82 FR 30931 - Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Proposed Rule Change, Security-Based Swap Submission, or Advance Notice Relating to the Clearance of Additional Credit Default Swap Contracts
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 126 (July 3, 2017)
Federal Register Volume 82, Issue 126 (July 3, 2017)
| Page Range | 30931-30932 | |
| FR Document | 2017-13899 |
[Federal Register Volume 82, Number 126 (Monday, July 3, 2017)] [Notices] [Pages 30931-30932] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-13899] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81029; File No. SR-ICC-2017-008] Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Proposed Rule Change, Security-Based Swap Submission, or Advance Notice Relating to the Clearance of Additional Credit Default Swap Contracts June 27, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act'') \1\ and Rule 19b-4,\2\ notice is hereby given that on June 13, 2017, ICE Clear Credit LLC (``ICC'') filed with the Securities and Exchange Commission the proposed rule change, security-based swap submission, or advance notice as described in Items I, II and III below, which Items have been prepared primarily by ICC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Clearing Agency's Statement of the Terms of Substance of the Proposed Rule Change The principal purpose of the proposed rule change is to revise the ICC Rulebook (the ``Rules'') to provide for the clearance of additional Standard Emerging Market Sovereign CDS contracts (collectively, ``EM Contracts''). II. Clearing Agency's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, ICC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. ICC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of these statements. A. Clearing Agency's Statement of the Purpose of, and Statutory Basis for, 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 believes the addition of these contracts will benefit the market for credit default swaps by providing market participants the benefits of clearing, including reduction in counterparty risk and safeguarding of margin assets pursuant to clearing house rules. Clearing of the additional EM Contracts will not require any changes to ICC's Risk Management Framework or other policies and procedures constituting rules within the meaning of the Act. ICC proposes amending Subchapter 26D of its Rules to provide for the clearance of additional EM Contracts, specifically the Kingdom of Saudi Arabia and the Republic of Kazakhstan. 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) are made to provide for clearing the additional EM Contracts. Specifically, in Rule 26D-102 (Definitions), ``Eligible SES Reference Entities'' is modified to include the Kingdom of Saudi Arabia and the Republic of Kazakhstan in the list of specific Eligible SES Reference Entities to be cleared by ICC. Section 17A(b)(3)(F) of the Act \3\ 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 and to comply with the provisions of the Act and the rules and regulations thereunder. The additional EM [[Page 30932]] Contracts are similar to the EM Contracts currently cleared by ICC, and will be cleared pursuant to ICC's existing clearing arrangements and related financial safeguards, protections and risk management procedures. Clearing of the additional EM Contracts will allow market participants an increased ability to manage risk and ensure the safeguarding of margin assets pursuant to clearing house rules. ICC believes that acceptance of the new EM Contracts, on the terms and conditions set out in the Rules, is consistent with the prompt and accurate clearance of and settlement of securities transactions and derivative agreements, contracts and transactions cleared by ICC, the safeguarding of securities and funds in the custody or control of ICC, and the protection of investors and the public interest, within the meaning of Section 17A(b)(3)(F) of the Act.\4\ --------------------------------------------------------------------------- \3\ 15 U.S.C. 78q-1(b)(3)(F). \4\ 15 U.S.C. 78q-1(b)(3)(F). --------------------------------------------------------------------------- Clearing of the additional EM Contracts will also satisfy the requirements of Rule 17Ad-22.\5\ In particular, in terms of financial resources, ICC will apply its existing initial margin methodology to the additional contracts. ICC believes that this model will provide sufficient initial margin requirements to cover its credit exposure to its clearing members from clearing such contracts, consistent with the requirements of Rule 17Ad-22(b)(2).\6\ In addition, ICC believes its Guaranty Fund, under its existing methodology, will, together with the required initial margin, provide sufficient financial resources to support the clearing of the additional contracts consistent with the requirements of Rule 17Ad-22(b)(3).\7\ ICC also believes that its existing operational and managerial resources will be sufficient for clearing of the additional contracts, consistent with the requirements of Rule 17Ad-22(d)(4),\8\ as the new contracts are substantially the same from an operational perspective as existing contracts. Similarly, ICC will use its existing settlement procedures and account structures for the new contracts, consistent with the requirements of Rule 17Ad- 22(d)(5), (12) and (15) \9\ as to the finality and accuracy of its daily settlement process and avoidance of the risk to ICC of settlement failures. ICC determined to accept the additional EM Contracts for clearing in accordance with its governance process, which included review of the contracts and related risk management considerations by the ICC Risk Committee and approval by its Board. These governance arrangements are consistent with the requirements of Rule 17Ad- 22(d)(8).