[Federal Register Volume 77, Number 91 (Thursday, May 10, 2012)]
[Notices]
[Pages 27529-27530]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-11244]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66922; File No. SR-ICC-2012-05]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Granting Accelerated Approval of Proposed Rule Change to Membership 
Qualifications

May 4, 2012.

I. Introduction

    On April 3, 2012, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission'') proposed rule 
change SR-ICC-2012-05 pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder.\2\ The 
proposed rule change was published for comment in the Federal Register 
on April 12, 2012.\3\ The Commission received no comment letters 
regarding the proposal. For the reasons discussed below, the Commission 
is granting approval of the proposed rule change on an accelerated 
basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-66766 (April 6, 
2012), 77 FR 22019 (April 12, 2012). In its filing with the 
Commission, ICC included statements concerning the purpose of and 
basis for the proposed rule change. The text of these statements is 
incorporated into the discussion of the proposed rule change in 
Section II below.
---------------------------------------------------------------------------

II. Description

    The purpose of proposed rule change is to revise Rule 201(b)(ii) to 
incorporate the Commodity Futures Trading Commission (``CFTC'') 
mandated $50,000,000 minimum adjusted net capital requirement for all 
ICC Clearing Participants. For a Participant that is not a Futures 
Commission Merchant (``FCM'') or a Broker-Dealer, there is no standard 
equivalent to ``adjusted net capital'' which can be utilized across all

[[Page 27530]]

types of Clearing Participant entities. Therefore, Rule 201(b)(ii)(C) 
places the burden on the Clearing Participant to demonstrate that its 
capital exceeds the capital requirement that would be applicable to it 
if it were an FCM, as determined pursuant to a methodology acceptable 
to ICC.
    In addition, in order to promote compliance with the capital 
adequacy requirements, Rule 201(b)(i) is amended to provide that a 
Clearing Participant must be regulated for capital adequacy by a 
competent authority such as the CFTC, SEC, Federal Reserve Board, 
Office of the Comptroller of the Currency, U.K. Financial Services 
Authority, or any other regulatory body ICC designates from time to 
time for this purpose, or is an affiliate of an entity that satisfies 
the capital adequacy regulatory requirement and is subject to 
consolidated holding company group supervision.
    Further, ICC is revising Rule 209 (Risk-Based Capital Requirement) 
to provide that if at any time and for so long as a Clearing 
Participant has a required contribution to the ICC General Guaranty 
Fund that exceeds 25% of its ``excess net capital,'' ICC may (in 
addition to imposing the trading activity limitations provided for in 
ICC Rule 203(b)) require such Clearing Participant to prepay and 
maintain with ICE Clear Credit an amount up to the Clearing 
Participant's assessment obligation. ICC Rule 102, the definitional 
section of the Rules, has been amended to define ``excess net capital'' 
as the amount reported on Form 1-FR-FCM or FOCUS Report or as otherwise 
reported to the CFTC under CFTC Rule 1.12. For a Participant that is 
not an FCM or a Broker-Dealer, there is no standard equivalent to 
``excess net capital'' which can be utilized across all types of 
Clearing Participant entities. Therefore, Rule 102 places the burden on 
the Clearing Participant to demonstrate that its capital exceeds the 
capital requirement that would be applicable to it if it were an FCM, 
as determined pursuant to a methodology acceptable to ICC.
    ICC believes that its membership qualification changes are in 
compliance with CFTC Regulations 39.12(a)(2)(ii) and 39.12(a)(2)(iii).

III. Discussion

    Section 19(b)(2)(B) of the Act \4\ 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. In particular, Section 17A(b)(3)(F) of 
the Act \5\ requires that the rules of the 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.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(2)(B).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The proposed change would allow ICC to expand the base of potential 
clearing members by lowering the net capital threshold for membership, 
thereby promoting the prompt and accurate clearance and settlement of 
securities transactions, and derivative agreements, contracts, and 
transactions.
    Further, the Commission finds good cause, pursuant to Section 
19(b)(2) of the Act,\6\ for approving the proposed rule change prior to 
the 30th day after the date of publication of notice in the Federal 
Register because as a registered DCO ICC is required to comply with the 
new CFTC regulations 39.12(a)(2)(ii) and 39.12(a)(2)(iii) by the time 
they become effective on May 7, 2012.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act and the 
rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-ICC-2012-05) is approved on 
an accelerated basis.\8\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(2).
    \8\ 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.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-11244 Filed 5-9-12; 8:45 am]
BILLING CODE 8011-01-P