81 FR 90891 - Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Clearing Rules Regarding German CDS Clearing Members

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 241 (December 15, 2016)

Page Range		90891-90893
FR Document		2016-30080
Federal Register, Volume 81 Issue 241 (Thursday, December 15, 2016)
[Federal Register Volume 81, Number 241 (Thursday, December 15, 2016)]
[Notices]
[Pages 90891-90893]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-30080]



[[Page 90891]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79516; File No. SR-ICEEU-2016-014]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to the Clearing Rules Regarding German CDS Clearing Members

December 9, 2016.
    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 November 25, 2016, ICE Clear Europe Limited (``ICE Clear Europe'' or 
``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. ICE Clear Europe filed the proposed rule changes pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(4)(i) \4\ 
thereunder, so that the proposal was effective upon filing with the 
Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(4)(i).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The principal purpose of the changes is to modify the ICE Clear 
Europe Clearing Rules (``Clearing Rules'') to clarify the application 
of economic sanctions compliance provisions to German CDS Clearing 
Members, as described herein.

II. Self-Regulatory Organization'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. 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) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

(a) Purpose
    The purpose of the rule amendments is to modify the ICE Clear 
Europe Clearing Rules to revise the application of certain provisions 
related to economic sanctions compliance by CDS Clearing Members and 
Customers of CDS Clearing Members incorporated in Germany. The existing 
ICE Clear Europe Rules impose certain requirements on all Clearing 
Members with respect to compliance with economic sanctions regimes, 
specifically those imposed by the European Union, the United Kingdom, 
the United States and the United Nations Security Council. These 
requirements include representations by Clearing Members that they 
would not be prevented from entering into any cleared contract or from 
using the Clearing House under such sanctions regimes, and that they 
are in compliance with requirements under such regimes relating to due 
diligence in respect of their customers in any cleared transactions.
    Clearing Members that are incorporated in Germany (``German 
Clearing Members'') have expressed concern to ICE Clear Europe that 
these requirements under the Rules may potentially be inconsistent with 
the anti-boycott provisions in Section 7 of the German Foreign Trade 
Ordinance (Au[szlig]enwirtschaftsverordnung) (the ``anti-boycott 
ordinance''), which generally prevents German persons from 
participating in so-called foreign boycotts. German Clearing Members 
have noted the view that contractual provisions that require them to 
comply with economic sanctions that are imposed by a jurisdiction other 
than Germany, the EU or the UN Security Council may, at least as a 
theoretical matter, conflict with the anti-boycott ordinance. This 
potential conflict may apply to sanctions imposed by the United States 
or the United Kingdom that are not also imposed by the EU or UN 
Security Council.
    To avoid this potential conflict, ICE Clear Europe is proposing to 
amend its Clearing Rules to provide exceptions to certain of the 
representations and undertakings for German Clearing Members, to the 
extent the representation or undertaking would be in conflict with the 
anti-boycott ordinance. Instead, such German Clearing Members would be 
required to provide notice to the Clearing House at least 30 days in 
advance of any transaction (including a customer transaction) that 
would otherwise violate such a representation or undertaking. In such 
case, ICE Clear Europe would as an operational and compliance matter 
continue to evaluate whether the transaction or activity would be 
subject to or restricted under any applicable sanctions regime or 
restriction (including those of the United States and United Kingdom). 
If so, ICE Clear Europe would be entitled, as it determined to be 
appropriate, to use one of its existing authorities under the Clearing 
Rules, including potentially under Rules 104, 404 and Parts 2 and 6 
depending on the circumstances, to avoid or decline to clear the 
transaction or impose a position limit preventing the transaction from 
being effective even if submitted. The amendments only relate to German 
Clearing Members that are CDS Clearing Members in connection with their 
CDS clearing activity; they do not apply to Clearing Members organized 
in other jurisdictions or to other products cleared by German Clearing 
Members.\5\
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    \5\ Following prior consultations with Clearing Members, ICE 
Clear Europe is considering other potential changes to its Rules 
relating to sanctions. The proposed rule changes in this filing are 
intended to address only a specific issue identified by German 
Clearing Members.
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    The changes are thus intended to avoid placing German CDS Clearing 
Members in a situation where they face a potential conflict between the 
Clearing Rules as they relate to non-German sanctions regimes and the 
anti-boycott ordinance, while at the same time allowing ICE Clear 
Europe itself to maintain compliance with all applicable sanctions 
regimes, including those of the United States and the United Kingdom. 
The making of these changes is regarded as important by German market 
participants particularly in relation to CDS clearing, which is subject 
to a clearing mandate under the European Market Infrastructure 
Regulation (EMIR),\6\ effective from February 2017. The so-called 
``frontloading window'' for mandatory clearing of CDS has already 
commenced and based on communications with Clearing Members, ICE Clear 
Europe understands that market participants regard it as important that 
there be certainty that CDS transactions executed today by German 
users, which will later be required to be cleared, can be capable of 
being cleared in compliance with applicable laws.
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    \6\ Regulation (EU) No 648/2012 of the European Parliament and 
of the Council of 4 July 2012 on OTC derivatives, central 
counterparties and trade repositories, as well as various 
implementing regulations and technical standards.

