[Federal Register Volume 78, Number 103 (Wednesday, May 29, 2013)]
[Notices]
[Pages 32287-32292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-12704]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69628; File No. SR-ICEEU-2013-09]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of Proposed Rule Change, and Amendment No. 1 Thereto, to 
Clear Contracts Traded on the LIFFE Administration and Management 
Market

May 23, 2013.
    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 May 13, 2013, ICE Clear Europe Limited (``ICE Clear Europe'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change, as modified by Amendment No. 1, and as described 
in Items I, II, and III

[[Page 32288]]

below, which Items have been prepared primarily by ICE Clear Europe.\3\ 
The Commission is publishing this notice to solicit comments on the 
proposed change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On May 22, 2013, ICE Clear Europe submitted Amendment No. 1 
to the proposed rule change to, among other things, clarify the 
scope of products proposed to be cleared, add new Rule 207(f) 
prohibiting FCM/BD Clearing Members and other Clearing Members 
organized in the U.S. from clearing LIFFE Contracts that are futures 
or options on underlying U.S. securities, add additional 
clarification surrounding the operation of the combined F&O Guaranty 
Fund and the margining of LIFFE Contracts, and supplement the 
statutory basis for the proposed rule change.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    ICE Clear Europe submits revised Parts 1, 2, 4, 5, 7, 8, 11, and 12 
and new Part 18 of its Rules (along with other clarifying and 
conforming Rule amendments) and revisions to its Finance Procedures, 
Clearing Procedures, Delivery Procedures and Membership Procedures. As 
announced on December 20, 2012, ICE Clear Europe has agreed to act as 
the clearing organization for futures and option contracts traded on 
LIFFE Administration and Management, a recognized investment exchange 
under the UK Financial Services and Markets Act of 2000, including 
those processed through LIFFE Administration and Management's Bclear 
service. BClear is the service operated by LIFFE, which enables LIFFE 
Clearing Members to report certain bilaterally agreed off exchange 
trades to LIFFE, for the purposes of the LIFFE Rules. Upon trades being 
reported they will be eligible for clearing by ICE Clear Europe as a 
LIFFE Block Transaction under the ICE Clear Europe Rules.
    The LIFFE contracts (``LIFFE Contracts'') that are proposed to be 
cleared by ICE Clear Europe include interest rate and government bond 
futures and options, certain agricultural futures and options, and 
futures and options on underlying equity securities and equity indices.
    With respect to LIFFE Contracts that constitute securities for 
purposes of the U.S. securities laws (i.e., LIFFE futures and options 
on equity securities) (the ``LIFFE securities products''), LIFFE does 
not permit direct access by U.S. persons (including U.S. LIFFE members) 
to its trading facility for purposes of trading such products. In 
addition, only certain LIFFE securities products are made available for 
trading indirectly by U.S. persons, in accordance with applicable U.S. 
legal and regulatory requirements.\4\ (Attached in Exhibit 5 hereto is 
a list of LIFFE securities products proposed to be cleared by ICE Clear 
Europe.) Consistent with these arrangements and U.S. legal and 
regulatory restrictions, ICE Clear Europe proposes to adopt new rule 
207(f), which provides that FCM/BD Clearing Members and other clearing 
members of ICE Clear Europe that are organized in the United States 
will not be permitted to clear LIFFE Contracts that are futures or 
options on underlying U.S. securities (other than futures contracts on 
broad-based security indices). In addition to adopting this Rule, ICE 
Clear Europe will notify clearing members of these restrictions and is 
adopting procedures for monitoring and enforcing compliance by clearing 
members with these restrictions.
---------------------------------------------------------------------------

    \4\ See, e.g., SEC No-Action Letter to LIFFE A&M, dated July 29, 
2009; SEC No-Action Letter to LIFFE A&M, dated March 6, 1996; SEC 
No-Action Letter to LIFFE A&M, dated May 1, 1992.
---------------------------------------------------------------------------

