83 FR 12833 - Self-Regulatory Organizations; LCH SA; Order Instituting Proceedings To Determine Whether To Approve or Disapprove Proposed Rule Changes Related to LCH SA's Recovery and Wind Down Plans
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 57 (March 23, 2018)
Federal Register Volume 83, Issue 57 (March 23, 2018)
| Page Range | 12833-12836 | |
| FR Document | 2018-05902 |
[Federal Register Volume 83, Number 57 (Friday, March 23, 2018)] [Notices] [Pages 12833-12836] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-05902] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82901; File Nos. SR-LCH SA-2017-012 and SR-LCH SA-2017- 013] Self-Regulatory Organizations; LCH SA; Order Instituting Proceedings To Determine Whether To Approve or Disapprove Proposed Rule Changes Related to LCH SA's Recovery and Wind Down Plans March 19, 2018. I. Introduction On November 30, 2017, Banque Centrale de Compensation, which conducts business under the name LCH SA (``LCH SA''), 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 (LCH SA-2017-012) to adopt a recovery plan (the ``RP''). The proposed rule change was published for comment in the Federal Register on December 19, 2017.\3\ On December 7, 2017, LCH SA filed with the Commission a proposed rule change (LCH SA-2017-013) to adopt a wind down plan (``WDP'').\4\ The proposed rule change was published for comment in the Federal Register on December 19, 2017.\5\ On January 23, 2018, the Commission designated a longer period for Commission action on both proposed rule changes.\6\ To date, the Commission has not received any comments on the proposed rule changes. The Commission is publishing this order to institute proceedings pursuant to Section 19(b)(2)(B) \7\ of the Act to determine whether to approve or disapprove the proposed rule changes. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ Securities Exchange Act Release No. 34-82316 (Dec. 13, 2017), 82 FR 60246 (Dec. 19, 2017) (SR-LCH-SA-2017-012) (``Notice 012''). \4\ Capitalized terms used in this order but not defined herein have the same meanings specified in LCH SA's rules. \5\ Securities Exchange Act Release No. 34-82317 (Dec. 13, 2017), 82 FR 60238 (Dec. 19, 2017) (SR-LCH SA-2017-013) (``Notice 013''). \6\ Securities Exchange Act Release No. 34-82570 (Jan. 23, 2018), 83 FR 4088 (Jan. 29, 2018) and Securities Exchange Act Release No. 34-82571 (Jan. 23, 2018), 83 FR 4081 (Jan. 29, 2018). \7\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to the proposed rule changes, nor does it mean that the Commission will ultimately disapprove the proposed rule changes. Rather, as discussed below, the Commission seeks additional input on the proposed rule changes and issues presented by the proposed rule changes. II. Description of the Proposed Rule Changes \8\ --------------------------------------------------------------------------- \8\ The descriptions of the proposed rule changes are substantially excerpted from Notice 012 and Notice 013. --------------------------------------------------------------------------- As a ``covered clearing agency,'' \9\ LCH SA is required to, among other things, ``establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . maintain a sound risk management framework for comprehensively managing legal, credit, liquidity, operational, general business, investment, custody, and other risks that arise in or are borne by the covered clearing agency, which . . . includes plans for the recovery and orderly wind-down of the covered clearing agency necessitated by credit losses, liquidity shortfalls, losses from general business risk, or any other losses.'' \10\ The Commission has previously clarified that it believes that such recovery and wind-down plans are ``rules'' within the meaning of Exchange Act section 19(b) and Rule 19b-4 because such plans would constitute changes to a stated policy, practice or interpretation of a covered clearing agency.\11\ Accordingly, a covered clearing agency, such as LCH SA, must file its RP and WDP with the Commission. --------------------------------------------------------------------------- \9\ The term ``covered clearing agency'' is defined in SEC Rule 17Ad-22(a)(5), 17 CFR 240.17Ad-22(a)(5). \10\ 17 CFR 240.17Ad-22(e)(3)(ii). \11\ Standards for Covered Clearing Agencies, Securities Exchange Act Release No. 34-78961 (Sep. 28, 2016), 81 FR 70786, 70809 (Oct. 13, 2016). --------------------------------------------------------------------------- A. The RP (LCH SA-2017-012) The Commission has previously explained that the term ``recovery'' refers to action taken to allow a financial company that is non-viable as a going concern or insolvent to sustain its critical operations and services.