[Federal Register Volume 79, Number 190 (Wednesday, October 1, 2014)]
[Notices]
[Pages 59340-59341]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-23315]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73220; File No. SR-ICC-2014-13]
Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change To Provide for the Clearance of
Additional Standard Emerging European and Middle Eastern Sovereign
Single Names
September 25, 2014.
I. Introduction
On July 31, 2014, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change SR-ICC-2014-13 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 August 15, 2014.\3\ The Commission did not receive any comments on
the proposed rule change.\4\ This order approves the proposed rule
change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Exchange Act Release No. 34-72802 (Aug.11, 2014), 79 FR
48280 (Aug. 15, 2014) (SR-ICC-2014-13).
\4\ On August 18, 2014, ICC filed Amendment No. 1 to the
proposed rule change. ICC withdrew Amendment No. 1 on August 21,
2014.
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II. Description of the Proposed Rule Change
ICC proposes to adopt rules that will provide the basis for ICC to
clear additional credit default swap contracts. Specifically, ICC is
proposing to amend Section 26D of its Rules to provide for the
clearance of additional Standard Emerging Sovereign Single Name
constituents of the CDX Emerging Markets Index (``SES Contracts'').
Currently, ICC clears six SES Contracts: four Standard Latin America
Sovereign Single Name constituents and two Standard Emerging European
and Middle Eastern Sovereign Single Name constituents of the CDX
Emerging Markets Index (the ``SEEME Contracts''). The proposed rule
change would provide for the clearance of two additional SEEME
Contracts: the Republic of Hungary and the Republic of South Africa.
ICC currently clears Series 14-21 of the CDX Emerging Markets
Index. Of the CDX Emerging Markets Indices cleared by ICC, the Republic
of Hungary is a constituent of the CDX Emerging Markets Index, Series
14-18, and the Republic of South Africa is a constituent of the CDX
Emerging Markets Index, Series 14-21. These two additional SEEME
Contracts would initially be offered on the 2014 ISDA Credit
Derivatives Definitions. ICC states that the addition of these SEEME
Contracts will allow market participants an increased ability to manage
risk, by providing market participants the ability to offset related
index positions.
These additional SEEME Contracts would have terms consistent with
the other SEEME Contracts currently cleared by ICC and governed by
Subchapter 26D of the ICC rules, namely the Russian Federation and the
Republic of Turkey. Minor revisions to Subchapter 26D (Standard
Emerging Sovereign (``SES'') Single Name) are proposed to provide for
clearing the additional SEEME Contracts. Rule 26D-102 would be modified
to include the Republic of Hungary and the Republic of South Africa in
the list of specific Eligible SES Reference Entities to be cleared by
ICC. ICC represents that the addition of these products would not
require any changes to ICC's Risk Management Framework or other
policies and procedures constituting rules within the meaning of the
Act. ICC states that, in connection with the clearance of the new
contracts, it will apply its existing margin and guaranty fund
methodology, operational and managerial resources, settlement
procedures and account structures, and default management policies and
procedures, which, together, it believes will provide sufficient
financial, operational, and managerial resources to support the
clearing of the new contracts.
III. Discussion and Commission Findings
Section 19(b)(2)(C) of the Act \5\ 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 \6\
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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\5\ 15 U.S.C. 78s(b)(2)(C).
\6\ 15 U.S.C. 78q-1(b)(3)(F).
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After careful review, the Commission finds that the proposed rule
change is consistent with Section 17A of the Act \7\ and the rules
thereunder applicable to ICC. The proposed rule change will provide for
clearing of additional SEEME Contracts, which are substantially similar
to other SEEME Contracts cleared by ICC, and the new contracts will be
cleared pursuant to ICC's existing clearing arrangements and related
financial safeguards, protections and risk management framework,
including policies and procedures. The Commission believes that the
proposal is therefore consistent with the prompt and accurate clearance
and settlement of securities transactions and derivative agreements,
contracts and transactions cleared by ICC, the safeguarding of
[[Page 59341]]
securities and funds in the custody or control of ICC, and the
protection of investors and the public interest, within the meaning of
Section 17A(b)(3)(F) of the Act.\8\
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\7\ 15 U.S.C. 78q-1.
\8\ 15 U.S.C. 78q-1(b)(3)(F).
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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 \9\ and the
rules and regulations thereunder.
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\9\ 15 U.S.C. 78q-1.
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-ICC-2014-13) be, and hereby
is, approved.\11\
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\10\ 15 U.S.C. 78s(b)(2).
\11\ 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.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-23315 Filed 9-30-14; 8:45 am]
BILLING CODE 8011-01-P