[Federal Register Volume 76, Number 139 (Wednesday, July 20, 2011)]
[Notices]
[Pages 43376-43380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-18307]



[[Page 43376]]

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DEPARTMENT OF THE TREASURY


Order Granting Temporary Exemptions From Certain Government 
Securities Act Provisions and Regulations in Connection With a Request 
From ICE Clear Credit LLC (Formerly ICE Trust U.S. LLC) Related to 
Central Clearing of Credit Default Swaps, and Request for Comments

AGENCY: Department of the Treasury, Office of the Assistant Secretary 
for Financial Markets.

ACTION: Notice of temporary exemptions.

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SUMMARY: The Department of the Treasury (``Treasury'' or ``We'') is 
granting by order temporary exemptions from certain Government 
Securities Act of 1986 provisions and regulations regarding 
transactions in credit default swaps that reference government 
securities. ICE Clear Credit LLC requested these temporary exemptions 
for itself, its Clearing Members, and certain brokers that are not 
registered as government securities brokers. Treasury will revisit 
these exemptions when the Commodity Futures Trading Commission and the 
Securities and Exchange Commission issue final rules or guidance to 
implement Title VII of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act. The temporary exemptions could become unavailable if 
the facts and circumstances, as represented in the request, change. 
Treasury is also soliciting public comment on this order.

DATES: Effective date: July 16, 2011. Submit comments on or before 
September 19, 2011.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

    You may download this order from http:// www.regulations.gov or the 
Bureau of the Public Debt's Web site at http://www.treasurydirect.gov. 
You may also e-mail comments to [email protected].

Paper Comments

    Send paper comments to Department of the Treasury, Bureau of the 
Public Debt, Government Securities Regulations Staff, 799 9th Street, 
NW., Washington, DC 20239-0001.
    Please submit your comments using only one method and provide your 
full name and mailing address. We will post all comments on the Bureau 
of the Public Debt's Web site at http://www.treasurydirect.gov. The 
order and comments will also be available for public inspection and 
copying at the Treasury Department Library, Main Treasury Building, 
1500 Pennsylvania Avenue, NW., Washington, DC 20220. To visit the 
library, call (202) 622-0990 for an appointment. In general, comments 
received, including attachments and other supporting materials, are 
part of the public record and are available to the public. Do not 
submit any information in your comment or supporting materials that you 
consider confidential or inappropriate for public disclosure.

FOR FURTHER INFORMATION CONTACT: Lori Santamorena, Kurt Eidemiller, or 
Kevin Hawkins, Department of the Treasury, Bureau of the Public Debt, 
at 202-504-3632.

SUPPLEMENTARY INFORMATION: 

