82 FR 16244 - Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change To Revise Liquidity Thresholds for Euro Denominated Products

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 62 (April 3, 2017)

Page Range		16244-16245
FR Document		2017-06440
Federal Register, Volume 82 Issue 62 (Monday, April 3, 2017)
[Federal Register Volume 82, Number 62 (Monday, April 3, 2017)]
[Notices]
[Pages 16244-16245]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-06440]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80324; File No. SR-ICC-2017-002]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change To Revise Liquidity Thresholds for Euro 
Denominated Products

March 28, 2017.

I. Introduction

    On January 27, 2017, 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-2017-002) 
to amend the ICC Clearing Rules, the ICC Treasury Operations Policies 
and Procedures and the ICC Liquidity Risk Management Framework to 
update ICC's liquidity thresholds for non-client Euro denominated 
products. The proposed rule change was published for comment in the 
Federal Register on February 14, 2017.\3\ The Commission received no 
comment letters regarding the proposed 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. 34-79988 (February 8, 
2017), 82 FR 10611 (February 14, 2017) (SR-ICC-2017-002) 
(``Notice'').
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II. Description of the Proposed Rule Change

    ICC has proposed changes to Schedule 401 of its Clearing Rules, 
Treasury Operations Policies and Procedures and Liquidity Risk 
Management Framework. The proposed changes will reduce Clearing 
Participants' Non-Client Initial Margin and Guaranty Fund Liquidity 
Requirements (``Non-Client Liquidity Requirements'') for products 
denominated in Euros from 65% Euro cash to 45% Euro cash.\4\ The 
proposed rule change further gives Clearing Participants the option of 
posting the next 20% of Non-Client Liquidity Requirements for these 
products in either Euro or US Dollar cash. The proposed rule change 
does not alter Clearing Participants' existing ability to post the 
final 35% of their Non-Client Liquidity requirements in US Treasuries 
or cash issued by any G7 nation.
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    \4\ Capitalized terms used in this order, but not defined 
herein, have the same meaning as in the ICC Clearing Rules.
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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 it 
finds that such proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such organization. Section 17A(b)(3)(F) of the Act 
requires,\6\ among other things, that the rules of a registered 
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. Rule 17Ad-22(d)(3) \7\ requires that a registered clearing 
agency shall establish, implement, maintain, and enforce written 
policies and procedures reasonably designed to hold assets in a manner 
that minimizes risk of loss or of delay in its access to them.
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    \5\ 15 U.S.C. 78s(b)(2)(C).
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
    \7\ 17 CFR 240.17Ad-22(d)(3).
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    The Commission finds that the proposed rule change, which adjusts 
the amount of Euro cash required in respect of non-client Euro 
denominated products, is consistent with Section 17A of the Act and 
Rule 17Ad-22 thereunder. The proposed rule change should not impact 
ICC's access to liquidity in the event of a clearing participant's 
default. ICC represented that ``the 45% minimum percentage requirement 
is equivalent to the maximum assumed one day movement in Initial Margin 
(assuming a 5-day risk horizon).'' \8\ Moreover, if additional Euro 
cash is needed, ICC asserts that it can rely on its committed foreign 
exchange facility for settled spot dollar-to-Euro foreign exchange 
transactions.\9\ Accordingly, because there is unlikely to be a 
diminution in ICC's ability to meet its obligations, this proposed rule 
change is consistent with the prompt and accurate clearance and 
settlement requirement of Section 17A(b)(3)(F) of the Act.\10\
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    \8\ Notice, 82 FR at 10612.
    \9\ Id.
    \10\ 15 U.S.C. 78q-1(b)(3)(F).
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    The proposed rule change also is consistent with the requirements 
in Section 17A(b)(3)(F) and Rule 17Ad-22(d)(3) that assets of a 
clearinghouse be safeguarded. As noted above, the proposed rule change 
now permits ICC's Clearing Participants to post an additional 20% of 
their Non-Client Liquidity Requirements in US Dollars. ICC in turn has 
represented that ``to the extent possible, ICC deposits US Dollar cash 
in its account at the Federal Reserve Bank of Chicago.'' \11\ Thus, 
giving ICC's Clearing Participants the option to post additional US 
Dollar cash, which may result in an increased amount of funds on 
deposit with a Federal Reserve Bank should further assure the 
safeguarding of those funds and minimize the risk of loss or delay in 
access to those funds, consistent with Section 17A(b)(3)(F) of the 
Act,\12\ and Rule 17Ad-22(d)(3).\13\
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    \11\ Notice, 82 FR at 10612.
    \12\ 15 U.S.C. 78q-1(b)(3)(F).
    \13\ 17 U.S.C. 240.17Ad-22(d)(3).
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IV. Conclusion

    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
that the proposed rule change (SR-ICC-2017-002) be, and hereby is, 
approved.\14\
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    \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).