    ICE Clear Europe's clearing activities with respect to the LIFFE 
securities products, and in particular those involving U.S. securities, 
will be conducted outside the United States. As noted above, all 
Clearing Members entitled to clear products involving U.S. securities 
will be located outside the United States. In addition, the internal 
ICE Clear Europe financial, managerial, operational and similar 
resources dedicated to the clearing function for LIFFE securities 
products are located in the United Kingdom or otherwise outside the 
United States. Specifically, the ICE Clear Europe management team and 
risk management personnel are located in London. There will be a 
dedicated LIFFE Risk Manager supported by a team of risk analysts in 
place on, or after, 1 July 2013, and further resources within the 
Operations, Corporate Development, Finance and Treasury Departments all 
situated in London.
    ICE Clear Europe itself does not have employees or offices located 
in the United States. ICE Clear Europe is recognized as an interbank 
payment system by the Bank of England under the Banking Act 2009 in the 
UK. Physical settlement of any LIFFE securities products will also 
occur through facilities outside the United States, in particular 
through the Euroclear UK and Ireland systems as well as other European 
Central Securities Depositories (CSDs). ICE Clear Europe does obtain 
certain information technology services from its U.S. affiliates 
pursuant to intercompany services agreements. However, all clearing 
personnel and decision-making, including supervision of such 
information technology services by ICE Clear Europe, remains in London, 
and those U.S. affiliates do not have any other role in ICE Clear 
Europe' clearing operations for the LIFFE securities products.
    The clearing of the LIFFE Contracts, including the LIFFE securities 
products, will be supported by the F&O Guaranty Fund. The F&O Guaranty 
Fund replaces the existing Energy Guaranty Fund, and will support the 
clearing of both the existing energy futures and options products 
cleared by ICE Clear Europe and the LIFFE Contracts. (The F&O Guaranty 
Fund will not support the clearing of credit default swap (``CDS'') or 
FX products cleared at ICE Clear Europe, and the CDS and FX Guaranty 
Funds will not support the clearing of energy or LIFFE contracts.) The 
F&O Guaranty Fund will be divided into two segments, an energy clearing 
segment and a LIFFE clearing segment, each of which is primarily 
allocated to losses from products in that segment and secondarily to 
losses from products in the other segment, as discussed below. The size 
of each segment will be determined separately based on ICE Clear 
Europe's risk assessment of the energy and LIFFE products, 
respectively, and each segment will be separately stress-tested in 
accordance with the clearing house's risk management policies and 
procedures. The energy segment will initially be the same size as the 
existing Energy Guaranty Fund, approximately USD650 million. The LIFFE 
clearing segment is expected to initially be approximately GBP370 
million (the exact size will be determined prior to the commencement of 
LIFFE Contract clearing).
    In the event of a default of a clearing member for which ICE Clear 
Europe needs to apply the F&O Guaranty Fund in accordance with the risk 
waterfall under the Rules, the energy segment will be applied first to 
losses resulting from cleared energy products, and the LIFFE segment 
will be applied first to losses resulting from cleared LIFFE Contracts. 
Once a segment has been exhausted by losses in its product category, 
remaining assets from the other segment may be applied to those losses.
    The purpose of the rule and procedure changes is to implement this 
clearing relationship. The other proposed changes in the Rules and 
procedures reflect conforming changes to definitions and related 
provisions and other drafting clarifications and updates, as noted 
below. In order to effect these amendments, the Finance Procedures have 
been updated more

[[Page 32289]]

generally, and the Finance Procedures and Delivery Procedures have been 
updated to reflect changes in EU Law with respect to Registry 
Regulations and the emissions markets operated by ICE Futures 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 significant aspects of 
these statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

