[Federal Register Volume 81, Number 229 (Tuesday, November 29, 2016)]
[Notices]
[Pages 86048-86050]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28634]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79375; File No. SR-ICEEU-2016-013]
Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to the Finance Procedures
November 22, 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 November 9, 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 primarily prepared 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)(i) and (ii) \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 change 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)(i) and (ii).
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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 changes is to modify certain aspects
of the ICE Clear Europe Finance Procedures.
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. 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
(a) Purpose
The purpose of the amendments is to modify certain aspects of the
ICE Clear Europe Finance Procedures. In paragraph 2.1 of the Finance
Procedures, amendments are made to add South African rand (``ZAR'') as
a currency eligible for Variation Margin and settlement payments for
financials and softs contracts which settle in such currency. Other
conforming changes have been made in the Finance Procedures (including
in paragraph 4) to reflect the addition of ZAR as an eligible currency
for such purposes. As with the other currencies currently eligible to
be used as Variation Margin and settlement payments for financials and
softs contracts, ZAR will be subject to haircuts determine [sic]
pursuant to the [sic] Finance Procedures and existing ICE Clear Europe
haircut policies. [sic] A typographical error and erroneous cross-
reference have also been corrected in paragraph 2.2.
In paragraph 6.1(e) of the Finance Procedures, the daily deadline
for a Clearing Member to provide manual cash settlement instructions
for same-day USD payments has been extended from 16:00 to 16:45 (London
time). ICE Clear Europe is making this change to accommodate a request
of Clearing Members, and does not believe it will adversely affect the
Clearing House's treasury or other operations. In paragraph
6.1(i)(vii), a change has been made to clarify that end-of-day or ad
hoc payments by a Clearing Member to the Clearing House may include, in
addition to other listed categories of payments, transfers of Surplus
Collateral.
Amendments have been made to paragraph 8.3 of the Finance
Procedures, which generally provides that the Clearing House will not
recognize any value for non-cash collateral (such as securities
collateral) within a specified period prior to its redemption or
maturity. Under the existing rule, this period commences one business
day prior to redemption or maturity. The amendments adopt a different
approach for UK government bonds, for which the period will commence
seven business days prior to redemption or maturity. This approach is
designed to reflect limitations imposed by the relevant securities
settlement system on the transfer of UK government bonds during the
seven business day period prior to redemption or maturity.
In paragraph 11.3(b), which addresses procedures for transfer of
non-cash permitted cover, an incorrect statement that the Clearing
House does not support cross-border or inter-settlement facility
settlements, bridge transactions or similar transactions has been
removed. In paragraph 11.4, certain account details and matching
deadlines for particular securities transfer systems
[[Page 86049]]
would be removed from the Finance Procedures. ICE Clear Europe would
instead publish such information (as updated from time to time) on its
Web site. This change would avoid the need to amend the Finance
Procedures to reflect future changes in operational settlement details.
Paragraph 13.9 has been revised to remove an erroneous reference to
a letter of credit.
(b) Statutory Basis
ICE Clear Europe believes that the changes described herein are
consistent with the requirements of Section 17A of the Act \5\ and the
regulations thereunder applicable to it, including the standards under
Rule 17Ad-22,\6\ 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.\7\ The amendments are intended to update and
clarify certain provisions of the Finance Procedures relevant to
settlement payments and use of non-cash permitted cover. As discussed
above, the amendments address the acceptance of ZAR for variation
margin and settlement payments for certain financials and softs
contracts. The amendments also modify the treatment of UK government
bonds for valuation purposes to reflect certain restrictions on
transfer of such bonds in the period immediately prior to redemption or
settlement. In ICE Clear Europe's view, the amendments will generally
enhance the procedures for settlement of cash and non-cash permitted
cover, and thus promote the prompt and accurate clearance and
settlement of cleared contracts. As a result, ICE Clear Europe believes
the amendments are consistent with the requirements of Section 17A of
the Act and the regulations thereunder.
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\5\ 15 U.S.C. 78q-1.
\6\ 17 CFR 240.17Ad-22. [sic]
\7\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
ICE Clear Europe does not believe the proposed changes to the rules
would have any impact, or impose any burden, on competition not
necessary or appropriate in furtherance of the purpose of the Act. ICE
Clear Europe is adopting the amendments to the Finance Procedures in
order to clarify certain aspects of the settlement of cash and non-cash
permitted cover for cleared contracts . . . [sic] ICE Clear Europe does
not believe the amendments would materially affect the cost of
clearing, adversely affect access to clearing in these products for
Clearing Members or their customers, or otherwise adversely affect
competition in clearing services. The changes will apply to all
Clearing Members. Although certain changes may affect the cost of using
UK government bonds as collateral (during the period immediately prior
to redemption or maturity of such collateral), those changes are, in
ICE Clear Europe's view, necessary and appropriate to reflect
limitations on transfer of such bonds in such period. As a result, ICE
Clear Europe believes that any impact or burden on competition from
such amendments would be appropriate in furtherance of the purpose 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
The foregoing rule change has become effective upon filing pursuant
to Section 19(b)(3)(A) \8\ of the Act and Rule 19b-4(f)(4)(i) and (ii)
\9\ thereunder. Certain aspects of the amendments effect a change in an
existing service of a registered clearing agency that primarily affects
the clearing operations of the clearing agency with respect to products
that are not securities, including futures that are not security
futures, swaps that are not security-based swaps or mixed swaps, and
forwards that are not security forwards, and does not significantly
affect any securities clearing operations of the clearing agency or any
rights or obligations of the clearing agency with respect to securities
clearing or persons using such securities-clearing service. Other
aspects of 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. At any time
within 60 days of the filing of the proposed rule change, the
Commission summarily may temporarily suspend such rule change 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.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(4).
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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-2016-013 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-2016-013. 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 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
[[Page 86050]]
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-2016-013 and should be
submitted on or before December 20, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-28634 Filed 11-28-16; 8:45 am]
BILLING CODE 8011-01-P