\10\ Finally, ICC will apply its existing default management policies and procedures for the additional EM Contracts. ICC believes that these procedures allow for it to take timely action to contain losses and liquidity pressures and to continue meeting its obligations in the event of clearing member insolvencies or defaults in respect of the additional single names, in accordance with Rule 17Ad- 22(d)(11).\11\ --------------------------------------------------------------------------- \5\ 17 CFR 240.17Ad-22. \6\ 17 CFR 240.17Ad-22(b)(2). \7\ 17 CFR 240.17Ad-22(b)(3). \8\ 17 CFR 240.17Ad-22(d)(4). \9\ 17 CFR 240.17Ad-22(d)(5), (12) and (15). \10\ 17 CFR 240.17Ad-22(d)(8). \11\ 17 CFR 240.17Ad-22(d)(11). --------------------------------------------------------------------------- B. Clearing Agency's Statement on Burden on Competition The additional EM Contracts will be available to all ICC participants for clearing. The clearing of these additional EM Contracts by ICC does not preclude the offering of the additional EM Contracts for clearing by other market participants. Accordingly, ICC does not believe that clearance of the additional EM Contracts will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. C. Clearing Agency's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments relating to the proposed rule change have not been solicited or received. ICC will notify the Commission of any written comments received by ICC. III. Date of Effectiveness of the Proposed Rule and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-ICC-2017-008 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-ICC-2017-008. 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 Room, 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 Credit and on ICE Clear Credit's Web site at https://www.theice.com/clear-credit/regulation. 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-ICC-2017-008 and should be submitted on or before July 24, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\12\ --------------------------------------------------------------------------- \12\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2017-13899 Filed 6-30-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 126 / Monday, July 3, 2017 / Notices 30931
a company in which a member of the income tax returns and a report of the II. Clearing Agency’s Statement of the
Investment Committee, BCG or a BCG investment activities of the Investment Purpose of, and Statutory Basis for, the
Entity acts as an officer, director, or Fund during such year. Proposed Rule Change
general partner, or has a similar capacity 6. An Investment Fund will maintain In its filing with the Commission, ICC
to control the sale or disposition of the and preserve, for the life of the included statements concerning the
company’s securities; or (e) an Investment Fund and at least six years purpose of and basis for the proposed
investment vehicle offered, sponsored, thereafter, such accounts, books, and rule change and discussed any
or managed by BCG or an affiliated other documents as constitute the comments it received on the proposed
person of BCG. record forming the basis for the audited
The restrictions contained in this rule change. The text of these statements
financial statements and annual reports may be examined at the places specified
condition, however, shall not be
of the Investment Fund to be provided in Item IV below. ICC has prepared
deemed to limit or prevent the
to its Members, and agrees that all such summaries, set forth in sections A, B,
disposition of an investment by a Co-
records will be subject to examination and C below, of the most significant
Investor: (a) To its direct or indirect
by the Commission and its staff. All aspects of these statements.
wholly-owned subsidiary, to any
such records will be maintained in an
company (a ‘‘Parent’’) of which the Co- A. Clearing Agency’s Statement of the
easily accessible place for at least the
Investor is a direct or indirect wholly- Purpose of, and Statutory Basis for, the
owned subsidiary, or to a direct or first two years.
Proposed Rule Change
indirect wholly-owned subsidiary of its For the Commission, by the Division of
Parent; (b) to immediate family Investment Management, pursuant to The purpose of the proposed rule
members of the Co-Investor or a trust delegated authority. change is to adopt rules that will
established for the benefit of any such Robert W. Errett, provide the basis for ICC to clear
family member; (c) when the investment additional credit default swap contracts.
Deputy Secretary.
is comprised of securities that are listed ICC believes the addition of these
[FR Doc. 2017–13893 Filed 6–30–17; 8:45 am]
on a national securities exchange contracts will benefit the market for
BILLING CODE P credit default swaps by providing
registered under section 6 of the
Exchange Act; (d) when the investment market participants the benefits of
is comprised of securities that are clearing, including reduction in
SECURITIES AND EXCHANGE counterparty risk and safeguarding of
national market system (‘‘NMS’’) stocks COMMISSION
pursuant to section 11A(a)(2) of the margin assets pursuant to clearing house
Exchange Act and rule 600(a) of rules. Clearing of the additional EM
[Release No. 34–81029; File No. SR–ICC– Contracts will not require any changes
Regulation NMS thereunder; (e) when
2017–008] to ICC’s Risk Management Framework
the investment is comprised of
securities that are listed on or traded on or other policies and procedures
Self-Regulatory Organizations; ICE constituting rules within the meaning of
any foreign securities exchange or board Clear Credit LLC; Notice of Proposed
of trade that satisfies regulatory the Act.
