80 FR 17537 - Self-Regulatory Organizations; ICE Clear Europe Limited; Order Approving Proposed Rule Change Relating to Additional European Sovereign CDS Contracts

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 62 (April 1, 2015)

Page Range		17537-17538
FR Document		2015-07362
Federal Register, Volume 80 Issue 62 (Wednesday, April 1, 2015)
[Federal Register Volume 80, Number 62 (Wednesday, April 1, 2015)]
[Notices]
[Pages 17537-17538]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-07362]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74588; File No. SR-ICEEU-2015-004]


Self-Regulatory Organizations; ICE Clear Europe Limited; Order 
Approving Proposed Rule Change Relating to Additional European 
Sovereign CDS Contracts

March 26, 2015.

I. Introduction

    On January 27, 2015, ICE Clear Europe Limited (``ICE Clear 
Europe'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to provide for the clearance of additional 
European sovereign credit default swap (``CDS'') contracts. The 
proposed rule change was published for comment in the Federal Register 
on February 11, 2015.\3\ The Commission did not receive comments on the 
proposed rule change. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-74213 (February 5, 
2015), 80 FR 7661 (February 11, 2015) (SR-ICEEU-2015-004).
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II. Description of the Proposed Rule Change

    The purpose of the proposed rule change is to provide for the 
clearing of Western European sovereign CDS contracts referencing four 
additional reference entities: The Kingdom of the Netherlands, the 
Republic of Finland, the Kingdom of Sweden and the Kingdom of Denmark 
(the ``Additional WE Sovereign Contracts''). ICE Clear Europe currently 
clears CDS contracts referencing six other Western European sovereigns: 
Ireland, the Republic of Italy, the Portuguese Republic, the Kingdom of 
Spain, the Kingdom of Belgium and the Republic of Austria.\4\ ICE Clear 
Europe believes clearance of the Additional WE Sovereign Contracts will 
benefit the markets for credit default swaps on Western European 
sovereigns by offering to market participants the benefits of clearing, 
including reduction in counterparty risk and safeguarding of margin 
assets pursuant to clearing house rules.
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    \4\ See Securities Exchange Act Release No. 34-71920 (April 9, 
2014), 79 FR 21331 (April 15, 2015) (SR-ICEEU-2014-04) (order 
approving proposed rule change to clear Western European sovereign 
CDS contracts referencing Ireland, the Republic of Italy, the 
Portuguese Republic and the Kingdom of Spain) and Securities 
Exchange Act Release No. 34-73737 (December 4, 2014), 79 FR 73372 
(December 10, 2014) (SR-ICEEU-2014-18) (order approving proposed 
rule change to clear additional Western European sovereign CDS 
contracts referencing Kingdom of Belgium and the Republic of 
Austria) (collectively, the ``Prior WE Sovereigns Orders'').
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    ICE Clear Europe has stated that the Additional WE Sovereign 
Contracts will constitute ``Non-STEC Single Name Contracts'' for 
purposes of the CDS Procedures and, accordingly, will be governed by 
Paragraph 10 of the CDS Procedures consistent with the treatment of the 
other Western European sovereign CDS contracts currently cleared by ICE 
Clear Europe. ICE Clear Europe has represented that clearing of the 
Additional WE Sovereign Contracts will not require any changes to ICE 
Clear Europe's existing Clearing Rules and Procedures, risk management 
framework (including relevant policies), or margin model.\5\
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    \5\ For a description of previously approved changes to ICE 
Clear Europe's risk management framework to accommodate clearing of 
Western European sovereign CDS contracts, see the Prior WE 
Sovereigns Orders. Id. ICE Clear Europe represents that it has 
performed a variety of empirical analyses related to clearing of the 
Additional WE Sovereign Contracts under its margin methodology, 
including back tests and stress tests.
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III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \6\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if it 
finds that such proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such organization. Section 17A(b)(3)(F) of the Act \7\ 
requires, among other things, that the rules of a clearing agency are 
designed to promote the prompt and accurate clearance and settlement of 
securities transactions and, to the extent applicable, derivative 
agreements, contracts, and transactions, to assure the safeguarding of 
securities and funds which are in the custody or control of the 
clearing agency or for which it is responsible, and, in general, to 
protect investors and the public interest.
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    \6\ 15 U.S.C. 78s(b)(2)(C).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    After careful review, the Commission finds that the proposed rule 
change is consistent with Section 17A of the Act \8\ and the rules 
thereunder applicable to ICE Clear Europe. The proposed rule change 
will provide for clearing of the Additional WE Sovereign Contracts, 
which are similar to the other Western European sovereign CDS contracts 
currently cleared by ICE Clear Europe, in accordance with the existing 
rules and procedures applicable to Western European sovereign CDS 
contracts. Specifically, the Commission believes that ICE Clear 
Europe's proposal to clear the Additional WE Sovereign Contracts 
pursuant to its current risk management framework (including margin and 
guaranty fund methodology), operational procedures, settlement 
procedures and default management policies is designed to promote the 
prompt and accurate clearance and settlement of securities 
transactions, to assure the safeguarding of securities and funds which 
are in the custody or control of ICE Clear Europe or for which it is 
responsible, and in general, to protect investors and the public 
interest, consistent with Section 17A(b)(3)(F) of the Act.\9\
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    \8\ 15 U.S.C. 78q-1.
    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \10\ and the 
rules and regulations thereunder.
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    \10\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the

