[Federal Register Volume 82, Number 129 (Friday, July 7, 2017)]
[Notices]
[Pages 31648-31649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14246]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-81068; File No. SR-ICEEU-2017-007]
Self-Regulatory Organizations; ICE Clear Europe Limited; Order
Approving Proposed Rule Change Relating to Amendments to the ICE Clear
Europe Limited Articles of Association
June 30, 2017.
I. Introduction
On May 2, 2017, ICE Clear Europe Limited (``ICE Clear Europe''),
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change (SR-
ICEEU-2017-007) to amend its Articles of Association. The proposed rule
change was published for comment in the Federal Register on May 19,
2017.\3\ The Commission received no comment letters regarding
[[Page 31649]]
the proposed change. For the reasons discussed below, the Commission is
approving the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 34-80674 (May 19, 2017),
82 FR 23080 (May 19, 2017) (SR-ICEEU-2017-007) (the ``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
As more fully described in the Notice, the proposed rule change
seeks to amend the Articles of Association, among other things, to
update the Articles to add definitions that reflect ICE Clear Europe's
existing committees, change the minimum number of directors from two to
six, provide for selection of replacement or additional directors by
the Nominations Committee, make use of a Senior Independent Director
appointed in accordance with the UK Corporate Governance Code, stagger
the retirement or rotation of independent directors (the provisions for
the retirement or rotation of CDS directors will not change),
explicitly provide that directors appoint members of relevant
committees, which operate under their own terms of reference, require
independent directors to disclose to the Board of Directors all other
directorships that they hold both prior to appointment and on an
ongoing basis, adopt new procedures identifying and addressing
conflicts of interest of directors with respect to both transactions
with ICE Clear Europe where a director has an interest and matters in
the ordinary course in which directors' interests are affected (i.e.,
directors affiliated with clearing members), make clarifications to
notice waiver requirements, and require a written record of all
unanimous or majority decisions of the directors for at least ten
years. Additionally, ICE Clear Europe proposed other non-substantive
corrections and clarifications to the Articles of Association. For
example, various references to persons have been revised to be gender-
neutral, and various articles have been renumbered in light of the
changes discussed above.
III. Discussion and Commission Findings
Section 19(b)(2)(C) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
such proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to such
organization.\4\ Section 17A(b)(3)(C) of the Act requires,\5\ among
other things, that the rules of a clearing agency \6\ assure a fair
representation of its participants in the selection of its directors
and administration of its affairs. Section 17A(b)(3)(F) of the Act
requires,\7\ among other things, that the rules of a registered
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, 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. Rule 17Ad-22(e)(2) requires that a covered clearing agency
\8\ shall establish, implement, maintain and enforce written policies
and procedures reasonably designed to provide for governance
arrangements that are clear and transparent; clearly prioritize the
safety and efficiency of the covered clearing agency; support the
public interest requirements in Section 17A of the Act; establish that
the board of directors and senior management have appropriate
experience and skills to discharge their duties and responsibilities;
specify clear and direct lines of responsibility; and consider the
interests of participants' customers, securities issuers and holders,
and other relevant stakeholders of the covered clearing agency.\9\
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(2)(C).
\5\ 15 U.S.C. 78q-1(b)(3)(C).
\6\ The ``rules of a clearing agency'' include its articles of
incorporation and bylaws. 15 U.S.C. 78c(a)(27).
\7\ 15 U.S.C. 78q-1(b)(3)(F).
\8\ See 17 CFR 240.17Ad-22(a)(5) (defining ``covered clearing
agency'').
\9\ See 17 CFR 240.17Ad-22(e)(2).
---------------------------------------------------------------------------
The Commission finds that the proposed rule change is consistent
with Section 17A of the Act and Rule 17Ad-22 thereunder. In particular,
the Commission finds that the amendments will clarify aspects of ICE
Clear Europe's governance framework and thus, in ICE Clear Europe's
view, facilitate the efficient operation of the clearing house and the
prompt and accurate clearance and settlement of transactions. The
Commission believes that these amendments are consistent with ICE Clear
Europe's obligation to have governance arrangements that are clear and
transparent, prioritize the safety and efficiency of the clearing
agency, and support the public interest requirements in Section 17A of
the Act and the objectives of owners and participants. Finally, with
respect to potential conflicts of interest concerning matters in the
ordinary course in which directors' interests are affected, the
Commission believes that this provision is consistent with the
requirement that the rules of a clearing agency assure a fair
representation of its participants in the administration of its
affairs. ICE Clear Europe has represented that these provisions are not
intended to result in the recusal or disqualification of member-
affiliated directors as a class,\10\ but rather could result in recusal
on a case-by-case basis depending on the conflict. Further, any recusal
is not automatic; rather, ICE Clear Europe's shareholders or the
remaining directors have the ability to determine whether full or
limited participation by the interested director is appropriate.
Moreover, ICE Clear Europe currently affords members participation in
product risk committees and on the Board's Risk Committee.
---------------------------------------------------------------------------
\10\ In particular, ICE Clear Europe has represented that the
recusal provisions in proposed Article 53 of its Shareholder
Articles would not prohibit member-affiliated directors from
participating in decisions relating to margin levels as a general
matter, decisions to clear new contracts, or other similar general
matters that are applicable to all members or particular classes of
clearing members.
---------------------------------------------------------------------------
Relying on these findings and assurances, the Commission believes
that the proposed rule change is consistent with Sections 17A(b)(3)(C)
and (F) of the Act,\11\ and Rule 17Ad-22(e)(2) thereunder.\12\
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78q-1(b)(3)(C) and (F).
\12\ 17 CFR 240.17Ad-22(e)(2).
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered pursuant to Section 19(b)(2) of the Act
that the proposed rule change (SR-ICEEU-2017-007) be, and hereby is,
approved.\13\
---------------------------------------------------------------------------
\13\ 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.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Brent J. Fields,
Secretary.
[FR Doc. 2017-14246 Filed 7-6-17; 8:45 am]
BILLING CODE 8011-01-P