\12\ To that end, LCH SA's RP seeks to maintain the continuity of critical services in times of extreme stress and to facilitate the recovery of LCH SA from such stress. In particular, the RP describes (i) the scenarios and triggers for initiating recovery measures; (ii) various recovery tools used in such recovery; and (iii) the governance framework for managing the [[Page 12834]] RP. Each of those aspects of the RP are discussed in more detail below. --------------------------------------------------------------------------- \12\ Id. at 70808, n. 251. --------------------------------------------------------------------------- The scenarios that could necessitate the implementation of the RP include the default of one or more clearing members, liquidity shortfalls as a result of the default of an investment counterparty of LCH SA or any other investment losses resulting from changes in the market value on the investments, a loss resulting from an event which impacts the critical services provided by LCH SA (e.g., failure in the provision of service by a third party), loss of critical contracts with exchanges, or the operational or financial failure of a financial market infrastructure such as an allied clearing house or trade repository.\13\ --------------------------------------------------------------------------- \13\ See Notice 012, 82 FR at 60247. --------------------------------------------------------------------------- The default management process is used to re-establish a matched book and return to business as usual and therefore LCH SA considers it to be a recovery tool.\14\ When pre-funded resources, such as defaulter's margin, defaulter's default fund contributions, LCH SA's capital, and non-defaulters' default fund contributions, are no longer available to meet obligations due to member and non-member losses, the RP lists various measures or tools that LCH SA can use to return to business as usual.\15\ The RP is organized to discuss each tool by the nature of the loss (e.g., clearing member default losses, liquidity shortfalls, operational, business, and investment risks). The RP also discusses the sequence in which these tools would be used and the relative strength of each.\16\ --------------------------------------------------------------------------- \14\ Id. \15\ Id. \16\ Id. at 60249-60250. --------------------------------------------------------------------------- When pre-funded resources have been exhausted after a clearing member default, LCH SA can call a default fund assessment up to a cap, request voluntary payments from all non-defaulting members, and effectuate service closure.\17\ In the event such tools are unavailable certain other business as usual tools, such as default fund additional margin, may enable LCH SA to collect additional resources. --------------------------------------------------------------------------- \17\ Id. at 60249. --------------------------------------------------------------------------- In the event of a liquidity shortfall, LCH SA may use its central bank credit line to deposit securities received on behalf of defaulting clearing members and obtain liquidity.\18\ Other potential tools to manage a liquidity stress situation are limits with respect to illiquid collateral, the application of increased haircuts on certain types of collateral to incentivize the use of more liquid collateral, or specific liquidity margins.\19\ LCH SA could also defer funding for the settlement platform for a limited period of time but views this as a tool of last resort.\20\ --------------------------------------------------------------------------- \18\ Id. \19\ Id. \20\ Id. --------------------------------------------------------------------------- For most investment, business, and operational losses, LCH SA can allocate its capital surplus against losses.\21\ Further down the list of preferable recovery tools for non-clearing member defaults are the abilities to raise capital or utilize insurance meant to cover a specific operational risk event.\22\ For any disruption or loss of key third-party service provider, LCH SA would be able to exercise several contractual rights and maintains exit plans which are intended to safeguard the continuity of services.\23\ --------------------------------------------------------------------------- \21\ Id. \22\ See Notice 012, 82 FR at 60249. \23\ Id. at 60250. --------------------------------------------------------------------------- The RP discusses the governance surrounding its creation, invocation, and operation.\24\ LCH SA relies upon its existing governance forums for both the creation and on-going monitoring and operation of the RP. Specifically, the LCH SA Management Committee is responsible for the preparation of the RP and the monitoring and implementation of the recovery tools set forth in the RP.\25\ The LCH SA Risk Committee reviews and makes a recommendation to the Board, who ultimately has the power to approve the RP.\26\ However, before submission to the LCH SA Risk Committee, the RP is reviewed and validated by the Executive Risk Committee of LCH Group.