I. Section 15C of the Securities Exchange Act of 1934

    Section 15C of the Securities Exchange Act of 1934 (``Exchange 
Act''), as amended by the Government Securities Act of 1986 (``GSA'') 
\1\ governs transactions in government securities \2\ by government 
securities brokers \3\ and government securities dealers.\4\ Treasury 
regulations promulgated under the GSA impose obligations on government 
securities brokers and government securities dealers concerning 
financial responsibility, protection of customer securities and 
balances, and recordkeeping and reporting.
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    \1\ Public Law 99-571, 100 Stat. 3208 (1986).
    \2\ The term government securities, as defined at 15 U.S.C. 
78c(a)(42), means: (A) Securities which are direct obligations of, 
or obligations guaranteed as to principal or interest by, the United 
States; (B) securities which are issued or guaranteed by the 
Tennessee Valley Authority or by corporations in which the United 
States has a direct or indirect interest and which are designated by 
the Secretary of the Treasury for exemption as necessary or 
appropriate in the public interest or for the protection of 
investors; (C) securities issued or guaranteed as to principal or 
interest by any corporation the securities of which are designated, 
by statute specifically naming such corporation, to constitute 
exempt securities within the meaning of the laws administered by the 
SEC; and (D) generally ``any put, call, straddle, option, or 
privilege'' on a government security other than one that is traded 
on a national securities exchange or for which quotations are 
disseminated through an automated quotation system operated by a 
registered securities association. Certain Canadian government 
obligations are also included for certain purposes.
    \3\ A government securities broker generally is ``any person 
regularly engaged in the business of effecting transactions in 
government securities for the account of others,'' with certain 
exclusions. 15 U.S.C. 78c(a)(43).
    \4\ A government securities dealer generally is ``any person 
engaged in the business of buying and selling government securities 
for his own account, through a broker or otherwise,'' with certain 
exclusions. 15 U.S.C. 78c(a)(44).
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    Section 15C(a) of the Exchange Act (Title I of the GSA) requires 
government securities brokers and government securities dealers that 
effect transactions in or induce the purchase or sale of government 
securities to be registered with the Securities and Exchange Commission 
(``SEC'').\5\ This registration requirement does not apply to financial 
institutions or brokers and dealers that are already registered under 
the Exchange Act, as long as written notice is filed with the 
appropriate regulatory agency.\6\ All government securities brokers and 
government securities dealers are required to comply with the 
requirements in Treasury's GSA regulations that are set out at 17 CFR 
parts 400-449.\7\ Treasury's GSA regulations, for the most part, 
incorporate with some modifications SEC rules for non-financial 
institution government securities brokers and government securities 
dealers and the appropriate regulatory agency \8\ rules for financial 
institutions that are required to file notice as government securities 
brokers and government securities dealers.
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    \5\ 15 U.S.C. 78o-5(a)(1)(A).
    \6\ 15 U.S.C. 78o-5(a)(1)(B).
    \7\ 17 CFR part 400 Rules of general application; 17 CFR part 
401 Exemptions; 17 CFR part 402 Financial responsibility; 17 CFR 
part 403 Protection of customer securities and balances; 17 CFR part 
404 Recordkeeping and preservation of records; 17 CFR part 405 
Reports and audit; 17 CFR part 420 Large position reporting; and 17 
CFR part 449 Forms, section 15C of the Securities Exchange Act of 
1934. The GSA regulations also include requirements for custodial 
holdings by depository institutions at 17 CFR part 450, which were 
issued under Title II of the GSA.
    \8\ The definition of appropriate regulatory agency with respect 
to a government securities broker or a government securities dealer 
is set out at 15 U.S.C. 78c(a)(34)(G). The definition includes the 
Board of Governors of the Federal Reserve System, the Comptroller of 
the Currency, the Federal Deposit Insurance Corporation, and in 
limited circumstances the SEC.
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    Section 15C(a)(5) of the Exchange Act provides that the Secretary 
of the Treasury (``Secretary''):

    By rule or order, upon the Secretary's own motion or upon 
application, may conditionally or unconditionally exempt any 
government securities broker or government securities dealer, or 
class of government securities brokers or government securities 
dealers, from any provision of subsection (a), (b), or (d) of this 
section, other than subsection (d)(3), or the rules thereunder, if 
the Secretary finds that such exemption is consistent with the 
public interest, the protection of investors, and the purposes of 
[the Exchange Act].

    Treasury, in coordination with the SEC, has previously issued 
several temporary exemptive orders to ICE Trust U.S. LLC (``ICE 
Trust'') to facilitate the central clearing of credit default swaps 
(``CDS'') \9\ that reference

[[Page 43377]]

