[Federal Register Volume 81, Number 174 (Thursday, September 8, 2016)]
[Notices]
[Pages 62228-62229]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-21646]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78762; File No. SR-ICEEU-2016-010]
Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to Certain Default Management Requirements Under Applicable
Law
September 2, 2016.
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 August 30, 2016, ICE Clear Europe Limited (``ICE Clear Europe'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule changes described in Items I, II and III below, which
Items have been prepared primarily by ICE Clear Europe. ICE Clear
Europe filed the proposed rule changes pursuant to Section 19(b)(3)(A)
of the Act,\3\ and Rule 19b-4(f)(4)(i) \4\ thereunder, so that the
proposal was effective upon filing with the Commission. The Commission
is publishing this notice to solicit comments on the proposed rule
changes from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(4)(i).
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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 modify the ICE
Clear Europe Clearing Rules (``Clearing Rules'') in order to clarify
the timing of certain default management procedures in light of
requirements under the European Market Infrastructure Regulation
(``EMIR'') \5\ and relevant UK law.
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\5\ 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, as well as various
implementing regulations and technical standards.
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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, ICE Clear Europe included
statements concerning the purpose of and basis for the proposed rule
changes. 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 such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the rule amendments is to modify the ICE Clear
Europe Clearing Rules to clarify the timing of certain default
procedures in light of regulatory requirements under EMIR and UK law.
In particular, Rule 1604(c), which applies to defaults involving an
FCM/BD Clearing Member, has been revised in light of EMIR Article
48(5)-(6) and Paragraph 34(2)(d) of the UK FSMA Recognition
Requirements (SI 2001/995).\6\ These provisions require that the
clearing house rules explicitly specify a pre-defined transfer period
within which a transfer of customer positions carried by a defaulting
clearing member to a new clearing member is to take place, if possible
(and after which the clearing house would exercise default remedies to
close out any such positions not transferred). The amendments to Rule
1604(c) specify that the clearing house will seek to transfer under the
Default Portability Rules any customer positions carried by a
defaulting FCM/BD Clearing Member within seven calendar days of the
default, and if a transfer has not been effected within such period (or
the clearing house otherwise deems it necessary for its protection),
the clearing house will terminate or liquidate such contracts, subject
to applicable law and its default rules. The transfer period is
intended to be consistent with the timing set forth in CFTC Rule 190.03
for the transfer of customer positions carried by a defaulting FCM and
for the liquidation of such contracts that have not been transferred.
The amendments do not otherwise affect the rights or obligations of the
clearing house or clearing members in respect of such a default. The
amendments are also consistent with the general approach in place for
non-FCM/BD Clearing Members in paragraph 6(f) of the applicable
Standard Terms Annexes to the Rules.
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\6\ Paragraph 34(2)(d) of the UK Financial Services and Markets
Act 2000 (Recognition Requirements for Investment Exchanges and
Clearing Houses) Regulations 2001 (SI 2001/995), which was added by
UK Financial Services and Markets Act 2000 (Over the Counter
Derivatives, Central Counterparties and Trade Repositories)
Regulations 2013 (SI 2013/504), Part 4, Paragraph 5(6). Citation has
been added by SEC staff and confirmed by ICEEU's outside counsel by
telephone on August 31, 2016.
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2. Statutory Basis
ICE Clear Europe believes that the changes described herein are
consistent with the requirements of Section 17A of the Act \7\ and the
regulations thereunder applicable to it, and are consistent with the
prompt and accurate clearance of and settlement of securities
transactions and, to the extent applicable, derivative agreements,
contracts and transactions, the safeguarding of securities and funds in
the custody or control of ICE Clear Europe or for which it is
responsible and the protection of investors and the public interest,
within the meaning of Section 17A(b)(3)(F) of the Act.\8\ The changes
to the Rules clarify the timing of certain actions to be taken in the
management of a default of an FCM/BD Clearing Member, in order to
comply with requirements under EMIR and UK law, and do not limit the
authority of the clearing house to act under its default management
rules for its protection. As such, ICE Clear Europe believes that the
changes will generally promote the prompt and accurate clearance and
settlement of securities and derivatives transactions, and further the
public interest in the safe and effective clearing of such
transactions. ICE Clear Europe does not believe the amendments will
adversely affect the safeguarding of securities and funds in its
custody or control or for which it is responsible. The changes are thus
consistent with the requirements of Section 17A of the Act.\9\
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\7\ 15 U.S.C. 78q-1.
\8\ 15 U.S.C. 78q-1(b)(3)(F).
\9\ 15 U.S.C. 78q-1.
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B. Self-Regulatory Organization's Statement on Burden on Competition
ICE Clear Europe does not believe the proposed changes would have
any impact, or impose any burden, on
[[Page 62229]]
competition not necessary or appropriate in furtherance of the purpose
of the Act. ICE Clear Europe is adopting amendments to the Clearing
Rules to clarify the timing of certain default management procedures in
light of regulatory requirements. ICE Clear Europe does not believe
that these changes will impose significant additional costs on Clearing
Members or other market participants. ICE Clear Europe also does not
believe the amendments will adversely affect access to clearing by
Clearing Members or their customers or otherwise adversely affect
Clearing Members or market participants. In this regard, the changes
will apply to all FCM/BD Clearing Members, and accordingly are not
expected to affect competition among Clearing Members or in the market
for clearing services generally.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
ICE Clear Europe has not solicited or received any written comments
with respect to the proposed changes. 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
The foregoing rule changes have become effective upon filing
pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(4)(i)
\11\ thereunder. The amendments effect a change in an existing service
of a registered clearing agency that does not adversely affect the
safeguarding of securities or funds in the custody or control of the
clearing agency or for which it is responsible, and does not
significantly affect the respective rights or obligations of the
clearing agency or persons using its clearing service, within the
meaning of Rule 19b-4(f)(4)(i). As noted above, the amendments clarify
the timing of certain default management actions by the clearing house,
including the period in which a transfer of customer positions of an
FCM/BD Clearing Member will be attempted and after which the clearing
house in which the clearing house will exercise default remedies to
close out remaining positions. These changes are intended to comply
with requirements under EMIR and UK law, and to be consistent with the
timing specified in applicable CFTC regulations. The amendments do not
otherwise affect the rights or obligations of the clearing house or
clearing members.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(4)(i).
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At any time within 60 days of the filing of the proposed rule
changes, the Commission summarily may temporarily suspend such rule
changes if it appears to the Commission that such action is necessary
or appropriate in the public interest, for the protection of investors,
or otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
changes are 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-2016-010 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-2016-010. 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 changes that are
filed with the Commission, and all written communications relating to
the proposed rule changes 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 Europe
and on ICE Clear Europe's Web site at https://www.theice.com/clear-europe/regulation#rule-filings.
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-2016-010
and should be submitted on or before September 29, 2016.
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. 2016-21646 Filed 9-7-16; 8:45 am]
BILLING CODE 8011-01-P