\27\ --------------------------------------------------------------------------- \24\ Id. \25\ Id. \26\ Id. \27\ Id. --------------------------------------------------------------------------- The Default Management Group is responsible for the management of clearing member defaults while all critical decisions are escalated and submitted to the LCH SA Default Crisis Management Team (``DCMT'').\28\ The triggering of recovery measures is subject to discussion in the DCMT and approval by the LCH SA CEO.\29\ --------------------------------------------------------------------------- \28\ Id. \29\ Id. --------------------------------------------------------------------------- The management of non-clearing member events will vary based on the nature of the event.\30\ For example, investment losses and liquidity shortfalls are managed by the departments responsible for controlling such risks within the parameters set by the Board.\31\ Similarly, operational risks are managed by each business line in accordance with the operational risk policy approved by the Board.\32\ Business risk is managed by individual business lines, with a second line challenge performed by the risk and finance departments to verify if sufficient capital buffers are available for the applicable business risks.\33\ Matters are escalated to the Management Committee when the RP is triggered and the LCH SA Board will approve implementation of the RP.\34\ --------------------------------------------------------------------------- \30\ Id. \31\ Id. \32\ Id. \33\ Id. \34\ Id. --------------------------------------------------------------------------- B. The WDP (LCH SA-2017-013) In the event a recovery is not successful, LCH SA would invoke its WDP to wind down its operations to full service closure in an orderly manner, thereby minimizing the disruption to clearing members, market participants, and the broader financial system. The WDP would be triggered after a determination by the LCH SA Board that all the recovery tools have been exhausted and have failed to return LCH SA to business as usual.\35\ A voluntary wind-down not precipitated by these extreme events would not be considered.\36\ The WDP would set forth clear mechanisms for the transfer of LCH SA's membership and business, and would be designed to facilitate continued access to critical services and to minimize market impact.\37\ --------------------------------------------------------------------------- \35\ Notice 013, 82 FR at 60239. \36\ Id. \37\ Id. at 60239-60240. --------------------------------------------------------------------------- The decision to wind down would be taken by the Board and ultimately the shareholders' meeting, upon advice of the Executive Risk Committee and Local Management Committee (``LMC'').\38\ The implementation of the WDP would be monitored by the LCH SA LMC or Default Crisis Management Team, the executive committee in charge of the coordination of defaults.\39\ All relevant regulatory authorities would be consulted before such a decision is taken, and the French Autorit[eacute] de Contr[ocirc]le Prudentiel et de Resolution would have to approve such a decision, unless all clearing services have already been closed.\40\ These authorities would then be kept regularly informed of the plan's implementation.\41\ Any decision to wind-down while in resolution would be taken by the relevant governing resolution authority.\42\ --------------------------------------------------------------------------- \38\ Id. at 60239. \39\ Id. \40\ Id. \41\ Id. \42\ Id. --------------------------------------------------------------------------- The WDP assumes that LCH SA's businesses would be wound down until full closure and that the closure of [[Page 12835]] various business lines could occur at different times, with some business functions significantly scaled down or even closed by the time the decision to wind-down is officially made.\43\ The WDP also states that LCH SA would publish written notice to the clearing members that a wind-down event has occurred and potential dates by which transactions will no longer be accepted for clearing.\44\ In a non-default situation or in a situation where the corresponding business line is still active, LCH SA would attempt to give clearing members the maximum time necessary to clear transactions in the normal course, close-out positions, and switch to another central counterparty.\45\ --------------------------------------------------------------------------- \43\ Id. \44\ Id. at 60239-60240. \45\ Id. at 60240. --------------------------------------------------------------------------- The WDP also provides detail about the closure of supporting functions. For instance, the treasury function would close once all clearing services have ceased and monies are paid by LCH SA and its members.