82_FR_31777 82 FR 31648 - Self-Regulatory Organizations; ICE Clear Europe Limited; Order Approving Proposed Rule Change Relating to Amendments to the ICE Clear Europe Limited Articles of Association

82 FR 31648 - Self-Regulatory Organizations; ICE Clear Europe Limited; Order Approving Proposed Rule Change Relating to Amendments to the ICE Clear Europe Limited Articles of Association

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 129 (July 7, 2017)

Page Range31648-31649
FR Document2017-14246

Federal Register, Volume 82 Issue 129 (Friday, July 7, 2017)
[Federal Register Volume 82, Number 129 (Friday, July 7, 2017)]
[Notices]
[Pages 31648-31649]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-14246]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81068; File No. SR-ICEEU-2017-007]


Self-Regulatory Organizations; ICE Clear Europe Limited; Order 
Approving Proposed Rule Change Relating to Amendments to the ICE Clear 
Europe Limited Articles of Association

June 30, 2017.

I. Introduction

    On May 2, 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-2017-007) to amend its Articles of Association. The proposed rule 
change was published for comment in the Federal Register on May 19, 
2017.\3\ The Commission received no comment letters regarding

[[Page 31649]]

the proposed change. For the reasons discussed below, the Commission is 
approving the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-80674 (May 19, 2017), 
82 FR 23080 (May 19, 2017) (SR-ICEEU-2017-007) (the ``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    As more fully described in the Notice, the proposed rule change 
seeks to amend the Articles of Association, among other things, to 
update the Articles to add definitions that reflect ICE Clear Europe's 
existing committees, change the minimum number of directors from two to 
six, provide for selection of replacement or additional directors by 
the Nominations Committee, make use of a Senior Independent Director 
appointed in accordance with the UK Corporate Governance Code, stagger 
the retirement or rotation of independent directors (the provisions for 
the retirement or rotation of CDS directors will not change), 
explicitly provide that directors appoint members of relevant 
committees, which operate under their own terms of reference, require 
independent directors to disclose to the Board of Directors all other 
directorships that they hold both prior to appointment and on an 
ongoing basis, adopt new procedures identifying and addressing 
conflicts of interest of directors with respect to both transactions 
with ICE Clear Europe where a director has an interest and matters in 
the ordinary course in which directors' interests are affected (i.e., 
directors affiliated with clearing members), make clarifications to 
notice waiver requirements, and require a written record of all 
unanimous or majority decisions of the directors for at least ten 
years. Additionally, ICE Clear Europe proposed other non-substantive 
corrections and clarifications to the Articles of Association. For 
example, various references to persons have been revised to be gender-
neutral, and various articles have been renumbered in light of the 
changes discussed above.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act 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.\4\ Section 17A(b)(3)(C) of the Act requires,\5\ among 
other things, that the rules of a clearing agency \6\ assure a fair 
representation of its participants in the selection of its directors 
and administration of its affairs. Section 17A(b)(3)(F) of the Act 
requires,\7\ 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(e)(2) requires that a covered clearing agency 
\8\ shall establish, implement, maintain and enforce written policies 
and procedures reasonably designed to provide for governance 
arrangements that are clear and transparent; clearly prioritize the 
safety and efficiency of the covered clearing agency; support the 
public interest requirements in Section 17A of the Act; establish that 
the board of directors and senior management have appropriate 
experience and skills to discharge their duties and responsibilities; 
specify clear and direct lines of responsibility; and consider the 
interests of participants' customers, securities issuers and holders, 
and other relevant stakeholders of the covered clearing agency.\9\
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(C).
    \6\ The ``rules of a clearing agency'' include its articles of 
incorporation and bylaws. 15 U.S.C. 78c(a)(27).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
    \8\ See 17 CFR 240.17Ad-22(a)(5) (defining ``covered clearing 
agency'').
    \9\ See 17 CFR 240.17Ad-22(e)(2).
---------------------------------------------------------------------------