government securities. On March 6, 2009, Treasury granted a temporary 
exemption \10\ from the provisions of section 15C(a), (b), and (d) 
(other than subsection (d)(3)) of the Exchange Act, and the rules 
thereunder, to ICE Trust, certain ICE Trust participants, and certain 
eligible contract participants (``ECPs'').\11\ In the same order 
Treasury also granted a limited temporary exemption from certain GSA 
regulatory requirements to government securities brokers and government 
securities dealers that are not financial institutions.\12\ On December 
7, 2009, Treasury extended the expiration date of these temporary 
exemptions until March 7, 2010.\13\ On January 28, 2010, Treasury 
granted a temporary, conditional exemption until March 7, 2010, to 
certain ICE Trust Clearing Members and certain ECPs to accommodate 
using ICE Trust to clear customer CDS transactions.\14\ On March 7, 
2010, Treasury granted a conditional, temporary exemption from certain 
GSA provisions and regulations to certain ICE Trust participants and 
certain ECPs.\15\ In the same order Treasury also granted a temporary 
exemption from certain GSA regulatory requirements for registered or 
noticed government securities brokers and government securities dealers 
that are not financial institutions. On November 30, 2010, Treasury 
issued an order extending the expiration date of these temporary 
exemptions until July 16, 2011.\16\ Treasury received no comments on 
its previous orders.
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    \9\ A CDS is a bilateral contract between two parties, known as 
counterparties. The value of this financial contract is based on 
underlying obligations of a single entity (reference entity) or on a 
particular security or other debt obligation, or an index of several 
such entities, securities, or obligations. Under a CDS contract, the 
obligation of a seller to make payments is triggered by a default or 
other credit event as to such entity or entities or such security or 
securities.
    \10\ 74 FR 10647, March 11, 2009 Order Granting Temporary 
Exemptions from Certain Provisions of the Government Securities Act 
and Treasury's Government Securities Act Regulations in Connection 
with a Request on Behalf of ICE US Trust LLC Related to Central 
Clearing of Credit Default Swaps, and Request for Comments, 
available at: http://www.treasurydirect.gov/instit/statreg/gsareg/gsareq_treasexemptiveorder309.pdf.
    \11\ ECPs are defined in section 1a(18) of the Commodity 
Exchange Act, 7 U.S.C. 1 et seq. The use of the term ECPs in the 
March 6, 2009 order refers to the definition of ECPs in effect on 
March 6, 2009, and excludes persons that are ECPs under former 
section 1a(12)(C).
    \12\ Registered or noticed government securities brokers and 
government securities dealers that are not financial institutions 
were temporarily exempted from the regulations in 17 CFR parts 402, 
403, 404, and 405 with exceptions.
    \13\ 74 FR 64127, December 7, 2009 Order Extending Temporary 
Exemptions from Certain Government Securities Act Provisions and 
Regulations in Connection with a Request from ICE Trust U.S. LLC 
Related to Central Clearing of Credit Default Swaps, available at: 
http://www.treasurydirect.gov/instit/statreg/gsareg/FR_Treasury_Order_ICE_Extension_(12-7-09).pdf.
    \14\ 75 FR 4626, January 28, 2010 Order Granting a Temporary 
Exemption from Certain Government Securities Act Provisions and 
Regulations in Connection with a Request from ICE Trust U.S. LLC 
Related to Central Clearing of Credit Default Swaps, and Request for 
Comments, available at: http://www.treasurydirect.gov/instit/statreg/gsareg/TreasuryICEOrderFedRegisterJan282010.pdf.
    \15\ 75 FR 11627, March 11, 2010 Order Granting Temporary 
Exemptions from Certain Government Securities Act Provisions and 
Regulations in Connection with a Request From ICE Trust U.S. LLC 
Related to Central Clearing of Credit Default Swaps, and Request for 
Comments, available at: http://www.treasurydirect.gov/instit/statreg/gsareg/TreasuryExemptiveOrderMarch112010FedRegister.pdf.
    \16\ 75 FR 75722, December 6, 2010 Order Extending Temporary 
Exemptions from Certain Government Securities Act Provisions and 
Regulations in Connection with a Request from ICE Trust U.S. LLC 
Related to Central Clearing of Credit Default Swaps, available at: 
http://www.treasurydirect.gov/instit/statreg/gsareg/TreasuryExemptiveOrderFedRegisterDec2010.pdf.
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II. Legislative Developments