\46\ Any other supporting operational, information technology, or risk functions would be kept active until all positions are closed.\47\ Further, once the WDP is implemented, LCH SA would deposit remaining cash in central bank accounts or invest the cash in instruments with maturities no longer than same-day repos.\48\ The WDP further notes that LCH SA's contractual agreements with third-party service providers, such as information technology or venue providers, contain wind-down provisions that permit LCH SA to exit the agreements under particular conditions.\49\ Finally, the WDP provides citations to its various clearing services' rule book provisions giving a legal basis for the actions taken to effectuate the plan.\50\ --------------------------------------------------------------------------- \46\ Id. \47\ Id. \48\ Id. \49\ Id. \50\ Id. --------------------------------------------------------------------------- III. Proceedings To Determine Whether To Approve or Disapprove the Proposed Rule Changes and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act to determine whether the proposed rule changes should be approved or disapproved.\51\ Institution of proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule changes. As noted above, institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, the Commission seeks and encourages interested persons to comment on the proposed rule changes and provide arguments to support the Commission's analysis as to whether to approve or disapprove the proposals. --------------------------------------------------------------------------- \51\ 15 U.S.C. 78s(b)(2)(B) (providing that proceedings to determine whether to disapprove a proposed rule change must be concluded within 180 days of the date of publication of notice of the filing of the proposed rule change. The time for conclusion of the proceedings may be extended for up to an additional 60 days if the Commission finds good cause for such extension and publishes its reasons for so finding or if the self-regulatory organization consents to the extension). --------------------------------------------------------------------------- Pursuant to Section 19(b)(2)(B) of the Act,\52\ the Commission is providing notice of the grounds for disapproval under consideration. The Commission is instituting proceedings to allow for additional analysis of, and input from, commenters with respect to the proposed rule changes' consistency with the Act \53\ and the rules thereunder, including the following provisions: --------------------------------------------------------------------------- \52\ 15 U.S.C. 78s(b)(2)(B). \53\ 15 U.S.C. 78q-1. ---------------------------------------------------------------------------Section 17A(b)(3)(F) of the Act, which requires that the rules of a clearing agency be designed to, among other things, assure the safeguarding of securities and funds which are in the custody or control of the clearing agency for which it is responsible; \54\ --------------------------------------------------------------------------- \54\ 15 U.S.C. 78q-1(b)(3)(F). --------------------------------------------------------------------------- Rule 17Ad-22(e)(2) under the Act, which requires that a covered clearing agency establish, implement, maintain, and enforce written policies and procedures reasonably designed to provide for governance arrangements that are clear and transparent and support the public interest requirements in Section 17A of the Act applicable to clearing agencies, and the objectives of owners and participants; \55\ --------------------------------------------------------------------------- \55\ 17 CFR 240.17Ad-22(e)(2). --------------------------------------------------------------------------- Rule 17Ad-22(e)(3)(ii) under the Act, which requires that covered clearing agencies, among other things, ``establish, implement, maintain and enforce written policies and procedures reasonably designed to . . . maintain a sound risk management framework for comprehensively managing legal, credit, liquidity, operational, general business, investment, custody, and other risks that arise in or are borne by the covered clearing agency, which . . . includes plans for the recovery and orderly wind-down of the covered clearing agency necessitated by credit losses, liquidity shortfalls, losses from general business risk, or any other losses;'' and Rules 17Ad-22(e)(15)(i)-(ii),\56\ which require LCH SA to establish, implement, maintain and enforce written policies and procedures reasonably designed to determine the amount of liquid net assets funded by equity based upon its general business risk profile and the length of time required to achieve a recovery or orderly wind- down, as appropriate, of its critical operations and services if such action is taken and to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for holding liquid net assets funded by equity equal to the greater of either six months of its current operating expenses or the amount determined by the board of directors to be sufficient to ensure a recovery or orderly wind-down of critical operations and services of the covered clearing agency, as contemplated by the plans established under Rule 17Ad-22(e)(3)(ii).