[Federal Register Volume 79, Number 111 (Tuesday, June 10, 2014)]
[Notices]
[Pages 33243-33244]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-13451]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72306; File No. SR-ICC-2014-07]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change to Revise End-of-Day Price Discovery 
Policies and Procedures

June 4, 2014.
    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 22, 2014, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared primarily by ICC. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of the proposed rule change is to revise the ICC End-
of-Day Price Discovery Policies and Procedures (``EOD Pricing Policy'') 
to revise the expectations surrounding the unwind of any Firm Trade 
transaction. This revision does not require any changes to the ICC 
Rules.

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

    In its filing with the Commission, ICC included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. ICC has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of these statements.

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

    The proposed revision to ICC's EOD Pricing Policy is intended to 
make the policy more readily enforceable, while maintaining the same or 
similar level of incentive for ICC Clearing Participants to provide 
quality price submissions.
    ICC believes such revision will facilitate the prompt and accurate 
clearance and settlement of securities transactions and derivative 
agreements, contracts, and transactions for which it is responsible. 
The proposed revision is described in detail as follows.
    ICC Clearing Participants (``CPs'') may be required from time to 
time, under the ICC EOD Pricing Policy, to enter into trades with other 
CPs as part of the ICC end-of-day price discovery process (``Firm 
Trade''). ICC does not require CPs to maintain Firm Trades as 
outstanding positions for any particular length of time. Currently, the 
ICC EOD Pricing Policy requires CPs that elect to unwind a Firm Trade 
to do so ``at the then-current market price.'' There are practical 
difficulties with objectively determining whether an unwind transaction 
was executed at the ``then-current market price'' and therefore such 
policy is difficult to enforce. ICC proposes revising the ICC EOD 
Pricing Policy to replace references to the ``then-current market 
price'' with the requirement that unwind transactions be executed in a 
competitive manner. Further, ICC proposes adding the requirement that, 
upon request, CPs be able to demonstrate to ICC's satisfaction that 
such unwind transaction was executed in a competitive manner. 
Additionally, ICC proposes adding a non-exclusive list of examples of 
how CPs may be able to demonstrate competitive execution of unwind 
transactions. Specifically, such examples include: (i) Execution on an 
available trading venue (e.g., a SEF or DCM); (ii) multiple dealer 
quotes received and execution of the unwind transaction at the best 
quoted price; or (iii) placement of the unwind transaction with an 
interdealer broker with price terms and instructions commensurate with 
a competitive execution.
    Section 17A(b)(3)(F) of the Act \3\ requires, among other things, 
that the rules of a 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 and to comply with the provisions of the Act and the rules 
and regulations thereunder. ICC believes that the proposed revision to 
the EOD Pricing Policy is consistent with the requirements of the Act 
and the rules and regulations thereunder applicable to ICC, in 
particular, to Section 17(A)(b)(3)(F),\4\ because ICC believes that the 
proposed rule changes will facilitate the prompt and accurate 
settlement of swaps and contribute to the safeguarding of securities 
and funds associated with swap transactions which are in the custody or 
control of ICC or for which it is responsible. The update to ICC's EOD 
Pricing Policy regarding Firm Trade unwind transactions makes the 
policy more readily enforceable, while maintaining the same or similar 
level of incentive for CPs to provide quality price submissions. ICC 
considers the proposed revision to be an enhancement of its consistent 
underlying intention to assure that CPs unwind Firm Trades 
competitively. The inclusion of Firm Trades in ICC's end-of-day price 
discovery process provides incentive for CPs to submit quality price 
submissions. If CPs unwound Firm Trades non-competitively at the 
original Firm Trade Price, thereby alleviating the Firm Trade's impact 
to their portfolio, the incentive to provide quality price submissions 
would be diminished. Receiving quality prices from its CPs is paramount 
to the pricing process and ICC believes the proposed revision both 
clarifies and enhances its EOD Pricing Policy. As such, the proposed 
revision will facilitate the prompt and accurate settlement of swaps 
and contribute to the safeguarding of securities and funds associated 
with swap transactions which are in the custody or control of ICC or 
for which it is responsible within the meaning of Section 17A(b)(3)(F) 
\5\ of the Act.
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    \3\ 15 U.S.C. 78q-1(b)(3)(F).
    \4\ Id.
    \5\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    ICC does not believe the proposed rule changes would have any 
impact, or impose any burden, on competition. The revision to ICC's EOD 
Pricing Policy regarding the unwinding of Firm Trades apply uniformly 
across all CPs. Therefore, ICC does not believe the proposed revision 
imposes any burden on competition that is inappropriate in furtherance 
of the purposes of the Act.

[[Page 33244]]

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

    Written comments relating to the proposed rule change have not been 
solicited or received. ICC will notify the Commission of any written 
comments received by ICC.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-ICC-2014-07 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-ICC-2014-07. 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 will also be available 
for inspection and copying at the principal office of ICE Clear Credit 
and on ICE Clear Credit's Web site at https://www.theice.com/notices/Notices.shtml?regulatoryFilings.
    All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-ICC-2014-07 
and should be submitted on or before July 1, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-13451 Filed 6-9-14; 8:45 am]
BILLING CODE 8011-01-P