(a) Purpose
    ICE Clear Europe submits revised Parts 1, 2, 4, 7, 8, 11, and 12 
and new Part 18 of its Rules (along with other clarifying and 
conforming Rule amendments) and revisions to its Finance Procedures, 
Clearing Procedures, Delivery Procedures and Membership Procedures. As 
announced on December 20, 2012, ICE Clear Europe has agreed to act as 
the clearing organization for futures and option contracts traded on 
LIFFE Administration and Management, a recognized investment exchange 
under the UK Financial Services and Markets Act of 2000. The purpose of 
the rule and procedure changes is to implement this clearing 
relationship. The other proposed changes in the Rules and procedures 
reflect conforming changes to definitions and related provisions and 
other drafting clarifications, and do not affect the substance of the 
Rules and procedures. The text of the proposed rule and procedure 
amendments are attached, with additions underlined and deletions in 
strikethrough text.
Rules
    The amendments revise Part 1 of the Rules, in which Rule 101, which 
provides definitions for certain terms, is modified to add new defined 
terms and revise existing definitions. Included in the changes to Rule 
101 are the designation of LIFFE as a Market for which ICE Clear Europe 
provides clearing services, the addition of defined terms and other 
revisions to cover LIFFE Contracts and the creation of a new category 
``F&O Contracts'' that will include Energy Contracts and LIFFE 
Contracts (and related definitions). The Energy Guaranty Fund will be 
redesignated as the F&O Guaranty Fund, which fund will be sub-divided 
with respect to Energy Contracts and LIFFE Contracts as discussed 
above.
    Part 2 of the Rules has been revised to address requirements for 
LIFFE Clearing Members and other conforming changes. New Rule 207(f) 
would be adopted to prohibit U.S. clearing members from clearing LIFFE 
securities products involving underlying U.S. securities.
    Part 3 of the Rules contain certain conforming changes.
    Changes to Part 4 of the Rules address the submission of LIFFE 
Contracts for clearing and related matters. A new Rule 410 has been 
added to set out a framework for Link Agreements, which are generally 
defined as agreements entered into between ICE Clear Europe and another 
exchange for which ICE Clear Europe does not otherwise provide clearing 
services that provides for the transfer of contracts to or from that 
exchange (or its clearing house) to ICE Clear Europe. LIFFE currently 
has link arrangements with Tokyo Financial Exchange Inc. and Tokyo 
Stock Exchange Inc., which exchanges would constitute ``Participating 
Exchanges'' pursuant to the new Rules.
    Part 5 of the Rules, which addresses margin requirements, contains 
certain conforming changes. Margin requirements for LIFFE Contracts 
will be calculated using the SPAN[supreg]1 v4 algorithm,\5\ with 
modifications for concentration charges and a trinomial model used with 
respect to certain LIFFE option transactions. ICE Clear Europe will 
determine the margin parameters used in the SPAN algorithm for LIFFE 
Contracts cleared by ICE Clear Europe, and make appropriate 
modifications to those parameters from time to time, within the 
framework of the margin requirement policy approved by the ICEU F&O 
Risk Committee. The margin parameters applicable from time to time will 
be issued and amended by ICE Clear Europe via a circular posted on its 
Web site.
---------------------------------------------------------------------------

    \5\ SPAN is a registered trademark of Chicago Mercantile 
Exchange Inc. and used by ICE Clear Europe under license. SPAN is a 
risk evaluation and margin framework algorithm.
---------------------------------------------------------------------------

