[Federal Register Volume 79, Number 153 (Friday, August 8, 2014)]
[Notices]
[Pages 46477-46479]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-18750]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72754; File No. SR-ICEEU-2014-11]


Self-Regulatory Organizations; ICE Clear Europe Limited; Order 
Granting Accelerated Approval of Proposed Rule Change Relating to EMIR 
Requirements

August 4, 2014.

I. Introduction

    On July 7, 2014, ICE Clear Europe Limited (``ICE Clear Europe'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change SR-ICEEU-2014-11 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 July 15, 2014.\3\ The Commission did not 
receive comments on the proposed rule change. For the reasons discussed 
below, the Commission is granting approval of 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.
    \3\ Securities Exchange Act Release No. 34-72582 (July 10, 
2014), 79 FR 41320 (July 15, 2014) (SR-ICEEU-2014-11) (This rule 
filing is hereinafter referred to as the ``Procedures Submission'').
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II. Description of the Proposed Rule Change

    ICE Clear Europe has stated that the principal purpose of the 
proposed rule change is to amend certain ICE Clear Europe procedural 
rules (``Procedures'') in order to comply with requirements under the 
European Market Infrastructure Regulation (including regulations and 
implementing technical standards thereunder, ``EMIR'') \4\ that will 
apply to ICE Clear Europe as an authorized central counterparty and to 
further implement proposed changes to its Clearing Rules (the 
``Clearing Rules'') relating to EMIR implementation and certain other 
matters as proposed in rule filing SR-ICEEU-2014-09 (the ``Rule 
Submission'').\5\
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    \4\ Regulation (EU) No 648/2012 of the European Parliament and 
of the Council of 4 July 2012 on OTC derivatives, central 
counterparties and trade repositories, as well as various 
implementing regulations and technical standards.
    \5\ Securities Exchange Act Release No. 34-72540 (July 3, 2014), 
79 FR 39429 (July 10, 2014) (SR-ICEEU-2014-09).

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[[Page 46478]]

    As described in more detail in the Rule Submission, in order to 
comply with EMIR, ICE Clear Europe is proposing changes to the 
structure of customer accounts for cleared transactions. The amendments 
to the Clearing Rules would establish two new types of individually 
segregated accounts, Individually Segregated Margin-flow Co-mingled 
Accounts and Individually Segregated Sponsored Accounts. The proposed 
changes to the Clearing Rules would also establish multiple new types 
of omnibus accounts, Segregated Customer Omnibus Accounts (separately 
for each product: FX, F&O and CDS) and Segregated TTFCA Customer 
Omnibus Accounts (separately for each product: FX, F&O and CDS) as well 
as Omnibus Margin-flow Co-mingled Accounts. The amendments to the 
Procedures described herein are intended to further implement these 
changes to the Clearing Rules, as well as make various other 
consolidating, conforming and clarifying changes and drafting 
improvements to the existing Procedures.
    ICE Clear Europe proposes to make amendments to the following 
Procedures: The Clearing Procedures, Finance Procedures, Membership 
Procedures, Business Continuity Procedures, Complaint Resolution 
Procedures, General Contract Terms, CDS Procedures, FX Procedures, OTC 
FX Product Guide and Published Terms for FX Contracts, Auction Terms 
for FX Default Auctions, Auction Terms for F&O Default Auctions and 
Delivery Procedures. The CDS Operational Procedures are being 
eliminated as they are no longer applicable. The proposed Procedure 
amendments are described as follows.\6\
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    \6\ The proposed rule change is described in further detail in 
the Procedures Submission. See supra note 3.
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    ICE Clear Europe proposes to make certain common changes to all 
relevant sections of the Procedures. In each such section of the 
Procedures, ICE Clear Europe would add provisions addressing governing 
law, arbitration and submission to jurisdiction that are substantially 
the same as those set forth in the Clearing Rules (specifically, Rules 
117 and 1608). In addition, various references to Sponsored Principals 
would be added throughout, as well as conforming changes to reflect 
changes in defined terms in the Clearing Rules, such as the use of 
``Buying Counterparty'' and ``Selling Counterparty''.
    ICE Clear Europe proposes revisions to its Clearing Procedures to 
incorporate the additional categories of customer accounts and relevant 
defined terms and other clarifications for margin for the relevant 
product categories (F&O, CDS and FX). The proposed revisions also 
include conforming changes, implementing changes and drafting 
improvements related to the transfer and close out of customer 
positions. In addition, the revisions would addresses certain matters 
with respect to Customer-CM Collateral provided to Non-FCM/BD Clearing 
Members, establish certain recordkeeping requirements for Clearing 
Members with respect to Customers (including as to the identity and 
default portability preferences thereof), and adopt certain additional 
defined terms and procedures relating to position transfers made under 
Rule 408(a)(i) and Part 12 of the Clearing Rules, as well as paragraph 
6 of the Clearing Procedures.
    ICE Clear Europe proposes to revise the Finance Procedures to 
incorporate the new account categories (and in particular Sponsored 
Principals), accommodate the use of pledged collateral arrangements as 
well as title transfer collateral, make certain revisions concerning 
margin requirements for F&O and FX contracts, and make other conforming 
and clarifying changes. The Finance Procedures would also be revised to 
incorporate certain parameters for the FX guaranty fund and to allow 
the Clearing House to allow different currencies to be used for the 
guaranty fund contributions for any product category. In addition, 
Revised Paragraph 15 of the Finance Procedures would specify additional 
parameters for the Clearing House contributions to the three guaranty 
funds, as described in further detail in the Procedures Submission.
    The Membership Procedures, which set out various aspects of the 
clearing membership application process, would be modified to also 
cover Sponsors and Sponsored Principals, in substantially the same 
manner as for Clearing Members. Other proposed revisions include 
various updates to defined terms and drafting clarifications as further 
described in the Procedures Submission.
    ICE Clear Europe proposes to revise the CDS Procedures to implement 
the Sponsored Principal model and make various updates to defined terms 
(and conforming references to terms) and make drafting improvements for 
clarity and conformity, as discussed in more detail in the Procedures 
Submission. As noted in the Rule Submission, various membership 
requirements in Paragraph 2 have been moved to Part 2 of the Clearing 
Rules, and Paragraph 6, which addresses the Clearing House's 
contributions to the CDS guaranty fund, has been removed and moved to 
the Finance Procedures. Paragraph 13, which addresses certain aspects 
of customer transactions, including transfer of customer positions, has 
been moved to paragraph 6 of the Clearing Procedures (and generalized 
to apply all product categories, not just CDS).
    Finally, ICE Clear Europe proposes to make clarifying, conforming 
and implementing changes to a number of other Procedures. Specifically, 
the FX Procedures would be revised to update various definitions, 
conform to new defined terms and other provisions of the updated 
Clearing Rules, incorporate the Sponsored Principal model, and make 
various other conforming and clarifying revisions as discussed in more 
detail in the Procedures Submission. The Auction Terms for F&O Default 
Auctions would be revised to incorporate participation by Sponsored 
Principals as well as a number of other conforming and clarifying 
revisions to the auction and bidding process as further described in 
the Procedures Submission. In addition, ICE Clear Europe proposes 
various amendments to the Delivery Procedures. In many cases these 
revisions do not strictly relate to EMIR implementation but reflect 
other general updates and conforming changes. ICE Clear Europe also 
proposes to make various non-substantive conforming changes and 
drafting clarifications to the Business Continuity Procedures and 
Complaint Resolution Procedures.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \7\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if the 
Commission finds that such proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such self-regulatory organization. Section 17A(b)(3)(F) 
of the Act \8\ requires, among other things, that the rules of a 
clearing agency are designed to promote the prompt and accurate 
clearance and settlement of securities transactions and, to the extent 
applicable, derivative agreements, contracts, and transactions, to 
assure the safeguarding of securities