[[Page 17538]]

proposed rule change (SR-ICEEU-2015-004) be, and hereby is, 
approved.\12\
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    \11\ 15 U.S.C. 78s(b)(2).
    \12\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).

    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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Brent J. Fields,
Secretary.
[FR Doc. 2015-07362 Filed 3-31-15; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 80, No. 62 / Wednesday, April 1, 2015 / Notices 17537

those that may be withheld from the II. Description of the Proposed Rule organization if it finds that such
public in accordance with the Change proposed rule change is consistent with
provisions of 5 U.S.C. 552, will be The purpose of the proposed rule the requirements of the Act and the
available for Web site viewing and change is to provide for the clearing of rules and regulations thereunder
printing in the Commission’s Public Western European sovereign CDS applicable to such organization. Section
Reference Room, 100 F Street NE., contracts referencing four additional 17A(b)(3)(F) of the Act 7 requires, among
Washington, DC 20549 on official reference entities: The Kingdom of the other things, that the rules of a clearing
business days between the hours of 10 Netherlands, the Republic of Finland, agency are designed to promote the
a.m. and 3 p.m. Copies of such filing the Kingdom of Sweden and the prompt and accurate clearance and
also will be available for inspection and Kingdom of Denmark (the ‘‘Additional settlement of securities transactions
copying at the principal offices of the WE Sovereign Contracts’’). ICE Clear and, to the extent applicable, derivative
Exchange. All comments received will Europe currently clears CDS contracts agreements, contracts, and transactions,
be posted without change; the referencing six other Western European to assure the safeguarding of securities
Commission does not edit personal sovereigns: Ireland, the Republic of and funds which are in the custody or
identifying information from Italy, the Portuguese Republic, the control of the clearing agency or for
submissions. You should submit only Kingdom of Spain, the Kingdom of which it is responsible, and, in general,
information that you wish to make Belgium and the Republic of Austria.4 to protect investors and the public
available publicly. All submissions ICE Clear Europe believes clearance of interest.
should refer to File Number SR–Phlx– the Additional WE Sovereign Contracts
2015–28, and should be submitted on or will benefit the markets for credit After careful review, the Commission
before April 22, 2015. default swaps on Western European finds that the proposed rule change is
sovereigns by offering to market consistent with Section 17A of the Act 8
For the Commission, by the Division of
Trading and Markets, pursuant to delegated participants the benefits of clearing, and the rules thereunder applicable to
authority.22 including reduction in counterparty risk ICE Clear Europe. The proposed rule
and safeguarding of margin assets change will provide for clearing of the
Brent J. Fields,
pursuant to clearing house rules. Additional WE Sovereign Contracts,
Secretary. ICE Clear Europe has stated that the which are similar to the other Western
