82 FR 39484 - Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change To Revise the ICC Clearing Rules and the ICC Treasury Operations Policies and Procedures

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 159 (August 18, 2017)

Page Range		39484-39485
FR Document		2017-17431
Federal Register, Volume 82 Issue 159 (Friday, August 18, 2017)
[Federal Register Volume 82, Number 159 (Friday, August 18, 2017)]
[Notices]
[Pages 39484-39485]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-17431]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81386; File No. SR-ICC-2017-010]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change To Revise the ICC Clearing Rules and the 
ICC Treasury Operations Policies and Procedures

August 14, 2017.

I. Introduction

    On June 16, 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-2017-010) 
to make changes to the ICC Clearing Rules (the ``ICC Rules'') and ICC 
Treasury Operations Policies and Procedures (``Treasury Policy'') to 
remove eligibility of Japanese yen (``JPY''), Great British pounds 
(``GBP''), and Canadian dollars (``CAD'') to meet Initial Margin 
(``IM'') and Guaranty Fund (``GF'') requirements. The proposed rule 
change was published for comment in the Federal Register on July 5, 
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. 34-81037 (June 28, 
2017), 82 FR 31121 (July 5, 2017) (SR-ICC-2017-010) (``Notice'').
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II. Description of the Proposed Rule Change

    ICC has proposed changes to Schedule 401 of the ICC Rules and to 
its Treasury Policy. The proposed changes would remove JPY, GBP, and 
CAD from eligibility to meet IM and GF requirements. Currently, a 
Clearing Participant may meet the final 35% of their IM and GF 
requirements with JPY, GBP, or CAD, in aggregate. Under the proposed 
revisions, Clearing Participants would continue to be able to meet 
their IM and GF requirements using Euro cash, U.S. cash, and/or U.S. 
Treasuries, in accordance with the applicable collateral thresholds.
    Specifically, with respect to Schedule 401 of the ICC Rules, ICC 
proposed removing references to G7 cash (which includes U.S. cash, Euro 
cash, JPY, GBP, and CAD) and defining ``All Eligible Collateral'' for 
both Non-Client IM and GF Liquidity Requirements and Client-Related IM 
Liquidity Requirements to be US cash, Euro cash, and/or U.S. 
Treasuries. Under the proposed changes, U.S. cash, Euro cash, and/or 
U.S. Treasuries would be eligible for meeting the final 35% of IM and 
GF requirements for all Non-Client IM and GF Liquidity Requirements and 
Client-Related U.S. dollar (``USD'') denominated IM Requirements; and 
U.S. cash, Euro cash, and/or U.S. Treasuries would be eligible for 
meeting a maximum of 100% of IM requirements for Client-Related Euro-
Denominated Product Requirements.
    In addition, ICC proposed to update its Treasury Policy to remove 
references to JPY, GBP, and CAD as eligible collateral. Under the 
proposed changes, ICC would remove references to JPY, GBP, and CAD in 
the ``Collateral Liquidation Assumptions'' tables (for both Euro and 
USD denominated requirements). ICC would also update the ``Eligible 
Client Collateral'' section of the Treasury Policy to note that its 
eligible collateral for client IM includes U.S. cash, Euro cash, and 
U.S. government securities in line with current eligible collateral for 
House exposures (i.e., U.S. Treasuries). ICC also would revise the 
``Client-Related

[[Page 39485]]

IM Liquidity Requirements'' section of the Treasury Policy to reflect 
the proposed liquidity requirement changes, namely USD-denominated 
product requirements of 65% cash and/or U.S. Treasuries, and 35% 
remainder eligible U.S. cash, U.S. Treasuries, and/or Euro cash; and 
Euro-denominated product requirements of 100% U.S. cash, Euro cash, 
and/or U.S. Treasuries. The proposed changes also include removing 
reference to G7 cash and including U.S. Treasury securities, U.S. cash, 
and Euro cash as eligible collateral from the House IM and GF Liquidity 
Requirements (for Non-Client USD and Euro-denominated requirements) 
chart, the list of acceptable forms of collateral for IM, and the list 
of acceptable forms of collateral for the GF).