    The Commission finds that the proposed rule change is consistent 
with Section 17A of the Act and Rule 17Ad-22 thereunder. In particular, 
the Commission finds that the amendments will clarify aspects of ICE 
Clear Europe's governance framework and thus, in ICE Clear Europe's 
view, facilitate the efficient operation of the clearing house and the 
prompt and accurate clearance and settlement of transactions. The 
Commission believes that these amendments are consistent with ICE Clear 
Europe's obligation to have governance arrangements that are clear and 
transparent, prioritize the safety and efficiency of the clearing 
agency, and support the public interest requirements in Section 17A of 
the Act and the objectives of owners and participants. Finally, with 
respect to potential conflicts of interest concerning matters in the 
ordinary course in which directors' interests are affected, the 
Commission believes that this provision is consistent with the 
requirement that the rules of a clearing agency assure a fair 
representation of its participants in the administration of its 
affairs. ICE Clear Europe has represented that these provisions are not 
intended to result in the recusal or disqualification of member-
affiliated directors as a class,\10\ but rather could result in recusal 
on a case-by-case basis depending on the conflict. Further, any recusal 
is not automatic; rather, ICE Clear Europe's shareholders or the 
remaining directors have the ability to determine whether full or 
limited participation by the interested director is appropriate. 
Moreover, ICE Clear Europe currently affords members participation in 
product risk committees and on the Board's Risk Committee.
---------------------------------------------------------------------------

    \10\ In particular, ICE Clear Europe has represented that the 
recusal provisions in proposed Article 53 of its Shareholder 
Articles would not prohibit member-affiliated directors from 
participating in decisions relating to margin levels as a general 
matter, decisions to clear new contracts, or other similar general 
matters that are applicable to all members or particular classes of 
clearing members.
---------------------------------------------------------------------------

    Relying on these findings and assurances, the Commission believes 
that the proposed rule change is consistent with Sections 17A(b)(3)(C) 
and (F) of the Act,\11\ and Rule 17Ad-22(e)(2) thereunder.\12\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78q-1(b)(3)(C) and (F).
    \12\ 17 CFR 240.17Ad-22(e)(2).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
that the proposed rule change (SR-ICEEU-2017-007) be, and hereby is, 
approved.\13\
---------------------------------------------------------------------------

    \13\ 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.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2017-14246 Filed 7-6-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                    31648                             Federal Register / Vol. 82, No. 129 / Friday, July 7, 2017 / Notices

