[Federal Register Volume 79, Number 227 (Tuesday, November 25, 2014)]
[Notices]
[Pages 70251-70253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-27843]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73645; File No. SR-ICEEU-2014-22]
Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
of Filing of Proposed Rule Change Relating to ICE Clear Europe Board
Risk Committee
November 18, 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 November 10, 2014, ICE Clear Europe Limited (``ICE Clear Europe'')
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 ICE Clear Europe. 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 principal purpose of the proposed changes is to establish a
risk committee (the ``Board Risk Committee'') which would advise the
ICE Clear Europe Board (the ``Board'') on certain clearing house-wide
risk management matters.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, ICE Clear Europe 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. ICE Clear Europe 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
(a) Purpose
The purpose of the amendments is for ICE Clear Europe to establish
the Board Risk Committee. Establishment of the Board Risk Committee is
required under Article 28 of the European Market Infrastructure
Regulation (``EMIR''),\3\ which will apply to ICE Clear Europe as an
authorized central counterparty. The Board Risk Committee will advise
the Board with respect to various firm-wide risk management matters,
with the goal of enabling the Board to ensure that ICE Clear Europe (i)
implements and maintains agreed risk management procedures, processes
and controls, (ii) provides appropriate access to participation in its
clearing services and (iii) appropriately considers the interests of
non-clearing member users of cleared products, including with respect
to account segregation and collateral protection. The activities of the
Board Risk Committee will relate to all categories of products cleared
at ICE Clear Europe, and are in addition to ICE Clear Europe's existing
product-specific risk committees (F&O, CDS and FX).
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\3\ Regulation (EU) No 648/2012 of the European Parliament and
of the Council of 4 July 2012 on OTC derivatives, central
counterparties and trade repositories.
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Pursuant to its terms of reference, the Board Risk Committee will
report directly to the Board and receive and review all recommendations
from each of the product-specific risk committees. The Board Risk
Committee will undertake at least annual reviews of business risk
mitigation procedures and controls and will have oversight of all risks
facing ICE Clear Europe, including counterparty credit risk (across all
clearing services) and non-counterparty credit risk matters, such as
operational and liquidity risk. The Board Risk Committee will also
advise the Board
[[Page 70252]]
regarding any arrangements that may materially impact the risk
management of ICE Clear Europe, such as a significant change in its
criteria for accepting clearing members, clearing in new markets, or
outsourcing of certain functions. The advice of the Board Risk
Committee is not required for the daily operations of ICE Clear Europe.
The Board Risk Committee will be provided (in addition to other
relevant information) with results and analysis of back-testing,
sensitivity testing, stress testing and reverse stress testing in
respect of any review of margin models, methodologies and/or the
liquidity risk management framework. The Board Risk Committee will also
consider any other issues that may be referred to it by the Board and/
or executive, including the exercise of discretion in relation to
recovery arrangements under the Rules.
In the course of its work the Board Risk Committee may obtain
external legal or other independent advice and secure the attendance of
third parties with relevant experience and expertise if it considers
this necessary.
The Board Risk Committee will consist of at least two and up to
four Clearing Member representatives and at least two and up to four
customer representatives, in each case appointed by the Chairman of the
Board Risk Committee following consideration by the ICE Clear Europe
Nominations Committee. The Chairman of the Board Risk Committee will be
an independent non-executive director of ICE Clear Europe appointed by
the Board and will be a full voting member of the committee. Any member
of the Board Risk Committee may be removed by the Board without cause.
The composition of the Board Risk Committee will be reviewed on an
annual basis to determine whether the committee has appropriate
representation of Clearing Members, customers and independent non-
executive directors, and appropriate representation of expertise and
experience in relevant risk disciplines, including market, credit and
operational risk. Based on this review, the Chairman may determine to
request the resignation of one or more committee members and/or appoint
one or more additional committee members to achieve such appropriate
representation.
