[Federal Register Volume 86, Number 246 (Tuesday, December 28, 2021)]
[Notices]
[Pages 73835-73838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-28110]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93839; File No. SR-ICEEU-2021-024]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change Relating 
to Amendments to the ICE Clear Europe Delivery Procedures

December 21, 2021.
    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 9, 2021, 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 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)(4)(ii) 
thereunder,\4\ 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)(4)(ii).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The principal purpose of the proposed amendments is for ICE Clear 
Europe to amend its Delivery Procedures (``Delivery Procedures'' or

[[Page 73836]]

``Procedures'') to amend Part CC thereof (``Part CC'') to revise the 
delivery specifications applicable to Midland West Texas Intermediate 
American Gulf Coast Crude Oil Futures (formerly Permian West Texas 
Intermediate Crude Oil Futures), consistent with changes to the 
contract terms being made by ICE Futures Europe, and to make certain 
conforming changes elsewhere in the Delivery Procedures.\5\
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    \5\ Capitalized terms used but not defined herein have the 
meanings specified in the Delivery Procedures or, if not defined 
therein, 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 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
    ICE Clear Europe is proposing to amend Part CC of the Delivery 
Procedures to revise delivery specifications to reflect amendments 
being made to the relevant futures contract by ICE Futures Europe, the 
exchange on which it is traded. As ICE Futures Europe has announced, it 
is changing the name of its existing ICE Futures Europe Permian West 
Texas Intermediate Crude Oil Futures (``Permian WTI Contracts'') to ICE 
Futures Europe Midland West Texas Intermediate American Gulf Coast 
Crude Oil Futures (``Midland WTI Contracts''), adding the Enterprise 
ECHO Terminal as a delivery point for the contract and changing the 
crude oil quality specification to a Permian Basin originated WTI crude 
oil that aligns with the current quality of light sweet crude oil 
originating from the Permian Basin, among other changes. To maintain 
consistency of the Delivery Procedures with the amended contract 
specifications for the Midland WTI Contracts, ICE Clear Europe is 
proposing to amend Part CC of the Delivery Procedures to references to 
``ICE Futures Europe Permian West Texas Intermediate Crude Oil 
Futures'' with ``ICE Futures Europe Midland West Texas Intermediate 
American Gulf Coast Crude Oil Futures'', and make conforming changes in 
Part CC and elsewhere in the Delivery Procedures. The amendments would 
also provide that delivery of Midland WTI Contracts may be made out of 
and into the Enterprise ECHO Terminal (a crude oil storage terminal 
owned and operated by Enterprise) in addition to the Magellan MEH 
Terminal (formerly defined as ``MEH''), and conforming changes would be 
made throughout Part CC to refer to either or both terminals where 
applicable, as well as to refer to Enterprise as well as Magellan where 
applicable.
    The amendments to Section 1 of Part CC would replace all references 
to Permian WTI Contracts with Midland WTI Contracts. Conforming changes 
would be made to all such references elsewhere in the Delivery 
Procedures. Section 1 would also be updated to add new definitions used 
in Part CC, including definitions for ``Enterprise'' and ``Enterprise 
Echo Terminal'', a new definition of ``Specified Terminal'' (which is 
used to reference the relevant delivery terminal under the Contract), 
as well as an updated definition for the Magellan MEH Terminal. Certain 
definitions such as ``CT'' and ``LPT'' would also be clarified.
    The amendments to Section 2.1 of Part CC would remove as 
inapplicable the reference to in-line transfer as a means for effecting 
delivery under Midland WTI Contracts, consistent with the revised 
contract specifications. The provision relating to tolerance of 
delivery into and out of the terminal would be revised to reflect 
relevant terminal operation by Enterprise as well as Magellan. 
Amendments would further provide that delivery under Contracts would be 
made at Enterprise ECHO Terminal and/or the Magellan MEH Terminal. Each 
of the Enterprise ECHO Terminal and the Magellan MEH Terminal would be 
a Delivery Facility for purposes of Midland WTI Contracts.
    The updates to Section 2.1 would also make clear that in order to 
make and take delivery, the Seller and Buyer must be approved customers 
and have executed documentation governing such delivery process at the 
applicable Specified Terminal (instead of referring to Magellan-
specific documentation). Conforming changes would be made throughout 
Part CC. The amendments would further provide that in accordance with 
the Contract Terms, the Seller would be obliged to have all the 
required permits, licenses and authorizations to operate as a customer 
at the applicable Specified Terminal, and that the Buyer would be 
obliged to have all the required permits, licenses and authorizations 
to operate as a customer at both Enterprise ECHO Terminal and Magellan 
MEH Terminal.
    Section 2.2 would be revised to describe the origin and quality of 
Midland WTI as Permian Basin originated West Texas Intermediate crude 
oil conforming to the Specifications, as described in the Contract 
Terms and the ICE Futures Europe Rules.
    An update would be made to Section 3.1 to correct a reference to 
the ``Rules'' with ``ICE Futures Europe Rules''. Similar updates would 
be made elsewhere in Part CC where ``Rules'' is used. Section 3.2 would 
be amended to provide that neither the Clearing House nor ICE Futures 
Europe would be responsible for performance of Enterprise or any person 
who operates the Enterprise ECHO Terminal (in addition to the existing 
provisions relating to Magellan or person who operates the Magellan MEH 
Terminal).
    An update would be made to Section 3.3 to replace a reference to 
the ``Procedures'' with ``Delivery Procedures'', for clarity.
    In Section 4.1 an errant reference to ``Buyer Contract Security'' 
would be removed.
    In Section 5, the Delivery timetable would be updated to reflect 
changes in the delivery process that relate to the option of delivery 
through the Enterprise ECHO Terminal. No changes would be made to the 
delivery timeline itself. The amendments would provide that on the 
Notice Day, Buyers would be able to elect a preference for delivery at 
a Specified Terminal (or split deliveries at both Specified Terminals), 
however such preference would only become effective once confirmed by 
the Clearing House, which confirmation would be final and binding on 
the Buyer. The amendments would further clarify the formula for 
undelivered volume which factors into the Clearing House's calculation 
of Delivery Margin. The amendments also provide that Nominations to be 
submitted on Nomination Day may be submitted to Enterprise via 
Enterprise's ESTREAM System in addition to Magellan via Magellan's 
COBALT system (as applicable).
(b) Statutory Basis
    ICE Clear Europe believes that the proposed amendments to the 
Delivery Procedures are consistent with the requirements of Section 17A 
of the Act \6\ and the regulations thereunder applicable to it. In 
particular, Section

