82 FR 28919 - Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing of Amendment No. 1 and Order Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to ICE Clear Europe's End-of-Day Price Discovery Policy

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 121 (June 26, 2017)

Page Range		28919-28920
FR Document		2017-13231
Federal Register, Volume 82 Issue 121 (Monday, June 26, 2017)
[Federal Register Volume 82, Number 121 (Monday, June 26, 2017)]
[Notices]
[Pages 28919-28920]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-13231]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80978; File No. SR-ICEEU-2017-003]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of Amendment No. 1 and Order Approving Proposed Rule Change, 
as Modified by Amendment No. 1 Thereto, Relating to ICE Clear Europe's 
End-of-Day Price Discovery Policy

June 20, 2017.

I. Introduction

    On March 10, 2017, ICE Clear Europe Limited (``ICE Clear Europe'') 
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-
ICEEU-2017-003) to amend ICE Clear Europe's CDS End-of-Day Price 
Discovery Policy (``EOD Price Discovery Policy'') to implement a new 
price submission process for Clearing Members. The proposed rule change 
was published for comment in the Federal Register on March 23, 2017.\3\ 
The Commission did not receive comments regarding the proposed changes. 
On May 1, 2017, the Commission extended the period in which to approve, 
disapprove, or institute proceedings to determine whether to disapprove 
the proposed rule change to June 21, 2017.\4\ On June 9, 2017, ICE 
Clear Europe filed Amendment No. 1 to the proposal.\5\ For the reasons 
discussed below, the Commission is approving the proposed rule changes, 
as modified by Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-80269 (March 17, 
2017), 82 FR 14925 (March 23, 2017) (SR-ICEEU-2017-003) 
(``Notice'').
    \4\ Securities Exchange Act Release No. 34-80566 (May 1, 2017), 
82 FR 21287 (May 5, 2017).
    \5\ ICE Clear Europe filed Amendment No. 1 to clarify that the 
implementation date for the proposed rule change will be July 10, 
2017, and to note that ICE Clear Europe will issue a circular 
confirming this timeline in advance of the July 10, 2017 
implementation date. Because Amendment No. 1 is a clarifying 
amendment that does not alter the substance of the propose rule 
change the Commission is not publishing it for comment.
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II. Description of the Proposed Rule Change

    ICE Clear Europe has proposed changes to its EOD Price Discovery 
Policy that are designed to implement a new price submission process. 
As part of its current price submission process, ICE Clear Europe 
requires Clearing Members to submit certain required price information 
to an intermediary, which ICE Clear Europe then obtains and uses as 
part of its price discovery process. The proposed rule changes would 
eliminate the use of the intermediary in the price submission process 
and instead require Clearing Members to submit required price 
information directly to ICE Clear Europe. In order to implement the 
direct price submission process, ICE Clear Europe proposed to amend its 
EOD Price Discovery Policy to (1) require Clearing Members establish 
direct connectivity with ICE Clear Europe and use a FIX API to provide 
ICE Clear Europe with the required price information, (2) add 
references to FIX API terminology, and (3) make revisions reflecting 
the replacement of existing trade date files with FIX API firm trade 
messages.\6\ Moreover, ICE Clear Europe proposed amending the Pricing 
Policy to note that ICE Clear Europe will send FIX API messages 
directly to Clearing Members, and to remove references to the 
intermediary and its ``Valuation Service API'' that ICE Clear Europe 
previously used.\7\ Although ICE Clear Europe proposed additional minor 
changes to the timing of various steps in the pricing process, these 
proposed changes would not affect the actual settlement submission 
windows.\8\
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    \6\ Notice, 82 FR at 14925.
    \7\ Id.
    \8\ Id.
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    In addition to the changes described above, ICE Clear Europe also 
proposed changes with respect to the format of information required to 
be submitted by Clearing Members for the CDX.NA.HY index. Moreover, ICE 
Clear Europe proposed modifications to the process for distributing 
end-of-day prices, which will result in ICE Clear Europe publishing 
separate messages setting forth end-of-day price information for single 
name and index CDS to Clearing Members.\9\
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    \9\ Id.

