80 FR 73852 - Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change Related to the ICC Rule Enforcement Process for Missed Submissions

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 227 (November 25, 2015)

Page Range		73852-73853
FR Document		2015-29927
Federal Register, Volume 80 Issue 227 (Wednesday, November 25, 2015)
[Federal Register Volume 80, Number 227 (Wednesday, November 25, 2015)]
[Notices]
[Pages 73852-73853]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-29927]



[[Page 73852]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76479; File No. SR-ICC-2015-015]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change Related to the ICC Rule Enforcement 
Process for Missed Submissions

November 19, 2015.

I. Introduction

    On September 30, 2015, ICE Clear Credit LLC (``ICC'') 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 (SR-ICC-2015-015) 
to the ICC Clearing Rules (the ``Rules'') related to the ICC rule 
enforcement process for Missed Submissions. The proposed rule change 
was published for comment in the Federal Register on October 16, 
2015.\3\ The Commission did not receive comments on the proposed rule 
change. For the reasons discussed below, the Commission is approving 
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. 34-76122 (Oct. 9, 2015), 
80 FR 62593 (Oct. 16, 2015) (SR-ICC-2015-015).
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II. Description of the Proposed Rule Change

    As part of ICC's end-of-day price discovery process, ICC Clearing 
Participants (``CPs'') are required to submit end-of-day prices for 
specific instruments related to their open interest at ICC, in 
accordance with Rule 404(b) and ICC Procedures. Failure of a CP to 
provide submissions required by ICC pursuant to Rule 404(b) and ICC 
Procedures constitute a Missed Submission. In order to provide 
incentive against Missed Submissions, ICC has adopted a summary 
assessment approach described in Rule 702(e) and Schedule 702 of the 
Rules.
    Currently, under Rule 702(e)(ii)(2), a CP may be eligible for a 
once-in-a-lifetime conditional waiver from such assessments if one or 
more Missed Submissions are the first instance(s) of a Missed 
Submission for the type of instrument (index or single name) and the CP 
provides adequate explanation of the cause and plans for remedial 
actions.
    Given the increased automation of price submissions, ICC recognizes 
that there may be circumstances, due to technological failures, which 
may result in Missed Submissions. ICC also notes that, due to the 
significant length of time since the inception of the end-of-day 
process, many CPs have utilized their once-in-a-lifetime waiver. As 
such, ICC believes it is reasonable to provide, under limited 
circumstances, a conditional once-a-year waiver for such Missed 
Submissions caused by technical failures, as described below. ICC 
believes that such Rule changes will not affect the integrity and 
effectiveness of the end-of-day price discovery process. ICC believes 
such Rule changes provide a valuable and practical balance between the 
technicalities of the price discovery process and appropriate 
penalization for Missed Submissions.
    The proposed Rule text provides for the replacement of ICC's 
current once-in-a-lifetime waiver for Missed Submissions with a 
conditional once-a-year waiver for Missed Submissions caused by 
technical failures. Under revised Rule 702(e)(ii)(2), a CP would be 
eligible for one waiver per year for single name Missed Submissions, 
and one waiver per year for index Missed Submissions. A CP may request 
such wavier(s) be applied against all Missed Submissions for a given 
instrument class on a given day. CPs would be required to provide 
documentation with a waiver request, explaining that the root-cause of 
the Missed Submission was a technology issue and including a 
remediation plan to fix the cause of the Missed Submission. ICC states 
that it would review and evaluate the waiver request and accept unless 
it had legitimate concerns that the root-cause of the Missed Submission 
had not been adequately identified, was not due to a technical issue, 
and/or would not be corrected by the provided remediation plan. ICC 
would maintain its current ability to provide waivers for Missed 
Submissions deemed to be due to extraordinary circumstances outside of 
a CP's control, as set forth in Rule 702(e)(ii)(3). Pending regulatory 
approval, ICC plans to implement these changes on January 1, 2016, and 
apply the once-a-year waiver to the 2016 calendar year, and each 
calendar year going forward. ICC represents that there are no changes 
to ICC policies and procedures as a result of the Rule changes.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \4\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if the 
Commission finds that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such self-regulatory organization. Section 17A(b)(3)(F) 
of the Act \5\ 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. Section 
17A(b)(3)(G) of the Act \6\ requires that rules the of the clearing 
agency provide that its participants shall be appropriately disciplined 
for violation of any provision of the rules of the clearing agency, 
including through the use of fines or any other fitting sanctions. 
Furthermore, Section 17A(b)(3)(H) of the Act \7\ requires, among other 
things, that rules the of the clearing agency, in general, provide a 
fair procedure with respect to the disciplining of participants.
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    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
    \6\ 15 U.S.C. 78q-1(b)(3)(G).
    \7\ 15 U.S.C. 78q-1(b)(3)(H).
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    The Commission finds that the proposed rule change is consistent 
with the requirements of Section 17A of the Act \8\ and the rules and 
regulations thereunder applicable to ICC. The proposed rule change 
would replace ICC's current once-in-a-lifetime waiver for Missed 
Submissions, which has already been utilized by many of ICC's CPs, with 
a conditional once-a-year waiver for Missed Submissions (one waiver 
each for single name and index Missed Submissions) caused by technical 
failures. The proposed rule change also provides details surrounding 
the process by which CPs can request such conditional waivers and ICC's 
review and evaluation of each request. The Commission believes that 
allowing for a once-per-year waiver for technical failures causing 
Missed Submissions is appropriate given the increased automation of 
end-of-day price submissions and is reasonably designed to maintain the 
integrity of ICC's end-of-day pricing process, thereby promoting the 
prompt and accurate clearance and settlement of securities transactions 
and, to the extent applicable, derivative agreements, contracts, and 
transactions in accordance 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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    Additionally, the Commission believes that allowing for a once-per-
year conditional waiver for technical failures in the summary 
assessment process for Missed Submissions is designed to ensure that 
CPs are