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[[Page 90892]]

    The proposed amendments to the Rules are described in more detail 
as follows:
    In Rule 101, a new definition of ``Sanction'' has been added, which 
largely tracks existing references in the Rules to economic sanctions 
regulations and restrictions imposed by the EU, United Kingdom, United 
States or UN Security Council.
    In Rule 201(a), which contains a representation that the Clearing 
Member will not be prevented from entering into a contract or using the 
Clearing House as a result of prohibition or restriction under an 
economic sanction regime, paragraph (xxxiv) has been amended to provide 
the exception described above for German CDS Clearing Members, solely 
in respect of their CDS business, and solely to the extent that the 
representation would conflict with applicable laws purporting to 
nullify or restrict the effect of foreign sanctions or preventing 
boycotts (the ``anti-boycott exception''). It has also been modified to 
use the new defined term Sanction.
    In Rule 203(a), a new paragraph (xxi) has been added, which 
requires a German CDS Clearing Member (or any Clearing Member dealing 
with a customer incorporated in Germany) to provide at least 30 days' 
notice before entering into a transaction that would breach applicable 
representations or undertakings in the Rules relating to Sanctions, but 
for the anti-boycott exception.
    Similar provisions have been added in new paragraphs (xiv) and (xv) 
of Rule 204(a), which requires Clearing Members to provide certain 
notices to the Clearing House. Paragraph (xiv) requires that a German 
CDS Clearing Member provide notice if any UK or US Sanctions would, if 
they were applicable, prevent the German CDS Clearing Member from 
entering into a cleared contract or using the Clearing House in 
circumstances in which neither EU Sanctions nor UN Security Council 
Sanctions would impose such restriction. Similarly, paragraph (xv) 
requires that a German CDS Clearing Member (or any Clearing Member for 
a customer incorporated in Germany) provide notice if U.K. or U.S. 
Sanctions would, if they were applicable, restrict or prevent any 
derivatives or spot trading activities involving the customer in 
circumstances in which neither EU Sanctions nor UN Security Council 
Sanctions would impose such restriction. Such notices must be given 30 
days before entering into any such cleared contract.
    Rule 405(a), which establishes certain representations deemed made 
by Clearing Members upon entering into a cleared contract, has been 
revised in paragraph (xi) to use the defined term Sanctions and include 
the anti-boycott exception discussed above.
    In Rule 1901(d), which establishes requirements for being a 
Sponsored Principal, clause (xiii) has been revised (in a manner 
similar to the changes in Rule 201(a) above) to use the defined term 
Sanction and include the anti-boycott exception discussed above.
    In addition, in the form of Standard Terms Annex for CDS 
transactions, paragraph 3(o), which includes representations by the 
customer about compliance with economic sanctions, has been revised to 
use the defined term Sanctions and include an anti-boycott exception 
applicable where the Clearing Member or Customer is located in Germany. 
The other Standard Terms Annexes for F&O and FX include only a 
conforming amendment to use the new defined term Sanction.
(b) Statutory Basis
    ICE Clear Europe believes that the changes described herein are 
consistent with the requirements of Section 17A of the Act \7\ and the 
regulations thereunder applicable to it, and are consistent with the 
prompt and accurate clearance of 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 ICE Clear Europe or for which it is 
responsible and the protection of investors and the public interest, 
within the meaning of Section 17A(b)(3)(F) of the Act.\8\ The 
amendments are intended to resolve a potential inconsistency for German 
Clearing Members between the provisions of the Rules relating to 
sanctions compliance and the German anti-boycott ordinance. Although 
certain responsibilities of German Clearing Members in this regard are 
being modified in light of the German anti-boycott ordinance, the 
amendments impose new notice requirements on such Clearing Members to 
facilitate the identification and review by the Clearing House of 
potential sanctions violations, which would entitle the Clearing House 
may [sic] take any appropriate action under the Rules, as discussed 
above. The amendments will thus facilitate continued compliance by ICE 
Clear Europe with sanctions regimes in all relevant jurisdictions. As 
such, ICE Clear Europe believes that the amendments will further the 
public interest in enforcement of such sanctions. By seeking to avoid a 
potential conflict with German law while maintaining overall 
compliance, the amendments will also further the development of a well-
founded legal framework applicable to German Clearing Members (and 
their customers) in all relevant jurisdictions, within the meaning of 
Rule 17Ad-22(d)(1).\9\ As a result, in ICE Clear Europe's view, the 
amendments are consistent with the requirements of Section 17A of the 
Act.\10\
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    \7\ 15 U.S.C. 78q-1.
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
    \9\ 17 CFR 240.17Ad-22(d)(1). In this regard, ICE Clear Europe 
notes that as a clearing organization that provides services outside 
the United States, it is required to identify and address any 
material conflict of law issues, and be able to demonstrate that its 
rules and procedures are enforceable in all relevant jurisdictions. 
See 17 CFR 39.27(c); see also recently adopted Commission Rule 17Ad-
22(e)(1) and related guidance in Exchange Act Release No. 34-78961 
(Sept. 28, 2016).
    \10\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed changes to the rules 
would have any impact, or impose any burden, on competition not 
necessary or appropriate in furtherance of the purpose of the Act. ICE 
Clear Europe is adopting amendments to the Clearing Rules intended to 
address certain potential compliance issues for German Clearing Members 
relating to different economic sanctions regimes. The amendments do not 
affect other Clearing Members, and are tailored to address a particular 
concern under the German anti-boycott ordinance that may affect the 
ability of German Clearing Members to comply with certain requirements 
under the Rules. ICE Clear Europe does not believe that these changes 
will impose any significant additional costs on Clearing Members or 
other market participants. ICE Clear Europe also does not believe the 
amendments will adversely affect access to clearing by Clearing Members 
or their customers or otherwise adversely affect Clearing Members or 
market participants.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    ICE Clear Europe has previously conducted a public consultation 
with respect to a series of amendments relating to economic sanctions 
matters.\11\ That consultation included a prior version of the 
provisions addressing the German anti-boycott ordinance issue that are 
the subject of this proposed rule change. Although a number of comments 
were received in that consultation generally (which ICE

