[Federal Register Volume 84, Number 146 (Tuesday, July 30, 2019)]
[Notices]
[Pages 36987-36989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-16094]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86457; File No. SR-LCH SA-2019-004]
Self-Regulatory Organizations; LCH SA; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change, as Modified by
Amendments No. 1 and No. 2, Relating to the Extension to Clients of
CDSClear of the Fee Applicable by LCH SA on the Amount of Allocated
Securities Collateral
July 24, 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 July 9, 2019, Banque Centrale de Compensation, which conducts
business under the name LCH SA (``LCH SA''), filed with the Securities
and Exchange Commission (``Commission'') the proposed rule change
described in Items I, II and III below, which Items
[[Page 36988]]
have been prepared by LCH SA. On July 10, 2019, LCH SA filed Amendment
No. 1 to the proposed rule change.\3\ On July 24, 2019, LCH SA filed
Amendment No. 2 to the proposed rule change.\4\ LCH SA filed the
proposal pursuant to Section 19(b)(3)(A) of the Act,\5\ and Rule 19b-
4(f)(2) \6\ thereunder, so that the proposal was effective upon filing
with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change, as modified by Amendments
No. 1 and No. 2 (hereafter referred to as the ``proposed rule
change''), from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 corrected a technical issue with the initial
filing of the proposed rule change but did not make any changes to
the substance of the filing or the text of the proposed rule change.
\4\ Amendment No. 2 provided a confidential Exhibit 3 to further
substantiate statements made in the filing but did not make any
changes to the substance of the filing or the text of the proposed
rule change.
\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change, Security-Based Swap Submission, or Advance Notice
The proposed rule change will extend to the clients of LCH SA
CDSClear service the current fee applicable on the amount of allocated
securities collateral posted by any clearing member or any other client
of LCH SA.
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, LCH SA 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. LCH SA 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
1. Purpose
As specified in the table below, the current LCH SA fee grid
charges a 10bp fee on the amount of allocated securities collateral,
except for clients of LCH SA CDSClear service, which are free of
charge.
Current LCH SA CDSClear Collateral Fee Grid
----------------------------------------------------------------------------------------------------------------
Cash collateral fee/spread
Currency Unsecured overnight --------------------------------------------------------
index House Client
----------------------------------------------------------------------------------------------------------------
EUR.............................. EONIA............... 30 bps.............. 15 bps.
GBP.............................. SONIA............... 35 bps.............. 20 bps.
USD.............................. FEDFUND............. 30 bps.............. 15 bps.
----------------------------------------------------------------------------------------------------------------
Allocated securities collateral fee/spread House............... Client
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
10 bps.............. Free of charge.
----------------------------------------------------------------------------------------------------------------
The purpose of the proposed fee change is to align the CDSClear fee
grid with other LCH SA business lines and introduce a new fee amount
for securities collateral posted by CDSClear clients.
No amendments to the LCH SA CDS Clearing Rules are required to
effect these changes.
As specified in Exhibit 5, the proposed change is for LCH SA
CDSClear to charge a 10bp fee on the amount of allocated securities
posted as collateral by the clients using CDSClear service.
2. Statutory Basis
Section 17A(b)(3)(D) of the Act requires that the rules of a
clearing agency provide for the equitable allocation of reasonable
dues, fees, and other charges.\7\
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------
LCH SA believes that proposing such clearing fee change is
consistent with the requirements of Section 17A of the Act \8\ and the
regulations thereunder applicable to it, and in particular provides for
the equitable allocation of reasonable fees, dues, and other charges
among clearing members and market participants by ensuring that
clearing members and clients pay reasonable fees and dues for the
services provided by LCH SA, within the meaning of Section 17A(b)(3)(D)
of the Act.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
The proposed clearing fee change is already applicable by LCH SA on
the amount of allocated securities collateral posted by all clearing
members and clients of Non-US Business'.\9\ The objective is to extend
it to clients using CDSClear service and apply it equally to all market
participants within the CCP.
---------------------------------------------------------------------------
\9\ See the definition under Order Granting Application for
Registration as a Clearing Agency and Request for Exemptive Relief,
Order, Securities Exchange Act Release No. 34-79707; File No. 600-36
(Dec. 29, 2016), 82 FR 1398 (Jan. 5, 2017) (available at https://www.federalregister.gov/documents/2017/01/05/2016-31940/self-regulatory-organizations-lch-sa-order-granting-application-for-registration-as-a-clearing).
---------------------------------------------------------------------------
Further, LCH SA believes that the proposed fee amount is reasonable
and has been set up at an appropriate level given the costs, expenses
and revenues (to be) generated to LCH SA in providing such services.
B. Clearing Agency's Statement on Burden on Competition
Section 17A(b)(3)(I) of the Act requires that the rules of a
clearing agency not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.\10\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
LCH SA does not believe that the proposed rule change would impose
any burden on competition, as it is already applicable within the CCP
and will also be extended to clients using CDSClear service for
consistency purposes.
Additionally, the proposed fee change will apply equally to all
CDSClear clearing members and clients as well and does not adversely
affect the ability of such clients or other market participants
generally to engage in cleared transactions or to access clearing
services.
Further, LCH SA believes that the fee amount has been set up at an
appropriate level given the costs and
[[Page 36989]]
expenses to LCH SA in offering the relevant clearing services.
C. Clearing Agency'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 but a consultation has been conducted with and
feedback sought from CDSClear members. No comment or question has been
received following this consultation. LCH SA will notify the Commission
of any written comments received by LCH SA.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has become effective upon filing
pursuant to Section 19(b)(3)(A) \11\ of the Act and Rule 19b-4(f)(2)
\12\ thereunder because it establishes a fee or other charge imposed by
LCH SA on its Clearing Members. At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such proposed rule change if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of the Act.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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:
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-LCH SA-2019-004 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-LCH SA-2019-004. 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 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 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 LCH SA and on LCH SA's website
at https://www.lch.com/resources/rules-and-regulations/proposed-rule-changes-0. 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-LCH SA-2019-004 and should
be submitted on or before August 20, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-16094 Filed 7-29-19; 8:45 am]
BILLING CODE 8011-01-P