81 FR 76987 - Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change To Provide for the Clearance of Additional Credit Default Swap Contracts

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 214 (November 4, 2016)

Page Range		76987-76988
FR Document		2016-26644
Federal Register, Volume 81 Issue 214 (Friday, November 4, 2016)
[Federal Register Volume 81, Number 214 (Friday, November 4, 2016)]
[Notices]
[Pages 76987-76988]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26644]



[[Page 76987]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79197; File No. SR-ICC-2016-012]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change To Provide for the Clearance of 
Additional Credit Default Swap Contracts

October 31, 2016.

I. Introduction

    On August 29, 2016, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act (``Act'') \1\ and Rule 
19b-4 thereunder,\2\ a proposed rule change to provide for the 
clearance of additional Standard Emerging Market Sovereign CDS 
contracts (collectively, ``EM Contracts''), 2003 ISDA Definitions of 
Standard Western European Sovereign CDS contracts (collectively, ``SWES 
Contracts''), and an additional Asia/Pacific Sovereign CDS contract 
(the ``Asia/Pacific Contract''). The proposed rule change was published 
for comment in the Federal Register on September 16, 2016.\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. 34-78818 (Sept. 12, 
2016), 81 FR 63831 (Sept. 19, 2016) (SR-ICC-2016-012).
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II. Description of the Proposed Rule Change

    The purpose of the proposed rule change is to adopt rules that will 
provide the basis for ICC to clear additional credit default swap 
contracts.
    ICC has proposed amending Subchapter 26D of its Rules to provide 
for the clearance of additional EM Contracts, specifically the Republic 
of Panama, Abu Dhabi, Dubai, the State of Israel and the State of 
Qatar. ICC plans to offer these additional EM Contracts on the 2003 and 
2014 ISDA Credit Derivatives Definitions.
    ICC represents that these additional EM Contracts have terms 
consistent with the other EM Contracts approved for clearing at ICC and 
governed by Subchapter 26D of the Rules. Minor revisions to Subchapter 
26D (Standard Emerging Market Sovereign (``SES'') Single Name) will 
also be made to provide for clearing the additional EM Contracts. 
Specifically, in Rule 26D-102 (Definitions), ``Eligible SES Reference 
Entities'' will be modified to include the Republic of Panama, Abu 
Dhabi, Dubai, the State of Israel and the State of Qatar in the list of 
specific Eligible SES Reference Entities to be cleared by ICC.
    Additionally, ICC has proposed amending Subchapter 26I of its Rules 
to provide for the clearance of 2003 ISDA Definitions of SWES 
Contracts. ICC currently clears the 2014 ISDA Definitions of ten SWES 
Contracts, namely the Republic of Ireland, the Italian Republic, the 
Portuguese Republic, the Kingdom of Spain, the Kingdom of Belgium, the 
Republic of Austria, the Kingdom of the Netherlands, the Federal 
Republic of Germany, the French Republic and the United Kingdom of 
Great Britain and Northern Ireland. The proposed changes to Subchapter 
26I will allow ICC to offer clearing for the 2003 ISDA Definitions of 
these SWES Contracts.
    Minor revisions to Subchapter 26I (Standard Western European 
(``SWES'') Single Name) will be made to provide for clearing the 2003 
ISDA Definitions of SWES Contracts. Specifically, in Rule 26I-102 
(Definitions), the definitions of ``Eligible SWES Reference 
Obligations'', ``List of Eligible SWES Reference Entities'' and ``SWES 
Contract Reference Obligations'' will be updated to distinguish between 
the 2003- and 2014-Type CDS Contracts, and the corresponding Applicable 
Credit Derivatives Definitions.\4\ Rule 26I-309 (Acceptance of SWES 
Contracts by ICE Clear Credit) will be revised in part (c) to note that 
a CDS Participant may not submit a Trade for clearance as a SWES 
contract, and any such Trade shall not be a Confirming Trade, if the 
acceptance would be at a time when the CDS Participant (or any Non-
Participant Party for whom such CDS Participant is acting) is, or is an 
Affiliate of, the Eligible SWES Reference Entity for such SWES Contract 
or is subject to an agreement under which it is reasonably likely that 
the CDS Participant (or any such Non-Participant Party) will become, or 
will become an Affiliate of, the Eligible SWES Reference Entity for 
such SWES Contract. Rule 26I-309 will also be revised in part (e) to 
address and distinguish between relevant successor or other events 
under both 2003- and 2014-Type CDS Contracts, and the corresponding 
Applicable Credit Derivatives Definitions.
---------------------------------------------------------------------------

