[Federal Register Volume 82, Number 60 (Thursday, March 30, 2017)]
[Notices]
[Pages 15733-15735]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-06242]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80304; File No. SR-ICEEU-2017-002]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing Amendment Nos. 1 and 2 and Order Granting Accelerated 
Approval of Proposed Rule Change, as Modified by Amendment Nos. 1 and 
2, To Revise the ICE Clear Europe Clearing Rules Relating to the 
Application of Default Provisions in the Event of a Resolution 
Proceeding

March 24, 2017.

I. Introduction

    On January 25, 2017, ICE Clear Europe Limited (``ICE Clear Europe'' 
or ``Clearing House'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change (SR-ICEEU-2017-002) to amend the 
ICE Clear Europe Clearing Rules (``Rules'') relating to the application 
of default provisions in the event of a resolution proceeding.\3\ The 
proposed rule change was published for comment in the Federal Register 
on February 15, 2017.\4\ On February 8, 2017, ICE Clear Europe filed 
Amendment No. 1 to the proposed rule change and on February 10, 2017, 
ICE Clear Europe filed Amendment No. 2 to the proposed rule change.\5\ 
The Commission received no comment letters regarding the proposed 
change. The Commission is publishing this notice to solicit comment on 
Amendment Nos. 1 and 2 from interested persons and, for the reasons 
stated below, is approving the proposed rule change, as modified by 
Amendment Nos. 1 and 2, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Capitalized terms used in this order, but not defined 
herein, have the meanings specified in ICE Clear Europe Clearing 
Rules.
    \4\ Securities Exchange Act Release No. 34-79999 (February 9, 
2017), 82 FR 10848 (February 15, 2017) (SR-ICEEU-2017-002).
    \5\ Amendment Nos. 1 and 2 are technical amendments to ICE Clear 
Europe's filing with respect to comments on the proposed rule change 
received by ICE Clear Europe.
    In its filing on January 25, 2017, ICE Clear Europe represented 
that it had published a prior version of the proposed amendments for 
consultation with its clearing members, two clearing members had 
inquired about the regulatory process surrounding the proposed 
change, and one clearing member suggested that certain additional 
clarifications be made to limit the application of other aspects of 
the ``Insolvency'' definition in the Rules. ICE Clear Europe further 
represented its conclusion that these suggested clarifications were 
not necessary or appropriate and that ICE Clear Europe would not 
make these requested clarifications.
    In Amendment No. 1, on February 8, 2017, ICE Clear Europe 
amended the filing (1) to note that no written comments were 
received in response to its prior consultation publication (Circular 
C16/018, available at https://www.theice.com/clear-europe/circulars 
(February 22, 2016)), (2) to include Circular C16/018 as Exhibit 2, 
and (3) to add a footnote that ``Capitalized terms used [in the 
notice] but not defined [t]herein have the meanings specified in the 
[ ] Rules.'' However, Exhibit 2 was not referenced in Item 9 of ICE 
Clear Europe's amended filing. Subsequently, ICE Clear Europe filed 
Amendment No. 2 on February 10, 2017. In Amendment No. 2, ICE Clear 
Europe referenced Exhibit 2 in Item 9 of its filing and corrected a 
pagination error in Amendment No. 1.
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II. Description of the Proposed Rule Change

    The principal purpose of the proposed rule change, as modified by 
Amendment Nos. 1 and 2, is to amend the Rules to clarify that the 
default remedies enumerated in the Rules are

[[Page 15734]]

not automatically triggered by certain resolution or insolvency 
proceedings brought under the special resolution regimes of the UK 
Banking Act 2009 or the national legislation of any European Economic 
Area jurisdiction implementing the Bank Recovery and Resolution 
Directive (Directive 2014/59/EU) (``BRRD'').
    Nevertheless, the proposed rule change preserves ICE Clear Europe's 
right under the Rules to declare an Event of Default or exercise 
default remedies in the event a clearing member (or other person) is 
not performing substantive obligations to the Clearing House. The 
proposed rule change also preserves ICE Clear Europe's right to declare 
an Event of Default or exercise all of the default remedies available 
in the Rules if applicable law, including special resolution regimes, 
does not prohibit doing so. Finally, the proposed rule change confirms 
that application of a special resolution regime with respect to ICE 
Clear Europe does not constitute an insolvency of ICE Clear Europe for 
purposes of the Rules.