[[Page 90893]]

Clear Europe continues to consider), no material comments were received 
on the provisions relating to the German anti-boycott ordinance. ICE 
Clear Europe has commenced a further public consultation relating to 
the proposed changes to the Rules discussed here. ICE Clear Europe will 
notify the Commission of any written comments received by ICE Clear 
Europe.
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    \11\ See ICE Clear Europe Circular C16/099.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A) \12\ of the Act and Rule 19b-4(f)(4)(i) \13\ 
thereunder because it effects a change in an existing service of a 
registered clearing agency that does not adversely affect the 
safeguarding of securities or funds in the custody or control of the 
clearing agency or for which it is responsible, and does not 
significantly affect the respective rights or obligations of the 
clearing agency or persons using its clearing service, within the 
meaning of Rule 19b-4(f)(4)(i). At any time within 60 days of the 
filing of the proposed rule change, the Commission summarily may 
temporarily suspend such rule change if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(4) [sic].
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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 rule-comments@sec.gov. Please include 
File Number SR-ICEEU-2016-014 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-2016-014. 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 Web site (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 Web site viewing and 
printing in the Commission's Public Reference Section, 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 Web site at https://www.theice.com/clear-europe/regulation#rule-filings.
    All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-ICEEU-2016-014 
and should be submitted on or before January 5, 2017.