    Part 6 of the Rules contain no changes.
    The amendments revise Part 7 of the Rules, which deals with 
settlement and delivery of futures, to address settlement of LIFFE 
Contracts. Specifically, Rule 703 has been amended to address the 
treatment of tenders delivered in relation to Futures that are not 
settled in cash. Additionally, Rule 704, which deals with the credit 
and debit of accounts, has been amended to provide that any payment or 
other allowance payable by or to either the Buyer or Seller under the 
terms of the Contract shall be paid by or to the Clearing House for 
onward payment to the Buyer or Seller, as the case may be.
    The amendments revise Part 8 of the Rules, which deals with 
Options, to provide additional terms with respect to the exercise of 
option contracts other than options on futures. Specifically, new Rule 
806 provides that upon exercise of any Option with a Deliverable which 
is not a Future, a Contract for the sale and purchase of the relevant 
Deliverable (a ``Contract of Sale'') at the Strike Price (or such other 
price as is required pursuant to the Contract Terms) will arise 
pursuant to Rule 401 and in accordance with the Contract Terms for the 
Option and applicable Market Rules. Additionally, new Rule 806 provides 
that upon such Contract of Sale or Contracts of Sale having arisen and 
all necessary payments having been made by the Clearing Member and 
Clearing House pursuant to the Clearing Procedures, the rights, 
obligations and liabilities of the Clearing House and the relevant 
Clearing Member in respect of the Option shall be satisfied and the 
Option shall be terminated.
    The amendments to Part 8 of the Rules also include the addition of 
new Rule 809, which clarifies the delivery and settlement procedures 
with respect to Contracts of Sale arising from Options. Pursuant to new 
Rule 809, the Clearing House has the authority to direct a Clearing 
Member, who is a seller under a Contract of Sale subject to delivery, 
to deliver the Deliverable under such Contract to another Clearing 
Member that is a buyer. New Rule 809 further provides that if a buyer 
under a Contract of Sale rejects a Deliverable delivered to it, the 
Clearing House as buyer under the back-to-back Contract with the Seller 
shall be entitled, if to do so would be in accordance with the 
applicable Contract Terms, to take the same action as against the 
seller under the equivalent Contract and the Clearing House shall not 
be deemed to have accepted such delivery until the relevant buyer has 
accepted delivery under the first Contract.
    New Rule 810 addresses the cash settlement terms of Options with 
Deliverables other than Futures. New

[[Page 32290]]