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[[Page 28920]]

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act directs the Commission to approve a 
propose 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.\10\ Section 17A(b)(3)(F) of the Act requires, 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.\11\ Rule 17Ad-22(e)(17) requires, in 
relevant part, that a registered clearing agency establish, implement, 
maintain, and enforce written policies and procedures reasonably 
designed to manage the covered clearing agency's operational risk by 
identifying the plausible sources of operational risk, both internal 
and external, and mitigating their impact through the use of 
appropriate systems, policies, procedures, and controls, and by 
ensuring that systems have a high degree of security, resiliency, 
operational reliability, and adequate, scalable capacity.\12\
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    \10\ 15 U.S.C. 78s(b)(2)(C).
    \11\ 15 U.S.C. 78q-1(b)(3)(F).
    \12\ 17 CFR 240.17Ad-22(e)(17).
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    The Commission finds that the proposed rule change, which modifies 
ICE Clear Europe's EOD Price Discovery Policy to implement a direct 
price submission process for Clearing Members, is consistent with 
Section 17A of the Act and Rule 17Ad-22 thereunder. The proposed rule 
change is consistent with the requirements of Section 17A(b)(3)(F) 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. By reducing operational risk the proposed rule changes 
reduce the likelihood that ICE Clear Europe will be unable to complete 
its end-of-day price discovery process. Completion of the end-of-day 
price discovery process is a necessary and essential element in ICE 
Clear Europe's clearance and settlement processes. The Commission 
believes that the proposed changes should enhance ICE Clear Europe's 
ability to complete the necessary pricing process effectively and 
thereby promote the prompt and accurate clearance and settlement of 
derivative agreements, contracts and transactions consistent with 
Section 17A(b)(3)(F).
    For similar reasons, the proposed rule changes are also consistent 
with Rule 17Ad-22(e)(17) in that they are designed to reduce 
operational risk outside of ICE Clear Europe's control.\13\ The 
proposed rule changes are intended to reduce ICE Clear Europe's 
external operational risk by implementing an appropriate system that 
will allow ICE Clear Europe to exert greater control over the price 
submission process by requiring direct connection and communication 
between ICE Clear Europe and its Clearing Members instead of relying on 
an intermediary to collect price information needed for ICE Clear 
Europe's price discovery process. As a result, because ICE Clear Europe 
will be able to reduce its reliance on intermediaries, and thereby 
reduce operational risk that is outside of its control, the Commission 
finds that the proposed rule changes are consistent with the 
requirements of Rule 17Ad-22(e)(17).
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    \13\ Id.
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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-ICEEU-2017-003), as amended by 
Amendment No. 1 thereto, 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).

    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-13231 Filed 6-23-17; 8:45 am]
BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices 28919