                                                    supported the draft amendments,27 and                    investor’s or the designated                             change that are filed with the
                                                    one commenter suggested that the                         beneficiary’s home state.31                              Commission, and all written
                                                    MSRB could easily separate Rule G–                                                                                communications relating to the
                                                                                                             III. Date of Effectiveness of the
                                                    21(e) from the rest of Rule G–21, if                                                                              proposed rule change between the
                                                                                                             Proposed Rule Change and Timing for
                                                    necessary.28 Specifically, commenters                                                                             Commission and any person, other than
                                                                                                             Commission Action
                                                    expressed support for the proposed rule                                                                           those that may be withheld from the
                                                    change’s use of hyperlinks,                                Within 45 days of the date of                          public in accordance with the
                                                    harmonization of Rule G–21(e) with the                   publication of this notice in the Federal                provisions of 5 U.S.C. 552, will be
                                                    advertising rules of other financial                     Register or within such longer period of                 available for Web site viewing and
                                                    regulators, and enhanced out-of-state                    up to 90 days (i) as the Commission may                  printing in the Commission’s Public
                                                    disclosure. The MSRB summarizes the                      designate if it finds such longer period                 Reference Room, 100 F Street NE.,
                                                    comments received relating to the                        to be appropriate and publishes its                      Washington, DC 20549 on official
                                                    proposed rule change in the four                         reasons for so finding or (ii) as to which               business days between the hours of
                                                    comment letters by topic below.                          the self-regulatory organization                         10:00 a.m. and 3:00 p.m. Copies of the
                                                                                                             consents, the Commission will:                           filing also will be available for
                                                    A. Hyperlinks                                              (A) By order approve or disapprove                     inspection and copying at the principal
                                                      Fidelity and SIFMA expressed                           such proposed rule change, or                            office of the MSRB. All comments
                                                    support for the use of hyperlinks to                       (B) institute proceedings to determine                 received will be posted without change;
                                                    provide more current performance                         whether the proposed rule change                         the Commission does not edit personal
                                                    information.29 The MSRB appreciates                      should be disapproved.                                   identifying information from
                                                    Fidelity’s and SIFMA’s support for the                   IV. Solicitation of Comments                             submissions. You should submit only
                                                    proposed rule change and their                                                                                    information that you wish to make
                                                    suggestion concerning the expanded use                     Interested persons are invited to                      available publicly. All submissions
                                                    of hyperlinks. The Board anticipates                     submit written data, views, and                          should refer to File Number SR–MSRB–
                                                    that it will continue to explore the use                 arguments concerning the foregoing,                      2017–04 and should be submitted on or
                                                    of hyperlinks in other areas of its rule                 including whether the proposed rule                      before July 28, 2017.
                                                    book.                                                    change is consistent with the Act.
                                                                                                                                                                        For the Commission, pursuant to delegated
                                                                                                             Comments may be submitted by any of
                                                    B. Harmonization With Other Financial                                                                             authority.32
                                                                                                             the following methods:
                                                    Regulations                                                                                                       Brent J. Fields,
                                                                                                             Electronic Comments                                      Secretary.
                                                      FSI supported the proposed rule
                                                                                                               • Use the Commission’s Internet                        [FR Doc. 2017–14240 Filed 7–6–17; 8:45 am]
                                                    change’s harmonization with the SEC’s
                                                                                                             comment form (http://www.sec.gov/                        BILLING CODE 8011–01–P
                                                    advertising rules applicable to mutual
                                                                                                             rules/sro.shtml); or
                                                    funds.30                                                   • Send an email to rule-comments@
                                                    C. Out-of-State Disclosure                               sec.gov. Please include File Number SR–                  SECURITIES AND EXCHANGE
                                                                                                             MSRB–2017–04 on the subject line.                        COMMISSION
                                                       SI supported the enhanced out-of-
                                                    state disclosure. SI commented that the                  Paper Comments
                                                                                                                                                                      [Release No. 34–81068; File No. SR–ICEEU–
                                                    ‘‘added detail and clarity’’ will enhance                  • Send paper comments in triplicate                    2017–007]
                                                    the value of 529 college savings plans                   to Secretary, Securities and Exchange
                                                    for investors and advisors, because the                  Commission, 100 F Street NE.,                            Self-Regulatory Organizations; ICE
                                                    disclosure will assist the reader in more                Washington, DC 20549.                                    Clear Europe Limited; Order Approving
                                                    fully understanding what the other                       All submissions should refer to File                     Proposed Rule Change Relating to
                                                    benefits may be of investing in a 529                    Number SR–MSRB–2017–04. This file                        Amendments to the ICE Clear Europe
                                                    college savings plan offered by the                      number should be included on the                         Limited Articles of Association
                                                                                                             subject line if email is used. To help the               June 30, 2017.
                                                      27 See, e.g., FSI letter at 2.
                                                      28 See
                                                                                                             Commission process and review your
                                                              SIFMA letter at 8 (‘‘[t]his section can be                                                              I. Introduction
                                                    easily separated from the rest of the rule, if           comments more efficiently, please use
                                                    necessary’’).                                            only one method. The Commission will                        On May 2, 2017, ICE Clear Europe
                                                      29 Specifically, Fidelity stated:                      post all comments on the Commission’s                    Limited (‘‘ICE Clear Europe’’), filed with
                                                      We fully support these draft amendments and            Internet Web site (http://www.sec.gov/                   the Securities and Exchange
                                                    believe that hyperlinks are a commonly used              rules/sro.shtml). Copies of the
                                                    method of communication, well understood by
                                                                                                                                                                      Commission (‘‘Commission’’), pursuant
                                                    investors, through which investors can obtain            submission, all subsequent                               to Section 19(b)(1) of the Securities
                                                    additional details on facts that matter to them.         amendments, all written statements                       Exchange Act of 1934 (‘‘Act’’),1 and
                                                      See Fidelity letter at 3.                              with respect to the proposed rule                        Rule 19b–4 thereunder,2 a proposed rule
                                                      Similarly, SIFMA stated that, ‘‘SIFMA and its                                                                   change (SR–ICEEU–2017–007) to amend
                                                    members support the ability to use hyperlinks in              31 SI
                                                                                                                     stated, in part, that:
                                                    this rule . . . .’’ See SIFMA letter at 8.
                                                                                                                                                                      its Articles of Association. The
                                                                                                                Strategic Insight appreciates the higher level of     proposed rule change was published for
                                                      30 Specifically, FSI stated:
                                                                                                             detail and clarity by expanding the description of
                                                      I. FSI strongly supports efforts to harmonize Rule                                                              comment in the Federal Register on
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                                                                             ‘‘other benefits’’ to include reference to ‘‘such as
                                                    G–21 with other financial regulations                    financial aid, scholarship funds, and protection         May 19, 2017.3 The Commission
                                                      . . . The Proposed Rule also amends Rule G–            from creditors’’ as these are important factors that     received no comment letters regarding
                                                    21(e) to incorporate the provisions included in the      investors often overlook. By expanding the
                                                    SEC’s amendments to its registered investment            description, 529s will also be easier to understand
                                                                                                                                                                        32 17 CFR 200.30–3(a)(12).
                                                    company advertising rules. The draft amendments          which encourages use of the product. Ultimately,
                                                                                                                                                                        1 15 U.S.C. 78s(b)(1).
                                                    to Rule G–21(e) replace the money market mutual          the added detail and clarity will enhance the value
                                                    fund disclosure required by current Rule G–21 with       of 529s for investors and advisors, as they may not        2 17 CFR 240.19b–4.