Rule 811 provides that the Clearing House shall make any necessary 
credits or debits to or from Clearing Members' Proprietary Margin 
Account and Customer Margin Accounts, as appropriate, arising as a 
result of each cash settlement and delivery in accordance with Part 3 
of the Rules.
    Part 9 of the Rules contain certain conforming changes.
    Part 10 of the Rules contain no changes.
    The amendments revise Part 11 of the Rules, which deals with the 
Guaranty Funds. The clearing of LIFFE Contracts will be supported by 
the existing Energy Guaranty Fund, which will be re-designated the 
``F&O Guaranty Fund.'' Contributions to the F&O Guaranty Fund will be 
primarily allocated to losses from either Energy Contracts or LIFFE 
Contracts, and secondarily allocated to the other such class of 
Contracts, as set forth in Rule 1103 and as discussed above.
    The amendments also revise Part 12 of the Rules, which addresses UK 
Settlement Finality Regulations and the Companies Act 1989. Conforming 
changes have been made to incorporate LIFFE Contracts in the provisions 
addressing various categories of transfer orders.
    The amendments include a new Part 18 of the Rules, which provide 
for transitional provisions concerning the novation of open contracts 
with LIFFE A&M and LCH.Clearnet Limited, under LIFFE A&M's existing 
clearing arrangements, to ICE Clear Europe, under the new clearing 
relationship, and the transfer of Clearing Member cash and securities 
from LCH.Clearnet Limited to ICE Clear Europe.
Membership Procedures
    ICE Clear Europe Limited also submits revised Membership 
Procedures. ICE Clear Europe's Membership Procedures have been updated 
to provide for the clearing of LIFFE Contracts and to reflect a new 
membership category, ``F&O Clearing Members'', which identify Clearing 
Members seeking to clear LIFFE Contracts as well as existing Energy 
Clearing Members. The amendments reflect various other updates and 
changes to conform to other provisions of the Rules and procedures. In 
Section 4 (``Matters Requiring Notification by Clearing Members''), the 
chart governing all notifications, their timing and their form 
requirements have been generally updated to address the changes to the 
numbering of provisions and otherwise to reflect the latest version of 
ICE Clear's Clearing Rules. New subsections G (``Clearing 
Procedures''), H (``Finance Procedures''), I (``Complaint Resolution 
Procedures'') and J (``Business Continuity Procedures'') have also been 
added, reflecting the notifications, timing and form requirements 
contained in such procedures.
Finance Procedures
    ICE Clear Europe also submits revised Parts 2, 3, 4, 5, 6 and 9 of 
its Finance Procedures, which reflect general updates as well as 
changes to the clearing of LIFFE Contracts.
    Section 2.1 has been revised to clarify the currencies supported by 
ICE Clear Europe in various contexts. Initial and Original Margin 
obligations may be met only in USD, GBP and EUR currency. CAD, CHF and 
SEK currency may be used by Clearing Members only for the receipt of 
income on non-cash Permitted Cover with coupons payable in those 
currencies. CAD may also be used for Variation Margin and settlement 
payments only for Energy Contracts which settle in CAD. Certain 
additional currencies may be used for Variation Margin and settlement 
payments for LIFFE Contracts which settle in such currencies.
    Similarly, Section 3.7 has been amended to clarify that currencies 
eligible for Triparty Collateral for Original or Initial Margin are 
limited to USD, GBP and EUR.
    Section 4.1 governing currency requirements for the accounts of the 
Clearing Members has been slightly modified: All F&O Clearing Members 
must have an account, denominated in USD; all CDS Clearing Members must 
have an account denominated in EUR; all F&O Clearing Members must 
additionally have at least one further account denominated in either 
GBP or EUR; all CDS Clearing Members must additionally have at least 
one further account denominated in either GBP or USD; a Clearing Member 
which has an Open Contract Position in a contract for which EUR, GBP, 
USD or CAD is the settlement currency must have an account denominated 
in such currency; a Clearing Member which transfers non-cash Permitted 
Cover to the Clearing House which pays a coupon, interest or 
redemptions in USD, EUR, GBP, CAD, CHF or SEK must have an account in 
that currency; and an F&O Clearing Member that is a LIFFE Clearing 
Member and is party to LIFFE Contracts which settle in CAD, CHF, CZK, 
DKK, HUF, JPY, NOK, PLN, SEK or TRY must have an account in each such 
currency.
    The procedures of the assured payment system have been updated 
under Section 5.5 of the Finance Procedures to conform to changes 
recently made to Rule 301(f) regarding the liability of Clearing 
Members for the remittance of funds through Approved Financial 
Institutions.
    Section 6.1(h), which addresses the various payments that may be 
included in a cash transfer, has been modified to address intra-day 
call of additional Initial or Original Margin Call, the proceeds of 
which may be applied against future Variation Margin or Mark-to-Market 
Margin calls. Intra-day Calls will now only be processed in USD, GBP or 
EUR. Section 6.1(h)(vi) has been revised to address general procedures 
for rebates, fee discounts and incentive programs that the Clearing 
House may adopt from time to time. In addition, the provisions on 
Currency Holidays and payments on other currencies, Section 
6.1(h)(viii), have also been updated and now include language on Force 
Majeure Events and Financial Emergencies.
    In Section 9, the definitions relating to the use of Emission 
Allowances and Permitted Cover have been updated to reflect changes in 
EU Law with respect to Registry Regulations. Certain conforming changes 
are made in Part 10 of the Finance Procedures. Finally, Section 12.1 
has been revised to reflect the sub-categories of Letters of Credit 
that might be used to satisfy Original Margin, being a ``Standard 
Letter of Credit'' and a ``Pass-Through Letter of Credit''. The 
relevant forms of the Letters of Credit have also been updated in 
Section 12.4.
Clearing Procedures
    ICE Clear Europe submits its revised Clearing Procedures. ICE Clear 
Europe's Clearing Procedures have been updated to provide for the 
clearing of LIFFE Contracts as well as certain other updates and 
confirmations. Accordingly, amendments have been made to the provisions 
relating to ICE Clear Europe's post-trade administration, clearing and 
settlement systems, position management and position accounts in 
Sections 1, 2 and 3, respectively.
Delivery Procedures
    ICE Clear Europe submits its revised Delivery Procedures. ICE Clear 
Europe's Delivery Procedures have been amended to provide for the 
delivery of LIFFE Contracts. The following provisions have been added 
to the Delivery Procedures, which set out the new delivery 
arrangements:
     Section 8 (``Alternative Delivery Procedure: LIFFE White 
Sugar and Raw Sugar'');
     Section 17 (``LIFFE Guardian''), which describes the LIFFE 
Guardian electronic grading and delivery system

[[Page 32291]]

which will be used in certain LIFFE deliveries; and
    Parts I-Q, which set out the delivery arrangements for the 
additional LIFFE Contracts as follows:

