[Federal Register Volume 80, Number 21 (Monday, February 2, 2015)]
[Notices]
[Pages 5610-5611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-01866]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74148; File No. SR-ICEEU-2015-002]
Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change Relating
to Clearance of New Government Bond Contracts
January 27, 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 January 16, 2015, ICE Clear Europe Limited (``ICE Clear Europe'' or
the ``Clearing House'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change described in Items
I, II and III below, which Items have been prepared primarily by ICE
Clear Europe. ICE Clear Europe filed the proposal pursuant to Section
19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(4)(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)(4)(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 proposed rule change is to modify
certain aspects of the ICE Clear Europe Delivery Procedures in
connection with Euro-Denominated Government Bond Contracts and Swiss
Confederation Bond Contracts (collectively, the ``European Government
Bond Contracts''), which are traded on the ICE Futures Europe market
and cleared by ICE Clear Europe.
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 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. ICE Clear Europe 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 modify certain
aspects of the ICE Clear Europe Delivery Procedures in connection with
European Government Bond Contracts, which are traded on ICE Futures
Europe and cleared by ICE Clear Europe. ICE Clear Europe does not
otherwise propose to amend its clearing rules or procedures in
connection with the European Government Bond Contracts.
The amendments adopt new Parts U and V of the Delivery Procedures,
which will be applicable to the European Government Bond Contracts in
the case of physical delivery. Part U applies to Euro-Denominated
Government Bond Contracts (a category that currently consists of
futures contracts on German, Italian and Spanish government bonds).
Part V applies to Swiss franc-denominated futures contracts on Swiss
government bonds. The amendments also adopt new Part W of the Delivery
Procedures, which addresses the treatment of certain cash claims,
distributions, transformations or other events (collectively, ``debt
events'') that may arise or occur with respect to a bond underlying a
government bond contract during the delivery period.
Each of new Parts U and V of the Delivery Procedures provides,
among other matters, specifications for delivery of the applicable
deliverable bonds under a European Government Bond Contract through the
Clearing House's account at the relevant European securities settlement
system (Euroclear, Clearstream Banking or SIX SIS AG, as applicable)
for the particular government bonds. Each Part also provides relevant
definitions and a detailed timetable for the respective notice,
allocation, delivery and other obligations of the parties (and the
Clearing House) in respect of delivery under the relevant contracts.
The amendments further address invoicing and payment for delivery.
New Part W of the Delivery Procedures addresses the occurrence of
certain debt events with respect to the bonds underlying a government
bond contract after the expiry date of the contract (and thus during
the relevant delivery period for the contract). These include cash
claims arising in relation to the underlying bond, the distribution of
other obligations to a bondholder (such as a payment in kind), and/or a
transformation of the underlying bond (for example pursuant to a
currency redenomination or debt restructuring). Part W clarifies the
rights and obligations of the buyer and seller under the relevant
contract in respect of such an event (in general, the buyer under the
contract will be entitled to the relevant cash claim, distribution or
transformed obligation). Part W also provides certain limitations on
the obligations and liability of the Clearing House with respect to a
debt event. The amendments provide mechanics for notification of a debt
event where an election is required to be made. The amendments also
contain procedures to address failed deliveries and settlements in
connection with debt events, as well as certain related tax
liabilities.
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 proposed delivery procedures for
European Government Bond Contracts are similar to those of other ICE
Futures Europe contracts currently cleared by ICE Clear Europe,
including the UK government bond futures contracts. ICE Clear Europe
believes that its existing financial resources, risk management,
systems and operational arrangements are sufficient to support clearing
of such products and physical delivery under such products (and will
not be adversely affected by the proposed amendments to the Delivery
Procedures).
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\5\ 15 U.S.C. 78q-1.
\6\ 17 CFR 240.17Ad-22.
\7\ 15 U.S.C. 78q-1(b)(3)(F).
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Specifically, ICE Clear Europe believes that it will be able to
manage the risks associated with physical delivery under the European
Government Bond Contracts. The European Government Bond Contracts
present a similar risk profile to other government bond futures
contracts currently traded on ICE Futures Europe and cleared by ICE
Clear Europe, and ICE Clear Europe believes that its existing risk
management and margin framework is sufficient for purposes of risk
management of the European
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Government Bond Contracts and related deliveries.
Similarly, ICE Clear Europe has established appropriate standards
for determining the eligibility of contracts submitted to the Clearing
House for clearing, and ICE Clear Europe believes that its existing
systems are appropriately scalable to handle physical delivery under
the European Government Bond Contracts, which is generally similar from
an operational perspective to delivery under other ICE Futures Europe
bond contracts currently cleared by ICE Clear Europe.
For the reasons noted above, ICE Clear Europe believes that the
proposed rule change is consistent with the requirements of Section 17A
of the Act \8\ and regulations thereunder applicable to it.
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\8\ 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 rule change will
have any impact, or impose any burden, on competition not necessary or
appropriate in furtherance of the Act. ICE Clear Europe is adopting the
amendments to the Delivery Procedures in connection with European
Government Bond Contracts traded on the ICE Futures Europe market. ICE
Clear Europe believes that such contracts will provide additional
opportunities for interested market participants to engage in trading
activity relating to European government bond futures. ICE Clear Europe
does not believe the adoption of related Delivery Procedures amendments
would adversely affect access to clearing for clearing members or their
customers, or otherwise adversely affect competition in clearing
services.
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. 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) \9\ of the Act and Rule 19b-4(f)(4)(ii) \10\
thereunder. 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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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(4)(ii).
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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-2015-002 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-2015-002. 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.
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-2015-002
and should be submitted on or before February 23, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-01866 Filed 1-30-15; 8:45 am]
BILLING CODE 8011-01-P