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \4\ 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 \5\ 
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, 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) \6\ 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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    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
    \6\ 17 CFR 240.17Ad-22(d)(3).
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    The Commission finds that the proposed rule change, which removes 
JPY, GBP, and CAD from eligibility to meet IM and GF requirements, is 
consistent with Section 17A of the Act and Rule 17Ad-22 thereunder. 
According to ICC, ICC would need to convert JPY, GBP, and CAD into 
another currency in order to use them to satisfy obligations arising 
from the products that ICC clears, which are denominated only in USD or 
Euros. Therefore, from ICC's perspective, JPY, GBP, and CAD are not as 
liquid as USD or Euros for purposes of ICC's business activities. 
Moreover, ICC has noted that JPY has a significant timing issue related 
to conversion. ICC also expressed the view that, from a practical 
standpoint, these changes should have minimal impact on ICC's financial 
resource composition because such currencies have been utilized rarely 
by Clearing Participants to meet IM and GF requirements. The Commission 
believes that, by removing JPY, GBP, and CAD as eligible forms of 
collateral that may be posted to ICC, ICC reduces the risk that ICC 
would not be able to meet its settlement or other liquidity obligations 
timely because of the need to convert one currency to another. The 
Commission therefore finds that the proposed revisions to the ICC Rules 
and Treasury Policy are designed to promote the prompt and accurate 
settlement of securities transactions, derivatives agreements, 
contracts, and transactions for which ICC is responsible, consistent 
with Section 17A(b)(3)(F) of the Exchange Act. Similarly the proposed 
changes are designed to allow ICC to hold collateral in forms that 
minimize the risk of loss or delay in accessing them by reducing the 
need for ICC to conduct currency conversions. The Commission therefore 
finds that the proposed revisions also are consistent with the 
requirements of Rule 17Ad-22(d)(3).

IV. Conclusion

    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
that the proposed rule change (SR-ICC-2017-010) be, and hereby is, 
approved.\7\
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    \7\ 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.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-17431 Filed 8-17-17; 8:45 am]
BILLING CODE 8011-01-P
39484 Federal Register / Vol. 82, No. 159 / Friday, August 18, 2017 / Notices

additional types of exchange-traded Commission, and all written Fund (‘‘GF’’) requirements. The
products that are principally exposed to communications relating to the proposed rule change was published for
futures contracts and that will enhance proposed rule change between the comment in the Federal Register on July
competition among market participants, Commission and any person, other than 5, 2017.3 The Commission received no
to the benefit of investors and the those that may be withheld from the comment letters regarding the proposed
marketplace. public in accordance with the change. For the reasons discussed
provisions of 5 U.S.C. 552, will be below, the Commission is approving the
C. Self-Regulatory Organization’s available for Web site viewing and proposed rule change.
Statement on Comments on the printing in the Commission’s Public
Proposed Rule Change Received From Reference Room, 100 F Street NE., II. Description of the Proposed Rule
Members, Participants, or Others Washington, DC 20549, on official Change
No written comments were solicited business days between the hours of ICC has proposed changes to
or received with respect to the proposed 10:00 a.m. and 3:00 p.m. Copies of the Schedule 401 of the ICC Rules and to its
rule change. filing also will be available for Treasury Policy. The proposed changes
inspection and copying at the principal would remove JPY, GBP, and CAD from
III. Date of Effectiveness of the
office of the Exchange. All comments eligibility to meet IM and GF