[cir] Part I: ``LIFFE Cocoa Contracts''
[cir] Part J: ``LIFFE Coffee Contracts''
[cir] Part K: ``LIFFE White Sugar Contracts''
[cir] Part L ``LIFFE Wheat Contracts''
[cir] Part M: ``LIFFE Deliveries''
[cir] Part N: ``LIFFE Common Delivery Procedures''
[cir] Part O: ``LIFFE Gilt Contracts''
[cir] Part P: ``LIFFE Japanese Government Bond Contracts''
[cir] Part Q: ``LIFFE Equity Futures/Options''

    .Further, the Schedule of Forms and Reports has been updated and 
lists additional delivery forms used for the LIFFE Contracts.
    Part A of the Delivery Procedures relating to emissions contracts 
has also been amended, reflecting changes to EU legislation, certain 
new emission contracts previously launched by ICE Futures Europe and 
the use of a single EU registry together with additional conforming and 
updating changes to the Delivery Procedures generally.
(b) Statutory Basis
    ICE Clear Europe believes that the proposed rule and procedure 
changes are consistent with the requirements of Section 17A of the Act 
\6\ and the regulations thereunder applicable to it, including the 
standards under Rule 17Ad-22.\7\ The amendments will provide for 
clearing of LIFFE Contracts by ICE Clear Europe, consistent with ICE 
Clear Europe's existing clearing arrangements and related financial 
safeguards, protections and risk management procedures, as discussed 
herein. Acceptance of LIFFE Contracts for clearing, and conditions set 
out in these rule and procedure amendments, will promote the prompt and 
accurate clearance of and settlement of securities transactions, the 
safeguarding of securities and funds in the custody or control of ICE 
Clear Europe and the protection of investors and the public interest, 
within the meaning of Section 17A(b)(3)(F) of the Act.\8\ The proposed 
amendments do not impact ICE Clear Europe's financial resources devoted 
to its security-based swap related (i.e., credit default swap) clearing 
business. Clearing of LIFFE Contracts will satisfy relevant 
requirements of Rule 17Ad-22,\9\ as discussed below.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78q-1.
    \7\ 17 CFR 240.17Ad-22.
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
    \9\ 17 CFR 240.17Ad-22.
---------------------------------------------------------------------------

    Financial Resources. As discussed above, ICE Clear Europe has 
structured the F&O Guaranty Fund to provide sufficient additional 
financial resources to support the clearing of LIFFE Contracts 
consistent with the requirements of Rule 17Ad-22.\10\ The proposed 
amendments do not impact ICE Clear Europe's financial resources devoted 
to its security-based swap related (i.e., credit default swap) clearing 
business. Moreover, new policies were approved covering margin 
requirements, mark-to-market margin, capital to margin, membership, 
internal rating, backtesting, wrong-way risk, concentration charges, 
intraday margin and stress testing in respect of the LIFFE A&M clearing 
relationship. Relevant models applicable to the clearing of LIFFE 
Contracts were subjected to independent validation as required by ICE 
Clear Europe's model governance framework.
---------------------------------------------------------------------------

    \10\ Id.
---------------------------------------------------------------------------

    Operational Resources. ICE Clear Europe believes it will have the 
operational and managerial capacity to clear the LIFFE Contracts as of 
the commencement of clearing, consistent with the requirements of Rule 
17Ad-22(d)(4).\11\ Staffing levels and resources at ICE Clear Europe 
related to operational and technology needs for the clearing of LIFFE 
Contracts will be subject to ongoing review. ICE Clear Europe believes 
that its existing systems are appropriately scalable to handle the 
expected increase in volume. ICE Clear Europe may also enter into 
services arrangements with LIFFE A&M from time to time in connection 
with the clearing of LIFFE Contracts, under which LIFFE A&M or its 
personnel may assist with certain clearing functions, particularly with 
respect to contracts that go to delivery.
---------------------------------------------------------------------------

    \11\ Id.
---------------------------------------------------------------------------