    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-30080 Filed 12-14-16; 8:45 am]
BILLING CODE 8011-01-P
Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Notices 90891

SECURITIES AND EXCHANGE (A) Self-Regulatory Organization’s transaction) that would otherwise
COMMISSION Statement of the Purpose of, and violate such a representation or
Statutory Basis for, the Proposed Rule undertaking. In such case, ICE Clear
[Release No. 34–79516; File No. SR–ICEEU– Change Europe would as an operational and
2016–014] (a) Purpose compliance matter continue to evaluate
whether the transaction or activity
The purpose of the rule amendments would be subject to or restricted under
Self-Regulatory Organizations; ICE
is to modify the ICE Clear Europe any applicable sanctions regime or
Clear Europe Limited; Notice of Filing
Clearing Rules to revise the application restriction (including those of the
and Immediate Effectiveness of a of certain provisions related to
Proposed Rule Change Relating to the United States and United Kingdom). If
economic sanctions compliance by CDS
Clearing Rules Regarding German CDS so, ICE Clear Europe would be entitled,
Clearing Members and Customers of
Clearing Members as it determined to be appropriate, to
CDS Clearing Members incorporated in
use one of its existing authorities under
December 9, 2016.
Germany. The existing ICE Clear Europe
Rules impose certain requirements on the Clearing Rules, including potentially
Pursuant to Section 19(b)(1) of the all Clearing Members with respect to under Rules 104, 404 and Parts 2 and 6
Securities Exchange Act of 1934 compliance with economic sanctions depending on the circumstances, to
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 regimes, specifically those imposed by avoid or decline to clear the transaction
notice is hereby given that on November the European Union, the United or impose a position limit preventing
25, 2016, ICE Clear Europe Limited Kingdom, the United States and the the transaction from being effective even
(‘‘ICE Clear Europe’’ or ‘‘Clearing United Nations Security Council. These if submitted. The amendments only
House’’) filed with the Securities and requirements include representations by relate to German Clearing Members that
Clearing Members that they would not are CDS Clearing Members in
Exchange Commission (‘‘Commission’’)
be prevented from entering into any connection with their CDS clearing
the proposed rule changes described in
cleared contract or from using the activity; they do not apply to Clearing
Items I, II and III below, which Items
Clearing House under such sanctions Members organized in other
have been primarily prepared by ICE jurisdictions or to other products
Clear Europe. ICE Clear Europe filed the regimes, and that they are in compliance
with requirements under such regimes cleared by German Clearing Members.5
proposed rule changes pursuant to
relating to due diligence in respect of The changes are thus intended to
Section 19(b)(3)(A) of the Act 3 and Rule
their customers in any cleared avoid placing German CDS Clearing
19b–4(f)(4)(i) 4 thereunder, so that the transactions.
proposal was effective upon filing with Members in a situation where they face
Clearing Members that are a potential conflict between the Clearing
the Commission. The Commission is incorporated in Germany (‘‘German Rules as they relate to non-German
publishing this notice to solicit Clearing Members’’) have expressed sanctions regimes and the anti-boycott
comments on the proposed rule change concern to ICE Clear Europe that these ordinance, while at the same time
from interested persons. requirements under the Rules may allowing ICE Clear Europe itself to
potentially be inconsistent with the maintain compliance with all applicable
I. Self-Regulatory Organization’s
anti-boycott provisions in Section 7 of sanctions regimes, including those of
Statement of the Terms of Substance of
the German Foreign Trade Ordinance the United States and the United
the Proposed Rule Change (Au+enwirtschaftsverordnung) (the Kingdom. The making of these changes
The principal purpose of the changes ‘‘anti-boycott ordinance’’), which
is regarded as important by German
is to modify the ICE Clear Europe generally prevents German persons from
market participants particularly in
Clearing Rules (‘‘Clearing Rules’’) to participating in so-called foreign
relation to CDS clearing, which is
boycotts. German Clearing Members
clarify the application of economic subject to a clearing mandate under the
have noted the view that contractual
sanctions compliance provisions to European Market Infrastructure
provisions that require them to comply
German CDS Clearing Members, as with economic sanctions that are Regulation (EMIR),6 effective from
described herein. imposed by a jurisdiction other than February 2017. The so-called
Germany, the EU or the UN Security ‘‘frontloading window’’ for mandatory
II. Self-Regulatory Organization’s clearing of CDS has already commenced
Statement of the Purpose of, and Council may, at least as a theoretical
matter, conflict with the anti-boycott and based on communications with
Statutory Basis for, the Proposed Rule Clearing Members, ICE Clear Europe
Change ordinance. This potential conflict may
apply to sanctions imposed by the understands that market participants
In its filing with the Commission, ICE United States or the United Kingdom regard it as important that there be
Clear Europe included statements that are not also imposed by the EU or certainty that CDS transactions executed
UN Security Council. today by German users, which will later
concerning the purpose of and basis for
To avoid this potential conflict, ICE be required to be cleared, can be capable
the proposed rule change. The text of
Clear Europe is proposing to amend its of being cleared in compliance with
these statements may be examined at
Clearing Rules to provide exceptions to applicable laws.
the places specified in Item IV below.
ICE Clear Europe has prepared certain of the representations and
summaries, set forth in sections (A), (B), undertakings for German Clearing 5 Following prior consultations with Clearing

