[Federal Register Volume 82, Number 129 (Friday, July 7, 2017)]
[Notices]
[Pages 31648-31649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14246]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81068; File No. SR-ICEEU-2017-007]


Self-Regulatory Organizations; ICE Clear Europe Limited; Order 
Approving Proposed Rule Change Relating to Amendments to the ICE Clear 
Europe Limited Articles of Association

June 30, 2017.

I. Introduction

    On May 2, 2017, ICE Clear Europe Limited (``ICE Clear Europe''), 
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-2017-007) to amend its Articles of Association. The proposed rule 
change was published for comment in the Federal Register on May 19, 
2017.\3\ The Commission received no comment letters regarding

[[Page 31649]]

the proposed 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. 34-80674 (May 19, 2017), 
82 FR 23080 (May 19, 2017) (SR-ICEEU-2017-007) (the ``Notice'').
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II. Description of the Proposed Rule Change

    As more fully described in the Notice, the proposed rule change 
seeks to amend the Articles of Association, among other things, to 
update the Articles to add definitions that reflect ICE Clear Europe's 
existing committees, change the minimum number of directors from two to 
six, provide for selection of replacement or additional directors by 
the Nominations Committee, make use of a Senior Independent Director 
appointed in accordance with the UK Corporate Governance Code, stagger 
the retirement or rotation of independent directors (the provisions for 
the retirement or rotation of CDS directors will not change), 
explicitly provide that directors appoint members of relevant 
committees, which operate under their own terms of reference, require 
independent directors to disclose to the Board of Directors all other 
directorships that they hold both prior to appointment and on an 
ongoing basis, adopt new procedures identifying and addressing 
conflicts of interest of directors with respect to both transactions 
with ICE Clear Europe where a director has an interest and matters in 
the ordinary course in which directors' interests are affected (i.e., 
directors affiliated with clearing members), make clarifications to 
notice waiver requirements, and require a written record of all 
unanimous or majority decisions of the directors for at least ten 
years. Additionally, ICE Clear Europe proposed other non-substantive 
corrections and clarifications to the Articles of Association. For 
example, various references to persons have been revised to be gender-
neutral, and various articles have been renumbered in light of the 
changes discussed above.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act 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.\4\ Section 17A(b)(3)(C) of the Act requires,\5\ among 
other things, that the rules of a clearing agency \6\ assure a fair 
representation of its participants in the selection of its directors 
and administration of its affairs. Section 17A(b)(3)(F) of the Act 
requires,\7\ 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, 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. Rule 17Ad-22(e)(2) requires that a covered clearing agency 
\8\ shall establish, implement, maintain and enforce written policies 
and procedures reasonably designed to provide for governance 
arrangements that are clear and transparent; clearly prioritize the 
safety and efficiency of the covered clearing agency; support the 
public interest requirements in Section 17A of the Act; establish that 
the board of directors and senior management have appropriate 
experience and skills to discharge their duties and responsibilities; 
specify clear and direct lines of responsibility; and consider the 
interests of participants' customers, securities issuers and holders, 
and other relevant stakeholders of the covered clearing agency.\9\
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    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(C).
    \6\ The ``rules of a clearing agency'' include its articles of 
incorporation and bylaws. 15 U.S.C. 78c(a)(27).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
    \8\ See 17 CFR 240.17Ad-22(a)(5) (defining ``covered clearing 
agency'').
    \9\ See 17 CFR 240.17Ad-22(e)(2).
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    The Commission finds that the proposed rule change is consistent 
with Section 17A of the Act and Rule 17Ad-22 thereunder. In particular, 
the Commission finds that the amendments will clarify aspects of ICE 
Clear Europe's governance framework and thus, in ICE Clear Europe's 
view, facilitate the efficient operation of the clearing house and the 
prompt and accurate clearance and settlement of transactions. The 
Commission believes that these amendments are consistent with ICE Clear 
Europe's obligation to have governance arrangements that are clear and 
transparent, prioritize the safety and efficiency of the clearing 
agency, and support the public interest requirements in Section 17A of 
the Act and the objectives of owners and participants. Finally, with 
respect to potential conflicts of interest concerning matters in the 
ordinary course in which directors' interests are affected, the 
Commission believes that this provision is consistent with the 
requirement that the rules of a clearing agency assure a fair 
representation of its participants in the administration of its 
affairs. ICE Clear Europe has represented that these provisions are not 
intended to result in the recusal or disqualification of member-
affiliated directors as a class,\10\ but rather could result in recusal 
on a case-by-case basis depending on the conflict. Further, any recusal 
is not automatic; rather, ICE Clear Europe's shareholders or the 
remaining directors have the ability to determine whether full or 
limited participation by the interested director is appropriate. 
Moreover, ICE Clear Europe currently affords members participation in 
product risk committees and on the Board's Risk Committee.
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    \10\ In particular, ICE Clear Europe has represented that the 
recusal provisions in proposed Article 53 of its Shareholder 
Articles would not prohibit member-affiliated directors from 
participating in decisions relating to margin levels as a general 
matter, decisions to clear new contracts, or other similar general 
matters that are applicable to all members or particular classes of 
clearing members.
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    Relying on these findings and assurances, the Commission believes 
that the proposed rule change is consistent with Sections 17A(b)(3)(C) 
and (F) of the Act,\11\ and Rule 17Ad-22(e)(2) thereunder.\12\
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    \11\ 15 U.S.C. 78q-1(b)(3)(C) and (F).
    \12\ 17 CFR 240.17Ad-22(e)(2).
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IV. Conclusion

    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
that the proposed rule change (SR-ICEEU-2017-007) be, and hereby is, 
approved.\13\
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    \13\ 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.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2017-14246 Filed 7-6-17; 8:45 am]
 BILLING CODE 8011-01-P