[[Page 16245]]


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    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. 2017-06440 Filed 3-31-17; 8:45 am]
 BILLING CODE 8011-01-P
16244 Federal Register / Vol. 82, No. 62 / Monday, April 3, 2017 / Notices

POSTAL SERVICE 2017.3 The Commission received no manner that minimizes risk of loss or of
comment letters regarding the proposed delay in its access to them.
Product Change—Priority Mail change. For the reasons discussed The Commission finds that the
Negotiated Service Agreement below, the Commission is approving the proposed rule change, which adjusts the
proposed rule change. amount of Euro cash required in respect
AGENCY: Postal ServiceTM.
ACTION: Notice. II. Description of the Proposed Rule of non-client Euro denominated
Change products, is consistent with Section 17A
SUMMARY: The Postal Service gives of the Act and Rule 17Ad–22
notice of filing a request with the Postal ICC has proposed changes to thereunder. The proposed rule change
Regulatory Commission to add a Schedule 401 of its Clearing Rules, should not impact ICC’s access to
domestic shipping services contract to Treasury Operations Policies and liquidity in the event of a clearing
the list of Negotiated Service Procedures and Liquidity Risk participant’s default. ICC represented
Agreements in the Mail Classification Management Framework. The proposed that ‘‘the 45% minimum percentage
Schedule’s Competitive Products List. changes will reduce Clearing requirement is equivalent to the
DATES: Effective date: April 3, 2017. Participants’ Non-Client Initial Margin maximum assumed one day movement
and Guaranty Fund Liquidity in Initial Margin (assuming a 5-day risk
FOR FURTHER INFORMATION CONTACT:
Requirements (‘‘Non-Client Liquidity horizon).’’ 8 Moreover, if additional Euro
Elizabeth A. Reed, 202–268–3179.
Requirements’’) for products cash is needed, ICC asserts that it can
SUPPLEMENTARY INFORMATION: The denominated in Euros from 65% Euro
United States Postal Service® hereby rely on its committed foreign exchange
cash to 45% Euro cash.4 The proposed facility for settled spot dollar-to-Euro
gives notice that, pursuant to 39 U.S.C. rule change further gives Clearing
3642 and 3632(b)(3), on March 27, 2017, foreign exchange transactions.9
Participants the option of posting the Accordingly, because there is unlikely
it filed with the Postal Regulatory next 20% of Non-Client Liquidity
Commission a Request of the United to be a diminution in ICC’s ability to
Requirements for these products in meet its obligations, this proposed rule
States Postal Service to Add Priority either Euro or US Dollar cash. The
Mail Contract 299 to Competitive change is consistent with the prompt
proposed rule change does not alter and accurate clearance and settlement
Product List. Documents are available at Clearing Participants’ existing ability to
www.prc.gov, Docket Nos. MC2017–100, requirement of Section 17A(b)(3)(F) of
post the final 35% of their Non-Client the Act.10
CP2017–147. Liquidity requirements in US Treasuries
Stanley F. Mires, or cash issued by any G7 nation. The proposed rule change also is
consistent with the requirements in
Attorney, Federal Compliance. III. Discussion and Commission Section 17A(b)(3)(F) and Rule 17Ad–
[FR Doc. 2017–06425 Filed 3–31–17; 8:45 am] Findings 22(d)(3) that assets of a clearinghouse be
BILLING CODE 7710–12–P safeguarded. As noted above, the
Section 19(b)(2)(C) of the Act 5 directs
the Commission to approve a proposed proposed rule change now permits ICC’s
rule change of a self-regulatory Clearing Participants to post an
SECURITIES AND EXCHANGE additional 20% of their Non-Client
COMMISSION organization if it finds that such
proposed rule change is consistent with Liquidity Requirements in US Dollars.
[Release No. 34–80324; File No. SR–ICC– the requirements of the Act and the ICC in turn has represented that ‘‘to the
2017–002] rules and regulations thereunder extent possible, ICC deposits US Dollar
applicable to such organization. Section cash in its account at the Federal
Self-Regulatory Organizations; ICE 17A(b)(3)(F) of the Act requires,6 among Reserve Bank of Chicago.’’ 11 Thus,
Clear Credit LLC; Order Approving other things, that the rules of a giving ICC’s Clearing Participants the
Proposed Rule Change To Revise registered clearing agency be designed option to post additional US Dollar
Liquidity Thresholds for Euro to promote the prompt and accurate cash, which may result in an increased
Denominated Products clearance and settlement of securities amount of funds on deposit with a
transactions and, to the extent Federal Reserve Bank should further
March 28, 2017.
applicable, derivative agreements, assure the safeguarding of those funds
I. Introduction contracts, and transactions, to assure the and minimize the risk of loss or delay
On January 27, 2017, ICE Clear Credit safeguarding of securities and funds in access to those funds, consistent with
LLC (‘‘ICC’’) filed with the Securities which are in the custody or control of Section 17A(b)(3)(F) of the Act,12 and
and Exchange Commission the clearing agency or for which it is Rule 17Ad–22(d)(3).13
(‘‘Commission’’), pursuant to Section responsible and, in general, to protect IV. Conclusion
19(b)(1) of the Securities Exchange Act investors and the public interest. Rule
of 1934 (‘‘Act’’) 1 and Rule 19b–4 17Ad–22(d)(3) 7 requires that a It is therefore ordered pursuant to
thereunder,2 a proposed rule change registered clearing agency shall Section 19(b)(2) of the Act that the
(SR–ICC–2017–002) to amend the ICC establish, implement, maintain, and proposed rule change (SR–ICC–2017–
Clearing Rules, the ICC Treasury enforce written policies and procedures 002) be, and hereby is, approved.14
Operations Policies and Procedures and reasonably designed to hold assets in a
the ICC Liquidity Risk Management 8 Notice, 82 FR at 10612.
mstockstill on DSK3G9T082PROD with NOTICES