action is necessary or appropriate in the 2017–018, and should be submitted on Commission is approving the proposed
public interest, for the protection of or before July 17, 2017. rule changes, as modified by
investors, or otherwise in furtherance of For the Commission, by the Division of Amendment No. 1.
the purposes of the Act. If the Trading and Markets, pursuant to delegated
Commission takes such action, the authority.15
II. Description of the Proposed Rule
Commission shall institute proceedings Change
Eduardo A. Aleman,
to determine whether the proposed rule Assistant Secretary. ICE Clear Europe has proposed
should be approved or disapproved. [FR Doc. 2017–13230 Filed 6–23–17; 8:45 am] changes to its EOD Price Discovery
IV. Solicitation of Comments BILLING CODE 8011–01–P Policy that are designed to implement a
Interested persons are invited to new price submission process. As part
submit written data, views, and of its current price submission process,
SECURITIES AND EXCHANGE ICE Clear Europe requires Clearing
arguments concerning the foregoing, COMMISSION
including whether the proposed rule Members to submit certain required
change is consistent with the Act. [Release No. 34–80978; File No. SR–ICEEU– price information to an intermediary,
Comments may be submitted by any of 2017–003] which ICE Clear Europe then obtains
the following methods: and uses as part of its price discovery
Self-Regulatory Organizations; ICE process. The proposed rule changes
Electronic Comments Clear Europe Limited; Notice of Filing would eliminate the use of the
• Use the Commission’s Internet of Amendment No. 1 and Order intermediary in the price submission
comment form (http://www.sec.gov/ Approving Proposed Rule Change, as
process and instead require Clearing
rules/sro.shtml); or Modified by Amendment No. 1 Thereto,
Members to submit required price
Relating to ICE Clear Europe’s End-of-
• Send an email to rule-comments@ information directly to ICE Clear
Day Price Discovery Policy
sec.gov. Please include File Number SR– Europe. In order to implement the direct
FINRA–2017–018 on the subject line. June 20, 2017. price submission process, ICE Clear
Paper Comments I. Introduction Europe proposed to amend its EOD
Price Discovery Policy to (1) require
• Send paper comments in triplicate On March 10, 2017, ICE Clear Europe Clearing Members establish direct
to Brent J. Fields, Secretary, Securities Limited (‘‘ICE Clear Europe’’) filed with connectivity with ICE Clear Europe and
and Exchange Commission, 100 F Street the Securities and Exchange use a FIX API to provide ICE Clear
NE., Washington, DC 20549–1090. Commission (‘‘Commission’’), pursuant Europe with the required price
All submissions should refer to File to Section 19(b)(1) of the Securities information, (2) add references to FIX
Number SR–FINRA–2017–018. This file Exchange Act of 1934 (‘‘Act’’) 1 and Rule
API terminology, and (3) make revisions
number should be included on the 19b–4 thereunder,2 a proposed rule
reflecting the replacement of existing
subject line if email is used. To help the change (SR–ICEEU–2017–003) to amend
ICE Clear Europe’s CDS End-of-Day trade date files with FIX API firm trade
Commission process and review your messages.6 Moreover, ICE Clear Europe
comments more efficiently, please use Price Discovery Policy (‘‘EOD Price
Discovery Policy’’) to implement a new proposed amending the Pricing Policy
only one method. The Commission will to note that ICE Clear Europe will send
post all comments on the Commission’s price submission process for Clearing
Members. The proposed rule change FIX API messages directly to Clearing
Internet Web site (http://www.sec.gov/
was published for comment in the Members, and to remove references to
rules/sro.shtml). Copies of the
Federal Register on March 23, 2017.3 the intermediary and its ‘‘Valuation
submission, all subsequent
amendments, all written statements The Commission did not receive Service API’’ that ICE Clear Europe
with respect to the proposed rule comments regarding the proposed previously used.7 Although ICE Clear
change that are filed with the changes. On May 1, 2017, the Europe proposed additional minor
Commission, and all written Commission extended the period in changes to the timing of various steps in
communications relating to the which to approve, disapprove, or the pricing process, these proposed
proposed rule change between the institute proceedings to determine changes would not affect the actual
Commission and any person, other than whether to disapprove the proposed settlement submission windows.8
those that may be withheld from the rule change to June 21, 2017.4 On June In addition to the changes described
public in accordance with the 9, 2017, ICE Clear Europe filed above, ICE Clear Europe also proposed
provisions of 5 U.S.C. 552, will be Amendment No. 1 to the proposal.5 For
changes with respect to the format of
available for Web site viewing and the reasons discussed below, the
information required to be submitted by
printing in the Commission’s Public Clearing Members for the CDX.NA.HY
15 17 CFR 200.30–3(a)(12).
Reference Room, 100 F Street NE., 1 15 index. Moreover, ICE Clear Europe
U.S.C. 78s(b)(1).
Washington, DC 20549 on official 2 17 CFR 240.19b–4. proposed modifications to the process
business days between the hours of 3 Securities Exchange Act Release No. 34–80269 for distributing end-of-day prices, which
10:00 a.m. and 3:00 p.m. Copies of such (March 17, 2017), 82 FR 14925 (March 23, 2017) will result in ICE Clear Europe
filing also will be available for (SR–ICEEU–2017–003) (‘‘Notice’’).
publishing separate messages setting
inspection and copying at the principal 4 Securities Exchange Act Release No. 34–80566

