[Federal Register Volume 79, Number 229 (Friday, November 28, 2014)]
[Notices]
[Pages 70904-70905]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28079]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73666; File No. SR-ICC-2014-16]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change Related to ICC's Use of House Initial 
Margin as an Internal Liquidity Resource

November 21, 2014.

I. Introduction

    On October 1, 2014, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change SR-ICC-2014-16 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 October 20, 2014.\3\ The Commission did not receive comments on the 
proposed rule change. For the reasons discussed below, the Commission 
is approving the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-73347 (Oct. 14, 
2014), 79 FR 62683 (Oct. 20, 2014) (SR-ICC-2014-16).
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II. Description of the Proposed Rule Change

    ICC has stated that the purpose of the proposed rule change is to 
amend ICC Clearing Rule 402(j) to provide further clarity regarding 
ICC's obligation to return any Clearing Participant's House Initial 
Margin used as an internal liquidity resource. Under Rule 402(j), ICC 
may, in connection with a Clearing Participant default, (i) exchange 
House Initial Margin held in the form of cash for securities of 
equivalent value and/or (ii) exchange House Initial Margin held in the 
form of cash in one currency for cash of equivalent value in a 
different currency. The proposed rule change clarifies that the 
exchanges involving a Clearing Participant's Initial Margin in its 
House Account will occur on a temporary basis and that ICC will reverse 
any such exchange as soon as practicable following the conclusion of 
event which gave rise to the liquidity need. ICC states that the 
duration of the liquidity event will likely be significantly shorter 
than the amount of time necessary to complete the default management 
process for the event which gave rise to the liquidity need. The 
proposed rule change will also delete general references to ICC's 
liquidity policies and procedures and instead will use the defined term 
``ICE Clear Credit Procedures'' found throughout the ICC Rules.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \4\ 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 \5\ 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 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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    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds that the proposed rule change is consistent 
with the requirements of Section 17A of the Act \6\ and the rules and 
regulations thereunder applicable to ICC. The proposed modification to 
Rule 402(j) provides clarity regarding ICC's obligation and timing to 
return any House Initial Margin used as an internal liquidity resource 
and is reasonably designed to allow ICC to manage its liquidity needs 
in the event of one or more Clearing Participant defaults. Accordingly, 
the Commission believes that the proposed rule change is reasonably 
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.\7\
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    \6\ 15 U.S.C. 78q-1.
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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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 \8\ and the 
rules and regulations thereunder.
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    \8\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the

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proposed rule change (SR-ICC-2014-16) be, and hereby is, approved.\10\
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ 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.\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. 2014-28079 Filed 11-26-14; 8:45 am]
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