Proposed Rule Change and Timing for
received will be posted without change; requirements. Currently, a Clearing
Commission Action
the Commission does not edit personal Participant may meet the final 35% of
Within 45 days of the date of identifying information from their IM and GF requirements with JPY,
publication of this notice in the Federal submissions. You should submit only GBP, or CAD, in aggregate. Under the
Register or within such longer period information that you wish to make proposed revisions, Clearing
up to 90 days (i) as the Commission may available publicly. All submissions Participants would continue to be able
designate if it finds such longer period should refer to File Number SR– to meet their IM and GF requirements
to be appropriate and publishes its NYSEArca–2017–69, and should be using Euro cash, U.S. cash, and/or U.S.
reasons for so finding or (ii) as to which submitted on or before September 8, Treasuries, in accordance with the
the self-regulatory organization 2017. applicable collateral thresholds.
consents, the Commission will: For the Commission, by the Division of Specifically, with respect to Schedule
(A) By order approve or disapprove Trading and Markets, pursuant to delegated 401 of the ICC Rules, ICC proposed
the proposed rule change, or authority.23 removing references to G7 cash (which
(B) institute proceedings to determine Eduardo A. Aleman, includes U.S. cash, Euro cash, JPY, GBP,
whether the proposed rule change Assistant Secretary. and CAD) and defining ‘‘All Eligible
should be disapproved. Collateral’’ for both Non-Client IM and
[FR Doc. 2017–17433 Filed 8–17–17; 8:45 am]
IV. Solicitation of Comments BILLING CODE 8011–01–P
GF Liquidity Requirements and Client-
Related IM Liquidity Requirements to be
Interested persons are invited to US cash, Euro cash, and/or U.S.
submit written data, views, and Treasuries. Under the proposed
arguments concerning the foregoing, SECURITIES AND EXCHANGE
COMMISSION changes, U.S. cash, Euro cash, and/or
including whether the proposed rule U.S. Treasuries would be eligible for
change is consistent with the Act. [Release No. 34–81386; File No. SR–ICC– meeting the final 35% of IM and GF
Comments may be submitted by any of 2017–010]
requirements for all Non-Client IM and
the following methods: GF Liquidity Requirements and Client-
Self-Regulatory Organizations; ICE
Electronic Comments Clear Credit LLC; Order Approving Related U.S. dollar (‘‘USD’’)
denominated IM Requirements; and
• Use the Commission’s Internet Proposed Rule Change To Revise the
ICC Clearing Rules and the ICC U.S. cash, Euro cash, and/or U.S.
comment form (http://www.sec.gov/
Treasury Operations Policies and Treasuries would be eligible for meeting
rules/sro.shtml); or
a maximum of 100% of IM requirements
• Send an email to rule-comments@ Procedures
for Client-Related Euro-Denominated
sec.gov. Please include File Number SR–
August 14, 2017. Product Requirements.
NYSEArca–2017–69 on the subject line. In addition, ICC proposed to update
I. Introduction
Paper Comments its Treasury Policy to remove references
On June 16, 2017, ICE Clear Credit to JPY, GBP, and CAD as eligible
• Send paper comments in triplicate LLC (‘‘ICC’’) filed with the Securities
to Secretary, Securities and Exchange collateral. Under the proposed changes,
and Exchange Commission ICC would remove references to JPY,
Commission, 100 F Street NE., (‘‘Commission’’), pursuant to Section
Washington, DC 20549–1090. GBP, and CAD in the ‘‘Collateral
19(b)(1) of the Securities Exchange Act Liquidation Assumptions’’ tables (for
All submissions should refer to File of 1934 (‘‘Act’’) 1 and Rule 19b–4 both Euro and USD denominated
Number SR–NYSEArca–2017–69. This thereunder,2 a proposed rule change requirements). ICC would also update
file number should be included on the (SR–ICC–2017–010) to make changes to the ‘‘Eligible Client Collateral’’ section
subject line if email is used. To help the the ICC Clearing Rules (the ‘‘ICC Rules’’) of the Treasury Policy to note that its
Commission process and review your and ICC Treasury Operations Policies eligible collateral for client IM includes
comments more efficiently, please use and Procedures (‘‘Treasury Policy’’) to U.S. cash, Euro cash, and U.S.
only one method. The Commission will
mstockstill on DSK30JT082PROD with NOTICES

