[Federal Register Volume 84, Number 102 (Tuesday, May 28, 2019)]
[Notices]
[Pages 24573-24575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10989]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85908; File No. SR-ICEEU-2019-010]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of Proposed Rule Change, Security-Based Swap Submission or 
Advance Notice Relating to Amendments to the ICE Clear Europe 
Membership Policy

May 21, 2019.

    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 May 13, 2019, ICE Clear Europe Limited (``ICE Clear Europe'' or the 
``Clearing House'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule changes described in Items I, II and 
III below, which Items have been prepared by ICE Clear Europe. 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. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change, Security-Based Swap Submission, or Advance Notice

    ICE Clear Europe proposes to amend its Clearing Membership Policy 
(the ``Policy'') to provide further clarification for the Clearing 
Membership requirements and to update certain ICE Clear Europe internal 
governance requirements applicable to all Clearing Membership 
applications.

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change, Security-Based Swap Submission or 
Advance Notice

    In its filing with the Commission, ICE Clear Europe included 
statements concerning the purpose of and basis for

[[Page 24574]]

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. ICE Clear Europe has prepared 
summaries, set forth in sections (A), (B), and (C) below, of the most 
significant aspects of such statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change, Security-Based Swap Submission or 
Advance Notice

(a) Purpose
    ICE Clear Europe is amending its Clearing Membership Policy. The 
proposed update allows for (i) the introduction of internal standards 
to be used by the Clearing House to assess the CDS Clearing Members' 
operational abilities to adhere to the existing CDS Clearing Membership 
requirements in relation to the end-of-day pricing submission 
obligations, (ii) the removal of the references to the F&O and CDS 
Product Risk Committees' (collectively, the ``Product Risk 
Committees'') role from the ICE Clear Europe internal governance steps 
to approve or reject new Clearing Members, as the Executive Risk 
Committee has obtained the authority from the ICE Clear Europe Board of 
Directors to approve or reject applications, and (iii) the introduction 
of an explicit requirement for the Clearing Risk Department to consider 
the performance of the applicant Clearing Members in the Default 
Management Test and to review such applicants' internal policies and 
procedures to assess the efficacy of their default management process, 
as part of the on boarding process.
(b) Statutory Basis
    ICE Clear Europe believes that the proposed Policy changes would be 
consistent with the requirements of Section 17A of the Securities 
Exchange Act 1934 (the ``Act'') \3\ and the regulations thereunder 
applicable to it, including the standards under Rule 17Ad-22 \4\.
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    \3\ 15 U.S.C. 78q-1.
    \4\ 17 CFR 240.17Ad-22.
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    In particular, Section 17A(b)(3)(F) of the Act \5\ 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 safeguarding of securities and funds 
in the custody or control of the clearing agency or for which it is 
responsible, and the protection of investors and the public interest. 
The proposed changes to the Policy would both (i) enhance the ability 
of ICE Clear Europe to assess the capacity of applicant Clearing 
Members to adhere to the rules of the Clearing House and (ii) 
streamline the on boarding approval process of applicant Clearing 
Members. The changes would thus facilitate continued clearing by 
Clearing Members in compliance with the applicable rules of the 
Clearing House and promote the prompt and accurate clearance and 
settlement of transactions by these persons. Through enhancing risk 
management processes relating to Clearing Member pricing capability and 
default management, the amendments may also enhance the safeguarding of 
securities and funds in the custody or control of the Clearing House or 
for which it is responsible as well as the protection of investors and 
the public interest.
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    \5\ 15 U.S.C. 78q-1.
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    In addition, Section 17A(b)(3)(F) of the Act \6\ requires, among 
other things, that the rules of a clearing agency are not designed to 
permit unfair discrimination in the admission of participants or among 
participants in the use of the clearing agency, or to regulate matters 
not related to the purposes of the Section of the Act \7\ or the 
administration of the clearing agency.
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    \6\ 15 U.S.C. 78q-1.
    \7\ Id.
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    The proposed changes would be aligned with such requirements as 
they introduce further clarity on how ICE Clear Europe shall test the 
ability of the CDS applicant Clearing Members to provide the required 
information on the end of day prices to the Clearing House, in line 
with the relevant rules of the Clearing House, and on the elements that 
ICE Clear Europe shall consider to assess the effectiveness of the 
applicant Clearing Members' default management process. The other set 
of the proposed changes, which refer to certain changes to the internal 
governance process for the approval or rejection of applicant Clearing 
Members, would apply uniformly to all applicant Clearing Members, 
ensuring that a consistent and non-discriminatory internal governance 
process is followed for the approval or rejection of applicant Clearing 
Members.
    The amendments would also satisfy the specific relevant 
requirements of Rule 17Ad-22,\8\ as set forth in the following 
discussion.
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    \8\ 17 CFR 240.17Ad-22.
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    Specifically Rule 17Ad-22(e)(2) \9\ requires, among other things, 
that the written policies and procedures of a clearing agency be 
designed to provide for governance arrangements that are clear and 
transparent.
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    \9\ 17 CFR 240.17Ad-22(e)(2).
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    ICE Clear Europe believes the proposed amendment to remove the 
references to the Product Risk Committees' role in the new Clearing 
Members approval process, as the ICE Clear Europe Executive Risk 
Committee has obtained the authority from the ICE Clear Europe Board of 
Directors to approve or reject applications, would allow for a more 
accurate description in the Policy of the actual internal governance 
process followed by ICE Clear Europe.
    Finally, Rule 17Ad-22(e)(18) \10\ requires, among other things, 
that the written policies and procedures of a clearing agency be 
designed to establish objective, risk-based, and publicly disclosed 
criteria for participation, which permit fair and open access by direct 
and, where relevant, indirect participants and other financial market 
utilities, and to require participants to have sufficient financial 
resources and robust operational capacity to meet obligations arising 
from participation in the clearing agency, and monitor compliance with 
such participation requirements on an ongoing basis.
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    \10\ 17 CFR 240.17Ad-22(e)(18).
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    ICE Clear Europe believes the proposed amendments would be 
consistent with such requirements. Indeed, the additional 
clarifications on the end-of-day pricing requirements for CDS Clearing 
Members and on the elements that ICE Clear Europe shall consider to 
assess the effectiveness of the applicant Clearing Members' default 
management process allow for the introduction of clearer and more 
objective parameters for the ICE Clear Europe Clearing Risk Department 
to make a determination on the Clearing Member's ability to adhere to 
the ICE Clear Europe Clearing Membership requirements.
    In relation to the requirement on the public disclosure of the 
criteria for participation to the Clearing House, ICE Clear Europe 
achieves compliance with such requirement by making the ICE Clear 
Europe Membership Procedures available on its website.\11\ The proposed 
amendments do not trigger any change to the ICE Clear Europe Membership 
Procedures, as the amendments do not refer to any of the four areas 
covered by the ICE Clear Europe Membership Procedures: Application 
Process, Resignation Process, Capital