    President Obama signed the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (``Dodd-Frank Act'') \17\ into law effective 
July 16, 2011, and the facts and circumstances for Treasury's previous 
exemptive orders changed.
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    \17\ Public Law 111-203, 124 Stat. 1376 (July 21, 2010).
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    The legislation was enacted, among other reasons, to reduce risk, 
increase transparency, and promote market integrity within the 
financial system, including by: (1) Providing for the registration and 
comprehensive regulation of swap dealers, security-based swap dealers, 
major swap participants and major security-based swap participants; (2) 
imposing clearing and trade execution requirements on swaps and 
security-based swaps, subject to certain exceptions; (3) creating 
rigorous recordkeeping and real-time reporting regimes; and (4) 
enhancing the rulemaking and enforcement authorities of the SEC and the 
Commodity Futures Trading Commission (``CFTC'') with respect to, among 
others, all registered entities and intermediaries subject to their 
oversight.\18\
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    \18\ See http://www.sec.gov and http://www.cftc.gov for a 
listing of all related proposed rulemakings.
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    Title VII of the Dodd-Frank Act established a comprehensive new 
regulatory framework for swaps and security-based swaps, and provided 
the SEC and the CFTC with the authority to regulate over-the-counter 
derivatives. The SEC and CFTC, in consultation with the Board of 
Governors of the Federal Reserve System, have issued proposed rules and 
proposed interpretive guidance under the Commodity Exchange Act 
(``CEA'') and the Exchange Act to implement relevant changes required 
by provisions of the Dodd-Frank Act, including the regulation of 
CDS.\19\
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    \19\ Id.
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    Under Title VII of the Dodd-Frank Act, the CFTC was given 
regulatory authority over swaps and the SEC was given regulatory 
authority over security-based swaps.\20\ The definition of the term 
``security-based swap,'' however, excludes swaps based on ``exempted 
securities.'' \21\ A CDS generally would be a swap and not a security-
based swap if it is based upon an exempted security (other than a 
municipal security). Because the CFTC has jurisdiction over swaps and 
the SEC has jurisdiction over security-based swaps, and because a CDS 
on an exempted security would be a swap and not a security-based swap, 
it is subject to CFTC jurisdiction.
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    \20\ The statute defines ``security-based swap'' as an 
agreement, contract, or transaction that is a ``swap'' (without 
regard to the exclusion from that definition for security-based 
swaps) and that also has certain characteristics specified in the 
statute.
    \21\ As of January 11, 1983, the date of enactment of the 
Futures Trading Act of 1982, Public Law 97-44, 96 Stat. 2294, 
section 3(a)(12) of the Exchange Act, 15 U.S.C. 78c(a)(12), provided 
that, among other securities, ``exempted securities'' include: (i) 
``Securities which are direct obligations of, or obligations 
guaranteed as to principal or interest by, the United States;'' (ii) 
certain securities issued or guaranteed by corporations in which the 
United States has a direct or indirect interest as designated by the 
Secretary of the Treasury; and (iii) certain other securities as 
designated by the SEC in rules and regulations.
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    The CFTC and SEC recently took action to defer many Dodd-Frank 
requirements regulating swaps and security-based swaps that would 
otherwise have gone into effect on July 16, 2011. On June 14, 2011, the 
CFTC issued a notice of proposed order and request for comment \22\ 
with respect to the effective dates of provisions of the Dodd-Frank Act 
relating to the regulation of the swaps markets. Similarly, the SEC has 
released orders \23\ granting temporary exemptions and other temporary 
relief, and providing information on compliance dates, applicable to 
the regulation of the security-based swaps markets. The SEC noted in 
certain of its orders that the temporary exemptions extended neither to 
the Exchange Act provisions applicable to government securities as set 
forth in Section 15C and its underlying rules and regulations, nor to 
the related definitions of ``government securities,'' ``government 
securities broker,'' and ``government securities dealer.'' The SEC 
further noted that it does not have authority under Section 36 of the 
Exchange Act to issue

[[Page 43378]]

exemptions in connection with these provisions.\24\
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    \22\ Available at http://cftc.gov/ucm/groups/public/@lrfederalregister/documents/file/2011-15195a.pdf.
    \23\Available at http://www.sec.gov/spotlight/dodd-frank.shtml.
    \24\ 15 U.S.C. 78mm(b).
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III. ICE Clear Credit LLC (``ICE Credit'') Request for Exemption