Rule Change, Security-Based Swap ICC proposes amending Subchapter
requirements under the law of the Submission, or Advance Notice
jurisdiction in which such foreign 26D of its Rules to provide for the
Relating to the Clearance of Additional clearance of additional EM Contracts,
securities exchange or board of trade is Credit Default Swap Contracts
organized similar to those that apply to specifically the Kingdom of Saudi
a national securities exchange or a June 27, 2017. Arabia and the Republic of Kazakhstan.
national market system of securities; or These additional EM Contracts have
Pursuant to Section 19(b)(1) of the terms consistent with the other EM
(f) when the investment is comprised of Securities Exchange Act of 1934 (the
securities that are government securities Contracts approved for clearing at ICC
‘‘Act’’) 1 and Rule 19b–4,2 notice is and governed by Subchapter 26D of the
as defined in section 2(a)(16) of the Act.
hereby given that on June 13, 2017, ICE Rules. Minor revisions to Subchapter
5. An Investment Fund will send,
within 120 days after the end of its Clear Credit LLC (‘‘ICC’’) filed with the 26D (Standard Emerging Market
fiscal year, or as soon as practicable Securities and Exchange Commission Sovereign (‘‘SES’’) Single Name) are
thereafter, to each Member who had an the proposed rule change, security- made to provide for clearing the
interest in the Investment Fund at any based swap submission, or advance additional EM Contracts. Specifically, in
time during the fiscal year then ended, notice as described in Items I, II and III Rule 26D–102 (Definitions), ‘‘Eligible
reports and information regarding the below, which Items have been prepared SES Reference Entities’’ is modified to
Investments, including financial primarily by ICC. The Commission is include the Kingdom of Saudi Arabia
statements for such Investment Fund publishing this notice to solicit and the Republic of Kazakhstan in the
audited by an independent accounting comments on the proposed rule change list of specific Eligible SES Reference
firm. The Investment Committee will from interested persons. Entities to be cleared by ICC.
make a valuation or have a valuation I. Clearing Agency’s Statement of the Section 17A(b)(3)(F) of the Act 3
made of all of the assets of an Terms of Substance of the Proposed requires, among other things, that the
Investment Fund as of each fiscal year Rule Change rules of a clearing agency be designed to
end. In addition, within 90 days after promote the prompt and accurate
the end of each fiscal year of the The principal purpose of the clearance and settlement of securities
proposed rule change is to revise the
sradovich on DSK3GMQ082PROD with NOTICES
Investment Fund or as soon as transactions and, to the extent
practicable thereafter, the Investment ICC Rulebook (the ‘‘Rules’’) to provide applicable, derivative agreements,
Fund shall send a report to each person for the clearance of additional Standard contracts, and transactions and to
who was a Member at any time during Emerging Market Sovereign CDS comply with the provisions of the Act
the fiscal year then ended, setting forth contracts (collectively, ‘‘EM Contracts’’). and the rules and regulations
such tax information as shall be thereunder. The additional EM
necessary for the preparation by the 1 15 U.S.C. 78s(b)(1).
Member of his or her federal and state 2 17 CFR 240.19b–4. 3 15 U.S.C. 78q–1(b)(3)(F).
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![30932 Federal Register / Vol. 82, No. 126 / Monday, July 3, 2017 / Notices
Contracts are similar to the EM related risk management considerations change is consistent with the Act.
Contracts currently cleared by ICC, and by the ICC Risk Committee and approval Comments may be submitted by any of
will be cleared pursuant to ICC’s by its Board. These governance the following methods:
existing clearing arrangements and arrangements are consistent with the
Electronic Comments
related financial safeguards, protections requirements of Rule 17Ad–22(d)(8).10
and risk management procedures. Finally, ICC will apply its existing • Use the Commission’s Internet
Clearing of the additional EM Contracts default management policies and comment form (http://www.sec.gov/
will allow market participants an procedures for the additional EM rules/sro.shtml); or
increased ability to manage risk and Contracts. ICC believes that these • Send an email to rule-comments@
ensure the safeguarding of margin assets procedures allow for it to take timely sec.gov. Please include File Number SR–
pursuant to clearing house rules. ICC action to contain losses and liquidity ICC–2017–008 on the subject line.
believes that acceptance of the new EM pressures and to continue meeting its
Contracts, on the terms and conditions obligations in the event of clearing Paper Comments
set out in the Rules, is consistent with member insolvencies or defaults in Send paper comments in triplicate to
the prompt and accurate clearance of respect of the additional single names, Secretary, Securities and Exchange
and settlement of securities transactions in accordance with Rule 17Ad– Commission, 100 F Street NE.,
and derivative agreements, contracts 22(d)(11).11 Washington, DC 20549–1090.