\57\ --------------------------------------------------------------------------- \56\ 17 CFR 240.17Ad-22(e)(15)(i)-(ii). \57\ 17 CFR 240.17Ad-22(e)(3)(ii). --------------------------------------------------------------------------- IV. Request for Written Comments The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues raised by the proposed rule changes. In particular, the Commission invites the written views of interested persons concerning whether the proposed rule changes are inconsistent with Section 17A(b)(3)(F) of the Act \58\ and Rules 17Ad-22(e)(2),\59\ 17Ad- 22(e)(3)(ii),\60\ and 17Ad-22(e)(15)(i)-(ii),\61\ under the Act, or any other provision of the Act or rules and regulations thereunder. --------------------------------------------------------------------------- \58\ 15 U.S.C. 78q-1(b)(3)(F). \59\ 17 CFR 240.17Ad-22(e)(2). \60\ 17 CFR 240.17Ad-22(e)(3)(ii). \61\ 17 CFR 240.17Ad-22(e)(15)(i)-(ii). --------------------------------------------------------------------------- Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b-4, any request for an opportunity to make an oral presentation.\62\ --------------------------------------------------------------------------- \62\ Section 19(b)(2) of the Act, as amended by the Securities Acts Amendments of 1975, Public Law 94-29, 89 Stat. 97 (1975), grants the Commission flexibility to determine what type of proceeding--either oral or notice and opportunity for written comments--is appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Acts Amendments of 1975, Report of the Senate Committee on Banking, Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). --------------------------------------------------------------------------- Interested persons are invited to submit written data, views, and arguments regarding whether the proposed rule changes should be approved or disapproved on or before April 13, 2018. Any person who wishes to file a rebuttal to any other person's [[Page 12836]] submission must file that rebuttal on or before April 27, 2018. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to rule-comments@sec.gov. Please include File Number SR-LCH SA-2017-012 and SR-LCH SA-2017-013 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. All submissions should refer to SR-LCH SA-2017-012 and SR-LCH SA-2017- 013. These file numbers 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 website (http://www.sec.gov/rules/sro.shtml). Copies of the submissions, all subsequent amendments, all written statements with respect to the proposed rule changes that are filed with the Commission, and all written communications relating to the proposed rule changes 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 website 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 the filings also will be available for inspection and copying at the principal office of LCH SA and on LCH SA's website at http://www.lch.com/asset-classes/cdsclear. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-LCH SA-2017-012 and SR-LCH SA-2017-013 and should be submitted on or before April 13, 2018. If comments are received, any rebuttal comments should be submitted on or before April 27, 2018. --------------------------------------------------------------------------- \63\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\63\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-05902 Filed 3-22-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 57 / Friday, March 23, 2018 / Notices 12833
(B) institute proceedings to determine For the Commission, by the Division of Act to determine whether to approve or
whether the proposed rule change Trading and Markets, pursuant to delegated disapprove the proposed rule changes.
should be disapproved. authority.32 Institution of proceedings does not
Eduardo A. Aleman, indicate that the Commission has
IV. Solicitation of Comments Assistant Secretary. reached any conclusions with respect to
Interested persons are invited to [FR Doc. 2018–05903 Filed 3–22–18; 8:45 am] the proposed rule changes, nor does it
submit written data, views, and BILLING CODE 8011–01–P mean that the Commission will
arguments concerning the foregoing, ultimately disapprove the proposed rule
including whether the proposed rule changes. Rather, as discussed below, the
change is consistent with the Act. SECURITIES AND EXCHANGE Commission seeks additional input on
Comments may be submitted by any of COMMISSION the proposed rule changes and issues
the following methods: presented by the proposed rule changes.