    On July 6, 2011, Treasury received a letter (``the ICE Credit 
request'') \25\ from ICE Credit requesting that, to avoid legal 
uncertainty, Treasury grant an exemption from the registration 
provisions of the GSA and Treasury regulations thereunder to ICE Credit 
and its Clearing Members \26\ and unregistered government securities 
brokers \27\ who enter into transactions with ICE Credit Clearing 
Members involving CDS that reference government securities and are 
submitted to ICE Credit for clearance and settlement.
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    \25\ Letter from Kevin R. McClear, General Counsel, ICE Trust 
U.S. LLC to the Commissioner of the Public Debt, Van Zeck, July 6, 
2011, available at: http://www.treasurydirect.gov/instit/statreg/gsareg/gsareg.htm. As noted in its request, on July 16, 2011, ICE 
Trust reorganized its corporate structure. ICE Trust changed from a 
New York-chartered limited purpose trust company to a Delaware 
limited liability company. ICE Trust also changed its name from ICE 
Trust U.S. LLC to ICE Clear Credit LLC and became a DCO with respect 
to swaps.
    \26\ The ICE Credit rulebook defines a Clearing Member as ``a 
person that has been approved by ICE Credit for the submission of an 
agreement or contract and that is party to an agreement with ICE 
Credit specifically relating to transactions in agreement or 
contract. Under ICE Credit rules, a Clearing Member must meet 
substantial eligibility criteria prior to being permitted to become 
a Clearing Member, which criteria include standards of business 
integrity, financial capacity, creditworthiness, operational 
capability, experience and competence as may be established by ICE 
Credit from time to time.'' The ICE Credit rulebook is publicly 
available online at https://www.theice.com/publicdocs/clear_us/ICE_Trust_Rules.pdf.
    \27\ In its request, ICE Credit refers to unregistered 
government securities brokers as ``inter-dealer brokers.'' See note 
25, supra.
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    In its request, ICE Credit contends that central clearing has 
several important market efficiency and investor protection benefits 
over clearing CDS on a bilateral basis. ICE Credit asserts that: a 
highly regulated central counterparty with significant financial 
resources substantially reduces the risk of counterparty default; the 
ICE Credit Rules allow a streamlined process for a party to a CDS 
transaction to move one or more pieces of its CDS portfolio from one 
Clearing Member to another (portability), which will result in a more 
efficient CDS marketplace, greater investor choice, and meaningful 
investor protection; central clearing provides a robust mechanism for 
the segregation and protection of margin provided by market 
participants; and the central counterparty model improves transparency.
    ICE Credit's request also acknowledges that ICE Credit will be 
subject to a new regulatory framework that includes comprehensive 
oversight of aspects of its CDS business including eligibility 
requirements, books and records, systems, and margin requirements of 
both ICE Credit and its Clearing Members. It also acknowledges that all 
rule changes must be approved by the SEC in accordance with regulations 
promulgated under Section 19(b) of the Exchange Act, and either self-
certified with or approved by the CFTC in accordance with the CEA. 
Further, upon the effective date of Title VII of the Dodd-Frank Act, 
Ice Credit will be deemed registered \28\ as a derivatives clearing 
organization (``DCO'') \29\ with the CFTC and will be subject to 
regular audit or risk reviews by the CFTC based on the 18 Core 
Principles set forth in the CEA.\30\
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    \28\ See Dodd-Frank Act section 725(b).
    \29\ 7 U.S.C. 1a(9).
    \30\ See Section 5b(c)(2) of the CEA.
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    ICE Credit's request notes that it will be subject to regulation of 
all aspects of its clearing activities, including eligibility 
requirements, margin required from Clearing Members, and the procedures 
relating to default. ICE Credit Clearing Members effecting customer 
transactions in CDS will be registered as futures commission merchants 
(``FCMs'') \31\ with the CFTC and as either broker-dealers or 
securities-based swaps dealers with the SEC.
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    \31\ 7 U.S.C. 1a(28).
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    ICE Credit is also requesting an exemption for certain unregistered 
government securities brokers. ICE Credit explains that its Clearing 
Members may use the facilities of unregistered government securities 
brokers to execute CDS and submit such transactions for clearance and 
settlement to ICE Credit. ICE Credit notes that the use of unregistered 
government securities brokers by CDS market participants is a means of 
promoting an orderly and efficient market for CDS that reference 
government securities.
    ICE Credit also contends in its request that CDS that reference 
government securities may not be exempt from the definition of 
``security'' under the Exchange Act. As a result, and in the absence of 
relief, ICE Credit, its Clearing Members, and certain unregistered 
government securities brokers that are engaged in the business of 
effecting transactions in government securities may have to register as 
government securities brokers or government securities dealers in 
accordance with section 15C of the Exchange Act.
    ICE Credit believes that an exemption is warranted in light of the 
comprehensive regulatory scheme imposed by the Dodd-Frank Act. ICE 
Credit argues that the registration of ICE Credit, its Clearing 
Members, and certain unregistered government securities brokers as 
government securities brokers or government securities dealers could 
create complex interpretive issues that result in legal uncertainty.
    The ICE Credit request states that, to date, the products eligible 
for clearing at ICE Credit include CDS transactions involving certain 
indices and CDS contracts based on individual reference entities or 
securities (single-name CDS contracts) that meet ICE Credit's risk 
management and other criteria. The request also states that as of June 
1, 2011, ICE Credit has cleared a notional amount of $666 billion of 
CDS on behalf of its 15 current Clearing Members. To date, ICE Credit 
has not cleared any CDS contracts that reference government securities.