[FR Doc. 2015–07366 Filed 3–31–15; 8:45 am] Additional WE Sovereign Contracts will European sovereign CDS contracts
BILLING CODE 8011–01–P constitute ‘‘Non-STEC Single Name currently cleared by ICE Clear Europe,
Contracts’’ for purposes of the CDS in accordance with the existing rules
Procedures and, accordingly, will be and procedures applicable to Western
SECURITIES AND EXCHANGE governed by Paragraph 10 of the CDS European sovereign CDS contracts.
COMMISSION Procedures consistent with the Specifically, the Commission believes
treatment of the other Western European that ICE Clear Europe’s proposal to clear
[Release No. 34–74588; File No. SR–ICEEU– sovereign CDS contracts currently the Additional WE Sovereign Contracts
2015–004] cleared by ICE Clear Europe. ICE Clear pursuant to its current risk management
Europe has represented that clearing of framework (including margin and
Self-Regulatory Organizations; ICE the Additional WE Sovereign Contracts
guaranty fund methodology),
Clear Europe Limited; Order Approving will not require any changes to ICE
operational procedures, settlement
Proposed Rule Change Relating to Clear Europe’s existing Clearing Rules
Additional European Sovereign CDS and Procedures, risk management procedures and default management
Contracts framework (including relevant policies), policies is designed to promote the
or margin model.5 prompt and accurate clearance and
March 26, 2015. settlement of securities transactions, to
III. Discussion and Commission assure the safeguarding of securities and
I. Introduction Findings funds which are in the custody or
On January 27, 2015, ICE Clear Section 19(b)(2)(C) of the Act 6 directs control of ICE Clear Europe or for which
Europe Limited (‘‘ICE Clear Europe’’) the Commission to approve a proposed it is responsible, and in general, to
filed with the Securities and Exchange rule change of a self-regulatory protect investors and the public interest,
Commission (‘‘Commission’’), pursuant consistent with Section 17A(b)(3)(F) of
4 See Securities Exchange Act Release No. 34–
to Section 19(b)(1) of the Securities the Act.9
71920 (April 9, 2014), 79 FR 21331 (April 15, 2015)
Exchange Act of 1934 (‘‘Act’’) 1 and Rule (SR–ICEEU–2014–04) (order approving proposed IV. Conclusion
19b–4 thereunder,2 a proposed rule rule change to clear Western European sovereign
change to provide for the clearance of CDS contracts referencing Ireland, the Republic of On the basis of the foregoing, the
additional European sovereign credit Italy, the Portuguese Republic and the Kingdom of
Spain) and Securities Exchange Act Release No. 34– Commission finds that the proposal is
default swap (‘‘CDS’’) contracts. The 73737 (December 4, 2014), 79 FR 73372 (December consistent with the requirements of the
proposed rule change was published for 10, 2014) (SR–ICEEU–2014–18) (order approving Act and in particular with the
comment in the Federal Register on proposed rule change to clear additional Western
requirements of Section 17A of the
February 11, 2015.3 The Commission European sovereign CDS contracts referencing
Kingdom of Belgium and the Republic of Austria) Act 10 and the rules and regulations
did not receive comments on the (collectively, the ‘‘Prior WE Sovereigns Orders’’). thereunder.
proposed rule change. This order 5 For a description of previously approved
mstockstill on DSK4VPTVN1PROD with NOTICES

