[Federal Register Volume 85, Number 51 (Monday, March 16, 2020)]
[Notices]
[Pages 14999-15002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05241]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88356; File No. SR-ICEEU-2020-001]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing and Immediate Effectiveness of Proposed Rule Changes Relating 
to Clearing Member Transaction Fees for Certain Equity Derivatives 
Contracts, Specifically the Fee Caps for the Block Only Standard and 
Flexible Single Stock Futures and Options (``the Contracts'')

March 10, 2020.
    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 February 25, 2020, ICE Clear Europe Limited (``ICE Clear Europe'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule changes described in Items I, II, and III below, which 
Items have been primarily prepared by ICE Clear Europe. ICE Clear 
Europe filed the proposed rule change pursuant to Section 19(b)(3)(A) 
of the Act \3\ and Rule 19b-4(f)(2) \4\ thereunder, such that the 
proposed rule change was immediately effective upon filing with the 
Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    ICE Clear Europe Limited (``ICE Clear Europe'') proposes rule 
changes relating to fees payable by Clearing Members for certain Equity 
Derivatives contracts, specifically the fee caps for the Block Only 
Standard and Flexible Single Stock Futures and Options (``the 
Contracts''). The revisions do not involve any changes to the ICE Clear 
Europe Clearing Rules or Procedures.\5\
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    \5\ Capitalized terms used but not defined herein have the 
meanings specified in the ICE Clear Europe Clearing Rules.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

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

(a) Purpose
    The purpose of the proposed rule changes is for ICE Clear Europe to 
update certain fees payable by Clearing Members for certain Equity 
Derivatives contracts which are cleared by ICEU Clear Europe. 
Specifically, ICE Clear Europe proposes changing the Clearing Member 
fee caps for the Block Only Standard and Flexible Single Stock Futures 
and Options. No changes will be made to the underlying fee rate per 
contract (``RPC'') for these products. Attached as Exhibit 5 is the 
table listing the new fee caps for the Block Only Standard and Flexible 
Single Stock Futures and Options that will be included in a Circular in 
advance of the proposed effective date. The new

[[Page 15000]]

Clearing Member fee caps are intended to come into effect on 2 March 
2020. The proposed revisions to the Clearing Member fee caps are 
described in detail as follows.
    ICE Clear Europe generally imposes clearing fees for the Contracts 
on a per lot basis. However, ICE Clear Europe also establishes a fee 
cap applicable to the clearing for the Contracts, which limits the 
maximum clearing fee payable by a Clearing Member per leg of a 
transaction regardless of the size or number of lots actually cleared. 
A similar fee structure (and fee cap) applies to the trading fee 
charged by the relevant exchange on which the Contracts are listed, 
which in this case is ICE Futures Europe (``the Exchange'' or 
``IFEU''). For example, under the proposed trading/clearing fees for UK 
Standard and Flexible Stock Options, with an total (i.e. trading plus 
clearing) fee cap of [pound]400 and a combined trading/clearing fee of 
[pound]0.40 per lot, a market participant would need to trade/clear 
1,000 lots to meet the total fee cap on a trade by trade basis. Any 
volume over 1,000 lots would not attract any charge on a trade by trade 
basis.
    ICE Clear Europe is proposing to increase the Clearing Member fee 
caps for the Contracts as discussed below. It should also be noted that 
the total trading/clearing fee caps would remain extremely low compared 
to notional value. For example, the largest trade that the Exchange 
observed from September 2018 to September 2019 in UK Stock Options in 
notional terms was [pound]86.6m and the proposed total fee cap of 
[pound]400 represents 0.00046% of this notional value.
    The changes to ICE Clear Europe's Clearing Member fee caps for the 
Contracts are intended to be consistent with parallel changes being 
made by the relevant exchange on which the Contracts are listed, namely 
IFEU. The Exchange has determined that it would be appropriate to raise 
the fee caps related to exchange fees for the Contracts, as the 
existing fee caps are low in notional terms compared to the size of 
trades in the Contracts and do not reflect the risks and costs that 
both the Exchange and the Clearing House take on by facilitating this 
business. These changes result from IFEU's annual review of fees for 
all of its Equity Derivative products and, with regards to these 
specific products, the fee caps have not changed since the predecessor 
LIFFE exchange was acquired 6 years ago as part of ICE's acquisition of 
the New York Stock Exchange. ICE Clear Europe also notes that in the 
case of the UK Standard Stock Options, raising the fee caps may also 
incentivise the use of the Central Limit Order Book instead of block 
transactions.
    Please find a breakdown of the existing trading/clearing fee 
structure and the proposed new fee structure below (changes highlighted 
in red) as per Exhibit 5. There are two fee structures for the 
Contracts, the difference between them being that if a Clearing Member 
meets the applicable minimum volume threshold it can choose to have the 
trade details published with a 15 minute delay post-trade which 
involves slightly higher fees than the standard fees associated with 
trades published as soon as they are matched.