[Release No. 34–82901; File Nos. SR–LCH II. Description of the Proposed Rule
Electronic Comments
SA–2017–012 and SR–LCH SA–2017–013] Changes 8
• Use the Commission’s internet As a ‘‘covered clearing agency,’’ 9 LCH
comment form (http://www.sec.gov/ Self-Regulatory Organizations; LCH
SA; Order Instituting Proceedings To SA is required to, among other things,
rules/sro.shtml); or ‘‘establish, implement, maintain and
Determine Whether To Approve or
• Send an email to rule-comments@ Disapprove Proposed Rule Changes enforce written policies and procedures
sec.gov. Please include File Number SR– Related to LCH SA’s Recovery and reasonably designed to . . . maintain a
NYSEArca–2018–15 on the subject line. Wind Down Plans sound risk management framework for
Paper Comments comprehensively managing legal, credit,
March 19, 2018. liquidity, operational, general business,
• Send paper comments in triplicate I. Introduction investment, custody, and other risks
to Secretary, Securities and Exchange that arise in or are borne by the covered
Commission, 100 F Street NE, On November 30, 2017, Banque clearing agency, which . . . includes
Washington, DC 20549–1090. Centrale de Compensation, which plans for the recovery and orderly wind-
conducts business under the name LCH down of the covered clearing agency
All submissions should refer to File
SA (‘‘LCH SA’’), filed with the necessitated by credit losses, liquidity
Number SR–NYSEArca–2018–15. This
Securities and Exchange Commission shortfalls, losses from general business
file number should be included on the
(‘‘Commission’’), pursuant to Section risk, or any other losses.’’ 10 The
subject line if email is used. To help the
19(b)(1) of the Securities Exchange Act Commission has previously clarified
Commission process and review your that it believes that such recovery and
comments more efficiently, please use of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change wind-down plans are ‘‘rules’’ within the
only one method. The Commission will meaning of Exchange Act section 19(b)
post all comments on the Commission’s (LCH SA–2017–012) to adopt a recovery
plan (the ‘‘RP’’). The proposed rule and Rule 19b–4 because such plans
internet website (http://www.sec.gov/ would constitute changes to a stated
rules/sro.shtml). Copies of the change was published for comment in
the Federal Register on December 19, policy, practice or interpretation of a
submission, all subsequent covered clearing agency.11 Accordingly,
amendments, all written statements 2017.3 On December 7, 2017, LCH SA
filed with the Commission a proposed a covered clearing agency, such as LCH
with respect to the proposed rule SA, must file its RP and WDP with the
change that are filed with the rule change (LCH SA–2017–013) to
adopt a wind down plan (‘‘WDP’’).4 The Commission.
Commission, and all written
communications relating to the proposed rule change was published for A. The RP (LCH SA–2017–012)
proposed rule change between the comment in the Federal Register on
December 19, 2017.5 On January 23, The Commission has previously
Commission and any person, other than explained that the term ‘‘recovery’’
those that may be withheld from the 2018, the Commission designated a
refers to action taken to allow a
public in accordance with the longer period for Commission action on
financial company that is non-viable as
provisions of 5 U.S.C. 552, will be both proposed rule changes.6 To date,
a going concern or insolvent to sustain
available for website viewing and the Commission has not received any
its critical operations and services.12 To
printing in the Commission’s Public comments on the proposed rule
that end, LCH SA’s RP seeks to maintain
Reference Room, 100 F Street NE, changes. The Commission is publishing
the continuity of critical services in
Washington, DC 20549, on official this order to institute proceedings
times of extreme stress and to facilitate
business days between the hours of pursuant to Section 19(b)(2)(B) 7 of the
the recovery of LCH SA from such
10:00 a.m. and 3:00 p.m. Copies of the stress. In particular, the RP describes (i)
32 17 CFR 200.30–3(a)(12).
filing also will be available for 1 15
the scenarios and triggers for initiating
U.S.C. 78s(b)(1).
inspection and copying at the principal 2 17 CFR 240.19b–4.
recovery measures; (ii) various recovery
office of the Exchange. All comments 3 Securities Exchange Act Release No. 34–82316 tools used in such recovery; and (iii) the
received will be posted without change. (Dec. 13, 2017), 82 FR 60246 (Dec. 19, 2017) (SR– governance framework for managing the
Persons submitting comments are LCH–SA–2017–012) (‘‘Notice 012’’).
cautioned that we do not redact or edit 4 Capitalized terms used in this order but not 8 The descriptions of the proposed rule changes
personal identifying information from defined herein have the same meanings specified in are substantially excerpted from Notice 012 and
LCH SA’s rules. Notice 013.
amozie on DSK30RV082PROD with NOTICES
comment submissions. You should 5 Securities Exchange Act Release No. 34–82317 9 The term ‘‘covered clearing agency’’ is defined
submit only information that you wish (Dec. 13, 2017), 82 FR 60238 (Dec. 19, 2017) (SR– in SEC Rule 17Ad–22(a)(5), 17 CFR 240.17Ad–
to make available publicly. All LCH SA–2017–013) (‘‘Notice 013’’). 22(a)(5).