    Participant Requirements. ICE Clear Europe believes that the 
Amendments and the clearing of LIFFE Contracts are consistent with the 
requirements of Rule 17Ad-22(d)(2) \12\ to provide fair and open access 
through participation requirements that are objective and publicly 
disclosed. ICE Clear Europe believes that the Amendments establish fair 
and objective criteria for the eligibility to clear LIFFE Contracts. 
ICE Clear Europe clearing membership is available to participants that 
meet such criteria. ICE Clear Europe clearing members that wish to 
clear LIFFE Contracts will have to satisfy the financial resources 
requirements to clear these products and continue to do so in order to 
preserve their eligibility to clear LIFFE Contracts. Clearing member 
compliance with the requirements to clear LIFFE Contracts will be 
monitored by ICE Clear Europe.
---------------------------------------------------------------------------

    \12\ Id.
---------------------------------------------------------------------------

    Settlement. ICE Clear Europe believes that the Amendments will 
improve the finality and accuracy of its daily settlement process and 
reduce the risk to ICE Clear Europe of settlement failures, consistent 
with the requirements of Rule 17Ad-22(d)(5), (12) and (15).\13\ The 
proposed Amendments require ICE Clear Europe clearing members that 
clear LIFFE Contracts to maintain accounts at approved financial 
institutions and that are denominated in the settlement currency of the 
LIFFE Contracts such clearing member clears. Also, the Finance 
Procedures Amendments clarify the steps a clearing member (and its 
approved financial institutions) must take in order for the clearing 
member's obligations to pay ICE Clear Europe to be deemed satisfied and 
complete.
---------------------------------------------------------------------------

    \13\ Id.
---------------------------------------------------------------------------

    Likewise, the proposed Amendments to the delivery procedures 
clarify the obligations of ICE Clear Europe and its clearing members in 
respect of physically-settled LIFFE Contracts. The proposed Amendments 
contemplate that ICE Clear Europe may, from time to time, enter into 
clearing services arrangements with LIFFE A&M, in respect of LIFFE 
Contracts, pursuant to which certain functions may be performed by 
LIFFE A&M for ICE Clear Europe. In general, the terms to be added to 
the ICE Clear Europe delivery procedures in large part reflect the 
terms currently applicable to the LIFFE Contracts under their existing 
clearing arrangements.
    ICE Clear Europe believes these changes are thus in furtherance of, 
and are consistent with, the requirements of Rule 17Ad-22 \14\ and will 
facilitate the continued operation of the clearing house's settlement 
process. ICE Clear Europe believes that its Rules and procedures 
related to settlements (including physical settlements), as amended, 
appropriately identify and manage the risks associated with settlements 
under LIFFE Contracts.
---------------------------------------------------------------------------

    \14\ Id.
---------------------------------------------------------------------------

    Default Procedures. ICE Clear Europe believes that the Rules and 
its relevant procedures allow for it to take timely action to contain 
losses and liquidity pressures and to continue meeting its obligations 
in the event of clearing member insolvencies or defaults, including in 
respect of LIFFE Contracts,

[[Page 32292]]

in accordance with Rule 17Ad-22(d)(11).\15\


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

    \15\ Id.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed rule changes would 
have any impact, or impose any burden, on competition. LIFFE A&M is an 
established market for the LIFFE Contracts, and ICE Clear Europe does 
not anticipate that its becoming the clearing house for the LIFFE 
Contracts will adversely affect the trading market for those contracts 
on LIFFE A&M. Moreover, ICE Clear Europe has established fair and 
objective criteria for eligibility to clear LIFFE Contracts, and 
accordingly ICE Clear Europe does not believe that the proposed rule 
changes will impose any burden on competition among clearing members.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments relating to the rule changes have been solicited 
and one comment has been received to date but was not in connection 
with the specific rule and procedure changes. 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

    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-ICEEU-2013-09 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-2013-09. 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 Europe 
and on ICE Clear Europe's Web site at https://www.theice.com/publicdocs/regulatory_filings/ICEU_SEC_051313_3.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-2013-09 
and should be submitted on or before June 19, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-12704 Filed 5-28-13; 8:45 am]
BILLING CODE 8011-01-P