[Federal Register Volume 79, Number 158 (Friday, August 15, 2014)]
[Notices]
[Pages 48280-48281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-19329]



[[Page 48280]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72802; File No. SR-ICC-2014-13]


Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change To Provide for the Clearance of 
Additional Standard Emerging European and Middle Eastern Sovereign 
Single Names

August 11, 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 July 31, 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 adopt rules that will 
provide the basis for ICC to clear additional credit default swap 
contracts. Specifically, ICC is proposing to amend Section 26D of its 
Rules to provide for the clearance of additional Standard Emerging 
Sovereign Single Name constituents of the CDX Emerging Markets Index 
(``SES Contracts''). Currently, ICC clears six SES Contracts: Four 
Standard Latin America Sovereign Single Name constituents of the CDX 
Emerging Markets Index and two Standard Emerging European and Middle 
Eastern Sovereign Single Names that have been constituents of the CDX 
Emerging Markets Index (the ``SEEME Contracts''). The proposed changes 
to the ICC Rules would provide for the clearance of additional SEEME 
Contracts, specifically the Republic of Hungary and the Republic of 
South Africa.

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 purpose of proposed rule change is to adopt rules that will 
provide the basis for ICC to clear additional credit default swap 
contracts. Currently, ICC clears six SES Contracts: Four Standard Latin 
America Sovereign Single Name constituents of the CDX Emerging Markets 
Index (the Federative Republic of Brazil, the United Mexican States, 
the Argentine Republic, and the Bolivarian Republic of Venezuela) and 
two SEEME Contracts (the Republic of Turkey and the Russian 
Federation). ICC proposes amending Subchapter 26D of its Rules to 
provide for the clearance of two additional SEEME Contracts, 
specifically the Republic of Hungary and the Republic of South Africa. 
ICC currently clears Series 14-21 of the CDX Emerging Markets Index. Of 
the CDX Emerging Markets Indices cleared by ICC, the Republic of 
Hungary is a constituent of the CDX Emerging Markets Index, Series 14-
18, and the Republic of South Africa is a constituent of the CDX 
Emerging Markets Index, Series 14-21. These two additional SEEME 
Contracts will initially be offered on the 2014 ISDA Credit Derivatives 
Definitions. The addition of these SEEME Contracts will allow market 
participants an increased ability to manage risk, by providing market 
participants the ability to offset related index positions.
    These additional SEEME Contracts have terms consistent with the 
other SEEME Contracts currently cleared by ICC and governed by 
Subchapter 26D of the ICC rules, namely the Russian Federation and the 
Republic of Turkey. Minor revisions to Subchapter 26D (Standard 
Emerging Sovereign (``SES'') Single Name) are made to provide for 
clearing the additional SEEME Contracts and described as follows.
    ICC Rule 26D-102 is also modified to include the Republic of 
Hungary and the Republic of South Africa in the list of specific 
Eligible SES Reference Entities to be cleared by ICC. The addition of 
these products does not require any changes to ICC's Risk Management 
Framework or other policies and procedures constituting rules within 
the meaning of the Act.
    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. The clearance of additional SEEME Contracts will allow 
market participants an increased ability to manage risk. ICC believes 
that acceptance of these new contracts, on the terms and conditions set 
out in the ICC Rules, is consistent with the prompt and accurate 
clearance of and settlement of securities transactions and derivative 
agreements, contracts and transactions cleared by ICC, the safeguarding 
of securities and funds in the custody or control of ICC, and the 
protection of investors and the public interest, within the meaning of 
Section 17A(b)(3)(F) of the Act.\4\
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    \3\ 15 U.S.C. 78q-1(b)(3)(F).
    \4\ Id.
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    Clearing of the additional SEEME Contracts will also satisfy the 
requirements of Rule 17Ad-22.\5\ In particular, in terms of financial 
resources, ICC will apply its existing margin methodology to the 
additional SEEME Contracts. ICC believes that this model will provide 
sufficient margin to cover its credit exposure to its clearing members 
from clearing such contracts, consistent with the requirements of Rule 
17Ad-22(b)(2).\6\ In addition, ICC believes its Guaranty Fund, under 
its existing methodology, will, together with the required margin, 
provide sufficient financial resources to support the clearing of the 
new contracts consistent with the requirements of Rule 17Ad-
22(b)(3).\7\ ICC also believes that its existing operational and 
managerial resources will be sufficient for clearing of the additional 
SEEME Contracts, consistent with the requirements of Rule 17Ad-
22(d)(4),\8\ as the new contracts are similar from an operational 
perspective to existing SEEME Contracts. Similarly, ICC will use its 
existing settlement procedures and account structures for the new 
contracts, consistent with the requirements of Rule 17Ad-22(d)(5), (12) 
and (15) \9\ as to the finality and accuracy of its daily settlement 
process and avoidance of the risk to ICC of settlement failures. 
Finally, ICC will apply its existing default management policies and 
procedures for the new contracts. ICC believes that these procedures 
allow for it to take timely

[[Page 48281]]

action to contain losses and liquidity pressures and to continue 
meeting its obligations in the event of clearing member insolvencies or 
defaults in respect of the additional SEEME Contracts, in accordance 
with Rule 17Ad-22(d)(11).\10\
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    \5\ 17 CFR 240.17Ad-22.
    \6\ 17 CFR 240.17Ad-22(b)(2).
    \7\ 17 CFR 240.17Ad-22(b)(3).
    \8\ 17 CFR 240.17Ad-22(d)(4).
    \9\ 17 CFR 240.17Ad-22(d)(5), (12) and (15).
    \10\ 17 CFR 240.17Ad-22(d)(11).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The additional SEEME Contracts will be available to all ICC 
Participants for clearing. The clearing of these additional SEEME 
Contracts by ICC does not preclude the offering of the additional SEEME 
Contracts for clearing by other market participants. Therefore, ICC 
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 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-2014-13 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-2014-13. 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 Credit 
and on ICE Clear Credit's Web site at https://www.theice.com/clear-credit/regulation.
    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-2014-13 
and should be submitted on or before September 5, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-19329 Filed 8-14-14; 8:45 am]
BILLING CODE 8011-01-P