and, therefore, expand its capacity to manage its cash
deposits pursuant to its cash management program. The Commission finds
that the proposed rule change promotes the prompt and accurate
clearance and settlement of securities transactions and, to the extent
applicable, derivative agreements, contracts, and transactions, and is
consistent with the requirement of
[[Page 46898]]
safeguarding securities and funds in the custody or control of the
clearing agency or for which it is responsible in Section 17A(b)(3)(F)
of the Act.
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\9\ Id. 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).
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ICC has requested that the Commission approve the proposed rule
change on an accelerated basis for good cause shown. ICC states that,
as a result of recent contractions in the repo marketplace that have
decreased its capacity to engage in reverse Repo Transactions, it has a
pressing need to timely engage additional reverse repo counterparties
so it has sufficient repo counterparty relationships and transaction
capacity to collateralize its cash deposits pursuant to its cash
management program. ICC further represented that maintaining sufficient
repo counterparty relationships and transaction capacity is critical
for risk mitigation purposes, and delaying the effectiveness of this
proposed rule change may result in ICC being unable to timely secure
additional repo counterparties. The Commission finds good cause,
pursuant to Section 19(b)(2)(C)(iii) of the Act,\10\ for approving the
proposed rule change on an accelerated basis.
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\10\ 15 U.S.C. 78s(b)(2)(C)(iii).
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V. Conclusion
It is therefore ordered pursuant to Section 19(b)(2) of the Act
that the proposed rule change (SR-ICC-2014-12) be, and hereby is,
approved on an accelerated basis.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-18878 Filed 8-8-14; 8:45 am]
BILLING CODE 8011-01-P