Members, to the extent the Members, ICE Clear Europe is considering other
and (C) below, of the most significant
rmajette on DSK2TPTVN1PROD with NOTICES

potential changes to its Rules relating to sanctions.
representation or undertaking would be The proposed rule changes in this filing are
aspects of such statements.
in conflict with the anti-boycott intended to address only a specific issue identified
ordinance. Instead, such German by German Clearing Members.
6 Regulation (EU) No 648/2012 of the European
1 15 U.S.C. 78s(b)(1). Clearing Members would be required to
Parliament and of the Council of 4 July 2012 on
2 17 CFR 240.19b–4. provide notice to the Clearing House at OTC derivatives, central counterparties and trade
3 15 U.S.C. 78s(b)(3)(A). least 30 days in advance of any repositories, as well as various implementing
4 17 CFR 240.19b–4(f)(4)(i). transaction (including a customer regulations and technical standards.

VerDate Sep<11>2014 15:19 Dec 14, 2016 Jkt 241001 PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 E:\FR\FM\15DEN1.SGM 15DEN1
90892 Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Notices

The proposed amendments to the cleared contract, has been revised in potential conflict with German law
Rules are described in more detail as paragraph (xi) to use the defined term while maintaining overall compliance,
follows: Sanctions and include the anti-boycott the amendments will also further the
In Rule 101, a new definition of exception discussed above. development of a well-founded legal
‘‘Sanction’’ has been added, which In Rule 1901(d), which establishes framework applicable to German
largely tracks existing references in the requirements for being a Sponsored Clearing Members (and their customers)
Rules to economic sanctions regulations Principal, clause (xiii) has been revised in all relevant jurisdictions, within the
and restrictions imposed by the EU, (in a manner similar to the changes in meaning of Rule 17Ad–22(d)(1).9 As a
United Kingdom, United States or UN Rule 201(a) above) to use the defined result, in ICE Clear Europe’s view, the
Security Council. term Sanction and include the anti- amendments are consistent with the
In Rule 201(a), which contains a boycott exception discussed above. requirements of Section 17A of the
representation that the Clearing Member In addition, in the form of Standard Act.10
will not be prevented from entering into Terms Annex for CDS transactions,
a contract or using the Clearing House paragraph 3(o), which includes (B) Self-Regulatory Organization’s
as a result of prohibition or restriction representations by the customer about Statement on Burden on Competition
under an economic sanction regime, compliance with economic sanctions, ICE Clear Europe does not believe the
paragraph (xxxiv) has been amended to has been revised to use the defined term proposed changes to the rules would
provide the exception described above Sanctions and include an anti-boycott have any impact, or impose any burden,
for German CDS Clearing Members, exception applicable where the Clearing on competition not necessary or
solely in respect of their CDS business, Member or Customer is located in appropriate in furtherance of the
and solely to the extent that the Germany. The other Standard Terms purpose of the Act. ICE Clear Europe is
representation would conflict with Annexes for F&O and FX include only adopting amendments to the Clearing
applicable laws purporting to nullify or a conforming amendment to use the Rules intended to address certain
restrict the effect of foreign sanctions or new defined term Sanction. potential compliance issues for German
preventing boycotts (the ‘‘anti-boycott Clearing Members relating to different
(b) Statutory Basis
exception’’). It has also been modified to economic sanctions regimes. The
use the new defined term Sanction. ICE Clear Europe believes that the amendments do not affect other Clearing
In Rule 203(a), a new paragraph (xxi) changes described herein are consistent Members, and are tailored to address a
has been added, which requires a with the requirements of Section 17A of particular concern under the German
German CDS Clearing Member (or any the Act 7 and the regulations thereunder anti-boycott ordinance that may affect
Clearing Member dealing with a applicable to it, and are consistent with the ability of German Clearing Members