10 17 CFR 240.17Ad–22(e)(3)(ii).
submissions should refer to File 6 Securities Exchange Act Release No. 34–82570
Number SR–NYSEArca–2018–15, and (Jan. 23, 2018), 83 FR 4088 (Jan. 29, 2018) and 11 Standards for Covered Clearing Agencies,
Securities Exchange Act Release No. 34–82571 (Jan. Securities Exchange Act Release No. 34–78961
should be submitted on or before April 23, 2018), 83 FR 4081 (Jan. 29, 2018). (Sep. 28, 2016), 81 FR 70786, 70809 (Oct. 13, 2016).
13, 2018. 7 15 U.S.C. 78s(b)(2)(B). 12 Id. at 70808, n. 251.
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![12836 Federal Register / Vol. 83, No. 57 / Friday, March 23, 2018 / Notices
submission must file that rebuttal on or For the Commission, by the Division of Exchange has prepared summaries, set
before April 27, 2018. Comments may Trading and Markets, pursuant to delegated forth in sections A, B, and C below, of
be submitted by any of the following authority.63 the most significant aspects of such
methods: Eduardo A. Aleman, statements.
Assistant Secretary.
Electronic Comments A. Self-Regulatory Organization’s
[FR Doc. 2018–05902 Filed 3–22–18; 8:45 am]
Statement of the Purpose of, and
• Use the Commission’s internet BILLING CODE 8011–01–P
Statutory Basis for, the Proposed Rule
comment form (http://www.sec.gov/ Change
rules/sro.shtml); or
• Send an email to rule-comments@ SECURITIES AND EXCHANGE 1. Purpose
sec.gov. Please include File Number SR– COMMISSION The Exchange proposes to amend the
LCH SA–2017–012 and SR–LCH SA– [Release No. 34–82900; File No. SR– Add/Remove Tiered Rebates/Fees set
2017–013 on the subject line. PEARL–2018–09] forth in Section (1)(a) of the Fee
Schedule to decrease the ‘‘Taker’’ fees in
Paper Comments Self-Regulatory Organizations; MIAX Tiers 4, 5 and 6 assessable to all orders
• Send paper comments in triplicate PEARL, LLC; Notice of Filing and submitted by a Market Maker 3 for
to Secretary, Securities and Exchange Immediate Effectiveness of a Proposed options in Penny classes (as defined
Commission, 100 F Street NE, Rule Change To Amend the Fee below).
Washington, DC 20549. Schedule The Exchange currently assesses
tiered transaction rebates and fees to all
All submissions should refer to SR–LCH March 19, 2018. market participants which are based
SA–2017–012 and SR–LCH SA–2017– Pursuant to the provisions of Section upon the total monthly volume
013. These file numbers should be 19(b)(1) of the Securities Exchange Act executed by the Member 4 on MIAX
included on the subject line if email is of 1934 (‘‘Act’’),1 and Rule 19b–4 PEARL in the relevant, respective origin
used. To help the Commission process thereunder,2 notice is hereby given that type (not including Excluded
and review your comments more on March 8, 2018, MIAX PEARL, LLC Contracts 5) expressed as a percentage of
efficiently, please use only one method. (‘‘MIAX PEARL’’ or ‘‘Exchange’’) filed TCV.6 In addition, the per contract
The Commission will post all comments with the Securities and Exchange
on the Commission’s internet website Commission (‘‘Commission’’) a 3 ‘‘Market Maker’’ means a Member registered
(http://www.sec.gov/rules/sro.shtml). proposed rule change as described in with the Exchange for the purpose of making
Items I, II, and III below, which Items markets in options contracts traded on the
Copies of the submissions, all Exchange and that is vested with the rights and
subsequent amendments, all written have been prepared by the Exchange. responsibilities specified in Chapter VI of Exchange
statements with respect to the proposed The Commission is publishing this Rules. See the Definitions Section of the Fee
rule changes that are filed with the notice to solicit comments on the Schedule and Exchange Rule 100.