    \4\ As defined in Rule 20-102 (Applicable Credit Derivatives 
Definitions).
---------------------------------------------------------------------------

    Rule 26I-315 (Terms of the Cleared SWES Contract) will be revised 
to provide reference to provisions of the proper ISDA Definitions, and 
corresponding changes to provision numbering will be made as necessary. 
Rule 26I-315(h) will be revised to refer to the Applicable Credit 
Derivatives Definitions and eligible Seniority Level, as appropriate.
    Defined terms in Rule 26I-316 (Physical Settlement Matrix Updates) 
will be updated to refer specifically to SWES contracts. Rule 26I-616 
(Contract Modification) will be revised to note that it shall not 
constitute a Contract Modification if the Board (or its designee) 
updates the List of Eligible SWES Reference Entities (and modifies the 
terms and conditions of related SWES Contracts) to give effect to 
determinations of Succession Events.
    Finally, ICC has proposed amending Subchapter 26L of its rules to 
provide for the clearance of an additional Asia/Pacific Contract, 
namely the Kingdom of Thailand. ICC plans to offer this contract on the 
2003 and 2014 ISDA Credit Derivatives Definitions.
    ICC represents that the additional Asia/Pacific Contract has terms 
consistent with the other Asia/Pacific Contracts approved for clearing 
at ICC and governed by Subchapter 26L of the Rules. Minor revisions to 
Subchapter 26L (Asia/Pacific Sovereign (``SAS'') Single Name) will be 
made to provide for clearing the additional Asia/Pacific Contract. 
Specifically, in Rule 26L-102 (Definitions), ``Eligible SAS Reference 
Entities'' will be modified to include the Kingdom of Thailand in the 
list of specific Eligible SAS Reference Entities to be cleared by ICC.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \5\ 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 \6\ 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, 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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    \5\ 15 U.S.C. 78s(b)(2)(C).
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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    ICC has represented that the additional EM Contracts, Asia/Pacific

[[Page 76988]]

Contract and the 2003 ISDA Definitions of SWES Contracts proposed for 
clearing are similar to the EM, SWES and Asia/Pacific Contracts that 
are currently cleared by ICC. ICC also represents that these contracts 
will be cleared pursuant to ICC's existing clearing arrangements and 
related financial safeguards, protections and risk management 
procedures. The Commission therefore finds that the proposed rule 
change is designed to promote the prompt and accurate clearance and 
settlement of securities transactions and, to the extent applicable, 
derivative agreements, contracts, and transactions, and 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.

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act \7\ and the 
rules and regulations thereunder.
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    \7\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-ICC-2016-012) be, 
and hereby is, approved.\9\
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    \8\ 15 U.S.C. 78s(b)(2).
    \9\ 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).
    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Brent J. Fields,
Secretary.
[FR Doc. 2016-26644 Filed 11-3-16; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 81, No. 214 / Friday, November 4, 2016 / Notices 76987