[[Page 73853]]

appropriately disciplined for violations of ICC's rules consistent with 
Section 17A(b)(3)(G) of the Act.\10\ The Commission also finds that the 
proposed process for the requesting and review of the conditional 
waivers is reasonably designed to provide for a fair procedure with 
respect to the disciplining of CPs for Missed Submissions in accordance 
with Section 17A(b)(3)(H) of the Act.\11\
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    \10\ 15 U.S.C. 78q-1(b)(3)(G).
    \11\ 15 U.S.C. 78q-1(b)(3)(H).
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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 \12\ and the 
rules and regulations thereunder.
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    \12\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\13\ that the proposed rule change (File No. SR-ICC-2015-015) be, 
and hereby is, approved.\14\
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    \13\ 15 U.S.C. 78s(b)(2).
    \14\ 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.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-29927 Filed 11-24-15; 8:45 am]
BILLING CODE 8011-01-P
Federal Register / Vol. 80, No. 227 / Wednesday, November 25, 2015 / Notices 73853

appropriately disciplined for violations and III below, which Items have been published for comment in the Federal
of ICC’s rules consistent with Section prepared by FINRA. The Commission is Register on November 7, 2014, and
17A(b)(3)(G) of the Act.10 The publishing this notice to solicit approved by the Commission, as
Commission also finds that the comments on the proposed rule change modified, on May 6, 2015.7
proposed process for the requesting and from interested persons. The Plan is designed to allow the
review of the conditional waivers is
I. Self-Regulatory Organization’s Commission, market participants, and
reasonably designed to provide for a fair
Statement of the Terms of Substance of the public to study and assess the
procedure with respect to the
the Proposed Rule Change impact of increment conventions on the
disciplining of CPs for Missed
FINRA is proposing to adopt FINRA liquidity and trading of the common
Submissions in accordance with Section
Rule 6191 to implement the quoting and stocks of small-capitalization
17A(b)(3)(H) of the Act.11
trading requirements of the Regulation companies. Each Participant is required
IV. Conclusion NMS Plan to Implement a Tick Size to comply with, and to enforce
On the basis of the foregoing, the Pilot Program (‘‘Plan’’). compliance by its members, as
Commission finds that the proposal is The text of the proposed rule change applicable, with the provisions of the
consistent with the requirements of the is available on FINRA’s Web site at Plan. As is described more fully below,
Act and in particular with the http://www.finra.org, at the principal the proposed rules would require
requirements of Section 17A of the office of FINRA and at the members to comply with the applicable
Act 12 and the rules and regulations Commission’s Public Reference Room. quoting and trading increments for Pilot
thereunder. II. Self-Regulatory Organization’s Securities.8
It is therefore ordered, pursuant to Statement of the Purpose of, and The Pilot Securities will include
Section 19(b)(2) of the Act,13 that the Statutory Basis for, the Proposed Rule stocks of companies with $3 billion or
proposed rule change (File No. SR–ICC– Change less in market capitalization, an average
2015–015) be, and hereby is, daily trading volume of one million
approved.14 In its filing with the Commission,
FINRA included statements concerning shares or less, and a volume weighted
For the Commission, by the Division of the purpose of and basis for the average price of at least $2.00 for every
Trading and Markets, pursuant to delegated trading day. The Pilot will consist of a
authority.15 proposed rule change and discussed any
comments it received on the proposed Control Group of approximately 1400
Brent J. Fields, Pilot Securities and three test groups
rule change. The text of these statements
Secretary. with 400 Pilot Securities in each
may be examined at the places specified
[FR Doc. 2015–29927 Filed 11–24–15; 8:45 am] selected by a stratified sampling.9
