[Federal Register Volume 80, Number 72 (Wednesday, April 15, 2015)]
[Notices]
[Pages 20280-20282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-08543]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74688; File No. SR-ICC-2015-006]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change To Provide for the Clearance of an
Additional Standard Emerging Market Sovereign Single Name
April 9, 2015.
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 March 27, 2015, 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 adopt rules that will
provide the basis for ICC to clear an additional credit default swap
contract. Specifically, ICC is proposing to amend Subchapter 26D of its
rules to provide for the clearance of an additional Standard Emerging
Market Sovereign CDS contract (``SES Contract''), namely Ukraine.
ICC has been approved to clear twelve SES Contracts: The Federative
Republic of Brazil, the United Mexican States, the Bolivarian Republic
of Venezuela, the Argentine Republic, the Republic of Turkey, the
Russian Federation, the Republic of Hungary, the Republic of South
Africa, the Republic of Chile, the Republic of Peru, the Republic of
Colombia, and the Republic of Poland.\3\
[[Page 20281]]
The proposed changes to the ICC Rules would provide for the clearance
of an additional SES Contract, specifically Ukraine.
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\3\ See Securities Exchange Act Release No. 34-65588 (Oct. 18,
2011), 76 FR 65763 (Oct. 24, 2011) (File No. SR-ICC-2011-01) (order
approving rule change to clear SES Contracts referencing the
Federative Republic of Brazil, the United Mexican States, the
Bolivian Republic of Venezuela, and the Argentine Republic);
Securities Exchange Act Release No. 34-70849 (Nov. 12, 2013), 78 FR
69167 (Nov. 18, 2013) (File No. SR-ICC-2013-07) (order approving
rule change to clear SES Contracts referencing the Republic of
Turkey and the Russian Federation); Securities Exchange Act Release
No. 34-73220 (Sep. 25, 2014), 79 FR 59340 (Oct. 1, 2014) (File No.
SR-ICC-2014-13) (order approving rule change to clear SES Contracts
referencing the Republic of Hungary and the Republic of South
Africa); and Securities Exchange Act Release No. 34-74593 (Mar. 26,
2015), 80 FR 17538 (Apr. 1, 2015) (order approving rule change to
clear SES Contracts referencing the Republic of Chile, the Republic
of Peru, the Republic of Colombia, and the Republic of Poland).
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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 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 purpose of the proposed rule change is to adopt rules that will
provide the basis for ICC to clear an additional credit default swap
contract. ICC has been approved to clear twelve SES Contracts: The
Federative Republic of Brazil, the United Mexican States, the
Bolivarian Republic of Venezuela, the Argentine Republic, the Republic
of Turkey, the Russian Federation, the Republic of Hungary, the
Republic of South Africa, the Republic of Chile, the Republic of Peru,
the Republic of Colombia, and the Republic of Poland. ICC proposes
amending Subchapter 26D of its Rules to provide for the clearance of an
additional SES Contract, specifically Ukraine. This additional SES
Contract will be offered on the 2014 ISDA Credit Derivatives
Definitions. The addition of the additional SES Contract will benefit
the market for emerging market credit default swaps by providing market
participants the benefits of clearing, including reduction in
counterparty risk and safeguarding of margin assets pursuant to
clearing house rules. Clearing of the additional SES Contract will not
require any changes to ICC's Risk Management Framework or other
policies and procedures constituting rules within the meaning of the
Act.
The additional SES Contract has terms consistent with the other SES
Contracts approved for clearing at ICC and governed by Subchapter 26D
of the ICC rules, namely the Federative Republic of Brazil, the United
Mexican States, the Bolivarian Republic of Venezuela, the Argentine
Republic, the Republic of Turkey, the Russian Federation, the Republic
of Hungary, the Republic of South Africa, the Republic of Chile, the
Republic of Peru, the Republic of Colombia, and the Republic of Poland.
Minor revisions to Subchapter 26D (Standard Emerging Market Sovereign
(``SES'') Single Name) are made to provide for clearing the additional
SES Contract and are described as follows.
Rule 26D-102 is modified to include Ukraine in the list of specific
Eligible SES Reference Entities to be cleared by ICC.
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. The clearance of the additional SES Contract will allow
market participants an increased ability to manage risk. ICC believes
that acceptance of this new contract, on the terms and conditions set
out in the ICC Rules, is consistent with the prompt and accurate
clearance of and settlement of securities transactions and derivative
agreements, contracts and transactions cleared by ICC, the safeguarding
of 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.\5\
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\4\ 15 U.S.C. 78q-1(b)(3)(F).
\5\ 15 U.S.C. 78q-1(b)(3)(F).
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Clearing of the additional SES Contract will also satisfy the
requirements of Rule 17Ad-22.\6\ In particular, in terms of financial
resources, ICC will apply its existing margin methodology to the
additional SES Contract. ICC believes that this model will provide
sufficient margin to cover its credit exposure to its clearing members
from clearing this contract, consistent with the requirements of Rule
17Ad-22(b)(2).\7\ In addition, ICC believes its Guaranty Fund, under
its existing methodology, will, together with the required margin,
provide sufficient financial resources to support the clearing of the
new contract consistent with the requirements of Rule 17Ad-22(b)(3).\8\
ICC also believes that its existing operational and managerial
resources will be sufficient for clearing of the additional SES
Contract, consistent with the requirements of Rule 17Ad-22(d)(4),\9\ as
the new contract is similar from an operational perspective to existing
SES Contracts. Similarly, ICC will use its existing settlement
procedures and account structures for the new contract, consistent with
the requirements of Rule 17Ad-22(d)(5), (12) and (15) \10\ as to the
finality and accuracy of its daily settlement process and avoidance of
the risk to ICC of settlement failures. Finally, ICC will apply its
existing default management policies and procedures for the new
contract. ICC believes that these procedures allow for it to take
timely action to contain losses and liquidity pressures and to continue
meeting its obligations in the event of clearing member insolvencies or
defaults in respect of the additional SES Contract, in accordance with
Rule 17Ad-22(d)(11).\11\
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\6\ 17 CFR 240.17Ad-22.
\7\ 17 CFR 240.17Ad-22(b)(2).
\8\ 17 CFR 240.17Ad-22(b)(3).
\9\ 17 CFR 240.17Ad-22(d)(4).
\10\ 17 CFR 240.17Ad-22(d)(5), (12) and (15).
\11\ 17 CFR 240.17Ad-22(d)(11).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The additional SES Contract will be available to all ICC
Participants for clearing. The clearing of the additional SES Contract
by ICC does not preclude the offering of the additional SES Contract
for clearing by other market participants. Accordingly, ICC does not
believe that clearance of the additional SES Contract will impose any
burden on competition not necessary or 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 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.
[[Page 20282]]
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-2015-006 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-2015-006. 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/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-2015-006
and should be submitted on or before May 6, 2015.
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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Brent J. Fields,
Secretary.
[FR Doc. 2015-08543 Filed 4-14-15; 8:45 am]
BILLING CODE 8011-01-P