[Federal Register Volume 80, Number 199 (Thursday, October 15, 2015)]
[Notices]
[Pages 62120-62121]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26152]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76111; File No. SR-ICC-2015-013]
Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change To Provide for the Clearance of
Additional Western European Sovereign Single Names
October 8, 2015.
I. Introduction
On July 6, 2015, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 62121]]
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change (SR-
ICC-2015-013) to provide the basis for ICC to clear additional Standard
Western European Sovereign credit default swap contracts (``SWES
Contracts''). The proposed rule change was published for comment in the
Federal Register on July 21, 2015.\3\ The Commission did not receive
comments on the proposed rule change. On September 3, 2015, the
Commission extended the time period in which to either approve,
disapprove, or institute proceedings to determine whether to disapprove
the proposed rule change to October 19, 2015.\4\ For the reasons
discussed below, the Commission is approving 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. 34-75456 (July 15,
2015), 80 FR 43146 (July 21, 2015) (SR-ICC-2015-013).
\4\ Securities Exchange Act Release No. 34-75836 (September 3,
2015), 80 FR 54627 (September 10, 2015) (SR-ICC-2015-013).
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II. Description 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 additional SWES Contracts. ICC
currently clears seven SWES Contracts: The Republic of Ireland, the
Italian Republic, the Portuguese Republic, the Kingdom of Spain, the
Kingdom of Belgium, the Republic of Austria, and the Kingdom of the
Netherlands. ICC proposes to revise subchapter 26I (Standard Western
European Sovereign (``SWES'') Single Name) of its Rules to provide for
the clearance of the additional SWES Contracts by modifying Rule 26I-
102 to include the Federal Republic of Germany, the French Republic,
and the United Kingdom of Great Britain and Northern Ireland in the
list of specific Eligible SWES Reference Entities to be cleared by ICC.
ICC plans to offer these additional SWES Contracts on the 2003 and 2014
ISDA Credit Derivatives Definitions. ICC stated in its filing that
these additional SWES Contracts have terms consistent with the other
SWES Contracts approved for clearing at ICC and governed by subchapter
26I of the ICC Rules, namely the Republic of Ireland, the Italian
Republic, the Portuguese Republic, the Kingdom of Spain, the Kingdom of
Belgium, the Republic of Austria, and the Kingdom of the Netherlands.
In addition, ICC stated in its filing that the proposed change is
dependent on the approval and implementation of the proposed rule
change in SR-ICC-2015-009 and therefore, the text of the proposed rule
change in Exhibit 5 should be read in conjunction with the proposed
rule change in SR-ICC-2015-009.\5\
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\5\ In SR-ICC-2015-009, ICC proposed to revise its Risk
Management Framework to extend its General Wrong Way Risk (``GWWR'')
framework to the portfolio level. The new GWWR methodology is
designed to account for the potential accumulation of portfolio
Wrong Way Risk (``WWR'') through Risk Factor specific WWR exposures
arising from the clearance of credit default swaps referencing
sovereign and banking sector names. The Commission approved the
proposed rule change SR-ICC-2015-009 on September 10, 2015. See
Securities Exchange Act Release No. 34-75887 (September 10, 2015),
80 FR 55672 (September 16, 2015) (SR-ICC-2015-009).
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III. Discussion and Commission Findings
Section 19(b)(2)(C) of the Act \6\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if the
Commission finds that the 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 \7\ 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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\6\ 15 U.S.C. 78s(b)(2)(C).
\7\ 15 U.S.C. 78q-1(b)(3)(F).
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The Commission finds that the proposed rule change is consistent
with the requirements of section 17A of the Act \8\ and the rules and
regulations thereunder applicable to ICC. The proposed rule change
would provide for the clearing of additional SWES Contracts referencing
Federal Republic of Germany, the French Republic, and the United
Kingdom of Great Britain and Northern Ireland, which are similar to the
other SWES Contracts currently cleared by ICC. ICC would clear the
additional SWES Contracts using ICC's existing clearing arrangements
and related financial safeguards, protections and risk management
procedures, including the portfolio-level GWWR methodology approved in
SR-ICC-2015-009, which is designed to account for the potential
accumulation of uncollateralized portfolio WWR exposures arising from
the clearance of sovereign and banking sector Risk Factors at ICC.\9\
The Commission therefore finds that the proposed rule change is
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 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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\8\ 15 U.S.C. 78q-1.
\9\ See supra note 5.
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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 \10\ and the
rules and regulations thereunder.
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\10\ 15 U.S.C. 78q-1.
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It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\11\ that the proposed rule change (File No. SR-ICC-2015-013) be,
and hereby is, approved.\12\
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\11\ 15 U.S.C. 78s(b)(2).
\12\ 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.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-26152 Filed 10-14-15; 8:45 am]
BILLING CODE 8011-01-P