IV. Temporary Exemption for ICE Credit, ICE Credit Clearing Members, 
and Certain Unregistered Government Securities Brokers

    In light of the comprehensive regulatory framework established by 
the Dodd-Frank Act, the application of the GSA registration 
requirements to ICE Credit, its Clearing Members, and certain 
unregistered government securities brokers in CDS transactions that are 
not currently registered or noticed government securities brokers or 
government securities dealers is not warranted at this time.
    Accordingly, the Secretary, by order, is granting a temporary 
exemption to ICE Credit, its Clearing Members, and certain unregistered 
government securities brokers from the provisions of section 15C(a), 
(b), and (d) (other than subsection (d)(3)) of the Exchange Act, and 
the rules thereunder.\32\ This temporary exemption is confined solely 
to these entities' transactions in CDS that reference government 
securities and are cleared by ICE Credit. This temporary exemption does 
not apply to any ICE Credit Clearing Members or government securities 
brokers that are registered or noticed as government securities brokers 
or government securities dealers.\33\
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    \32\ See note 5, supra.
    \33\ As used in this order, registered or noticed government 
securities brokers or government securities dealers encompasses all 
brokers, dealers, and entities required to register or file notice 
pursuant to section 15C(a)(1) of the Exchange Act.

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[[Page 43379]]

V. Temporary Exemption for Registered or Noticed Government Securities 
Brokers and Government Securities Dealers That Are Not Financial 
Institutions

    The Secretary is also granting a temporary exemption to registered 
or noticed government securities brokers and government securities 
dealers that are not financial institutions \34\ from the regulations 
in 17 CFR parts 402, 403, 404, and 405, with exceptions.\35\ This 
temporary exemption is confined solely to these entities' transactions 
in CDS that reference government securities and are cleared by ICE 
Credit.
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    \34\ A financial institution is defined in 15 U.S.C. 78c(a)(46).
    \35\ This order does not exempt registered or noticed government 
securities brokers or government securities dealers that are not 
financial institutions from the regulations regarding capital 
requirements, reserves and custody of securities, records and 
reports, and quarterly security counts.
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    With respect to noticed government securities brokers and 
government securities dealers that are financial institutions (and also 
ICE Credit Clearing Members), the GSA regulations generally adopt the 
appropriate regulatory agency rules for financial institutions that are 
comparable to the CFTC rules to which the temporary exemption does not 
extend. The GSA regulations also incorporate rules of the appropriate 
regulatory agencies that are otherwise applicable to financial 
institutions.
    Treasury is not extending this temporary exemption to financial 
institution government securities brokers and government securities 
dealers. They should continue to comply with existing rules.
    Treasury believes that continuing to facilitate the central 
clearing of CDS transactions through the granting of the temporary 
exemptions in this order is consistent with the public interest, the 
protection of investors, and the purposes of the Exchange Act. These 
temporary exemptions will remain in effect unless Treasury revokes or 
modifies them. As of the effective date of Treasury's order, the CFTC 
and the SEC have not issued final rules or interpretive guidance to 
implement Title VII of the Dodd-Frank Act.\36\ When they do, Treasury 
will revisit these exemptions.
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    \36\ See notes 21 and 22, supra.
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    While providing temporary exemptions from certain provisions of 
section 15C of the Exchange Act, Treasury is not making a 
determination, for purposes of this order, on whether particular CDS 
that reference government securities are ``government securities'' as 
defined by the Exchange Act. The exemptions being granted in this order 
are not intended to limit regulatory authority of other regulators.

VI. Consultations and Considerations

    In granting these temporary exemptions, Treasury has consulted with 
and considered the views of the staffs of the CFTC, the SEC, and the 
appropriate regulatory agencies for financial institutions.
    Treasury bases this order on the facts and circumstances presented 
and representations made by ICE Credit in its request. These temporary 
exemptions could become unavailable if the facts or circumstances 
change such that the representations in the request are no longer 
materially accurate. If this were to happen, the status of existing 
positions in cleared CDS that reference government securities would 
remain unchanged, but no new positions could be established pursuant to 
the temporary exemptions unless approved by Treasury.
    ICE Credit must promptly notify Treasury in writing if any of the 
relevant information provided to obtain these temporary exemptions 
changes.