[[Page 46479]]

and funds which are in the custody or control of the clearing agency or 
for which it is responsible and, in general, to protect investors and 
the public interest.
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    \7\ 15 U.S.C. 78s(b)(2)(C).
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds that the proposed amendments to the Procedures 
are consistent with the requirements of Section 17A of the Act \9\ and 
the rules and regulations thereunder applicable to ICE Clear Europe. In 
particular, the Commission believes that the proposed amendments to the 
ICE Clear Europe Procedures, which are principally designed to further 
implement proposed changes to its Clearing Rules as contained in the 
Rule Submission, are 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 
assure the safeguarding of securities and funds which are in the 
custody or control of the clearing agency or for which it is 
responsible, consistent with Section 17A(b)(3)(F) of the Act.\10\
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    \9\ 15 U.S.C. 78q-1.
    \10\ 15 U.S.C. 78q-1(b)(3)(F).
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    Section 19(b)(2)(C)(iii) of the Act \11\ allows the Commission to 
approve a proposed rule change earlier than 30 days after the date of 
publication of the notice of the proposed rule change in the Federal 
Register where the Commission finds good cause for so doing and 
publishes the reason for the finding. In its filing, ICE Clear Europe 
requested that the Commission approve the proposed rule change on an 
accelerated basis for good cause shown. ICE Clear Europe has 
represented that the proposed Procedures changes are necessary to 
further implement the rule changes contained in the Rule Submission in 
order to comply with requirements under EMIR in connection with its 
authorization as a central counterparty under EMIR. ICE Clear Europe 
further notes that failure to have the amendments in effect, and to be 
in compliance with the EMIR requirements, may adversely affect the 
approval of its authorization application and therefore its ability to 
do business as a recognised central counterparty. Accordingly, the 
Commission finds that good cause exists to approve the proposed rule 
change on an accelerated basis pursuant to Section 19(b)(2)(C)(iii) of 
the Act.\12\
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    \11\ 15 U.S.C. 78s(b)(2)(C)(iii).
    \12\ 15 U.S.C. 78s(b)(2)(C)(iii).
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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 \13\ and the 
rules and regulations thereunder.
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    \13\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\14\ that the proposed rule change (SR-ICEEU-2014-11) be, and 
hereby is, approved on an accelerated basis.\15\
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    \14\ 15 U.S.C. 78s(b)(2).
    \15\ 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.\16\
Kevin M. O'Neill,
Deputy Secretary.
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    \16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2014-18750 Filed 8-7-14; 8:45 am]
BILLING CODE 8011-01-P