82 FR 44477 - Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change Relating to the Clearance of Additional Credit Default Swap Contracts

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 183 (September 22, 2017)

[Federal Register Volume 82, Number 183 (Friday, September 22, 2017)]
[Notices]
[Pages 44477-44478]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-20204]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81646; File No. SR-ICC-2017-009]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change Relating to the Clearance of Additional 
Credit Default Swap Contracts

September 18, 2017.

I. Introduction

    On June 13, 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 to revise the ICC 
Rulebook (the ``Rules'') in order to provide for the clearance of 
Standard Asia Corporate Single Name CDS contracts (collectively, 
``STASC Contracts''), Standard Asia Financial Corporate Single Name CDS 
contracts (collectively, ``STASFC Contracts''), and Standard Emerging 
Market Corporate Single Name CDS contracts (collectively, ``STEMC 
Contracts''). The proposed rule change was published for comment in the 
Federal Register on July 3, 2017.\3\ The Commission did not receive 
comments on the proposed rule change. On August 17, 2017, the 
Commission designated a longer period for Commission action on the 
proposed rule change.\4\ 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. 34-81030 (June 27, 
2017), 82 FR 30933 (July 3, 2017) (SR-ICC-2017-009) (``Notice'').
    \4\ Securities Exchange Act Release No. 34-81414 (August 17, 
2017), 82 FR 40050 (August 23, 2017) (SR-ICC-2017-009).
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II. Description of the Proposed Rule Change

    The purpose of this proposed rule change is to provide the basis 
for ICC to clear additional credit default swap contracts. 
Specifically, ICC has proposed amending Chapter 26 of the ICC Rules to 
add Subchapters 26O (providing for the clearance of STASC Contracts), 
26P (providing for the clearance of STASFC Contracts), and 26Q 
(providing for the clearance of STEMC Contracts). ICC has represented 
that proposed Subchapters 26O and 26Q have terms similar to those 
Subchapters governing clearance of other corporate single name CDS 
contracts,\5\ and that proposed Subchapter 26P has terms similar to 
those Subchapters governing clearance of other financial corporate 
single name CDS contracts.\6\ Therefore, ICC states that the rules 
found in the new Subchapters 26O, 26P, and 26Q ``largely mirror'' the 
ICC Rules for currently cleared contracts, ``with certain modifications 
that reflect differences in terms and market conventions.'' \7\ Each 
contract will be denominated in United States Dollars.\8\ ICC has also 
represented that clearing of the additional STASC, STASFC, and STEMC 
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.\9\
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    \5\ Notice, 82 FR at 30934.
    \6\ Id.
    \7\ Id.
    \8\ Id.
    \9\ Id.
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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 the 
Commission finds that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such self-regulatory organization.\10\ Section 
17A(b)(3)(F) of the Act \11\ requires that, 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, 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.
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    \10\ 15 U.S.C. 78s(b)(2)(C).
    \11\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds that the rule change is consistent with the 
requirements of Section 17A of the Act \12\ and the rules and 
regulations thereunder applicable to ICC. The Commission has reviewed 
the terms and conditions of these contracts and has determined that 
they are substantially similar to those that ICC currently clears, the 
key difference being the underlying reference obligations. Moreover, 
the Commission has reviewed the Notice and ICC's Rules, policies and 
procedures, which provide that the STASC, STASFC and STEMC Contracts 
will be cleared pursuant to ICC's existing clearing arrangements and 
related financial safeguards, protections and risk management 
procedures.\13\ In addition, the Commission has evaluated information 
submitted by ICC, including data on volume, open interest, and the 
number of ICC clearing participants (``CPs'') that currently trade in 
the STASC, STASFC and STEMC Contracts as well as certain model 
parameters for the additional STASC, STASFC and STEMC Contracts. Based 
on this review, the Commission finds that ICC's rules, policies, and 
procedures are reasonably designed to price and measure the potential 
risk presented by these products; collect financial resources in 
proportion to such risk; and liquidate these products in the event of a 
CP default. Thus, the Commission finds that acceptance of the 
additional STASC, STASFC and STEMC Contracts, on the terms and 
conditions set out in ICC's Rules, is consistent with the

[[Page 44478]]

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.\14\
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    \12\ 15 U.S.C. 78q-1.
    \13\ Notice, 82 FR at 30934.
    \14\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \15\ and the 
rules and regulations thereunder.
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    \15\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the proposed rule change (File No. SR-ICC-2017-009) be, 
and hereby is, approved.\17\
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    \16\ 15 U.S.C. 78s(b)(2).
    \17\ 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.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-20204 Filed 9-21-17; 8:45 am]
 BILLING CODE 8011-01-P