[[Page 73837]]

17A(b)(3)(F) of the Act \7\ 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 Delivery Procedures are designed to clarify the delivery 
procedures to conform to changes made to the renamed Midland WTI 
Contracts under ICE Futures Europe rules, principally to allow delivery 
to be made through the Enterprise ECHO Terminal as well as the Magellan 
MEH Terminal. Changes also clarify the quality specifications for the 
product, consistent with the exchange rules. In all other respects, the 
Midland WTI Contracts will be cleared by the Clearing House in the same 
manner as the prior Permian WTI Contracts, and will be supported by ICE 
Clear Europe's existing F&O financial resources, risk management, 
systems and operational arrangements. Accordingly, ICE Clear Europe 
believes that its financial resources, risk management, systems and 
operational arrangements continue to be sufficient to support clearing 
of such contracts as amended and to manage the risks associated with 
such contracts. As a result, in ICE Clear Europe's view, the amendments 
would be consistent with the prompt and accurate clearance and 
settlement of the contracts, and the protection of investors and the 
public interest consistent with the requirements of Section 
17A(b)(3)(F) of the Act.\8\ (In ICE Clear Europe's view, the amendments 
would not affect the safeguarding of funds or securities in the custody 
or control of the clearing agency or for which it is responsible, 
within the meaning of Section 17A(b)(3)(F).\9\)
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    \6\ 15 U.S.C. 78q-1.
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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    In addition, Rule 17Ad-22(e)(10) \10\ provides that ``[e]ach 
covered clearing agency shall establish, implement, maintain and 
enforce written policies and procedures reasonable designed to, as 
applicable [. . .] establish and maintain transparent written standards 
that state its obligations with respect to the delivery of physical 
instruments, and establish and maintain operational practices that 
identify, monitor and manage the risks associated with such physical 
deliveries.'' As discussed above, the amendments would amend the 
Delivery Procedures applicable to the settlement of Midland WTI 
Contracts in light of the addition of the Enterprise ECHO Terminal as a 
Delivery Facility. The procedures would revise, among other matters, 
quality specifications, limitation of liability for the Clearing House 
and ICE Futures Europe in respect of the delivery under such contracts 
at the relevant terminals, and documentation requirements regarding the 
election of the relevant terminal, consistent with the requirements of 
the Clearing House. Clearance of the Midland WTI Contracts would 
continue to be supported by ICE Clear Europe's existing financial 
resources, risk management, systems and operational arrangements. The 
amendments thus appropriately clarify the role and responsibilities of 
the Clearing House and Clearing Members with respect to physical 
delivery. As a result, ICE Clear Europe believes the amendments are 
consistent with the requirements of Rule 17Ad-22(e)(10).\11\
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    \10\ 17 CFR 240.17Ad-22(e)(10).
    \11\ 17 CFR 240.17Ad-22(e)(10).
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(B) Clearing Agency's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed amendments 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 to the Delivery Procedures are intended to update the 
existing procedures applicable to the delivery of Midland WTI Contracts 
to be consistent with changes in exchange rules, principally to add an 
additional delivery terminal option. 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 the new 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 
appropriate 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 
rule change.

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) of the Act \12\ and paragraph (f) of Rule 19b-4 \13\ 
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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f).
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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 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-2021-024 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-2021-024. 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

[[Page 73838]]

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-2021-024 and should be 
submitted on or before January 18, 2022.

    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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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-28110 Filed 12-27-21; 8:45 am]
BILLING CODE 8011-01-P