(May 1, 2017), 82 FR 21287 (May 5, 2017). forth end-of-day price information for
office of FINRA. All comments received
sradovich on DSK3GMQ082PROD with NOTICES

will be posted without change; the
5 ICE Clear Europe filed Amendment No. 1 to single name and index CDS to Clearing
clarify that the implementation date for the Members.9
Commission does not edit personal proposed rule change will be July 10, 2017, and to
identifying information from note that ICE Clear Europe will issue a circular
submissions. You should submit only confirming this timeline in advance of the July 10, 6 Notice, 82 FR at 14925.
2017 implementation date. Because Amendment
information that you wish to make No. 1 is a clarifying amendment that does not alter
7 Id.

available publicly. All submissions the substance of the propose rule change the
8 Id.

should refer to File Number SR–FINRA– Commission is not publishing it for comment. 9 Id.

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28920 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices

III. Discussion and Commission transactions consistent with Section notice is hereby given that on June 12,
Findings 17A(b)(3)(F). 2017, Bats EDGA Exchange, Inc. (the
For similar reasons, the proposed rule ‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Section 19(b)(2)(C) of the Act directs
changes are also consistent with Rule Securities and Exchange Commission
the Commission to approve a propose
17Ad–22(e)(17) in that they are (‘‘Commission’’) the proposed rule
rule change of a self-regulatory
designed to reduce operational risk change as described in Items I and II
organization if it finds that such
outside of ICE Clear Europe’s control.13 below, which Items have been prepared
proposed rule change is consistent with
The proposed rule changes are intended by the Exchange. The Exchange has
the requirements of the Act and the
to reduce ICE Clear Europe’s external designated the proposed rule change as
rules and regulations thereunder operational risk by implementing an one establishing or changing a member
applicable to such organization.10 appropriate system that will allow ICE due, fee, or other charge imposed by the
Section 17A(b)(3)(F) of the Act requires, Clear Europe to exert greater control Exchange under Section 19(b)(3)(A)(ii)
among other things, that the rules of a over the price submission process by of the Act 3 and Rule 19b–4(f)(2)
registered clearing agency be designed requiring direct connection and thereunder,4 which renders the
to promote the prompt and accurate communication between ICE Clear proposed rule change effective upon
clearance and settlement of securities Europe and its Clearing Members filing with the Commission. The
transactions and, to the extent instead of relying on an intermediary to Commission is publishing this notice to
applicable, derivative agreements, collect price information needed for ICE solicit comments on the proposed rule
contracts, and transactions.11 Rule Clear Europe’s price discovery process. change from interested persons.
17Ad–22(e)(17) requires, in relevant As a result, because ICE Clear Europe
part, that a registered clearing agency will be able to reduce its reliance on I. Self-Regulatory Organization’s
establish, implement, maintain, and intermediaries, and thereby reduce Statement of the Terms of Substance of
enforce written policies and procedures operational risk that is outside of its the Proposed Rule Change
reasonably designed to manage the control, the Commission finds that the The Exchange filed a proposal to
covered clearing agency’s operational proposed rule changes are consistent amend its fee schedule to replace its
risk by identifying the plausible sources with the requirements of Rule 17Ad– current inverted pricing model with a
of operational risk, both internal and 22(e)(17). simple, low fee model.
external, and mitigating their impact The text of the proposed rule change