                                                    a modified version of the money market mutual            have been able to identify what the ‘‘other benefits’’     3 Securities Exchange Act Release No. 34–80674
                                                    fund disclosure currently required by SEC rules.         were referencing previously.                             (May 19, 2017), 82 FR 23080 (May 19, 2017) (SR–
                                                      See FSI letter at 2.                                      See SI letter.                                        ICEEU–2017–007) (the ‘‘Notice’’).



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                                                                                       Federal Register / Vol. 82, No. 129 / Friday, July 7, 2017 / Notices                                                        31649

                                                    the proposed change. For the reasons                       representation of its participants in the               the administration of its affairs. ICE
                                                    discussed below, the Commission is                         selection of its directors and                          Clear Europe has represented that these
                                                    approving the proposed rule change.                        administration of its affairs. Section                  provisions are not intended to result in
                                                                                                               17A(b)(3)(F) of the Act requires,7 among                the recusal or disqualification of
                                                    II. Description of the Proposed Rule
                                                                                                               other things, that the rules of a                       member-affiliated directors as a class,10
                                                    Change
                                                                                                               registered clearing agency be designed                  but rather could result in recusal on a
                                                       As more fully described in the Notice,                  to promote the prompt and accurate                      case-by-case basis depending on the
                                                    the proposed rule change seeks to                          clearance and settlement of securities                  conflict. Further, any recusal is not
                                                    amend the Articles of Association,                         transactions and, to the extent
                                                    among other things, to update the                                                                                  automatic; rather, ICE Clear Europe’s
                                                                                                               applicable, derivative agreements,
                                                    Articles to add definitions that reflect                                                                           shareholders or the remaining directors
                                                                                                               contracts, and transactions, to assure the
                                                    ICE Clear Europe’s existing committees,                                                                            have the ability to determine whether
                                                                                                               safeguarding of securities and funds
                                                    change the minimum number of                               which are in the custody or control of                  full or limited participation by the
                                                    directors from two to six, provide for                     the clearing agency or for which it is                  interested director is appropriate.
                                                    selection of replacement or additional                     responsible and, in general, to protect                 Moreover, ICE Clear Europe currently
                                                    directors by the Nominations                               investors and the public interest. Rule                 affords members participation in
                                                    Committee, make use of a Senior                            17Ad–22(e)(2) requires that a covered                   product risk committees and on the
                                                    Independent Director appointed in                          clearing agency 8 shall establish,                      Board’s Risk Committee.
                                                    accordance with the UK Corporate                           implement, maintain and enforce                            Relying on these findings and
                                                    Governance Code, stagger the retirement                    written policies and procedures                         assurances, the Commission believes
                                                    or rotation of independent directors (the                  reasonably designed to provide for                      that the proposed rule change is
                                                    provisions for the retirement or rotation                  governance arrangements that are clear                  consistent with Sections 17A(b)(3)(C)
                                                    of CDS directors will not change),                         and transparent; clearly prioritize the                 and (F) of the Act,11 and Rule 17Ad–
                                                    explicitly provide that directors appoint                  safety and efficiency of the covered
                                                    members of relevant committees, which                                                                              22(e)(2) thereunder.12
                                                                                                               clearing agency; support the public
                                                    operate under their own terms of                           interest requirements in Section 17A of                 IV. Conclusion
                                                    reference, require independent directors                   the Act; establish that the board of
                                                    to disclose to the Board of Directors all                  directors and senior management have                      It is therefore ordered pursuant to
                                                    other directorships that they hold both                    appropriate experience and skills to                    Section 19(b)(2) of the Act that the
                                                    prior to appointment and on an ongoing                     discharge their duties and                              proposed rule change (SR–ICEEU–2017–
                                                    basis, adopt new procedures identifying                    responsibilities; specify clear and direct              007) be, and hereby is, approved.13
                                                    and addressing conflicts of interest of                    lines of responsibility; and consider the                 For the Commission by the Division of
                                                    directors with respect to both                             interests of participants’ customers,                   Trading and Markets, pursuant to delegated