SECURITIES AND EXCHANGE Entities’’ will be modified to include the numbering will be made as necessary.
COMMISSION Republic of Panama, Abu Dhabi, Dubai, Rule 26I–315(h) will be revised to refer
the State of Israel and the State of Qatar to the Applicable Credit Derivatives
[Release No. 34–79197; File No. SR–ICC–
2016–012]
in the list of specific Eligible SES Definitions and eligible Seniority Level,
Reference Entities to be cleared by ICC. as appropriate.
Self-Regulatory Organizations; ICE Additionally, ICC has proposed Defined terms in Rule 26I–316
Clear Credit LLC; Order Approving amending Subchapter 26I of its Rules to (Physical Settlement Matrix Updates)
Proposed Rule Change To Provide for provide for the clearance of 2003 ISDA will be updated to refer specifically to
the Clearance of Additional Credit Definitions of SWES Contracts. ICC SWES contracts. Rule 26I–616 (Contract
Default Swap Contracts currently clears the 2014 ISDA Modification) will be revised to note
Definitions of ten SWES Contracts, that it shall not constitute a Contract
October 31, 2016. namely the Republic of Ireland, the Modification if the Board (or its
I. Introduction Italian Republic, the Portuguese designee) updates the List of Eligible
Republic, the Kingdom of Spain, the SWES Reference Entities (and modifies
On August 29, 2016, ICE Clear Credit Kingdom of Belgium, the Republic of the terms and conditions of related
LLC (‘‘ICC’’) filed with the Securities Austria, the Kingdom of the SWES Contracts) to give effect to
and Exchange Commission Netherlands, the Federal Republic of determinations of Succession Events.
(‘‘Commission’’), pursuant to Section Germany, the French Republic and the Finally, ICC has proposed amending
19(b)(1) of the Securities Exchange Act United Kingdom of Great Britain and Subchapter 26L of its rules to provide
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a Northern Ireland. The proposed changes for the clearance of an additional Asia/
proposed rule change to provide for the to Subchapter 26I will allow ICC to offer Pacific Contract, namely the Kingdom of
clearance of additional Standard clearing for the 2003 ISDA Definitions Thailand. ICC plans to offer this
Emerging Market Sovereign CDS of these SWES Contracts. contract on the 2003 and 2014 ISDA
contracts (collectively, ‘‘EM Contracts’’), Minor revisions to Subchapter 26I Credit Derivatives Definitions.
2003 ISDA Definitions of Standard (Standard Western European (‘‘SWES’’) ICC represents that the additional
Western European Sovereign CDS Single Name) will be made to provide Asia/Pacific Contract has terms
contracts (collectively, ‘‘SWES for clearing the 2003 ISDA Definitions consistent with the other Asia/Pacific
Contracts’’), and an additional Asia/ of SWES Contracts. Specifically, in Rule Contracts approved for clearing at ICC
Pacific Sovereign CDS contract (the 26I–102 (Definitions), the definitions of and governed by Subchapter 26L of the
‘‘Asia/Pacific Contract’’). The proposed ‘‘Eligible SWES Reference Obligations’’, Rules. Minor revisions to Subchapter
rule change was published for comment ‘‘List of Eligible SWES Reference 26L (Asia/Pacific Sovereign (‘‘SAS’’)
in the Federal Register on September Entities’’ and ‘‘SWES Contract Reference Single Name) will be made to provide
16, 2016.3 The Commission did not Obligations’’ will be updated to for clearing the additional Asia/Pacific
receive comments on the proposed rule distinguish between the 2003- and 2014- Contract. Specifically, in Rule 26L–102
change. For the reasons discussed Type CDS Contracts, and the (Definitions), ‘‘Eligible SAS Reference
below, the Commission is approving the corresponding Applicable Credit Entities’’ will be modified to include the
proposed rule change. Derivatives Definitions.4 Rule 26I–309 Kingdom of Thailand in the list of
II. Description of the Proposed Rule (Acceptance of SWES Contracts by ICE specific Eligible SAS Reference Entities
Change Clear Credit) will be revised in part (c) to be cleared by ICC.
to note that a CDS Participant may not
The purpose of the proposed rule submit a Trade for clearance as a SWES III. Discussion and Commission
change is to adopt rules that will contract, and any such Trade shall not Findings
provide the basis for ICC to clear be a Confirming Trade, if the acceptance Section 19(b)(2)(C) of the Act 5 directs
additional credit default swap contracts. the Commission to approve a proposed
would be at a time when the CDS
ICC has proposed amending rule change of a self-regulatory
Participant (or any Non-Participant
Subchapter 26D of its Rules to provide
Party for whom such CDS Participant is organization if the Commission finds
for the clearance of additional EM
acting) is, or is an Affiliate of, the that the proposed rule change is
Contracts, specifically the Republic of
Eligible SWES Reference Entity for such consistent with the requirements of the
Panama, Abu Dhabi, Dubai, the State of
SWES Contract or is subject to an Act and the rules and regulations
Israel and the State of Qatar. ICC plans
agreement under which it is reasonably thereunder applicable to such self-
to offer these additional EM Contracts
likely that the CDS Participant (or any regulatory organization. Section
on the 2003 and 2014 ISDA Credit
such Non-Participant Party) will 17A(b)(3)(F) of the Act 6 requires, among
Derivatives Definitions.
ICC represents that these additional become, or will become an Affiliate of, other things, that the rules of a clearing
EM Contracts have terms consistent the Eligible SWES Reference Entity for agency be designed to promote the
with the other EM Contracts approved such SWES Contract. Rule 26I–309 will prompt and accurate clearance and
for clearing at ICC and governed by also be revised in part (e) to address and settlement of securities transactions,
Subchapter 26D of the Rules. Minor distinguish between relevant successor and to the extent applicable, derivative
revisions to Subchapter 26D (Standard or other events under both 2003- and agreements, contracts and transactions,
Emerging Market Sovereign (‘‘SES’’) 2014-Type CDS Contracts, and the to assure the safeguarding of securities
Single Name) will also be made to corresponding Applicable Credit and funds which are in the custody or
asabaliauskas on DSK3SPTVN1PROD with NOTICES

