80 FR 8730 - Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change To Provide for the Clearance of Additional Standard Western European Sovereign Single Names

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 32 (February 18, 2015)

Page Range		8730-8731
FR Document		2015-03229

Federal Register, Volume 80 Issue 32 (Wednesday, February 18, 2015)

[Federal Register Volume 80, Number 32 (Wednesday, February 18, 2015)]
[Notices]
[Pages 8730-8731]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-03229]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74256; File No. SR-ICC-2014-21]

Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change To Provide for the Clearance of
Additional Standard Western European Sovereign Single Names

February 11, 2015.

I. Introduction

On December 16, 2014, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change SR-ICC-2014-21 pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder.\2\ The
proposed rule change was published for comment in the Federal Register
on January 2, 2015.\3\ The Commission received one comment.\4\ 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. 34-73941 (Dec. 24,
2014), 80 FR 75 (Jan. 2, 2015) (File No. SR-ICC-2014-21).
\4\ See Comment from Anonymous, dated January 23, 2015,
available at http://www.sec.gov/comments/sr-icc-2014-21/icc201421-1.htm (stating ``Good Idea'').
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II. Description of the Proposed Rule Change

ICC proposes to adopt rules that will provide the basis for ICC to
clear additional credit default swap (``CDS'') contracts. Specifically,
ICC is proposing to amend Section 26I of its Rules to provide for the
clearance of additional Standard Western European Sovereign CDS
contracts (collectively, ``SWES Contracts''). ICC has been approved to
clear four SWES Contracts: the Republic of Ireland, the Italian
Republic, the Portuguese Republic, and the Kingdom of Spain.\5\ The
proposed changes to the ICC Rules would provide for the clearance of
additional SWES Contracts, specifically the Kingdom of Belgium and the
Republic of Austria (the ``Additional SWES Contracts'').
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\5\ See Exchange Act Release No. 34-72941(Nov. 5, 2014), 79 FR
67213 (Nov. 12, 2014) (File No. SR-ICC-2014-14) (order approving
rule change to clear other Western European sovereign CDS contracts)
(the ``Prior WES Order'').
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ICC states that these Additional SWES Contracts will be offered on
the 2003 and 2014 ISDA Credit Derivatives Definitions. ICC believes
that the addition of these SWES Contracts will benefit the market for
credit default swaps on Western European sovereigns by providing market
participants the benefits of clearing, including reduction in
counterparty risk and safeguarding of margin assets pursuant to
clearing house rules. According to ICC, the clearing of the additional
SWES Contracts will not require any changes in ICC's risk management
framework (including relevant policies) or margin model. ICC represents
that the Additional SWES Contracts have terms consistent with the other
SWES Contracts which ICC has been approved to clear and which will be
governed by Subchapter 26I of the ICC rules, namely the Republic of
Ireland, the Italian Republic, the Portuguese Republic, and the Kingdom
of Spain.
ICC proposes minor revisions to Subchapter 26I (Standard Western
European Sovereign (``SWES'') Single Name) to provide for clearing the
additional SWES Contracts. Rule 26I-102 will be modified to include the
Kingdom of Belgium and the Republic of Austria in the list of specific
Eligible SWES Reference Entities to be cleared by ICC. Additionally, in
ICC Rule 26D-102 (Definitions), the definition of ``Eligible SES
Reference Entity'' will be modified to correct a typographical error
and correctly identify the reference entity for a cleared product as
Hungary (as opposed to the Republic of Hungary).

III. Comments

The Commission received one comment supporting approval of the
proposed rule change. In this anonymous comment, the author expressed
general support for the proposal but did not opine on any particular
aspects of the proposal or offer any specific comment beyond a
statement of general support.

IV. 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 the
Commission finds that such 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 \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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The Commission finds that clearing of the Additional SWES Contracts
is consistent with the requirements of Section 17A of the Act \8\ and
regulations thereunder applicable to it, including the standards under
Rule 17Ad-22.\9\ The proposed change will provide for clearing of
Additional SWES Contracts in the same manner as other SWES Contracts.
Specifically, the new contracts will be cleared, and the risk
associated with clearing the new contracts will be appropriately
managed, pursuant to ICC's existing margin and guaranty fund
methodology, operational and managerial procedures, settlement
procedures and default management policies. The Commission believes
that the proposal is therefore designed to promote the prompt and
accurate clearance and settlement of securities transactions and
derivative agreements, contracts and transactions cleared by ICC, to
assure the safeguarding of securities and funds in the custody or
control of ICC, and to protect investors and the public interest,
within the meaning of is designed to promote the prompt and accurate