[[Page 15001]]

[GRAPHIC] [TIFF OMITTED] TN16MR20.000

(b) Statutory Basis
    ICE Clear Europe believes that the proposed rule changes are 
consistent with the requirements of the Act, including Section 17A of 
the Act \6\ and regulations thereunder applicable to it. ICE Clear 
Europe's fees are imposed at the product level on a per transaction 
basis (as are the applicable Exchange fees). As a result, the fees (and 
fee caps) apply equally to all market participants who trade/clear the 
Contracts. ICE Clear Europe continues to believe that the use of fee 
caps provides appropriate incentives and rewards to market participants 
for the use of the Clearing House's clearing services for the 
Contracts. However, as noted above, ICE Clear Europe has not increased 
the applicable fee caps since it began clearing the Contracts six years 
ago, and believes that the current cap levels are too low, relative to 
the observed trade sizes and activity, to properly compensate ICE Clear 
Europe for the risks, costs and expenses of clearing the Contracts. ICE 
Clear Europe believes that the increases in the fee caps are modest in 
size in comparison to notional volume cleared and are appropriate to 
compensate it for offering clearing services for the Contracts, taking 
into account the investments it has made in providing its clearing 
services. ICE Clear Europe has determined that the revised fee caps 
will provide a more appropriate balance between the costs of clearing 
and expenses incurred by ICE Clear Europe and an appropriate fee 
structure for

[[Page 15002]]

market participants that takes into account their transaction volume. 
As such, in ICE Clear Europe's view, the amendments are consistent with 
the equitable allocation of reasonable dues, fees and other charges 
among its Clearing Members and other market participants, within the 
meaning of Section 17A(b)(3)(D) of the Act,\7\ and further do not 
unfairly discriminate among such participants in their use of the 
Clearing House, within the meaning of Section 17A(b)(3)(F) of the 
Act.\8\
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    \6\ 15 U.S.C. 78q-1.
    \7\ 15 U.S.C. 78q-1(b)(3)(D). Under this provision, ``[a] 
clearing agency shall not be registered unless the Commission 
determines that--(D) The rules of the clearing agency provide for 
the equitable allocation of reasonable dues, fees, and other charges 
among its participants.''
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Self-Regulatory Organization'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 purpose of the Act. As discussed 
above, because fees are imposed on a per transaction basis at the 
product level, the fee caps are applied equally to all those market 
participants who trade and/or clear the Contracts. Although the 
amendments may result in higher fees for particular Clearing Members 
because of the higher fee caps, ICE Clear Europe believes that the new 
fee caps would be set at an appropriate level to better reflect the 
cost that the Clearing House takes on by facilitating the relevant 
clearing services. Any such higher fees will also more closely reflect 
the volume traded. ICE Clear Europe does not believe that the 
amendments would adversely affect the ability of such Clearing Members 
or other market participants generally to access clearing services for 
the Contracts. Further, since the revised fee caps will apply to all 
Clearing Members, ICE Clear Europe believes that the amendments would 
not otherwise affect competition among Clearing Members, adversely 
affect the market for clearing services or limit market participants' 
choices for obtaining clearing services.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    Written comments relating to the proposed changes to the rules have 
not been solicited or received. ICE Clear Europe will notify the 
Commission of any written comments received by ICE Clear Europe.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) \9\ of the Act and paragraph (f) of Rule 19b-4 \10\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(2).
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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, 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-2020-001 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-2020-001. 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 ICE Clear Europe and on ICE 
Clear Europe's website at https://www.theice.com/notices/Notices.shtml?regulatoryFilings.
    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-2020-001 and should be 
submitted on or before April 6, 2020.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-05241 Filed 3-13-20; 8:45 am]
 BILLING CODE 8011-01-P