in Item IV below. FINRA has prepared
BILLING CODE 8011–01–P summaries, set forth in sections A, B, During the pilot, Pilot securities in the
and C below, of the most significant Control Group will be quoted and
aspects of such statements. traded at the currently permissible
SECURITIES AND EXCHANGE increments. Pilot Securities in the first
COMMISSION A. Self-Regulatory Organization’s
test group (‘‘Test Group One’’) will be
Statement of the Purpose of, and
[Release No. 34–76483; File No. SR–FINRA– quoted in $0.05 minimum increments
2015–047] Statutory Basis for, the Proposed Rule
but will continue to trade at any price
Change
increment that is currently permitted.10
Self-Regulatory Organizations; 1. Purpose Pilot Securities in the second test group
Financial Industry Regulatory (‘‘Test Group Two’’) will be quoted in
Authority, Inc.; Notice of Filing of a On August 25, 2014, NYSE Group,
Inc., on behalf of Financial Industry $0.05 minimum increments and will
Proposed Rule Change To Adopt
Regulatory Authority, Inc. (‘‘FINRA’’), trade at $0.05 minimum increments
FINRA Rule 6191(a) To Implement the
BATS Exchange, Inc., BATS Y- subject to a midpoint exception, a retail
Quoting and Trading Requirements of
Exchange, Inc., Chicago Stock Exchange, investor order exception, and a
the Regulation NMS Plan To Implement
Inc., EDGA Exchange, Inc., EDGX negotiated trade exception.11 Pilot
a Tick Size Pilot Program
Exchange, Inc., NASDAQ OMX BX, Inc., Securities in the third test group (‘‘Test
November 19, 2015. NASDAQ OMX PHLX LLC, the Nasdaq Group Three’’) will be subject to the
Pursuant to Section 19(b)(1) of the Stock Market LLC, New York Stock same restrictions as Test Group Two
Securities Exchange Act of 1934 Exchange LLC (‘‘NYSE’’), NYSE MKT and also will be subject to the ‘‘Trade-
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 LLC, and NYSE Arca, Inc. (collectively at’’ requirement to prevent price
notice is hereby given that on November ‘‘Participants’’), filed with the matching by a market participant that is
13, 2015, Financial Industry Regulatory Commission, pursuant to Section 11A of not displaying at the price of a Trading
Authority, Inc. (‘‘FINRA’’) filed with the the Act 3 and Rule 608 of Regulation
Securities and Exchange Commission NMS thereunder, the Plan to implement material as part of this proposed rule change to,
(‘‘SEC’’ or ‘‘Commission’’) the proposed a tick size pilot program (‘‘Pilot’’).4 The among other things, provide that the terms used in
rule change as described in Items I, II, Participants filed the Plan to comply proposed Rule 6191 shall have the same meaning
as provided in the Plan, unless otherwise specified.
with an order issued by the Commission 7 See Securities Exchange Act Release No. 74892
10 15 U.S.C. 78q–1(b)(3)(G). on June 24, 2014.5 The Plan 6 was (May 6, 2015), 80 FR 27514 (May 13, 2015)
11 15 U.S.C. 78q–1(b)(3)(H). (‘‘Approval Order’’).
12 15 U.S.C. 78q–1. 3 15 U.S.C. 78k–1. 8 Proposed Rule 6191 shall be in effect during a
tkelley on DSK3SPTVN1PROD with NOTICES

13 15 U.S.C. 78s(b)(2). 4 See Letter from Brendon J. Weiss, Vice pilot period to coincide with the pilot period for the
14 In approving the proposed rule change, the Plan (including any extensions to the pilot period
President, Intercontinental Exchange, Inc., to
Commission considered the proposal’s impact on Secretary, Commission, dated August 25, 2014. for the Plan).
efficiency, competition and capital formation. 15 5 See Securities Exchange Act Release No. 72460 9 See Section V of the Plan for identification of
U.S.C. 78c(f). (June 24, 2014), 79 FR 36840 (June 30, 2014). Pilot Securities, including criteria for selection and
15 17 CFR 200.30–3(a)(12). 6 Unless otherwise specified, capitalized terms grouping.
1 15 U.S.C. 78s(b)(1). 10 See Section VI(B) of the Plan.
used in this rule filing are defined as set forth in
2 17 CFR 240.19b–4. the Plan. FINRA also proposes supplementary 11 See Section VI(C) of the Plan.

VerDate Sep<11>2014 19:15 Nov 24, 2015 Jkt 238001 PO 00000 Frm 00156 Fmt 4703 Sfmt 4703 E:\FR\FM\25NON1.SGM 25NON1
Document Created: 2018-03-01 11:14:35
Document Modified: 2018-03-01 11:14:35
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 73852