82 FR 9086 - Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change To Provide for the Clearance of Additional Credit Default Swap Contracts

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 21 (February 2, 2017)

[Federal Register Volume 82, Number 21 (Thursday, February 2, 2017)]
[Notices]
[Pages 9086-9087]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-02185]



[[Page 9086]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79892; File No. SR-ICC-2016-014]


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

January 27, 2017.

I. Introduction

    On November 18, 2016, 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 Australian Corporate Single Name CDS contracts (collectively, 
``STAC Contracts'') and Standard Australian Financial Corporate Single 
Name CDS contracts (collectively, ``STAFC Contracts''). The proposed 
rule change was published for comment in the Federal Register on 
December 7, 2016.\3\ The Commission did not receive comments on the 
proposed rule change. On January 18, 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. 79439 (December 1, 
2016), 81 FR 88291 (December 7, 2016) (SR-ICC-2016-014).
    \4\ Securities Exchange Act Release No. 79821 (January 18, 
2017), 82 FR 8450 (January 25, 2017) (SR-ICC-2016-014).
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II. Description of the Proposed Rule Change

    The rule change adopts rules that provide the basis for ICC to 
clear additional credit default swap contracts. Specifically, ICC is 
amending Chapter 26 of the ICC Rules to add Subchapters 26M and 26N to 
provide for the clearance of STAC and STAFC Contracts, respectively. 
ICC represents clearing of the additional STAC and STAFC 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 represents that STAC Contracts have similar terms to the 
Standard European Corporate Single Name CDS contracts (``STEC 
Contracts'') currently cleared by ICC and governed by Subchapter 26G of 
the ICC Rules. Therefore, ICC states that the rules found in Subchapter 
26M largely mirror the ICC Rules for STEC Contracts in Subchapter 26G, 
with certain modifications that reflect differences in terms and market 
conventions between those contracts and STAC Contracts. STAC Contracts 
will be denominated in United States Dollars.
    ICC Rule 26M-102 (Definitions) sets forth the definitions used for 
the STAC Contracts. ICC represents that the definitions are 
substantially the same as the definitions found in Subchapter 26G of 
the ICC Rules, other than certain conforming changes. Similarly, ICC 
states that its Rules 26M-203 (Restriction on Activity), 26M-206 
(Notices Required of Participants with respect to STAC Contracts), 26M-
303 (STAC Contract Adjustments), 26M-309 (Acceptance of STAC Contracts 
by ICE Clear Credit), 26M-315 (Terms of the Cleared STAC Contract), 
26M-316 (Relevant Physical Settlement Matrix Updates), 26M-502 
(Specified Actions), and 26M-616 (Contract Modification) reflect or 
incorporate the basic contract specifications for STAC Contracts and 
are substantially the same as under Subchapter 26G of the ICC Rules.
    ICC states that STAFC Contracts have similar terms to the Standard 
European Financial Corporate Single Name CDS contracts (``STEFC 
Contracts'') currently cleared by ICC and governed by Subchapter 26H of 
the ICC Rules. Thus, ICC represents that the rules found in Subchapter 
26N largely mirror the ICC Rules for STEFC Contracts in Subchapter 26H, 
with certain modifications that reflect differences in terms and market 
conventions between those contracts and STAFC Contracts. STAFC 
Contracts will be denominated in United States Dollars.
    ICC Rule 26N-102 (Definitions) sets forth the definitions used for 
the STAFC Contracts. ICC states that the definitions are substantially 
the same as the definitions found in Subchapter 26H of the ICC Rules, 
other than certain conforming changes. ICC represents that its Rules 
26N-203 (Restriction on Activity), 26N-206 (Notices Required of 
Participants with respect to STAFC Contracts), 26N-303 (STAFC Contract 
Adjustments), 26N-309 (Acceptance of STAFC Contracts by ICE Clear 
Credit), 26N-315 (Terms of the Cleared STAFC Contract), 26N-316 
(Relevant Physical Settlement Matrix Updates), 26N-502 (Specified 
Actions), and 26N-616 (Contract Modification) reflect or incorporate 
the basic contract specifications for STAFC Contracts and are 
substantially the same as under Subchapter 26H of the ICC Rules.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \5\ 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. Section 17A(b)(3)(F) 
of the Act \6\ 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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    \5\ 15 U.S.C. 78s(b)(2)(C).
    \6\ 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 \7\ and the rules and 
regulations thereunder applicable to ICC. The rule changes expands 
clearing to additional products, the STAC and STAFC credit default swap 
contracts, thus promoting the prompt and accurate clearance and 
settlement of securities transactions and, to the extent applicable, 
derivative agreements, contracts, and transactions. ICC represents that 
the STAC and STAFC contracts are similar to the STEC and STEFC 
Contracts that ICC currently clears, and that the STAC and STAFC 
Contracts will be cleared pursuant to ICC's existing clearing 
arrangements and related financial safeguards, protections and risk 
management procedures. Clearing of the STAC and STAFC Contracts will 
thus allow market participants an increased ability to manage risk, 
while ensuring the safeguarding of margin assets pursuant to clearing 
house rules. Therefore, the Commission believes that acceptance of the 
STAC and STAFC 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.\8\
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    \7\ 15 U.S.C. 78q-1.
    \8\ 15 U.S.C. 78q-1(b)(3)(F).

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[[Page 9087]]

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 \9\ and the 
rules and regulations thereunder.
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    \9\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (File No. SR-ICC-2016-014) be, 
and hereby is, approved.\11\
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    \10\ 15 U.S.C. 78s(b)(2).
    \11\ 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.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2017-02185 Filed 2-1-17; 8:45 am]
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