[Federal Register Volume 77, Number 38 (Monday, February 27, 2012)]
[Notices]
[Pages 11607-11608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-4421]



[[Page 11607]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66434; File No. SR-ICEEU-2012-02]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing and Order Granting Accelerated Approval of Proposed Rule 
Change To Revise Procedures Related to Certain Technical and 
Operational Changes Relating to Operational Processing of Restructuring 
Credit Events Under CDS Contracts

February 21, 2012.
    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 February 7, 2012, ICE Clear Europe Limited (``ICE Clear Europe'') 
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 ICE Clear Europe. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons and to approve the proposed rule change 
on an accelerated basis.
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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

    ICE Clear Europe is in regular communication with representatives 
of its Clearing Members, as that term is defined in the Rules of ICE 
Clear Europe \3\ (the ``Rules''), in relation to the operation of 
clearing processes and arrangements. ICE Clear Europe has published 
these proposed technical procedural changes, has carried out a public 
consultation process in respect of all of the changes described below, 
and has presented and agreed to the changes described below with its 
Clearing Members. These changes seek processes to be followed by ICE 
Clear Europe and its Clearing Members on the occurrence of any 
``restructuring credit event'' under applicable CDS Contracts (as 
defined by ICE Clear Europe Rule 101). ICE Clear Europe takes the view 
that the proposed rule changes are improvements in operational services 
that implement changes that are principally administrative in nature.
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    \3\ See ICE Clear Europe Rule 101. The Rules of ICE Clear Europe 
are available on-line at: https://www.theice.com/Rulebook.shtml?clearEuropeRulebook=.
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    Specifically, ICE Clear Europe makes amendments to its procedures 
for the processing of restructuring credit events under CDS Contracts 
submitted and accepted for clearing by ICE Clear Europe, to reflect 
changes to systems used by the repository for recording such 
instruments, for processing of notices relating to such credit events. 
The repository presently used by ICE Clear Europe for these purposes is 
The Depository Trust & Clearing Corporation (``DTCC'') Trade 
Information Warehouse. These changes were published in ICE Clear Europe 
circular no. C11/171 on November 25, 2011, available at: https://www.theice.com/publicdocs/clear_europe/circulars/C11171_att1.pdf.
    The proposed changes allow for more operationally efficient and 
straight-through processing of the service of credit event notices and 
other notices following the occurrence of a restructuring credit event. 
The changes reflect changes made to the account structures and 
processes for the service of notices within the DTCC and should 
considerably reduce risks for the clearing house and its clearing 
members.

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.\4\
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    \4\ The Commission has modified the text of the summaries 
prepared by ICE Clear Europe.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The proposed rule changes consist of technical rule changes that 
are designed to implement operational and process improvements that 
have been discussed with and approved by the Clearing Members of ICE 
Clear Europe. The principal purpose of the proposed rule change is for 
the applicable rule or procedural provision to be updated to reflect 
such improvement. In particular, the proposed rule changes relate to 
the processing of restructuring credit events under the terms of 
cleared CDS Contracts submitted and accepted for clearing by ICE Clear 
Europe.
    Following consultation with its Clearing Members, ICE Clear Europe 
determined that the CDS Procedures needed to be updated in order to 
process a restructuring credit event in light of changes to DTCC's 
systems. The proposed amended procedures modify the procedures for 
processing of restructuring credit events, principally those for the 
notification and processing of Matched Pairs (as defined below) in the 
event of any restructuring credit event. The majority of the changes 
relate to Section 8.4 of the procedures, which governs the allocation 
and processing of Matched Pairs. Matched Pairs are constituted of two 
clearing members who are matched with one another for purposes of 
delivering credit event notices to ICE Clear Europe and receiving 
credit event notices from ICE Clear Europe. While the proposed changes 
to Section 8.4 do not modify the basic principles of netting (or 
aggregation) of CDS Contracts prior to the processing of the applicable 
restructuring credit event, of the allocation of Matched Pairs pursuant 
to Rules 1507 and 1508, or of the obligation of ICE Clear Europe to 
issue Matched Pairs notices promptly pursuant to those Rules, the 
proposed amended procedures do modify: (a) The timing of transmission 
of RMP Matching Reports,\5\ and the procedures and timing for checking 
that any such RMP Matching Report reflects the applicable Clearing 
Members' net Open Contract Position (as defined in the Rules) (at 
Section 8.4(d)); (b) the timing, form, and method for delivery of 
Matched Pairs notices (at Section 8.4(e)); (c) the timing and process 
for the input of records of all CDS Contracts being replaced pursuant 
to such matching process (at Section 8.4 (e)(v) and (vi)); (d) the 
specification of electronic notice for restructuring credit event 
notices (at Section 8.4(f)); and (e) changes to the Manual Notice 
Process \6\ that specify procedures for reconciliation of the records 
of ICE Clear Europe with those of the Clearing Members and with those 
specified on the DTCC systems (at Sections 8.4(f)(v) and 8.4(g)). In 
each case, the applicable procedure is modified to harmonize the pre-
existing