and transactions cleared by ICC, the
safeguarding of securities and funds in B. Clearing Agency’s Statement on All submissions should refer to File
the custody or control of ICC, and the Burden on Competition Number SR–ICC–2017–008. This file
protection of investors and the public The additional EM Contracts will be number should be included on the
interest, within the meaning of Section available to all ICC participants for subject line if email is used. To help the
17A(b)(3)(F) of the Act.4 clearing. The clearing of these Commission process and review your
Clearing of the additional EM additional EM Contracts by ICC does not comments more efficiently, please use
Contracts will also satisfy the preclude the offering of the additional only one method. The Commission will
requirements of Rule 17Ad–22.5 In EM Contracts for clearing by other post all comments on the Commission’s
particular, in terms of financial market participants. Accordingly, ICC Internet Web site (http://www.sec.gov/
resources, ICC will apply its existing does not believe that clearance of the rules/sro.shtml). Copies of the
initial margin methodology to the additional EM Contracts will impose submission, all subsequent
additional contracts. ICC believes that any burden on competition not amendments, all written statements
this model will provide sufficient initial necessary or appropriate in furtherance with respect to the proposed rule
margin requirements to cover its credit of the purposes of the Act. change that are filed with the
exposure to its clearing members from Commission, and all written
clearing such contracts, consistent with C. Clearing Agency’s Statement on communications relating to the
the requirements of Rule 17Ad– Comments on the Proposed Rule proposed rule change between the
22(b)(2).6 In addition, ICC believes its Change Received From Members, Commission and any person, other than
Guaranty Fund, under its existing Participants or Others those that may be withheld from the
methodology, will, together with the Written comments relating to the public in accordance with the
required initial margin, provide proposed rule change have not been provisions of 5 U.S.C. 552, will be
sufficient financial resources to support solicited or received. ICC will notify the available for Web site viewing and
the clearing of the additional contracts Commission of any written comments printing in the Commission’s Public
consistent with the requirements of Rule received by ICC. Reference Room, 100 F Street NE.,
17Ad–22(b)(3).7 ICC also believes that Washington, DC 20549, on official
III. Date of Effectiveness of the business days between the hours of
its existing operational and managerial
Proposed Rule and Timing for 10:00 a.m. and 3:00 p.m. Copies of such
resources will be sufficient for clearing
Commission Action filings will also be available for
of the additional contracts, consistent
with the requirements of Rule 17Ad– Within 45 days of the date of inspection and copying at the principal
22(d)(4),8 as the new contracts are publication of this notice in the Federal office of ICE Clear Credit and on ICE
substantially the same from an Register or within such longer period Clear Credit’s Web site at https://
operational perspective as existing up to 90 days (i) as the Commission may www.theice.com/clear-credit/regulation.
contracts. Similarly, ICC will use its designate if it finds such longer period All comments received will be posted
existing settlement procedures and to be appropriate and publishes its without change; the Commission does
account structures for the new contracts, reasons for so finding or (ii) as to which not edit personal identifying
consistent with the requirements of Rule the self-regulatory organization information from submissions. You
17Ad–22(d)(5), (12) and (15) 9 as to the consents, the Commission will: should submit only information that
finality and accuracy of its daily (A) By order approve or disapprove you wish to make available publicly. All
settlement process and avoidance of the such proposed rule change, or submissions should refer to File
risk to ICC of settlement failures. ICC (B) institute proceedings to determine Number SR–ICC–2017–008 and should
determined to accept the additional EM whether the proposed rule change be submitted on or before July 24, 2017.
Contracts for clearing in accordance should be disapproved. For the Commission, by the Division of
with its governance process, which IV. Solicitation of Comments Trading and Markets, pursuant to delegated
sradovich on DSK3GMQ082PROD with NOTICES
included review of the contracts and authority.12
Interested persons are invited to
Robert W. Errett,
4 15 U.S.C. 78q–1(b)(3)(F). submit written data, views, and
Deputy Secretary.
5 17 CFR 240.17Ad–22. arguments concerning the foregoing,
6 17 CFR 240.17Ad–22(b)(2). including whether the proposed rule [FR Doc. 2017–13899 Filed 6–30–17; 8:45 am]
7 17 CFR 240.17Ad–22(b)(3). BILLING CODE 8011–01–P
8 17 CFR 240.17Ad–22(d)(4). 10 17 CFR 240.17Ad–22(d)(8).
9 17 CFR 240.17Ad–22(d)(5), (12) and (15). 11 17 CFR 240.17Ad–22(d)(11). 12 17 CFR 200.30–3(a)(12).
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Document Created: 2018-11-14 10:20:04
Document Modified: 2018-11-14 10:20:04
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 82 FR 30931 |
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