through the use of appropriate systems, IV. Conclusion is available at the Exchange’s Web site
policies, procedures, and controls, and It is therefore ordered pursuant to at www.bats.com, at the principal office
by ensuring that systems have a high Section 19(b)(2) of the Act that the of the Exchange, and at the
degree of security, resiliency, proposed rule change (SR–ICEEU–2017– Commission’s Public Reference Room.
operational reliability, and adequate, 003), as amended by Amendment No. 1 II. Self-Regulatory Organization’s
scalable capacity.12 thereto, be, and hereby is, approved.14 Statement of the Purpose of, and
The Commission finds that the For the Commission by the Division of Statutory Basis for, the Proposed Rule
proposed rule change, which modifies Trading and Markets, pursuant to delegated Change
ICE Clear Europe’s EOD Price Discovery authority.15
Policy to implement a direct price In its filing with the Commission, the
submission process for Clearing Eduardo A. Aleman, Exchange included statements
Members, is consistent with Section Assistant Secretary. concerning the purpose of and basis for
17A of the Act and Rule 17Ad–22 the proposed rule change and discussed
[FR Doc. 2017–13231 Filed 6–23–17; 8:45 am]
thereunder. The proposed rule change is any comments it received on the
BILLING CODE 8011–01–P
consistent with the requirements of proposed rule change. The text of these
Section 17A(b)(3)(F) that the rules of a statements may be examined at the
registered clearing agency be designed SECURITIES AND EXCHANGE places specified in Item IV below. The
to promote the prompt and accurate COMMISSION Exchange has prepared summaries, set
clearance and settlement of securities forth in Sections A, B, and C below, of
[Release No. 34–80976; File No. SR– the most significant parts of such
transactions and, to the extent
BatsEDGA–2017–18] statements.
applicable, derivative agreements,
contracts, and transactions. By reducing Self-Regulatory Organizations; Bats A. Self-Regulatory Organization’s
operational risk the proposed rule EDGA Exchange, Inc.; Notice of Filing Statement of the Purpose of, and the
changes reduce the likelihood that ICE and Immediate Effectiveness of a Statutory Basis for, the Proposed Rule
Clear Europe will be unable to complete Proposed Rule Change Related To Change
its end-of-day price discovery process. Amend Its Fee Schedule To Replace
Completion of the end-of-day price 1. Purpose
Current Inverted Pricing Model With
discovery process is a necessary and Low Fee Model Most exchanges today utilize maker-
essential element in ICE Clear Europe’s taker pricing under which they provide
clearance and settlement processes. The June 20, 2017. a rebate to orders that add liquidity and
Commission believes that the proposed Pursuant to Section 19(b)(1) of the charge a fee to orders that remove
changes should enhance ICE Clear Securities Exchange Act of 1934 (the liquidity. The Exchange currently
Europe’s ability to complete the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 incorporates an inverse of that pricing
sradovich on DSK3GMQ082PROD with NOTICES

necessary pricing process effectively model under which it charges a fee to
13 Id.
and thereby promote the prompt and add liquidity and provides a rebate to
14 In approving the proposed rule change, the
accurate clearance and settlement of remove liquidity. As described below,
Commission considered the proposal’s impact on
derivative agreements, contracts and efficiency, competition, and capital formation. 15 the Exchange proposes to amend its fee
U.S.C. 78c(f). schedule to replace its current inverted
10 15 U.S.C. 78s(b)(2)(C). 15 17 CFR 200.30–3(a)(12).
11 15 U.S.C. 78q–1(b)(3)(F). 1 15 U.S.C. 78s(b)(1). 3 15 U.S.C. 78s(b)(3)(A)(ii).
12 17 CFR 240.17Ad–22(e)(17). 2 17 CFR 240.19b–4. 4 17 CFR 240.19b–4(f)(2).

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Document Created: 2018-11-14 10:11:04
Document Modified: 2018-11-14 10:11:04
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 28919