[Federal Register Volume 85, Number 250 (Wednesday, December 30, 2020)]
[Notices]
[Pages 86595-86598]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28809]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90782; File No. SR-ICEEU-2020-017]
Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change, as
Modified by Amendment No. 1, Relating to Amendments to the ICE Clear
Europe Clearing Rules
December 22, 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 December 14, 2020, 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 and II below, which Items have been prepared primarily 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)(6)
thereunder,\4\ so that the proposal was immediately effective upon
filing with the Commission. On December 21, 2020, ICE Clear Europe
filed Amendment No. 1 to the proposed rule change. The Commission is
publishing this notice to solicit comments on the proposed rule change,
as modified by Amendment No. 1 (hereafter 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)(6).
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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'') submitted the
proposed rule change to amend its Clearing Rules (the ``Rules'') \5\ to
address certain requirements under the European Union General Data
Protection Regulation (``GDPR'') \6\ in the event that at the end of
current transition period (ending December 31, 2020) (the ``Transition
Period'') the United Kingdom (``UK'') exits the European Union (``EU'')
in circumstances where: (i) No trade agreement has been agreed between
the UK and the EU27 which stipulates that EU data protection law, among
other laws, shall continue to apply in the UK UK [sic] (a ``trade
agreement''); and (ii) the UK's data protection laws have not been
found to provide for an adequate level of protection for the personal
data of individuals in the EU pursuant to a decision made by the
European Commission under Article 45 of the GDPR (an ``adequacy
decision''). The proposed rule change is intended to supplement
existing Rule provisions to reflect the judgment in a recent EU
judicial decision. Amendment No. 1 was intended to (i) restate the
description of the proposed rule change to clarify that ICE Clear
Europe is now implementing certain amendments previously filed in 2019
\7\ (the ``2019 Filing'') and (ii) amend Exhibit 5 of the Initial
Filing to provide a comparison of the proposed Rule changes (including
those previously filed amendments in the 2019 Filing) to the current
Rules in effect. The proposed rule changes in the initial filing were
otherwise unchanged.
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\5\ Capitalized terms used but not defined herein have the
meanings specified in the Rules.
\6\ Regulation (EU) 2016/679 of the European Parliament and of
the Council of 27 April 2016 on the protection of natural persons
with regard to the processing of personal data and on the free
movement of such data.
\7\ Exchange Act Release No. 34-85247 (SR-ICEEU-2019-004) (Mar.
5, 2019), 84 FR 8769 (Mar. 11, 2019). This earlier filing also
generally addresses the situation where the UK would be treated as a
`third country' for GDPR purposes.
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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 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
(a) Purpose
The purpose of the proposed changes is to implement the amendments
to Rule 106 and the adoption of Exhibit 5, Annex A and Annex B to the
Rules that were submitted in the 2019 Filing (but not implemented at
that time) and further to add certain supplemental data protection
clauses to the Standard Contractual Clauses in Exhibit 5 of the Rules
that address certain requirements under the GDPR relating to personal
data.
The amendments would be relevant upon the end of the Transition
Period, in circumstances where: (i) No trade agreement has been agreed
between the UK and the EU27; and (ii) the UK has
[[Page 86596]]
not been the subject of an adequacy decision, such that the UK thereby
becomes a third country under the GDPR.
Amendments previously submitted by the Clearing House in the 2019
Filing, and which are now proposed to be implemented, generally address
the situation where the UK would be treated as a `third country' for
GDPR purposes. In that case, in certain circumstances, it may be
necessary or advisable to take certain additional steps to avoid a
greater risk that transfers of personal data from EU27-based Clearing
Members to ICE Clear Europe violate the GDPR, including the use of
certain Standard Contractual Clauses, which were endorsed and published
in a decision of the European Commission, that will govern transfer of
personal data to ICE Clear Europe in order to comply with the GDPR.
Because such changes were not needed during the Transition Period, ICE
Clear Europe did not implement the changes submitted in the 2019
Filing.\8\ At this time, in light of the end of the Transition Period,
ICE Clear Europe is proposing to implement the changes in the 2019
Filing to amend Rule 106 and add Exhibit 5, Annex A, and Annex B to the
Rules as described in the 2019 Filing in the circumstances described
above.
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\8\ See ICE Clear Europe Circular C19/053 (March 15, 2019),
available at https://www.theice.com/publicdocs/clear_europe/circulars/C19053.pdf.
