[Federal Register Volume 87, Number 176 (Tuesday, September 13, 2022)]
[Notices]
[Pages 56110-56112]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19676]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95683; File No. SR-ICEEU-2022-010]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of Proposed Rule Change Relating to Amendments to the ICE 
Clear Europe Clearing Membership Procedures

September 7, 2022.
    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 August 30, 2022, 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. 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

    The principal purpose of the proposed amendments is for ICE Clear 
Europe to modify its Clearing Membership Procedures (``Clearing 
Membership Procedures'' or ``Procedures'') to make certain 
clarifications and updates.

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 its Clearing Membership 
Procedures to make certain clarifications and enhancements to remove 
certain provisions that are duplicative of the Clearing House's 
Counterparty Credit Risk Policy and Counterparty Credit Risk 
Procedures,\3\ to more clearly document certain practices and to make 
certain non-substantive changes to improve clarity and readability.
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    \3\ The Counterparty Credit Risk Policy and Procedures are 
described in Exchange Act Release No. 34-93880, SR ICEEU-2021-15 
(Dec. 30, 2021) 87 FR 513 (Jan. 5, 2022).
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    The section describing the purpose of the Procedures would add a 
defined term referencing the Clearing House's Clearing Rules. 
Conforming changes would be made to each reference to the ``Clearing 
Rules'' appearing in the remainder of the Procedures.
    The section describing the application process would update the 
names of certain departments responsible for reviewing Clearing 
Membership applications as follows: such applications (i) would be 
reviewed by the Credit and Clearing Risk department (this change does 
not represent a change in departments, rather, it is an inclusion of 
the relevant department names rather than stating ``Risk'' generally) 
and (ii) are subject to the approval of the Executive Risk Committee 
(rather than simply the ``Committee''), which would also be known as 
``the Committee or ``ERC'' in shorthand in the Procedures. Conforming 
changes would be made in the remainder of the Procedures.
    A paragraph which provided that the Clearing Risk Department would 
conduct a credit review which may include a credit check and 
assessments based on the Clearing House's Counterparty Ratings System 
would be removed as the credit review is covered by the Counterparty 
Credit Risk Policy and Procedures.
    The proposed amendments would provide that the list of Approved 
Jurisdiction for applicants (those jurisdictions for which additional 
legal and regulatory analysis is not required) would be maintained by 
the legal department, rather than in the Clearing Membership 
Parameters. This change reflects current practice as the list of 
Approved Jurisdictions is currently maintained by the legal department. 
Further, in order to consolidate information and because the legal 
department is placed to provide guidance on Approved Jurisdictions, the 
Clearing Membership Procedures would reflect that such list would be 
maintained by the legal department only.
    The subsection discussing termination of Clearing Membership by ICE 
Clear Europe would be updated to remove a sentence which provided that 
the Board is required to approve the issuance of a Termination Notice 
against

[[Page 56111]]