approves the proposed rule change. changes to ICE Clear Europe’s risk management It is therefore ordered, pursuant to
framework to accommodate clearing of Western Section 19(b)(2) of the Act,11 that the
European sovereign CDS contracts, see the Prior WE
22 17 CFR 200.30–3(a)(12). Sovereigns Orders. Id. ICE Clear Europe represents 7 15
1 15 U.S.C. 78s(b)(1). that it has performed a variety of empirical analyses U.S.C. 78q–1(b)(3)(F).
2 17 CFR 240.19b–4. 8 15 U.S.C. 78q–1.
related to clearing of the Additional WE Sovereign
9 15 U.S.C. 78q–1(b)(3)(F).
3 Securities Exchange Act Release No. 34–74213 Contracts under its margin methodology, including
back tests and stress tests. 10 15 U.S.C. 78q–1.
(February 5, 2015), 80 FR 7661 (February 11, 2015)
(SR–ICEEU–2015–004). 6 15 U.S.C. 78s(b)(2)(C). 11 15 U.S.C. 78s(b)(2).

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17538 Federal Register / Vol. 80, No. 62 / Wednesday, April 1, 2015 / Notices

proposed rule change (SR–ICEEU–2015– minimize the burden of the collection of publishing this notice to solicit
004) be, and hereby is, approved.12 information on respondents, including comments on Amendment No. 1 from
For the Commission, by the Division of through the use of automated collection interested persons and is approving the
Trading and Markets, pursuant to delegated techniques or other forms of information proposed rule change, as modified by
authority.13 technology. Consideration will be given Amendment No. 1, on an accelerated
Brent J. Fields, to comments and suggestions submitted basis.
Secretary. in writing within 60 days of this II. Description of the Proposed Rule
[FR Doc. 2015–07362 Filed 3–31–15; 8:45 am]
publication. Change
An agency may not conduct or
BILLING CODE 8011–01–P
sponsor, and a person is not required to A. Description of the Initial Rule Filing
respond to, a collection of information ICC proposes to adopt rules that will
SECURITIES AND EXCHANGE unless it displays a currently valid provide the basis for ICC to clear
COMMISSION control number. additional credit default swap contracts.
Please direct your written comment to Specifically, ICC is proposing to amend
Proposed Collection; Comment Pamela Dyson, Director/Chief Subchapter 26D–102 of its rules to
Request Information Officer, Securities and provide for the clearance of additional
Exchange Commission, c/o Remi Pavlik- Standard Emerging Market Sovereign
Upon Written Request Copies Available Simon, 100 F Street NE., Washington, single-name constituents of the CDX
From: Securities and Exchange DC 20549 or send an email to: PRA_ Emerging Markets Index (collectively,
Commission, Office of FOIA Services, Mailbox@sec.gov. ‘‘SES Contracts’’). Currently, ICC is
100 F Street NE., Washington, DC
Dated: March 27, 2015. approved to clear eight SES Contracts:
20549–2736.
Brent J. Fields, the Federative Republic of Brazil, the
Extension: Secretary. United Mexican States, the Bolivarian
Form SE; SEC File No. 270–289, OMB Republic of Venezuela, the Argentine
[FR Doc. 2015–07463 Filed 3–31–15; 8:45 am]
Control No. 3235–0327. Republic, the Republic of Turkey, the
BILLING CODE 8011–01–P
Notice is hereby given that, pursuant Russian Federation, the Republic of
to the Paperwork Reduction Act of 1995 Hungary, and the Republic of South
(44 U.S.C. 3501 et seq.), the Securities SECURITIES AND EXCHANGE Africa.5 The proposed change to the ICC
and Exchange Commission COMMISSION Rules would provide for the clearance of
(‘‘Commission’’) is soliciting comments five additional SES Contracts: the
on the collection of information [Release No. 34–74593; File No. SR–ICC– Republic of Chile, the Republic of Peru,
2015–003]
summarized below. The Commission the Republic of Colombia, Ukraine, and
plans to submit this existing collection Self-Regulatory Organizations; ICE the Republic of Poland (‘‘Additional
of information to the Office of Clear Credit LLC; Notice of Filing of SES Contracts’’).
Management and Budget for extension ICC believes that the addition of these