Framework to update ICC’s liquidity 3 SecuritiesExchange Act Release No. 34–79988 9 Id.

thresholds for non-client Euro (February 8, 2017), 82 FR 10611 (February 14, 2017) 10 15 U.S.C. 78q–1(b)(3)(F).
(SR–ICC–2017–002) (‘‘Notice’’). 11 Notice, 82 FR at 10612.
denominated products. The proposed 4 Capitalized terms used in this order, but not 12 15 U.S.C. 78q–1(b)(3)(F).
rule change was published for comment defined herein, have the same meaning as in the 13 17 U.S.C. 240.17Ad–22(d)(3).
in the Federal Register on February 14, ICC Clearing Rules. 14 In approving the proposed rule change, the
5 15 U.S.C. 78s(b)(2)(C).
Commission considered the proposal’s impact on
1 15 U.S.C. 78s(b)(1). 6 15 U.S.C. 78q–1(b)(3)(F).
efficiency, competition, and capital formation. 15
2 17 CFR 240.19b–4. 7 17 CFR 240.17Ad–22(d)(3). U.S.C. 78c(f).

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Federal Register / Vol. 82, No. 62 / Monday, April 3, 2017 / Notices 16245

For the Commission by the Division of II. Self-Regulatory Organization’s The Filer Form has three main
Trading and Markets, pursuant to delegated Statement of the Purpose of, and components: (1) The ‘‘Participating
authority.15 Statutory Basis for, the Proposed Rule Member Information’’ section, which
Brent J. Fields, Change seeks information about the members
Secretary. that are selling the private placement;
In its filing with the Commission,
[FR Doc. 2017–06440 Filed 3–31–17; 8:45 am]
FINRA included statements concerning (2) the ‘‘Issuer Information’’ section,
BILLING CODE 8011–01–P
the purpose of and basis for the which captures basic information about
proposed rule change and discussed any the issuer; and (3) the ‘‘Offering
comments it received on the proposed Information’’ section, which seeks
SECURITIES AND EXCHANGE information about the offering. FINRA
COMMISSION rule change. The text of these statements
may be examined at the places specified proposes changes to the Filer Form that
[Release No. 34–80321; File No. SR–FINRA– in Item IV below. FINRA has prepared will add, clarify and eliminate questions
2017–008] summaries, set forth in sections A, B, or other information requested in each
and C below, of the most significant section. Members may respond
Self-Regulatory Organizations; ‘‘unknown’’ for all new requests for
aspects of such statements.
Financial Industry Regulatory information. Therefore, the Filer Form,
Authority, Inc.; Notice of Filing and A. Self-Regulatory Organization’s as proposed to be modified, would not
Immediate Effectiveness of a Proposed Statement of the Purpose of, and impose any new obligation on broker-
Rule Change Relating to the Private Statutory Basis for, the Proposed Rule dealers to seek out information that they
Placement Filer Form Under FINRA Change do not already have. FINRA describes
Rules 5122 and 5123 these proposed changes below.
1. Purpose
The Participating Member section of
March 28, 2017. Rules 5122 and 5123 require a FINRA the Filer Form would add questions
Pursuant to Section 19(b)(1) of the member to file information regarding regarding whether the member making
Securities Exchange Act of 1934 private placements in which the the filing (‘‘filing member’’) is the
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 member participates.5 When Rule 5123 exclusive selling agent in the private
notice is hereby given that on March 17, became effective on December 3, 2012,6 placement and whether there is any
2017, Financial Industry Regulatory FINRA required members to use the affiliation between the issuer or sponsor
Authority, Inc. (‘‘FINRA’’) filed with the Filer Form for filings under both rules.7 of the private placement with any
Securities and Exchange Commission Members submit the Filer Form and member participating in the offering
(‘‘SEC’’ or ‘‘Commission’’) the proposed relevant offering documents to FINRA upon whose behalf the filing member is
rule change as described in Items I, II, through the FINRA Firm Gateway.8 On submitting the Filer Form. This section
and III below, which Items have been July 1, 2013, FINRA amended Rule 5123 would no longer require the title and
prepared by FINRA. FINRA has to require members to file the requisite email address for the contact person of
designated the proposed rule change as information ‘‘in a manner prescribed by the filing member or the contact name,