a Clearing Member. There is no such requirement under the Rules, and 
accordingly the amendments would bring the Procedures into line with 
the Rules and the scope of authority currently delegated by the Board 
and does not represent a change in existing practice or procedures as 
they relate to Termination Notices. Action by the Clearing House to 
terminate a member under Rule 209 would be subject to the existing 
general governance provisions of the Rules, including Rule 114. Rule 
114(a) allows the Clearing House to delegate authority to its Board, 
Chairman, President or any other Director or employee. Although ICE 
Clear Europe would expect that a decision to issue a Termination Notice 
against a Clearing Member would likely be made by the Board, the 
Clearing House's existing Delegation of Authority to its President 
implemented pursuant to Rule 114(a) could potentially apply to issuance 
of a Termination Notice in certain emergency scenarios including 
situations where time is of the essence for the interests of the 
Clearing House and its Clearing Members. In such cases and pursuant to 
the specifications included in the Delegation of Authority, the 
President may be authorized to issue a Termination Notice. Accordingly, 
the proposed update will conform the Clearing Membership Procedures to 
reflect the Clearing House's existing authority under the Rules and 
Delegation of Authority to issue Termination Notice in respect of 
Clearing Members.
    The subsection discussing the minimum capital requirements that the 
Clearing House requires of Clearing Members would be updated to remove 
a reference to data sources used to determine a Clearing Member's 
Capital. Such matters are addressed in the Counterparty Credit Risk 
Policy and Procedures and do not need to be addressed in the Clearing 
Membership Procedures. Additionally, the amendments clarify that 
certain additional risk-based requirements that may be imposed under 
the CDS Procedures would apply only to CDS Clearing Members in 
accordance with the terms of the CDS Procedures. This update does not 
represent a change to the Clearing Membership Procedures and is 
intended to reflect that the Clearing Membership Procedures align with 
the CDS Procedures.
    The subsection discussing contributions to the Guaranty Fund for 
CDS and F&O would be updated to clarify that the Clearing Membership 
applications would be required to make Guaranty Fund contributions as 
specified by the F&O Guaranty Fund Policy and Section 5 of the CDS Risk 
Policy. The change is intended to update references to the correct F&O 
and CDS policies and does not represent a change in substantive 
requirements.
    A subsection discussing the Clearing House's margin-to-capital 
ratio requirement would be removed as unnecessary because such 
requirement is addressed in greater detail in the Clearing House's 
Counterparty Credit Risk Policy and Procedures.
    In the section discussing on-going monitoring of the Clearing 
Members by the Clearing House, a sentence which cross-referenced the 
Counterparty Credit Risk Policy would be removed as unnecessary.
    The proposed amendments would provide that the Clearing House's 
periodic counterparty review includes know-your-customer and anti-money 
laundering assessments. This amendment is intended to reflect current 
practice.
    A subsection referencing the Clearing House's Quarterly 
Counterparty Rating System Report would be removed as the topic is 
discussed in greater detail in the Counterparty Credit Risk Policy and 
Procedures.
    A subsection discussing the information the Clearing House requires 
that Clearing Members provide through the Annual Member Return (AMR) 
would be updated to expressly include updated Clearing Member 
information. AMR is an annual process by which ICE Clear Europe 
requests Clearing Members to provide and confirm certain information 
related to their clearing membership; AMR is a means for the Clearing 
House to ensure that it has up-to-date information about Clearing 
Members. The proposed change is intended to inform Clearing Members 
that information requested as part of AMR will include updated Clearing 
Member information, which may include, for example, a change of a 
Clearing Member's registered or operational address, its legal entity 
name, etc.
    Other non-substantive typographical and similar drafting 
clarifications and updates would be made throughout the Procedures to 
improve readability and correct grammatical errors.
(b) Statutory Basis
    ICE Clear Europe believes that the proposed amendments to the 
Clearing Membership Procedures are consistent with the requirements of 
Section 17A of the Act \4\ and the regulations thereunder applicable to 
it. 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.
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    \4\ 15 U.S.C. 78q-1.
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    The proposed changes to the Clearing Membership Procedures are 
intended to update and more clearly document the Clearing House's 
procedures for reviewing applications for clearing membership, 
variations of membership permissions and on-going monitoring and 
termination of membership of ICEU. The amendments remove certain 
overlapping or duplicative information that is addressed in more detail 
in the Clearing House's Counterparty Credit Risk Policy and Procedures. 
In ICE Clear Europe's view the amendments would thus facilitate the 
clearing membership process, and related risk management by the 
Clearing House. The amendments would therefore facilitate the prompt 
and accurate clearing of cleared contracts and protect investors and 
the public interest in the sound operations of the Clearing House, 
consistent with the requirement s of Section 17A(b)(3)(F).\6\ Further, 
the amendments will not affect the safeguarding of securities and funds 
in the custody or control of the Clearing House or for which it is 
responsible, within the meaning Section 17A(b)(3)(F).\7\
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    \6\ 15 U.S.C. 78q-1(b)(3)(F).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    The amendments to the Procedures are also consistent with relevant 
provisions of Rule 17Ad-22.\8\ Rule 17Ad-22(e)(18) provides that 
``[e]ach covered clearing agency shall establish, implement, maintain 
and enforce written policies and procedures reasonable designed to, as 
applicable [. . .] establish objective, risk-based and publicly 
disclosed criteria for participation, which permit fair and open access 
by direct . . . participants . . . 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''.\9\ As set forth above, the amendments to the Clearing 
Membership Procedures are intended to clarify and enhance the Clearing

[[Page 56112]]

House's procedures as they relate to Clearing Membership application 
and monitoring processes. The amendments do not substantively change 
the requirements for membership or the related Rules, but rather update 
the Procedures to reflect the Clearing House's current practices, avoid 
duplication of other Clearing House policies (specifically the 
Counterparty Credit Risk Policy and Procedures) and make other updates 
to improve clarity and readability. The amendments will facilitate the 
Clearing House's ability to implement and monitor its participation 
requirements. In ICE Clear Europe's view, the amendments are therefore 
consistent with the requirements of Rule 17Ad-22(e)(18).\10\
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    \8\ 17 CFR 240.17 Ad-22.
    \9\ 17 CFR 240.17 Ad-22(e)(18).
    \10\ 17 CFR 240.17Ad-22(e)(18).
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    Rule 17Ad-22(e)(2) further provides that ``[e]ach covered clearing 
agency shall establish, implement, maintain and enforce written 
policies and procedures reasonable designed to, as applicable [. . .] 
provide for governance arrangements that are (i) clear and transparent, 
(ii) clearly prioritize the safety and efficiency of the covered 
clearing agency; and (iii) support the public interest requirement in 
Section 17A of the Act'' \11\ among other requirements. As set forth 
above, the amendments clarify the governance arrangements around the 
termination of clearing membership status under Rule 209, to remove a 
requirement that terminations be approved by the Board. Such a 
requirement is not provided in the Rules, and accordingly the 
amendments would make the Procedures consistent with the governance 
procedures of the Rules, including Rule 114. As such, in ICE Clear 
Europe's view, the amendments are consistent with the requirements of 
Rule 17Ad-22(e)(2).\12\
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    \11\ 17 CFR 240.17Ad-22(e)(2).
    \12\ 17 CFR 240.17Ad-22(e)(2).
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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 amendments 
are being adopted to update and clarify the Clearing Membership 
Procedures, which relates to the Clearing House's internal processes 
for implementation and ongoing monitoring of its membership 
requirements. No substantive changes are being made to the membership 
requirements themselves or the Rules. Accordingly, ICE Clear Europe 
does not believe the amendments would affect the costs of clearing, the 
ability of market participants to access clearing, or the market for 
clearing services generally. Therefore, ICE Clear Europe does not 
believe the proposed rule change imposes 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 amendments have not been 
solicited or received by ICE Clear Europe. ICE Clear Europe will notify 
the Commission of any written comments received with respect to the 
proposed rule change and adoption.

III. Date of Effectiveness of the Proposed Rule Change

    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 such 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 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-2022-010 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-2022-010. 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 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/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-2022-010 and should be 
submitted on or before October 4, 2022.

    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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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19676 Filed 9-12-22; 8:45 am]
BILLING CODE 8011-01-P