[[Page 11608]]

procedures with those of DTCC and the Clearing Members. No change is 
made to the rights or obligations of Clearing Members in respect of CDS 
Contracts, and no change is made to the custody or guarantee fund 
functions of ICE Clear Europe.
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    \5\ The term ``RMP Matching Report'' means the report given by 
the Clearing House, as referred to in paragraph 8.4(e), to each CDS 
Clearing Member identifying the RMPs and allocations of Matched 
Pairs and the associated MP Amounts affecting the Open Contract 
Position of that CDS Clearing Member, which report comprises Matched 
Pair Notices for purposes of Rule 1508 in respect of each Matched 
Pair.
    \6\ The term ``Manual Notice Process'' means the process for the 
delivery, receipt and copying to the Clearing House of notices 
pursuant to paragraph 8.4(g).
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    ICE Clear Europe has engaged in a public consultation process in 
relation to all the changes, pursuant to the circular referred to 
above, as it was required to do under applicable U.K. law. This public 
consultation involved the publication of such circular on a publicly 
accessible portion of the Internet Web site of ICE Clear Europe. ICE 
Clear Europe has received no opposing views from its Clearing Members 
in relation to the proposed rule amendments and received no responses 
to its public consultations during the consultation period. The 
proposed rule change is not inconsistent with the existing rules of ICE 
Clear Europe, including any other rules proposed to be amended.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed rule change would 
have any impact, or impose any burden on competition.

(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 been 
solicited by ICE Clear Europe pursuant to public consultation processes 
in the circulars referred to above. No comments have been received, 
presumably in light of the extensive discussions that preceded the 
public consultations. The time period for the public consultation has 
closed so ICE Clear Europe does not expect to receive any further 
written comments as a result of this process.

III. 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-2012-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ICEEU-2012-02. 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 Section, 100 F Street 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 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/publicdocs/regulatory_filings/ICE_Clear_Europe_Rule_Amendments_2012_02.pdf.
    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-2012-02 
and should be submitted on or before March 19, 2012.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    Section 19(b) of the Act \7\ 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. The Commission finds that the proposed rule change is 
consistent with the requirements of the Act, in particular the 
requirements of Section 17A of the Act,\8\ and the rules and 
regulations thereunder applicable to ICE Clear Europe. Specifically, 
the Commission finds that the proposed rule change is consistent with 
Section 17A(b)(3)(F) of the Act,\9\ which requires, among other things, 
that the rules of a registered clearing agency be designed to promote 
the prompt and accurate clearance and settlement of derivative 
agreements, contracts, and transactions because it should permit ICE 
Clear Europe to align its restructuring credit event processing with 
the system used by the repository for processing notices related to 
such credit events.
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    \7\ 15 U.S.C. 78s(b).
    \8\ 15 U.S.C. 78q-1. In approving this proposed rule change, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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    ICE Clear Europe has requested that the Commission approve the 
proposed rule change on an accelerated basis for good cause shown. The 
Commission finds good cause for accelerating approval because ICE Clear 
Europe must have operational procedures that match the operational 
procedures of the system used by the repository for processing notices 
of restructuring credit events in order to process such credit events 
efficiently and effectively.

V. Conclusion

    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
that the proposed rule change (SR-ICEEU-2012-02) be, and hereby is, 
approved on an accelerated basis.
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    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Kevin O'Neill,
Deputy Secretary.
[FR Doc. 2012-4421 Filed 2-24-12; 8:45 am]
BILLING CODE 8011-01-P