VII. Solicitation of Comments

    We request comments on the temporary exemptions we are granting in 
this order to accommodate central clearing of CDS that reference 
government securities by ICE Credit. We are also soliciting public 
comment on whether there is a need for broader exemptive relief from 
provisions of the GSA and Treasury regulations in light of the Dodd-
Frank Act amendments to the Exchange Act. For example, is it necessary 
to provide similar exemptive relief to other entities that engage in 
transactions in CDS that reference government securities and are not 
submitted to a central counterparty (``uncleared'')?
    Treasury will continue to monitor ICE Credit's progress and the 
development of central counterparties for the CDS market and determine 
to what extent, if any, additional action might be necessary.
    Treasury also will continue to consult with the staffs of the CFTC, 
the SEC, and the appropriate regulatory agencies for financial 
institutions on this matter.

VIII. Conclusion

    It is hereby ordered, pursuant to section 15C(a)(5) of the Exchange 
Act, that:
    (a) Temporary Exemption for ICE Clear Credit LLC (``ICE Credit''), 
ICE Credit Clearing Members, and Certain Government Securities Brokers.
    (1) Persons eligible. This temporary exemption is available to a) 
ICE Credit and b) ICE Credit Clearing Members and unregistered 
government securities brokers who enter into transactions with ICE 
Credit Clearing Members involving CDS that reference government 
securities and are submitted to ICE Credit for clearance and 
settlement. However, this temporary exemption is not available to ICE 
Credit Clearing Members and government securities brokers that are 
registered or noticed as government securities brokers or government 
securities dealers under section 15C(a)(1) of the Exchange Act.
    (2) Scope of the temporary exemption. Subject to the exclusions in 
paragraph (a)(1), such entities shall temporarily be exempt from the 
provisions of section 15C(a), (b), and (d) (other than subsection 
(d)(3)) of the Exchange Act, and the rules thereunder.
    (b) Temporary Exemption for Registered or Noticed Government 
Securities Brokers and Government Securities Dealers that are not 
Financial Institutions.
    ICE Credit Clearing Members and government securities brokers that 
are registered or noticed government securities brokers and government 
securities dealers but not financial institutions are exempt from the 
regulations in 17 CFR parts 402, 403, 404, and 405 with respect to 
their transactions with ICE Credit Clearing Members involving CDS that 
reference government securities and are submitted to ICE Credit for 
clearance and settlement. However, this order does not exempt 
registered or noticed government securities brokers or government 
securities dealers that are not financial institutions from the 
following:
    (1) The capital requirements for registered government securities 
brokers and government securities dealers in part 402 of the GSA 
regulations (which are comparable to SEC Rule 15c3-1 on net capital);
    (2) The provisions of part 403 of the GSA regulations that 
incorporate and modify SEC Rule 15c3-3 on reserves and custody of 
securities;
    (3) The provisions of parts 404 and 405 of the GSA regulations that 
incorporate and modify SEC Rules 17a-3 through 17a-5, 17h-1T and 17h-
2T, on records and reports; and
    (4) The provisions of part 404 of the GSA regulations that 
incorporate and modify SEC Rule 17a-13 on quarterly security counts.
    The temporary exemptions contained in this order are based on the 
facts and circumstances presented in the request. These temporary 
exemptions could

[[Page 43380]]

become unavailable if the facts or circumstances change such that the 
representations in the request are no longer materially accurate. ICE 
Credit must promptly notify Treasury in writing if any of the 
information provided to obtain these temporary exemptions changes. If 
an underlying representation were to no longer be accurate, the status 
of existing positions in cleared CDS that reference government 
securities would remain unchanged, but no new positions could be 
established pursuant to the temporary exemptions unless approved by 
Treasury.

IX. Paperwork Reduction Act

    There is no new collection of information contained in this order, 
and, therefore, the Paperwork Reduction Act does not apply.

Mary J. Miller,
Assistant Secretary for Financial Markets.
[FR Doc. 2011-18307 Filed 7-15-11; 4:15 pm]
BILLING CODE 4810-39-P