Commission, and all written proposed rule change from interested 4 ‘‘Member’’ means an individual or organization
that is registered with the Exchange pursuant to
communications relating to the persons. Chapter II of the Exchange Rules for purposes of
proposed rule changes between the I. Self-Regulatory Organization’s trading on the Exchange as an ‘‘Electronic Exchange
Commission and any person, other than Member’’ or ‘‘Market Maker.’’ Members are deemed
Statement of the Terms of Substance of ‘‘members’’ under the Exchange Act. See the
those that may be withheld from the the Proposed Rule Change Definitions Section of the Fee Schedule and
public in accordance with the Exchange Rule 100.
provisions of 5 U.S.C. 552, will be The Exchange is filing a proposal to 5 ‘‘Excluded Contracts’’ means any contracts
available for website viewing and amend the MIAX PEARL Fee Schedule routed to an away market for execution. See the
printing in the Commission’s Public (the ‘‘Fee Schedule’’). The Exchange Definitions Section of the Fee Schedule.
Reference Room, 100 F Street NE, initially filed the proposal on February 6 ‘‘TCV’’ means total consolidated volume
28, 2018 (SR–PEARL–2018–06). That calculated as the total national volume in those
Washington, DC 20549, on official classes listed on MIAX PEARL for the month for
business days between the hours of filing was withdrawn and replaced with which the fees apply, excluding consolidated
10:00 a.m. and 3:00 p.m. Copies of the the current filing (SR–PEARL–2018–09). volume executed during the period time in which
filings also will be available for The text of the proposed rule change the Exchange experiences an ‘‘Exchange System
is available on the Exchange’s website at Disruption’’ (solely in the option classes of the
inspection and copying at the principal affected Matching Engine (as defined below)). The
office of LCH SA and on LCH SA’s http://www.miaxoptions.com/rule- term Exchange System Disruption, which is defined
website at http://www.lch.com/asset- filings/pearl at MIAX PEARL’s principal in the Definitions section of the Fee Schedule,
classes/cdsclear. All comments received office, and at the Commission’s Public means an outage of a Matching Engine or collective
Reference Room. Matching Engines for a period of two consecutive
will be posted without change. Persons hours or more, during trading hours. The term
submitting comments are cautioned that II. Self-Regulatory Organization’s Matching Engine, which is also defined in the
we do not redact or edit personal Definitions section of the Fee Schedule, is a part of
Statement of the Purpose of, and the MIAX PEARL electronic system that processes
identifying information from comment Statutory Basis for, the Proposed Rule options orders and trades on a symbol-by-symbol
submissions. You should submit only Change basis. Some Matching Engines will process option
information that you wish to make classes with multiple root symbols, and other
In its filing with the Commission, the Matching Engines may be dedicated to one single
available publicly.
Exchange included statements option root symbol (for example, options on SPY
All submissions should refer to File concerning the purpose of and basis for may be processed by one single Matching Engine
Number SR–LCH SA–2017–012 and SR– the proposed rule change and discussed that is dedicated only to SPY). A particular root
symbol may only be assigned to a single designated
amozie on DSK30RV082PROD with NOTICES
LCH SA–2017–013 and should be any comments it received on the Matching Engine. A particular root symbol may not
submitted on or before April 13, 2018. proposed rule change. The text of these be assigned to multiple Matching Engines. The
If comments are received, any rebuttal statements may be examined at the Exchange notes that the term ‘‘Exchange System
comments should be submitted on or places specified in Item IV below. The Disruption’’ and its meaning have no applicability
before April 27, 2018. outside of the Fee Schedule, as it is used solely for
purposes of calculating volume for the threshold
1 15 U.S.C. 78s(b)(1). tiers in the Fee Schedule. See the Definitions
63 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. Section of the Fee Schedule.
VerDate Sep<11>2014 21:54 Mar 22, 2018 Jkt 244001 PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 E:\FR\FM\23MRN1.SGM 23MRN1](https://thefederalregister.org/doc/83_FR_12890/page/4.svg)
Document Created: 2018-11-01 08:54:00
Document Modified: 2018-11-01 08:54:00
| 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 | 83 FR 12833 |
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