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In addition, ICE Clear Europe is proposing additional amendments,
beyond those in the 2019 Filing, in the instant filing that are
intended to take into account the recent Court of Justice of the
European Union decision in the Schrems II \9\ case. That decision,
among other matters, recognized that transfer of personal data outside
of the EU may be permissible if governed by the Standard Contractual
Clauses, subject to certain additional protections and conditions,
including in some cases the use of supplementary measures, to achieve
the required level of data protection. In light of this decision, and
given the possibility that the Transition Period will end without a
trade agreement between the UK and the EU27 and/or an EU adequacy
decision with respect to UK data protection requirements, ICE Clear
Europe believes that it would be prudent to put in place additional
safeguards with respect to transfers of personal data from EU27-based
Clearing Members to ICE Clear Europe such that it can be certain that
such transfers are subject to appropriate safeguards within the meaning
of the GDPR.
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\9\ Case C-311/18 Data Protection Commissioner v Facebook
Ireland Ltd and Maximilian Schrems.
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In the event that the Transition Period ends without a trade
agreement between the UK and the EU27 and/or an EU adequacy decision
with respect to UK data protection requirements, the amendments set out
in the Initial Filing would be incorporated into the Rules.\10\ In
addition, the new Appendix to Exhibit 5 of the Rules would set out
additional safeguards to the Standard Contractual Clauses that address
the conditions that must be met in order to rely upon such clauses as
set out in Schrems II. Specifically, the Appendix would state that the
data importer (in this case, ICE Clear Europe) would have to assess
whether the laws applicable to it provide adequate protection under EU
data protection law. To the extent that the laws do not, (1) the data
importer would adopt supplementary measures to protect the personal
data received under Standard Contractual Clauses from the data exporter
in accordance with EU data protection laws and (2) in the event that
the data importer receives a legally binding request for access to the
data by a public authority, the data importer would (i) promptly notify
the data exporter of the request, (ii) comply with its internal
policies governing disclosure, (iii) not make disproportionate
disclosures and (iv) upon request from the data exporter, provide
general information on such requests received in the preceding 12 month
period.
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\10\ The instant filing would correct a typographical error in
the definition of Standard Contractual Clauses in Rule 106(m) and
Exhibit 5 of the Rules as set out in the Initial Filing.
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(b) Statutory Basis
ICE Clear Europe believes that the proposed amendments are
consistent with the requirements of Section 17A of the Act \11\ and the
regulations thereunder applicable to it, including the standards under
Rule 17Ad-22.\12\ In particular, Section 17A(b)(3)(F) of the Act \13\
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 amendments clarify certain rights and obligations of the
Clearing House and Clearing Members with respect to personal data
obtained in connection with clearing activity in light of legal
considerations under the GDPR that may apply to Clearing Members and
ICE Clear Europe at the end of the Transition Period if there is no
trade agreement and the EU has not issued an adequacy decision. In such
circumstances, to the extent EU-27 based Clearing Members must in
practice export personal data to ICE Clear Europe in order to clear
transactions at ICE Clear Europe, the proposed Rule changes will
facilitate the continued transfer of personal data for that purpose in
the scenario described above and avoid increased risk of violations of
GDPR requirements in connection with such transfers. The changes will
thus facilitate continued clearing by EU27 Clearing Members in
compliance with applicable law and promote the prompt and accurate
clearance and settlement of transactions by such persons. As such, the
amendments are consistent with the protection of investors and the
public interest. (ICE Clear Europe does not believe the amendments will
have any effect on the safeguarding of securities and funds in the
custody or control of the Clearing House or for which it is
responsible.)
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\11\ 15 U.S.C. 78q-1.
\12\ 17 CFR 240.17Ad-22.
\13\ 15 U.S.C. 78q-1(b)(3)(F).
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Moreover, the amendments are consistent with Rule 17Ad-
22(e)(1),\14\ which requires that each covered clearing agency
establish, implement, maintain and enforce written policies and
procedures reasonably designed to provide for a well-founded, clear,
transparent, and enforceable legal basis for each aspect of its
activities in all relevant jurisdictions. As discussed herein, the
amendments are designed to facilitate continued compliance by ICE Clear
Europe and its Clearing Members with requirements of GDPR that will
apply at the end of the Transition Period if there is no trade
agreement and the EU has not issued an adequacy decision, in light of
the additional requirements of the Schrems II decision. Specifically,
the Rule change will facilitate EU-based Clearing Members' continued
ability to export personal data as necessary in connection with
clearing without violating GDPR should the Transition Period end
without a trade agreement and without an adequacy decision. The
amendments thereby facilitate continued clearing for EU-based persons
in accordance with EU regulations relating to data protection. ICE
Clear Europe does not expect that the amendments will adversely impact
its ability to comply with the Act or any standards under Rule 17Ad-
22.\15\
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\14\ 17 CFR 240.17Ad-22(e)(1).
