[Federal Register Volume 80, Number 200 (Friday, October 16, 2015)]
[Notices]
[Pages 62593-62594]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26325]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76122; File No. SR-ICC-2015-015]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change Related to the ICC Rule Enforcement
Process for Missed Submissions
October 9, 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 September 30, 2015, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared primarily by ICC. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The purpose of the proposed changes is to make revisions to the ICC
Clearing Rules (the ``Rules'') related to the ICC rule enforcement
process for Missed Submissions.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, ICC 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. ICC 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
As part of ICC's end-of-day price discovery process, ICC Clearing
Participants (``CPs'') are required to submit end-of-day prices for
specific instruments related to their open interest at ICC, in
accordance with Rule 404(b) and ICC Procedures. Failure of a CP to
provide submissions required by ICC pursuant to Rule 404(b) and ICC
Procedures constitute a Missed Submission. In order to provide
incentive against Missed Submissions, ICC has adopted a summary
assessment approach described in Rule 702(e) and Schedule 702 of the
Rules.
Currently, under Rule 702(e)(ii)(2), a CP may be eligible for a
once-in-a-lifetime conditional waiver from such assessments, if one or
more Missed Submissions are the first instance(s) of a Missed
Submission for the type of instrument (index or single name) and the CP
provides adequate explanation of the cause and plans for remedial
actions.
Given the increased automation of price submissions, ICC recognizes
that there may be circumstances, due to technological failures, which
may result in Missed Submissions. Furthermore, due to the significant
length of time since the inception of the end-of-day process, many CPs
have utilized their once-in-a-lifetime waiver. As such, ICC believes it
is reasonable to provide, under limited circumstances, a conditional
once-a-year waiver for such Missed Submissions caused by technical
failures, as described below. Such Rule changes will not affect the
integrity and effectiveness of the end-of-day price discovery process.
ICC believes such Rule changes provide a valuable and practical balance
between the technicalities of the price discovery process and
appropriate penalization for Missed Submissions.
The proposed Rule text provides for the replacement of ICC's
current once-in-a-lifetime waiver for Missed Submissions with a
conditional once-a-year waiver for Missed Submissions caused by
technical failures. Under revised Rule 702(e)(ii)(2), a CP would be
eligible for one waiver per year for single name Missed Submissions,
and one waiver per year for index Missed Submissions. A CP may request
such wavier(s) be applied against all Missed Submissions for a given
instrument class on a given day. A CP would be required to provide
documentation with a waiver request, explaining that the root-cause of
the Missed Submission was a technology issue and including a
remediation plan to fix the cause of the Missed Submission. ICC would
review and evaluate the waiver request and accept unless it had
legitimate concerns that the root-cause of the Missed Submission had
not been adequately identified, was not due to a technical issue, and/
or would not be corrected by the provided remediation plan. ICC would
maintain its current ability to provide waivers for Missed Submissions
deemed to be due to extraordinary circumstances outside of a CP's
control, as set forth in Rule 702(e)(ii)(3). Pending regulatory
approval, ICC plans to implement these changes on January 1, 2016, and
apply the once-a-year waiver to the 2016 calendar year, and each
calendar year going forward. There are no changes to ICC policies and
procedures as a result of the Rule changes.
Section 17A(b)(3)(F) of the Act \3\ requires, among other things,
that the rules of a clearing agency be designed to protect investors
and the public interest and to comply with the provisions of the Act
and the rules and regulations thereunder. ICC believes that the
proposed rule changes are consistent with the requirements of the Act
and the rules and regulations thereunder applicable to ICC, in
particular, to Section 17(A)(b)(3)(F),\4\ because ICC believes that the
proposed rule changes will assure the prompt and accurate clearance and
settlement of securities transactions, derivatives agreements,
contracts, and transactions, as the proposed revisions enhance ICC's
price discovery process, by ensuring a fair and equitable assessment
structure. As such, the proposed changes are designed to promote the
prompt and accurate clearance and settlement of securities
transactions, derivatives agreements, contracts, and transactions
[[Page 62594]]
within the meaning of Section 17A(b)(3)(F) \5\ of the Act.
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\3\ 15 U.S.C. 78q-1(b)(3)(F).
\4\ Id.
\5\ Id.
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Furthermore, such proposed changes are designed to ensure that CPs
are appropriately disciplined for violations of ICC's rules,
specifically Missed Submissions, through an appropriate fining
structure, in accordance with Section 17A(b)(3)(G).\6\ Finally, such
proposed rule changes are intended to provide a fair procedure with
respect to the disciplining of CPs for Missed Submissions, in
accordance with Section 17A(b)(3)(H).\7\
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\6\ 15 U.S.C. 78q-1(b)(3)(G).
\7\ 15 U.S.C. 78q-1(b)(3)(H).
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B. Self-Regulatory Organization's Statement on Burden on Competition
ICC does not believe the proposed rule changes would have any
impact, or impose any burden, on competition. The Rule changes related
to the ICC rule enforcement process for Missed Submissions apply
uniformly across all market participants. Therefore, ICC does not
believe the proposed rule changes impose any burden on competition that
is inappropriate in furtherance of the purposes 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 rule change have not been
solicited or received. ICC will notify the Commission of any written
comments received by ICC.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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-ICC-2015-015 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-ICC-2015-015. 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 also will be available
for inspection and copying at the principal office of ICE Clear Credit
and on ICE Clear Credit's Web site at https://www.theice.com/clear-credit/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-ICC-2015-015
and should be submitted on or before November 6, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-26325 Filed 10-15-15; 8:45 am]
BILLING CODE 8011-01-P