                                                    transactions with ICE Clear Europe                         securities issuers and holders, and other               authority.14
                                                    where a director has an interest and                       relevant stakeholders of the covered
                                                    matters in the ordinary course in which                                                                            Brent J. Fields,
                                                                                                               clearing agency.9
                                                    directors’ interests are affected (i.e.,                      The Commission finds that the                        Secretary.
                                                    directors affiliated with clearing                         proposed rule change is consistent with                 [FR Doc. 2017–14246 Filed 7–6–17; 8:45 am]
                                                    members), make clarifications to notice                    Section 17A of the Act and Rule 17Ad–                   BILLING CODE 8011–01–P
                                                    waiver requirements, and require a                         22 thereunder. In particular, the
                                                    written record of all unanimous or                         Commission finds that the amendments
                                                    majority decisions of the directors for at                 will clarify aspects of ICE Clear Europe’s
                                                    least ten years. Additionally, ICE Clear                   governance framework and thus, in ICE
                                                    Europe proposed other non-substantive                      Clear Europe’s view, facilitate the
                                                    corrections and clarifications to the                      efficient operation of the clearing house
                                                    Articles of Association. For example,                      and the prompt and accurate clearance
                                                    various references to persons have been                    and settlement of transactions. The
                                                    revised to be gender-neutral, and                          Commission believes that these
                                                    various articles have been renumbered                      amendments are consistent with ICE
                                                    in light of the changes discussed above.                   Clear Europe’s obligation to have
                                                    III. Discussion and Commission                             governance arrangements that are clear
                                                    Findings                                                   and transparent, prioritize the safety
                                                                                                               and efficiency of the clearing agency,
                                                       Section 19(b)(2)(C) of the Act directs
                                                                                                               and support the public interest
                                                    the Commission to approve a proposed
                                                                                                               requirements in Section 17A of the Act
                                                    rule change of a self-regulatory                                                                                      10 In particular, ICE Clear Europe has represented
                                                                                                               and the objectives of owners and
                                                    organization if it finds that such                                                                                 that the recusal provisions in proposed Article 53
                                                    proposed rule change is consistent with                    participants. Finally, with respect to
                                                                                                                                                                       of its Shareholder Articles would not prohibit
                                                    the requirements of the Act and the                        potential conflicts of interest concerning
                                                                                                                                                                       member-affiliated directors from participating in
                                                    rules and regulations thereunder                           matters in the ordinary course in which                 decisions relating to margin levels as a general
                                                    applicable to such organization.4                          directors’ interests are affected, the                  matter, decisions to clear new contracts, or other
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                    Section 17A(b)(3)(C) of the Act                            Commission believes that this provision                 similar general matters that are applicable to all
                                                    requires,5 among other things, that the                    is consistent with the requirement that                 members or particular classes of clearing members.

                                                    rules of a clearing agency 6 assure a fair                 the rules of a clearing agency assure a                    11 15 U.S.C. 78q–1(b)(3)(C) and (F).

                                                                                                               fair representation of its participants in                 12 17 CFR 240.17Ad–22(e)(2).

                                                                                                                                                                          13 In approving the proposed rule change, the
                                                      4 15 U.S.C. 78s(b)(2)(C).
                                                      5 15 U.S.C. 78q–1(b)(3)(C).                                   7 15
                                                                                                                       U.S.C. 78q–1(b)(3)(F).                          Commission considered the proposal’s impact on
                                                      6 The ‘‘rules of a clearing agency’’ include its              8 See
                                                                                                                        17 CFR 240.17Ad–22(a)(5) (defining             efficiency, competition, and capital formation. 15
                                                    articles of incorporation and bylaws. 15 U.S.C.            ‘‘covered clearing agency’’).                           U.S.C. 78c(f).
                                                    78c(a)(27).                                                   9 See 17 CFR 240.17Ad–22(e)(2).                         14 17 CFR 200.30–3(a)(12).




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Document Created: 2017-07-07 02:19:41
Document Modified: 2017-07-07 02:19:41
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 31648 

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