customer incorporated in Germany) to the prompt and accurate clearance of to comply with certain requirements
provide at least 30 days’ notice before and settlement of securities transactions under the Rules. ICE Clear Europe does
entering into a transaction that would and, to the extent applicable, derivative not believe that these changes will
breach applicable representations or agreements, contracts and transactions, impose any significant additional costs
undertakings in the Rules relating to the safeguarding of securities and funds on Clearing Members or other market
Sanctions, but for the anti-boycott in the custody or control of ICE Clear participants. ICE Clear Europe also does
exception. Europe or for which it is responsible not believe the amendments will
Similar provisions have been added and the protection of investors and the adversely affect access to clearing by
in new paragraphs (xiv) and (xv) of Rule public interest, within the meaning of Clearing Members or their customers or
204(a), which requires Clearing Section 17A(b)(3)(F) of the Act.8 The otherwise adversely affect Clearing
Members to provide certain notices to amendments are intended to resolve a Members or market participants.
the Clearing House. Paragraph (xiv) potential inconsistency for German
requires that a German CDS Clearing Clearing Members between the (C) Self-Regulatory Organization’s
Member provide notice if any UK or US provisions of the Rules relating to Statement on Comments on the
Sanctions would, if they were sanctions compliance and the German Proposed Rule Change Received From
applicable, prevent the German CDS anti-boycott ordinance. Although Members, Participants or Others
Clearing Member from entering into a certain responsibilities of German ICE Clear Europe has previously
cleared contract or using the Clearing Clearing Members in this regard are conducted a public consultation with
House in circumstances in which being modified in light of the German respect to a series of amendments
neither EU Sanctions nor UN Security anti-boycott ordinance, the amendments relating to economic sanctions
Council Sanctions would impose such impose new notice requirements on matters.11 That consultation included a
restriction. Similarly, paragraph (xv) such Clearing Members to facilitate the prior version of the provisions
requires that a German CDS Clearing identification and review by the addressing the German anti-boycott
Member (or any Clearing Member for a Clearing House of potential sanctions ordinance issue that are the subject of
customer incorporated in Germany) violations, which would entitle the this proposed rule change. Although a
provide notice if U.K. or U.S. Sanctions Clearing House may [sic] take any number of comments were received in
would, if they were applicable, restrict appropriate action under the Rules, as that consultation generally (which ICE
or prevent any derivatives or spot discussed above. The amendments will
trading activities involving the customer thus facilitate continued compliance by 9 17 CFR 240.17Ad–22(d)(1). In this regard, ICE

in circumstances in which neither EU Clear Europe notes that as a clearing organization
ICE Clear Europe with sanctions regimes that provides services outside the United States, it
Sanctions nor UN Security Council in all relevant jurisdictions. As such,
rmajette on DSK2TPTVN1PROD with NOTICES

is required to identify and address any material
Sanctions would impose such ICE Clear Europe believes that the conflict of law issues, and be able to demonstrate
restriction. Such notices must be given amendments will further the public that its rules and procedures are enforceable in all
30 days before entering into any such relevant jurisdictions. See 17 CFR 39.27(c); see also
interest in enforcement of such recently adopted Commission Rule 17Ad–22(e)(1)
cleared contract. sanctions. By seeking to avoid a and related guidance in Exchange Act Release No.
Rule 405(a), which establishes certain 34–78961 (Sept. 28, 2016).
representations deemed made by 7 15 U.S.C. 78q–1. 10 15 U.S.C. 78q–1.

Clearing Members upon entering into a 8 15 U.S.C. 78q–1(b)(3)(F). 11 See ICE Clear Europe Circular C16/099.

VerDate Sep<11>2014 15:19 Dec 14, 2016 Jkt 241001 PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 E:\FR\FM\15DEN1.SGM 15DEN1
Document Created: 2016-12-15 01:10:29
Document Modified: 2016-12-15 01:10:29
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 90891