III. Discussion and Commission's Findings

    Section 19(b)(2)(C) of the Act \6\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if it 
finds that such proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such organization. Section 17A(b)(3)(F) of the Act \7\ 
requires, among other things, that the rules of a registered 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, in general, to 
protect investors and the public interest.
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    \6\ 15 U.S.C. 78s(b)(2)(C).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds that the proposed rule change, which clarifies 
the application of certain default provisions in the event of a 
resolution proceeding with respect to either the Clearing House, a 
clearing member, or other person, are consistent with the requirements 
of the requirements of Section 17A(b)(3)(F) of the Act.\8\ The proposed 
change recognizes that other statutory resolution regimes could have an 
impact on ICE Clear Europe's rights and responsibilities in the event 
either ICE Clear Europe or one of its clearing members is subject to 
these regimes. Similarly, the proposed rule change clarifies the extent 
to which ICE Clear Europe's rights and responsibilities under its Rules 
are affected during the operation of a statutory resolution regime. ICE 
Clear Europe represents that the amendments are not intended to 
increase risk to ICE Clear Europe, and will not impact ICE Clear 
Europe's ability to take risk management measures under its Rules with 
respect to non-defaulting clearing members (including clearing members 
that may be subject to a Resolution Step that is not an Unprotected 
Resolution Step).
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    \8\ Id.
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    The Commission finds that this explicit recognition and the 
additional clarity provided, should promote the prompt and accurate 
clearance and settlement of securities transactions and, to the extent 
applicable, derivative agreements, contracts, and transactions as well 
as promote the public interest when default circumstances arise. The 
Commission notes ICE Clear Europe's representation that the amendments 
are not intended to increase risk to ICE Clear Europe and will not 
impact ICE Clear Europe's ability to take risk management measures with 
respect to its non-defaulting clearing members (including clearing 
members that may be subject to a Resolution Step that is not an 
Unprotected Resolution Step). Moreover, the Commission finds that by 
clarifying legal limitations on ICE Clear Europe's ability to determine 
that a clearing member is in default during certain resolution 
proceedings, the proposed rule change is consistent with Rule 17Ad-
22(e)(1), which requires that a clearing house provide ``a well-
founded, clear, transparent and enforceable legal basis for each aspect 
of its activities in all relevant jurisdictions.'' \9\
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    \9\ 17 CFR 240.17Ad-22(e)(1).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as modified by Amendment Nos. 1 and 2, 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-2017-002 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-ICEEU-2017-002. 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 the filing also will be available 
for inspection and copying at the principal office of ICE Clear Europe 
and on its Web site at https://www.theice.com/clear-europe/regulation#rule-filings.
    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-2017-002 
and should be submitted on or before April 20, 2017.

V. Accelerated Approval of the Proposed Rule Change, as Modified by 
Amendment Nos. 1 and 2

    The Commission finds good cause, pursuant to section 19(b)(2) of 
the Act,\10\ to approve the proposed rule change, as modified by 
Amendment Nos. 1 and 2, prior to the 30th day after publication of 
Amendment Nos. 1 and 2 in the Federal Register. As described above, the 
proposed rule change clarifies that the default remedies enumerated in 
the Rules are not automatically triggered by certain resolution 
proceedings brought under the UK Banking Act 2009 or the BRRD (and 
related national implementing legislation). Nevertheless, the rule 
change preserves ICE Clear Credit's right under the Rules to declare an 
Event of Default and exercise default remedies in the event a clearing 
member (or other person) is not performing

[[Page 15735]]

substantive obligations to the Clearing House. Also, as noted above, 
Amendment Nos. 1 and 2 are technical amendments to ICE Clear Europe's 
filing with respect to comments on the proposed rule change received by 
ICE Clear Europe.
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    \10\ 15 U.S.C. 78s(b)(2).
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    Thus, the proposed rule change is intended to comply with 
restrictions on ICE Clear Europe's exercise of its default remedies 
provided by applicable laws in other jurisdictions. Moreover, ICE Clear 
Europe represents that the proposed rule change has been filed at the 
request of regulatory authorities in the United Kingdom and the 
European Union. Finally, the Commission finds that implementation of 
the proposed rule change will not substantially affect the rights of 
members of the Clearing House as a practical matter because the 
proposed rule change clarifies restrictions that are already imposed on 
the Clearing House by applicable law in other jurisdictions. 
Accordingly, the Commission finds good cause for approving the proposed 
rule change, as modified by Amendment Nos. 1 and 2, on an accelerated 
basis pursuant to section 19(b)(2) of the Act.

VI. Conclusion

    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
that the proposed rule change (SR-ICEEU-2017-002), as modified by 
Amendment Nos. 1 and 2, be, and hereby is, approved on an accelerated 
basis.\11\
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    \11\ 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.\12\
Eduardo A. Aleman,
Assistant Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2017-06242 Filed 3-29-17; 8:45 am]
 BILLING CODE 8011-01-P