constituting a ‘‘non-controversial’’ rule FINRA’’ and also began using an title and telephone number for other
change under paragraph (f)(6) of Rule updated version of the Filer Form.9 The members identified in the filing.
19b–4 under the Act,3 which renders changes proposed herein would further The Issuer Information section of the
the proposal effective upon receipt of update the version of the Filer Form that Filer Form would add a question asking
this filing by the Commission. The has been in use since 2013 for filings whether the issuer is a reporting
Commission is publishing this notice to made pursuant to Rule 5122 and Rule company. This section would no longer
solicit comments on the proposed rule 5123. require the filing member to enter the
change from interested persons.4
name, title and email address of the
I. Self-Regulatory Organization’s 5 Both Rules 5122 and 5123 provide exemptions
issuer’s contact person.
Statement of the Terms of Substance of from the filing requirement when certain types of The Offering Information section
securities are sold or securities are sold to certain
the Proposed Rule Change types of investors. See Rules 5122(c) and 5123(b). would add questions regarding:
FINRA is proposing changes to the 6 See Securities Exchange Act Release No. 67157 • The type of security the issuer is
Private Placement Filer Form (‘‘Filer (June 7, 2012), 77 FR 35457 (June 13, 2012) (Notice offering;
of Filing of Amendments No. 2 and No. 3 and Order • whether the issuer raised capital
Form’’) that members complete when Granting Accelerated Approval of File No. SR– within the preceding 12 months from
submitting private placement filings FINRA–2011–057); Regulatory Notice 12–40
(September 2012). any source (excluding loans or
under FINRA Rules 5122 (Private
7 See Regulatory Notice 12–40 (September 2012). investments by affiliates);
Placements of Securities Issued by
See also Regulatory Notice 13–26 (August 2013); • minimum investment amount that
Members) or 5123 (Private Placements Securities Exchange Act Release No. 69843 (June the issuer will accept and whether the
of Securities). The proposal does not 25, 2013), 78 FR 39367 (July 1, 2013) (Notice of
issuer can waive that minimum;
make any changes to the text of FINRA Filing and Immediate Effectiveness of a Proposed
Rule Change Relating to Members’ Filing • whether the filing member sold or
rules.
Obligations under FINRA Rule 5123 (Private will sell the offering to any non-
15 17
Placements of Securities) File No. SR–FINRA– accredited investors;
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2013–026).
8 FINRA Firm Gateway is an online compliance
• the exemption from the Securities
2 17 CFR 240.19b–4.
tool that provides consolidated access to FINRA
Act of 1933 that the issuer is relying
3 17 CFR 240.19b–4(f)(6). FINRA has given the applications and allows members to submit upon; 10 and
mstockstill on DSK3G9T082PROD with NOTICES

Commission written notice of its intent to file the required filings electronically to meet their
proposed rule change at least five business days compliance and regulatory obligations. 10 FINRA notes that one of the exemptions listed
prior to the date of filing of the proposed rule 9 See Securities Exchange Act Release No. 69843 on the Filer Form is Rule 505 of Regulation D. The
change, or such shorter time as designated by the (June 25, 2013), 78 FR 39367 (July 1, 2013) (Notice SEC has recently repealed Rule 505, with a stated
Commission. of Filing and Immediate Effectiveness of a Proposed effective date of May 22, 2017, in connection with
4 The text of the proposed rule change is available Rule Change Relating to Members’ Filing its amendments to exemptions to facilitate
at the principal office of FINRA, on FINRA’s Web Obligations under FINRA Rule 5123 (Private intrastate and regional securities offerings. See
site at http://www.finra.org, and at the Placements of Securities) File No. SR–FINRA– Securities Exchange Act Release No. 79161, 81 FR
Commission’s Public Reference Room. 2013–026). Continued

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Document Created: 2017-04-01 09:36:32
Document Modified: 2017-04-01 09:36:32
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		82 FR 16244