provide for clearing the additional EM Derivatives Definitions. control of the clearing agency or for
Contracts. Specifically, in Rule 26D–102 Rule 26I–315 (Terms of the Cleared which it is responsible and, in general,
(Definitions), ‘‘Eligible SES Reference SWES Contract) will be revised to to protect investors and the public
provide reference to provisions of the interest.
1 15 U.S.C. 78s(b)(1). proper ISDA Definitions, and ICC has represented that the
2 17 CFR 240.19b–4. corresponding changes to provision additional EM Contracts, Asia/Pacific
3 Securities Exchange Act Release No. 34–78818
5 15 U.S.C. 78s(b)(2)(C).
(Sept. 12, 2016), 81 FR 63831 (Sept. 19, 2016) (SR– 4 As defined in Rule 20–102 (Applicable Credit

ICC–2016–012). Derivatives Definitions). 6 15 U.S.C. 78q–1(b)(3)(F).

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76988 Federal Register / Vol. 81, No. 214 / Friday, November 4, 2016 / Notices

Contract and the 2003 ISDA Definitions (‘‘MIAX’’ or ‘‘Exchange’’) filed with the Market Makers are allocated two (2) Full
of SWES Contracts proposed for clearing Securities and Exchange Commission Service MEI Ports 5 and two (2) Limited
are similar to the EM, SWES and Asia/ (‘‘Commission’’) a proposed rule change Service MEI Ports 6 per matching engine
Pacific Contracts that are currently as described in Items I, II, and III below, to which they connect. The Exchange
cleared by ICC. ICC also represents that which Items have been prepared by the currently assesses the following MEI
these contracts will be cleared pursuant Exchange. The Commission is Port fees: (i) $5,000 for Market Maker
to ICC’s existing clearing arrangements publishing this notice to solicit Assignments in up to 5 option classes or
and related financial safeguards, comments on the proposed rule change up to 10% of option classes by volume;
protections and risk management from interested persons. (ii) $10,000 for Market Maker
procedures. The Commission therefore Assignments in up to 10 option classes
finds that the proposed rule change is I. Self-Regulatory Organization’s
Statement of the Terms of Substance of or up to 20% of option classes by
designed to promote the prompt and volume; (iii) $14,000 for Market Maker
accurate clearance and settlement of the Proposed Rule Change
Assignments in up to 40 option classes
securities transactions and, to the extent The Exchange is filing a proposal to or up to 35% of option classes by
applicable, derivative agreements, amend the MIAX Options Fee Schedule volume; (iv) $17,500 for Market Maker
contracts, and transactions, and to (the ‘‘Fee Schedule’’). While changes to Assignments in up to 100 option classes
assure the safeguarding of securities and the Fee Schedule pursuant to this or up to 50% of option classes by
funds which are in the custody or proposal are effective upon filing, the volume; and (v) $20,500.00 for Market
control of the clearing agency or for Exchange has designated these changes Maker Assignments in over 100 option
which it is responsible and, in general, to be operative on October 17, 2016. classes or over 50% of option classes by
to protect investors and the public The text of the proposed rule change volume up to all option classes listed on
interest. is available on the Exchange’s Web site MIAX.7 In each of the foregoing
IV. Conclusion at http://www.miaxoptions.com/filter/ categories, the stated fee applies if the
wotitle/rule_filing, at MIAX’s principal less of the two applicable measurements
On the basis of the foregoing, the office, and at the Commission’s Public
Commission finds that the proposal is is met. For example, a Market Maker
Reference Room. that wishes to make markets in just one
consistent with the requirements of the
Act 7 and the rules and regulations II. Self-Regulatory Organization’s symbol would require the two (2) MEI
thereunder. Statement of the Purpose of, and Ports in a single matching engine; a
It is therefore ordered, pursuant to Statutory Basis for, the Proposed Rule Market Maker wishing to make markets
Section 19(b)(2) of the Act,8 that the Change in all symbols traded on MIAX would
proposed rule change (File No. SR–ICC– require the two (2) MEI Ports in each of