remove eligibility of Japanese yen government securities in line with
post all comments on the Commission’s (‘‘JPY’’), Great British pounds (‘‘GBP’’), current eligible collateral for House
Internet Web site (http://www.sec.gov/ and Canadian dollars (‘‘CAD’’) to meet exposures (i.e., U.S. Treasuries). ICC
rules/sro.shtml). Copies of the Initial Margin (‘‘IM’’) and Guaranty also would revise the ‘‘Client-Related
submission, all subsequent
amendments, all written statements 23 17 CFR 200.30–3(a)(12). 3 Securities Exchange Act Release No. 34–81037
with respect to the proposed rule 1 15 U.S.C. 78s(b)(1). (June 28, 2017), 82 FR 31121 (July 5, 2017) (SR–
change that are filed with the 2 17 CFR 240.19b–4. ICC–2017–010) (‘‘Notice’’).

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Federal Register / Vol. 82, No. 159 / Friday, August 18, 2017 / Notices 39485

IM Liquidity Requirements’’ section of purposes of ICC’s business activities. SECURITIES AND EXCHANGE
the Treasury Policy to reflect the Moreover, ICC has noted that JPY has a COMMISSION
proposed liquidity requirement changes, significant timing issue related to
namely USD-denominated product conversion. ICC also expressed the view [Release No. 34–81393; File No. SR–NYSE–
requirements of 65% cash and/or U.S. that, from a practical standpoint, these 2017–17]
Treasuries, and 35% remainder eligible changes should have minimal impact on
U.S. cash, U.S. Treasuries, and/or Euro ICC’s financial resource composition Self-Regulatory Organizations; New
cash; and Euro-denominated product York Stock Exchange LLC; Order
because such currencies have been
requirements of 100% U.S. cash, Euro Granting Approval of Proposed Rule
utilized rarely by Clearing Participants
cash, and/or U.S. Treasuries. The Change To Provide Advance Notice of
to meet IM and GF requirements. The Dividend or Stock Distribution
proposed changes also include
Commission believes that, by removing Announcements to the Exchange
removing reference to G7 cash and
including U.S. Treasury securities, U.S. JPY, GBP, and CAD as eligible forms of
collateral that may be posted to ICC, ICC August 14, 2017.
cash, and Euro cash as eligible collateral
from the House IM and GF Liquidity reduces the risk that ICC would not be I. Introduction
Requirements (for Non-Client USD and able to meet its settlement or other
liquidity obligations timely because of On June 13, 2017, New York Stock
Euro-denominated requirements) chart,
the need to convert one currency to Exchange LLC (‘‘NYSE’’ or the
the list of acceptable forms of collateral
another. The Commission therefore ‘‘Exchange’’) filed with the Securities
for IM, and the list of acceptable forms
finds that the proposed revisions to the and Exchange Commission
of collateral for the GF).
(‘‘Commission’’), pursuant to Section
ICC Rules and Treasury Policy are
III. Discussion and Commission 19(b)(1) of the Securities Exchange Act
designed to promote the prompt and
Findings of 1934 (‘‘Exchange Act’’) 1 and Rule
accurate settlement of securities
Section 19(b)(2)(C) of the Act 4 directs 19b–4 thereunder,2 a proposed rule
transactions, derivatives agreements, change to amend the NYSE Listed
the Commission to approve a proposed contracts, and transactions for which
rule change of a self-regulatory Company Manual (the ‘‘Manual’’) to
ICC is responsible, consistent with require listed companies to provide
organization if it finds that such Section 17A(b)(3)(F) of the Exchange
proposed rule change is consistent with notice to the Exchange at least ten
Act. Similarly the proposed changes are minutes before making any public
the requirements of the Act and the
designed to allow ICC to hold collateral announcement with respect to a
rules and regulations thereunder
applicable to such organization. Section in forms that minimize the risk of loss dividend or stock distribution,
17A(b)(3)(F) of the Act 5 requires, among or delay in accessing them by reducing including when the notice is outside of
other things, that the rules of a the need for ICC to conduct currency Exchange trading hours. The proposed
registered clearing agency be designed conversions. The Commission therefore rule change was published for comment
to promote the prompt and accurate finds that the proposed revisions also in the Federal Register on June 30,
clearance and settlement of securities are consistent with the requirements of 2017.3 The Commission received no
transactions and, to the extent Rule 17Ad–22(d)(3). comments regarding the proposal. This
applicable, derivative agreements, order approves the proposed rule
IV. Conclusion change.
contracts, and transactions, to assure the
safeguarding of securities and funds It is therefore ordered pursuant to II. Description of the Proposal
which are in the custody or control of Section 19(b)(2) of the Act that the
the clearing agency or for which it is Currently, the Exchange’s immediate
proposed rule change (SR–ICC–2017– news release policy, set forth in Section
responsible and, in general, to protect 010) be, and hereby is, approved.7
investors and the public interest. Rule 202.06 of the Manual, requires
17Ad–22(d)(3) 6 requires that a For the Commission by the Division of companies releasing material news,
registered clearing agency shall Trading and Markets, pursuant to delegated between 7:00 a.m. and 4:00 p.m. Eastern
authority.8 Time to notify the Exchange’s Market
establish, implement, maintain and
enforce written policies and procedures Eduardo A. Aleman, Watch team by telephone at least ten
reasonably designed to hold assets in a Assistant Secretary. minutes prior to issuing their
manner that minimizes risk of loss or of [FR Doc. 2017–17431 Filed 8–17–17; 8:45 am]
announcement and, when the
delay in its access to them. announcement is in written form, email
BILLING CODE 8011–01–P
The Commission finds that the a copy of the proposed announcement
proposed rule change, which removes to Market Watch at least ten minutes
JPY, GBP, and CAD from eligibility to prior its release (‘‘immediate news
meet IM and GF requirements, is release policy’’).4 In its proposal, NYSE
consistent with Section 17A of the Act stated that listed companies announcing
and Rule 17Ad–22 thereunder. dividend or stock distributions during
According to ICC, ICC would need to the hours noted above are required to
convert JPY, GBP, and CAD into another comply with the immediate news
currency in order to use them to satisfy release policy in connection with such
obligations arising from the products announcements.
mstockstill on DSK30JT082PROD with NOTICES

that ICC clears, which are denominated
1 15 U.S.C. 78s(b)(1).
only in USD or Euros. Therefore, from
2 17 CFR 240.19b–4.
ICC’s perspective, JPY, GBP, and CAD
3 See Securities Exchange Act Release No. 81021
are not as liquid as USD or Euros for 7 In approving the proposed rule change, the
(June 26, 2017), 82 FR 29966 (‘‘Notice’’).
Commission considered the proposal’s impact on 4 See Sections 202.05 (Timely Disclosure of
4 15 U.S.C. 78s(b)(2)(C). efficiency, competition, and capital formation. 15 Material News) and 202.06 (Procedure for Public
5 15 U.S.C. 78q–1(b)(3)(F). U.S.C. 78c(f). Release of Information; Trading Halts) of the
6 17 CFR 240.17Ad–22(d)(3). 8 17 CFR 200.30–3(a)(12). Manual.

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Document Created: 2017-08-18 07:40:54
Document Modified: 2017-08-18 07:40:54
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 39484