[[Page 8731]]

clearance and settlement of securities transactions, consistent with
Section 17A(b)(3)(F) of the Act.\10\
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\8\ 15 U.S.C. 78q-1.
\9\ 17 CFR 240.17Ad-22.
\10\ 15 U.S.C. 78q-1(b)(3)(F).
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V. 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 \11\ and the
rules and regulations thereunder.
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\11\ 15 U.S.C. 78q-1.
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\12\ that the proposed rule change (SR-ICC-2014-21) be, and hereby
is, approved.\13\
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\12\ 15 U.S.C. 78s(b)(2).
\13\ 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.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-03229 Filed 2-17-15; 8:45 am]
BILLING CODE 8011-01-P

8730 Federal Register / Vol. 80, No. 32 / Wednesday, February 18, 2015 / Notices

IV. Conclusion II. Description of the Proposed Rule III. Comments
Change The Commission received one
On the basis of the foregoing, the
Commission finds that the proposal is ICC proposes to adopt rules that will comment supporting approval of the
provide the basis for ICC to clear proposed rule change. In this
consistent with the requirements of the
additional credit default swap (‘‘CDS’’) anonymous comment, the author
Act and in particular with the
contracts. Specifically, ICC is proposing expressed general support for the
requirements of Section 17A of the Act 8
to amend Section 26I of its Rules to proposal but did not opine on any
and the rules and regulations particular aspects of the proposal or
thereunder. provide for the clearance of additional
Standard Western European Sovereign offer any specific comment beyond a
It Is Therefore Ordered, pursuant to CDS contracts (collectively, ‘‘SWES statement of general support.
Section 19(b)(2) of the Act,9 that the Contracts’’). ICC has been approved to IV. Discussion and Commission
proposed rule change (File No. SR–ICC– clear four SWES Contracts: the Republic Findings
2014–23) be, and hereby is, approved.10 of Ireland, the Italian Republic, the
Section 19(b)(2)(C) of the Act 6 directs
For the Commission, by the Division of Portuguese Republic, and the Kingdom
the Commission to approve a proposed
Trading and Markets, pursuant to delegated of Spain.5 The proposed changes to the rule change of a self-regulatory
authority.11 ICC Rules would provide for the organization if the Commission finds
Brent J. Fields, clearance of additional SWES Contracts, that such proposed rule change is
Secretary. specifically the Kingdom of Belgium consistent with the requirements of the
and the Republic of Austria (the Act and the rules and regulations
[FR Doc. 2015–03230 Filed 2–17–15; 8:45 am]
‘‘Additional SWES Contracts’’). thereunder applicable to such self-
BILLING CODE 8011–01–P
ICC states that these Additional SWES regulatory organization. Section
Contracts will be offered on the 2003 17A(b)(3)(F) of the Act 7 requires, among
SECURITIES AND EXCHANGE and 2014 ISDA Credit Derivatives other things, that the rules of a clearing
COMMISSION Definitions. ICC believes that the agency are designed to promote the
addition of these SWES Contracts will prompt and accurate clearance and
benefit the market for credit default settlement of securities transactions
[Release No. 34–74256; File No. SR–ICC– swaps on Western European sovereigns and, to the extent applicable, derivative
2014–21] by providing market participants the agreements, contracts, and transactions,
benefits of clearing, including reduction to assure the safeguarding of securities
Self-Regulatory Organizations; ICE
in counterparty risk and safeguarding of and funds which are in the custody or
Clear Credit LLC; Order Approving
margin assets pursuant to clearing house control of the clearing agency or for
Proposed Rule Change To Provide for
rules. According to ICC, the clearing of which it is responsible and, in general,
the Clearance of Additional Standard
the additional SWES Contracts will not to protect investors and the public
Western European Sovereign Single
require any changes in ICC’s risk interest.
Names management framework (including The Commission finds that clearing of
February 11, 2015. relevant policies) or margin model. ICC the Additional SWES Contracts is
represents that the Additional SWES consistent with the requirements of
I. Introduction Contracts have terms consistent with the Section 17A of the Act 8 and regulations
other SWES Contracts which ICC has thereunder applicable to it, including
On December 16, 2014, ICE Clear the standards under Rule 17Ad–22.9
been approved to clear and which will
Credit LLC (‘‘ICC’’) filed with the The proposed change will provide for
be governed by Subchapter 26I of the
Securities and Exchange Commission ICC rules, namely the Republic of clearing of Additional SWES Contracts
(‘‘Commission’’) the proposed rule Ireland, the Italian Republic, the in the same manner as other SWES
change SR–ICC–2014–21 pursuant to Portuguese Republic, and the Kingdom Contracts. Specifically, the new
Section 19(b)(1) of the Securities of Spain. contracts will be cleared, and the risk
Exchange Act of 1934 (‘‘Act’’) 1 and Rule associated with clearing the new
19b–4 thereunder.2 The proposed rule ICC proposes minor revisions to
Subchapter 26I (Standard Western contracts will be appropriately
change was published for comment in managed, pursuant to ICC’s existing
European Sovereign (‘‘SWES’’) Single
the Federal Register on January 2, margin and guaranty fund methodology,
Name) to provide for clearing the
2015.3 The Commission received one operational and managerial procedures,
additional SWES Contracts. Rule 26I–
comment.4 For the reasons discussed settlement procedures and default
102 will be modified to include the
below, the Commission is approving the management policies. The Commission
Kingdom of Belgium and the Republic
proposed rule change. believes that the proposal is therefore
of Austria in the list of specific Eligible
SWES Reference Entities to be cleared designed to promote the prompt and
8 15 U.S.C. 78q–1.
by ICC. Additionally, in ICC Rule 26D– accurate clearance and settlement of
9 15 U.S.C. 78s(b)(2).
102 (Definitions), the definition of securities transactions and derivative
10 In approving the proposed rule change, the
‘‘Eligible SES Reference Entity’’ will be agreements, contracts and transactions
Commission considered the proposal’s impact on
efficiency, competition and capital formation. 15 modified to correct a typographical error cleared by ICC, to assure the
U.S.C. 78c(f). and correctly identify the reference safeguarding of securities and funds in
11 17 CFR 200.30–3(a)(12).
entity for a cleared product as Hungary the custody or control of ICC, and to
emcdonald on DSK67QTVN1PROD with NOTICES