In its filing with the Commission, the
2016–012) be, and hereby is, approved.9 the Exchange’s matching engines. The
Exchange included statements
Exchange also currently charges $50 per
For the Commission, by the Division of concerning the purpose of and basis for
Trading and Markets, pursuant to delegated month for each additional Limited
the proposed rule change and discussed
authority.10 Service MEI Port per matching engine
any comments it received on the
Brent J. Fields, for Market Makers over and above the
proposed rule change. The text of these
Secretary. two (2) Limited Service MEI Ports per
statements may be examined at the
matching engine that are allocated with
[FR Doc. 2016–26644 Filed 11–3–16; 8:45 am] places specified in Item IV below. The
the Full Service MEI Ports. The Full
BILLING CODE 8011–01–P Exchange has prepared summaries, set
Service MEI Ports, Limited Service MEI
forth in sections A, B, and C below, of
Ports, and the additional Limited
the most significant aspects of such
SECURITIES AND EXCHANGE Service MEI Ports all include access to
statements.
COMMISSION MIAX’s primary and secondary data
A. Self-Regulatory Organization’s centers and its disaster recovery center.
[Release No. 34–79198; File No. SR–MIAX– Statement of the Purpose of, and
2016–37] The Exchange originally added the
Statutory Basis for, the Proposed Rule Limited Service MEI Ports to enhance
Change the MEI Port connectivity made
Self-Regulatory Organizations; Miami
International Securities Exchange LLC; 1. Purpose available to Market Makers, and has
Notice of Filing and Immediate subsequently made additional Limited
The Exchange proposes to amend the Service MEI Ports available to Market
Effectiveness of a Proposed Rule MIAX Options Fee Schedule (the ‘‘Fee
Change To Amend Its Fee Schedule Schedule’’) to offer two (2) additional
single matching engine that is dedicated only to
October 31, 2016. Limited Service MIAX Express Interface SPY). A particular root symbol may only be
Pursuant to the provisions of Section (‘‘MEI’’) Ports to Market Makers.3 assigned to a single designated matching engine. A
19(b)(1) of the Securities Exchange Act Currently, MIAX assesses monthly particular root symbol may not be assigned to
MEI Port Fees on Market Makers based multiple matching engines.
of 1934 (‘‘Act’’) 1 and Rule 19b–4 5 Full Service MEI Ports provide Market Makers
thereunder,2 notice is hereby given that upon the number of MIAX matching with the ability to send Market Maker quotes,
on October 17, 2016, Miami engines 4 used by the Market Maker. eQuotes, and quote purge messages to the MIAX
International Securities Exchange LLC System. Full Service MEI Ports are also capable of
3 The term ‘‘Market Makers’’ refers to Lead Market receiving administrative information. Market
asabaliauskas on DSK3SPTVN1PROD with NOTICES

7 15 Makers (‘‘LMMs’’), Primary Lead Market Makers Makers are limited to two Full Service MEI Ports
U.S.C. 78q–1. per matching engine.
8 15 U.S.C. 78s(b)(2).
(‘‘PLMMs’’), and Registered Market Makers
(‘‘RMMs’’) collectively. See Exchange Rule 100. 6 Limited Service MEI Ports provide Market
9 In approving the proposed rule change, the
4 A ‘‘matching engine’’ is a part of the MIAX Makers with the ability to send eQuotes and quote
Commission considered the proposal’s impact on electronic system that processes options quotes and purge messages only, but not Market Maker Quotes,
efficiency, competition and capital formation. 15 trades on a symbol-by-symbol basis. Some matching to the MIAX System. Limited Service MEI Ports are
U.S.C. 78c(f). engines will process option classes with multiple also capable of receiving administrative
10 17 CFR 200.30–3(a)(12).
root symbols, and other matching engines will be information. Market Makers initially receive two
1 15 U.S.C. 78s(b)(1). Limited Service MEI Ports per matching engine.
dedicated to one single option root symbol (for
2 17 CFR 240.19b–4. example, options on SPY will be processed by one 7 See MIAX Fee Schedule, Section 5)d)ii).

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Document Created: 2018-02-14 08:26:05
Document Modified: 2018-02-14 08:26:05
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		81 FR 76987