The ICE Clear Europe Chief Risk Officer, President and other
appropriate ICE Clear Europe staff members will attend Board Risk
Committee meetings in a non-voting capacity. In addition, the chairs of
any groups or committees involved in the development of risk policies
and a representative from each of the markets cleared by ICE Clear
Europe will have a right to attend, but not vote, at Board Risk
Committee meetings. The Board Risk Committee may also invite external
independent experts to attend meetings in a non-voting capacity. A
quorum will be a minimum of four members, one of whom must be a
customer representative and one of whom must be a Clearing Member
representative. (The Chairman of the committee will count toward the
quorum for this purpose.) Each Board Risk Committee member will have
one vote and decisions of the Board Risk Committee will be made by a
simple majority, provided that if the committee is evenly divided, the
Chairman may cast a deciding vote (in addition to the Chairman's normal
vote as a member of the committee). Meetings will be held as needed and
at least quarterly.
(b) Statutory Basis
ICE Clear Europe believes that the proposed rule change is
consistent with the requirements of Section 17A of the Act \4\ and the
regulations thereunder applicable to it, including the standards under
Rule 17Ad-22.\5\ Section 17A(b)(3)(F) of the Act \6\ 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. The establishment of the Board Risk
Committee is intended to enhance the governance structure and overall
risk management of the Clearing House, in compliance with the
requirements of EMIR. As described above, the Board Risk Committee is
intended to advise the Board with respect to a range of enterprise-wide
risk management matters across all product categories. It is also
designed to provide appropriate representation for both Clearing
Members and customers, and thereby to enable the Board to ensure that
it provides appropriate access to participation in clearing services
and that the interests of Clearing Members and customers are
appropriately considered. As a result, ICE Clear Europe believes that
the proposed rule change will promote the prompt and accurate clearance
and settlement of cleared transactions, and in general is designed to
protect investors and the public interest, within the meaning of
Section 17A(b)(3)(F).\7\ In addition, the change is consistent with the
requirements of Rule 17Ad-22(d)(8),\8\ which requires that a clearing
agency have governance arrangements that are clear and transparent to
fulfill the public interest requirements of Section 17A of the Act
applicable to clearing agencies, to support the objectives of owners
and participants, and to promote the effectiveness of the clearing
agency's risk management procedures. As set forth above, the Board Risk
Committee is intended to enhance the Board's ability to oversee
enterprise-wide risk management for all product categories, and to
provide representation to, and take into account the interests of, both
Clearing Members and their customers.
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\4\ 15 U.S.C. 78q-1.
\5\ 17 CFR 240.17Ad-22.
\6\ 15 U.S.C. 78q-1(b)(3)(F).
\7\ Id.
\8\ 17 CFR 240.17Ad-22(d)(8).
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B. Self-Regulatory Organization's Statement on Burden on Competition
ICE Clear Europe does not believe the proposed amendments would
have any impact, or impose any burden, on competition not necessary or
appropriate in furtherance of the purposes of the Act. The change will
not affect the terms or conditions of any cleared contract or the
standards or requirements for participation in or use of the Clearing
House, and accordingly should not, in the Clearing House's view, affect
the availability of clearing, access to clearing services or the costs
of clearing for clearing members or other market participants. ICE
Clear Europe further believes that the establishment of the Board Risk
Committee will strengthen its risk management capabilities and
governance, as required in order to comply with EMIR. As a result, ICE
Clear Europe believes that any impact on competition is appropriate 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 changes to the rules have
not been solicited or received. ICE Clear Europe will notify the
Commission of any written comments received by ICE Clear Europe.
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 of such
date (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
[[Page 70253]]
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-ICEEU-2014-22 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-ICEEU-2014-22. 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 also will be available
for inspection and copying at the principal office of ICE Clear Europe
and on ICE Clear Europe's Web site at https://www.theice.com/clear-europe/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-ICEEU-2014-22
and should be submitted on or before December 16, 2014.
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\9\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27843 Filed 11-24-14; 8:45 am]
BILLING CODE 8011-01-P