1 15 U.S.C. 78s(b)(1).
(as opposed to the Republic of protect investors and the public interest,
2 17 CFR 240.19b–4.
Hungary). within the meaning of is designed to
3 Securities Exchange Act Release No. 34–73941
promote the prompt and accurate
(Dec. 24, 2014), 80 FR 75 (Jan. 2, 2015) (File No.
SR–ICC–2014–21). 5 See Exchange Act Release No. 34–72941(Nov. 5,
6 15 U.S.C. 78s(b)(2)(C).
4 See Comment from Anonymous, dated January 2014), 79 FR 67213 (Nov. 12, 2014) (File No. SR–
7 15 U.S.C. 78q–1(b)(3)(F).
23, 2015, available at http://www.sec.gov/ ICC–2014–14) (order approving rule change to clear
8 15 U.S.C. 78q–1.
comments/sr-icc-2014-21/icc201421-1.htm (stating other Western European sovereign CDS contracts)
‘‘Good Idea’’). (the ‘‘Prior WES Order’’). 9 17 CFR 240.17Ad–22.

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Federal Register / Vol. 80, No. 32 / Wednesday, February 18, 2015 / Notices 8731

clearance and settlement of securities solicit comments on the proposed rule substantively identical to corresponding
transactions, consistent with Section change from interested persons. rules on BZX and BYX 6 related to
17A(b)(3)(F) of the Act.10 registration requirements in order to
I. Self-Regulatory Organization’s
provide a consistent regulatory
V. Conclusion Statement of the Terms of Substance of
the Proposed Rule Change approach across each of the BGM
On the basis of the foregoing, the Affiliated Exchanges.7
Commission finds that the proposal is The Exchange filed a proposal to Currently, Rule 1.5(n) defines the
consistent with the requirements of the amend Rules 1.5, 2.3, 2.5, and 2.6 term ‘‘Member’’ as meaning any
Act and in particular with the related to the registration requirements registered broker or dealer, or any
requirements of Section 17A of the for Members of the Exchange. person associated with a registered
Act 11 and the rules and regulations The text of the proposed rule change broker or dealer, that has been admitted
thereunder. is available at the Exchange’s Web site to membership in the Exchange. A
It is therefore ordered, pursuant to at www.batstrading.com, at the Member will have the status of a
Section 19(b)(2) of the Act,12 that the principal office of the Exchange, and at ‘‘member’’ of the Exchange as that term
proposed rule change (SR–ICC–2014– the Commission’s Public Reference is defined in Section 3(a)(3) of the Act.
21) be, and hereby is, approved.13 Room. The Exchange is proposing, however, to
For the Commission, by the Division of II. Self-Regulatory Organization’s delete ‘‘or any person associated with a
Trading and Markets, pursuant to delegated Statement of the Purpose of, and registered broker or dealer’’ from the
authority.14 Statutory Basis for, the Proposed Rule rule text, as such phrase is not
Brent J. Fields, Change contained in corresponding BZX and
Secretary. BYX rules (i.e., Rule 1.5(n)) and because
In its filing with the Commission, the
[FR Doc. 2015–03229 Filed 2–17–15; 8:45 am] Exchange included statements the Exchange no longer believes that
BILLING CODE 8011–01–P concerning the purpose of and basis for this language is necessary. The
the proposed rule change and discussed Exchange is also proposing to amend
any comments it received on the the rule text such that Membership may
SECURITIES AND EXCHANGE proposed rule change. The text of these be granted to a sole proprietor,
COMMISSION statements may be examined at the partnership, corporation, limited
[Release No. 34–74254; File No. SR–EDGA– places specified in Item IV below. The liability company or other organization
2015–06] Exchange has prepared summaries, set which is a registered broker or dealer
forth in Sections A, B, and C below, of pursuant to Section 15 of the Act, and
Self-Regulatory Organizations; EDGA the most significant parts of such which has been approved by the
Exchange, Inc.; Notice of Filing and statements. Exchange, language which is currently
Immediate Effectiveness of a Proposed included in Rule 2.3(a), which, as