Amendment No. 1 and Order Granting
and approval. SES Contracts will benefit the market
Accelerated Approval of a Proposed
Form SE (17 CFR 239.64) is used by for emerging market credit default
Rule Change, as Modified by
registrants to file paper copies of swaps by providing market participants
Amendment No. 1, to Provide for the
exhibits, reports or other documents the benefits of clearing, including
Clearance of Additional Standard
that would be difficult or impossible to reduction in counterparty risk and
Emerging Market Sovereign Single
submit electronically, as provided in safeguarding of margin assets pursuant
Names to clearing house rules. ICC states that
Rule 311 of Regulation S–T (17 CFR
232.311). The information contained in March 26, 2015. the Additional SES Contracts will be
Form SE is used by the Commission to offered on the 2014 ISDA Credit
I. Introduction Derivatives Definitions and have terms
identify paper copies of exhibits. Form
SE is filed by individuals, companies or On January 23, 2015 ICE Clear Credit consistent with the other SES Contracts
other entities that are required to file LLC (‘‘ICC’’) filed with the Securities approved for clearing at ICC and
documents electronically. and Exchange Commission governed by Subchapter 26D of the ICC
Approximately 31 registrants file Form (‘‘Commission’’) the proposed rule rules. According to ICC, the clearing of
SE and it takes an estimated 0.10 hours change SR–ICC–2015–003 pursuant to the Additional SES Contracts will not
per response for a total annual burden Section 19(b)(1) of the Securities require any changes to ICC’s Risk
of 3 hours. Exchange Act of 1934 (‘‘Act’’) 1 and Rule Management Framework or other
Written comments are invited on: (a) 19b-4 thereunder.2 The proposed rule
Whether the proposed collection of change was published for comment in forth in the Initial Rule Filing, as further described
the Federal Register on February 9, below.
information is necessary for the proper 5 See Securities Exchange Act Release No. 34–
performance of the functions of the 2015.3 The Commission did not receive 65588 (Oct. 18, 2011), 76 FR 65763 (Oct. 24, 2011)
agency, including whether the any comments. On March 25, 2015, ICC (File No. SR–ICC–2011–01) (order approving rule
information will have practical utility; filed Amendment No. 1 to the proposed change to clear SES Contracts referencing the
rule change.4 The Commission is Federative Republic of Brazil, the United Mexican
(b) the accuracy of the agency’s estimate States, the Bolivian Republic of Venezuela, and the
of the burden imposed by the collection Argentine Republic); Securities Exchange Act
1 15 U.S.C. 78s(b)(1).
of information; (c) ways to enhance the Release No. 34–70849 (Nov. 12, 2013), 78 FR 69167
mstockstill on DSK4VPTVN1PROD with NOTICES

2 17 CFR 240.19b–4.
quality, utility, and clarity of the (Nov. 18, 2013) (File No. SR–ICC–2013–07) (order
3 Securities Exchange Act Release No. 34–74192
approving rule change to clear SES Contracts
information collected; and (d) ways to (Feb. 3, 2015), 80 FR 7070 (Feb. 9, 2015) (File No. referencing the Republic of Turkey and the Russian
SR–ICC–2015–003) (hereinafter referred to as the Federation); and Securities Exchange Act Release
12 In approving the proposed rule change, the ‘‘Initial Rule Filing’’). No. 34–73220 (Sep. 25, 2014), 79 FR 59340 (Oct. 1,
Commission considered the proposal’s impact on 4 ICC filed Amendment No. 1 to remove Ukraine 2014) (File No. SR–ICC–2014–13) (order approving
efficiency, competition and capital formation. 15 from the list of proposed additional Standard rule change to clear SES Contracts referencing the
U.S.C. 78c(f). Emerging Market Sovereign single-name Republic of Hungary and the Republic of South
13 17 CFR 200.30–3(a)(12). constituents of the CDX Emerging Markets Index set Africa).

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Document Created: 2015-12-18 11:04:14
Document Modified: 2015-12-18 11:04:14
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 17537