\15\ 17 CFR 240.17Ad-22.
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[[Page 86597]]
(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 purpose of the Act. The amendments
are considered prudent in order for ICE Clear Europe to ensure that
there will be no interruption in the receipt of personal data from its
EU27-based Clearing Members (or increased risk to such Clearing Members
in the provision of such data). ICE Clear Europe does not believe the
amendments will in themselves materially affect the cost of, or access
to, clearing as they are generally consistent with GDPR requirements
with which entities based in the EU must already comply. To the extent
the amendments impose certain additional costs on Clearing Members and
Sponsored Principals that may differ from current practices, these
result from the requirements imposed by the GDPR, and are generally
applicable to Clearing Members and Sponsored Principals throughout the
European Union. (In addition, Clearing Members and Sponsored Principals
are already required under the Rules to ensure that their transmission
of data is lawful. As a result, the amendments are therefore not
expected to impose significant additional burdens.) As a result, ICE
Clear Europe does not believe the proposed rule changes impose any
burden on competition that is inappropriate in furtherance of the
purposes 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 rule changes 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
Because the foregoing proposed rule change does not:
(i) Significantly affect the protection of investors or the public
interest;
(ii) impose any significant burden on competition; and
(iii) become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \16\ and
Rule 19b-4(f)(6) \17\ thereunder.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(6).
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ICE Clear Europe has requested that the Commission waive both the
five-day pre-filing requirement and the 30-day delayed operative date
under Rule 19b-4(f)(6)(iii) \18\ so that the proposed rule changes may
become effective and operative upon filing with the Commission. ICE
Clear Europe believes that waiver of both would facilitate continued
compliance with the GDPR requirements which will apply at the end of
the Transition Period, in circumstances where no trade agreement has
been agreed and there is no adequacy decision. The Transition Period is
currently scheduled to end on December 31, 2020, and it is uncertain
whether any trade agreement may be entered into between the EU and UK
and/or whether any adequacy determination would be made by the EU by
that time. Regardless of the 30-day operative delay, the amendments
will not have any effect any sooner than the end of the Transition
Period. ICE Clear Europe does not believe that any delay in
implementing the amendments will benefit Clearing Members, their
customers or any other market participants. Any delay is also likely to
be inconsistent with market expectations in light of the date upon
which the Transition Period is scheduled to end. As a result, in ICE
Clear Europe's view, immediate effectiveness is consistent with the
protection of investors and the public interest.
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\18\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that the delay of the operation of the
proposed rule change, through the five-day pre-filing requirement and
the 30-day delayed operative date, could impede continued compliance
with the GDPR requirements given that the Transition Period could end
sooner than the 30-day delayed operative date of the proposed rule
change. The Commission therefore believes that waiving the five-day
pre-filing requirement and 30-day operative delay would provide
certainty to ICE Clear Europe and EU27-based Clearing Members regarding
the application of the GDPR and allow EU27-based Clearing Members to
continue clearing at ICE Clear Europe after the end of the Transition
Period in the circumstances discussed above. Moreover, the Commission
believes that the proposed rule change would not impose any significant
burden on competition because it results from the requirements imposed
by the GDPR that are generally applicable to Clearing Members and
Sponsored Principals throughout the European Union. Thus, the
Commission believes that the proposed rule change, and waiving the
five-day pre-filing requirement and 30-day operative delay, would not
(i) significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; or (iii)
affect the safeguarding of funds or securities in the custody or
control of ICE Clear Europe or for which it is responsible. Therefore,
the Commission waives the five-day pre-filing requirement and
designates the proposed rule change as operative upon filing.\19\
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\19\ For purposes only of waiving the five-day pre-filing
requirement and the 30-day operative delay, the Commission has
considered the proposed rule change's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
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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.
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:
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-2020-017 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-2020-017. 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
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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/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-2020-017 and should be
submitted on or before January 21, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2020-28809 Filed 12-29-20; 8:45 am]
BILLING CODE 8011-01-P