[Federal Register Volume 88, Number 65 (Wednesday, April 5, 2023)]
[Notices]
[Pages 20200-20202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07006]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97224; File No. SR-ICEEU-2023-009]


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

March 30, 2023.
    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 March 23, 2023, 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 primarily prepared 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

    ICE Clear Europe Limited (``ICE Clear Europe'' or the ``Clearing 
House'') proposes to modify its Investment Management Procedures \3\ 
(the ``Investment Management Procedures'' or the ``Procedures'') to 
change the maximum maturities for certain investments made with amounts 
held by the Clearing House as regulatory capital.
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    \3\ Capitalized terms used but not defined herein have the 
meanings specified in the ICE Clear Europe Clearing Rules and the 
Investment Management Procedures.
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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 the Investment Management 
Procedures in the Table of Authorised Investments and Concentration 
Limits for ICEU's Regulatory Capital (the ``Table'') to change the 
maximum maturity of certain investments in sovereign and government 
agency bonds. In particular, the maximum maturity on the purchase of 
U.S. Sovereign Bonds, UK Sovereign Bonds, EU Sovereign Bonds, U.S. 
Government Agency Bonds, UK Government Agency Bonds, and EU Government 
Agency Bonds would be amended from 90 days to 13 months. The amendments 
would align the maximum maturity for such investments with the existing 
maximum maturity for permitted investments in the same instrument that 
are made with cash provided by Clearing Members (``CMs'') (e.g., as 
margin or guaranty fund contribution) and the Clearing House's own 
contribution to the guaranty fund. By extending the maximum maturity, 
ICE Clear Europe would have the flexibility to invest its regulatory 
capital in longer term sovereign and government bonds. ICE Clear Europe 
believes that such flexibility is important in light of current and 
expected market conditions, including to assist ICE Clear Europe in 
avoiding having to invest or reinvest in shorter duration instruments 
during potential periods of market volatility, such as those that may 
arise in connection with U.S. debt ceiling developments.
(b) Statutory Basis
    ICE Clear Europe believes that the proposed amendments to the 
Investment Management Procedures are consistent with the requirements 
of

[[Page 20201]]

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 Investment Management Procedures are 
designed to align the maximum maturity for certain investments made 
with ICE Clear Europe's regulatory capital with the maximum maturity 
for investments of other funds by the Clearing House (specifically, 
cash provided by Clearing Members and the Clearing House's own 
contribution to the guaranty fund). Although regulatory capital serves 
a different purpose from default resources, ICE Clear Europe believes 
that the same principles of capital preservation and maintaining high 
levels of liquidity are appropriate for all cash managed by the 
Clearing House. The current maximum maturities for investments in 
sovereign and government bonds for regulatory capital creates an 
unnecessary limitation compared to Clearing Member cash and the 
Clearing House guaranty fund contributions. The current limitation may 
subject regulatory capital investments to short-term volatility and 
reinvestment risk that could be avoided in appropriate cases through 
having the flexibility to invest in longer dated, but still high 
quality and liquid, instruments. ICE Clear Europe does not believe it 
is necessary for the maximum maturity for investments of its regulatory 
capital to be more restrictive than for its other investments of cash. 
ICE Clear Europe believes that, as with investments of Clearing Member 
cash and Clearing House guaranty fund contributions, investments in 
qualifying sovereign and agency bonds with an up-to 13 month maturity 
would nonetheless have acceptable credit, market and liquidity risks 
that can be managed by the Clearing House. Moreover, the Clearing House 
would then have the same tools and ability to manage its regulatory 
capital as it would its CM cash and Clearing House guaranty fund 
contributions. (In addition, the general investment consideration under 
the existing Procedures that investments have a variety of maturity 
dates would continue to apply.) Having a consistent set of investment 
and maturity requirements would also simplify the Clearing House 
investment process. Accordingly, ICE Clear Europe believes that the 
Investment Management Procedures, as amended, are consistent with the 
safeguarding of funds and securities in the custody or control of the 
clearing agency or for which it is responsible. For the same reasons, 
the amendments are also consistent with the protection of investors and 
the public interest. As such, ICE Clear Europe believes the amendments 
are consistent with the requirements of Section 17A(b)(3)(F) of the 
Act.\6\
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    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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    Rule 17A-22(e)(16) requires a covered clearing agency to 
``establish, implement, maintain and enforce written policies and 
procedures reasonably designed to, as applicable [. . .] safeguard its 
own and its participants' assets, minimize the risk of loss and delay 
in access to these assets, and invest such assets in instruments with 
minimal credit, market and liquidity risks.'' \7\ As discussed above, 
the amendments to the Investment Management Procedures are intended to 
align the maximum maturities for certain investments made with ICE 
Clear Europe's own regulatory capital with the maximum maturities for 
investments in the same assets when made with Clearing Member cash or 
the Clearing House's own contribution to the guaranty fund. ICE Clear 
Europe does not believe it is necessary to distinguish between the two 
types of investments in terms of maximum maturity. As revised, the 
Procedures will limit investment of Clearing House cash of all 
varieties to instruments with minimal credit, market and liquidity 
risks, consistent with the manner in which Clearing Member cash and 
Clearing House guaranty fund contributions are currently invested. As 
such, the revised Investment Management Procedures would continue to 
help enable the Clearing House to safeguard such assets and minimize 
the risk of loss and delay in access to such assets, consistent with 
the requirements of Rule 17Ad-22(e)(16).\8\
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    \7\ 17 CFR 240.17Ad-22(e)(16).
    \8\ 17 CFR 240.17Ad-22(e)(16).
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    Rule 17Ad-22(e)(15) requires a covered clearing agency to 
``establish, implement, maintain and enforce written policies and 
procedures reasonably designed to, as applicable [. . .] hold liquid 
net assets funded by equity [. . .] which [. . .] shall be of high 
quality and sufficiently liquid to allow the covered clearing agency to 
meet its current and projected operating expenses under a range of 
scenarios, including in adverse market conditions.'' \9\ As set forth 
above, ICE Clear Europe believes the revisions to the maximum maturity 
for investments of its own capital will result in investments in assets 
with minimal credit, market and liquidity risks, consistent with other 
investments made by the Clearing House. The current investment profile 
is conservative, allowing for investment only in the highest rated 
securities, and this would not be affected by the proposed changes. For 
similar reasons, ICE Clear Europe believes that under the revised 
Investment Management Procedures, such investments of its capital will 
be of sufficient high quality and liquidity to permit the Clearing 
House to meet its operating expenses, even in adverse market 
conditions. As a result, in ICE Clear Europe's view, the amendments are 
consistent with the requirements of Rule 17Ad-22(e)(15).\10\
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    \9\ 17 CFR 240.17Ad-22(e)(15)(B).
    \10\ 17 CFR 240.17Ad-22(e)(15)(B).
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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 changes are 
being proposed in order to update the Investment Management Procedures 
to align maturity requirements for investment of the Clearing House's 
capital. The amendments are not intended to impose new requirements on 
Clearing Members, and will not affect the investment of cash provided 
by Clearing Members. The terms of clearing are not otherwise changing. 
ICE Clear Europe does not believe that proposed amendments would 
adversely affect competition among Clearing Members or other market 
participants or affect the ability of market participants to access 
clearing 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 amendment has not been

[[Page 20202]]

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

    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-2023-009 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-2023-009. 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-2023-009 and should be 
submitted on or before April 26, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-07006 Filed 4-4-23; 8:45 am]
BILLING CODE 8011-01-P