[[Page 24575]]

Requirements and Matters Requiring Notification by Clearing Members.
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    \11\ https://www.theice.com/clear-europe/regulation.
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    As a result, in ICE Clear Europe's view, the amendments would be 
consistent with the obligations of Rule 17Ad-22(e)(18) \12\ that 
require clearing agencies to have objective, risk-based, and publicly 
disclosed criteria for participation of Clearing Members.
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    \12\ 17 CFR 240.17Ad-22(e)(18).
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(B) Clearing Agency's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed rule changes would 
have any impact, or impose any burden, on competition not necessary or 
appropriate in furtherance of the purposes of the Act.
    The proposed amendments related to the changes for CDS Membership 
shall be applied uniformly to all CDS Clearing Members. Additionally, 
the proposed changes on the elements to be considered by the Clearing 
House to assess the effectiveness of the applicant Clearing Members' 
default management process and the proposed changes to the internal 
governance approval process of new Clearing Members shall apply 
uniformly to all new Clearing Members. Therefore, ICE Clear Europe does 
not believe the amendments would adversely affect competition among 
Clearing Members, materially affect the cost of clearing, adversely 
affect access to clearing in Contracts for Clearing Members or their 
customers, or otherwise adversely affect competition in clearing 
services. Accordingly, ICE Clear Europe does not believe that the 
amendments would impose any impact or burden on competition that is not 
ate in furtherance of the purpose of the Act.

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants or Others

    Written comments relating to the proposed amendments have not been 
solicited or received by ICE Clear Europe. ICE Clear Europe will notify 
the Commission of any comments received with respect to the proposed 
amendments.

III. Date of Effectiveness of the Proposed Rule Change, Security-Based 
Swap Submission and Advance Notice 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, security-based swap submission or advance notice 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-2019-010 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-2019-010. 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 website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change, security-based 
swap submission or advance notice that are filed with the Commission, 
and all written communications relating to the proposed rule change, 
security-based swap submission or advance notice 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 website 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 
will also be available for inspection and copying at the principal 
office of ICE Clear Europe and on ICE Clear Europe's website at https://www.theice.com/clear-europe/regulation. All comments received will be 
posted without change. Persons submitting comments are cautioned that 
we do not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
ICEEU-2019-010 and should be submitted on or before June 18, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-10989 Filed 5-24-19; 8:45 am]
BILLING CODE 8011-01-P