Rule Change to Rules 1.5, 2.3, 2.5, and A. Self-Regulatory Organization’s described below, the Exchange is
2.6 Related to the Registration Statement of the Purpose of, and proposing to delete in order to further
Requirements for Members of EDGA Statutory Basis for, the Proposed Rule align Exchange rules with BZX and BYX
Exchange, Inc. Change 1.5(n).
1. Purpose The Exchange is also proposing to
February 11, 2015. delete the definition of ‘‘Principal’’ from
Pursuant to Section 19(b)(1) of the The Exchange proposes to amend the Rule 1.5(t), which will instead be
Securities Exchange Act of 1934 (the various Exchange rules related to the defined in the proposed changes to
‘‘Act’’),1 and Rule 19b–4 thereunder,2 registration requirements on the paragraph (d) of Interpretation and
notice is hereby given that on January Exchange in order to make the Policy .01 to Rule 2.5, which are further
30, 2015, EDGA Exchange, Inc. (the Exchange’s registration requirements described below. Currently, the term
‘‘Exchange’’ or ‘‘EDGA’’) filed with the substantively identical to the principal means persons associated with
Securities and Exchange Commission corresponding rules on BATS Exchange, a member who are actively engaged in
(‘‘Commission’’) the proposed rule Inc. (‘‘BZX’’) and BATS Y-Exchange, the management of the member’s
change as described in Items I and II Inc. (‘‘BYX’’), as further described securities business, including
below, which Items have been prepared below. Earlier this year, the Exchange supervision, solicitation, conduct of
by the Exchange. The Exchange has and its affiliate, EDGX Exchange, Inc. business or the training of persons
designated this proposal as a ‘‘non- (‘‘EDGX’’), received approval to effect a associated with a Member for any of
controversial’’ proposed rule change merger (the ‘‘Merger’’) of the Exchange’s these functions. Such persons shall
pursuant to Section 19(b)(3)(A) of the parent company, Direct Edge Holdings include sole proprietors, officers,
Act 3 and Rule 19b–4(f)(6)(iii) LLC, with BATS Global Markets, Inc., partners, managers of business offices
thereunder,4 which renders it effective the parent of BZX and BYX (together engaged in such functions, and directors
upon filing with the Commission. The with BZX, EDGA, and EDGX, the ‘‘BGM of corporations. The Exchange is
Commission is publishing this notice to Affiliated Exchanges’’).5 In the context proposing to add the text ‘‘(Reserved)’’
of the Merger, the BGM Affiliated to the rule text in order to maintain the
10 15 U.S.C. 78q–1(b)(3)(F). Exchanges are working to align certain current paragraph numbering within
11 15 U.S.C. 78q–1. system and regulatory functionality, Rule 1.5. The proposed new definition
12 15 U.S.C. 78s(b)(2).
retaining only intended differences for principal will be discussed below.
emcdonald on DSK67QTVN1PROD with NOTICES

13 In approving the proposed rule change, the

Commission considered the proposal’s impact on
between the BGM Affiliated Exchanges. The Exchange intends to consolidate
efficiency, competition and capital formation. 15 Thus, the proposal set forth below is its registration requirements in Rule 2.5
U.S.C. 78c(f). intended to amend Rules 1.5, 2.3, 2.5,
14 17 CFR 200.30–3(a)(12).
and 2.6 to make such Rules 6 See BZX and BYX Rules 1.5, 2.3, 2.5, and 2.6.
1 15 U.S.C. 78s(b)(1).
7 The Exchange notes that EDGX intends to file
2 17 CFR 240.19b–4. 5 See Securities Exchange Act Release No. 71449 a proposal very similar to this proposal that will
3 15 U.S.C. 78s(b)(3)(A).
(January 30, 2014), 79 FR 6961 (February 5, 2014) align the rules related to registration requirements
4 17 CFR 240.19b–4(f)(6)(iii). (SR–EDGX–2013–043; SR–EDGA–2013–034). across each of the BGM Affiliated Exchanges.

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Document Created: 2018-02-16 11:10:37
Document Modified: 2018-02-16 11:10:37

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 8730