83 FR 47665 - Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change Relating to the Clearance of an Additional Credit Default Swap Contract

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 183 (September 20, 2018)

Page Range		47665-47666
FR Document		2018-20434

Federal Register, Volume 83 Issue 183 (Thursday, September 20, 2018)

[Federal Register Volume 83, Number 183 (Thursday, September 20, 2018)]
[Notices]
[Pages 47665-47666]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-20434]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84130; File No. SR-ICC-2018-007]

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

September 14, 2018.

I. Introduction

On June 13, 2018, 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 \1\ and Rule
19b-4 thereunder,\2\ a proposed rule change to revise the ICC Rulebook
(the ``Rules'') \3\ to provide for the clearance of an additional
Standard Emerging Market Sovereign CDS contract (``EM Contract''). The
proposed rule change was published for comment in the Federal Register
on July 3, 2018.\4\ The Commission did not receive comments regarding
the proposed rule change. On August 16, 2018, the Commission designated
a longer period for Commission action on the proposed rule change.\5\
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\ Capitalized terms used herein but not otherwise defined have
the meaning set forth in the ICC Rules. Available at https://www.theice.com/publicdocs/clear_credit/ICE_Clear_Credit_Rules.pdf.
\4\ Securities Exchange Act Release No. 34-83545 (June 28,
2018), 83 FR 31244 (July 3, 2018) (SR-ICC-2018-007) (``Notice'').
\5\ Securities Exchange Act Release No. 34-83864 (August 16,
2018), 83 FR 42540 (August 22, 2018) (SR-ICC-2018-007).
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II. Description of the Proposed Rule Change

The proposed rule change will provide the basis for ICC to clear an
additional credit default swap contract. ICC proposes to amend
Subchapter 26D of its Rules to provide for the clearance of an
additional EM Contract, the Lebanese Republic. ICC represents that this
additional EM Contract has terms consistent with the other EM Contracts
approved for clearing at ICC and is governed by Subchapter 26D of the
Rules.\6\ Minor revisions to Subchapter 26D (Standard Emerging Market
Sovereign (``SES'') Single Name) are being made to provide for clearing
the additional EM Contract. Specifically, in Rule 26D-102
(Definitions), ``Eligible SES Reference Entities'' is modified to
include the Lebanese Republic in the list of specific Eligible SES
Reference Entities to be cleared by ICC. ICC has also represented that
clearing of the additional EM Contract will not require any changes to
ICC's Risk Management Framework or other policies and procedures
constituting rules within the meaning of the Securities Exchange Act of
1934 (``Act'').\7\
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\6\ Notice, 83 FR at 31245.
\7\ 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 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.\8\ Section 17A(b)(3)(F) of the Act 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, assure the safeguarding of securities and funds which are
in the custody or control of the clearing agency for which it is
responsible and, in general, to protect investors and the public
interest.\9\
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\8\ 15 U.S.C. 78s(b)(2)(C).
\9\ 15 U.S.C. 78q-1(b)(3)(F).
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The Commission finds that the rule change is consistent with
Section 17A(b)(3)(F) of the Act \10\ and the rules and regulations
thereunder applicable to ICC. The Commission has reviewed the terms and
conditions of this contract and has determined that it is substantially
similar to the other contracts listed in Subchapter 26D of the ICC
Rules, all of which ICC currently clears, the key difference being that
the underlying reference obligations will be issuances by the Lebanese
Republic. Moreover, after reviewing the Notice and ICC's Rules,
policies and procedures, the Commission finds that the additional EM
Contract will be cleared pursuant to ICC's existing clearing
arrangements and related financial safeguards, protections and risk
management procedures.\11\ In addition, based on its own experience and
expertise, including a review of data on volume, open interest, and the
number of ICC clearing participants (``CPs'') that currently trade in
the additional EM Contract as well as certain model parameters for the
additional EM Contract, the Commission finds that ICC's rules,
policies, and procedures are reasonably designed to price and measure
the

[[Page 47666]]

potential risk presented by this product, collect financial resources
in proportion to such risk, and liquidate this product in the event of
a CP default, all of which should help ensure ICC's ability to maintain
the financial resources it needs to provide its critical services and
function as a central counter party, thereby promoting the prompt and
accurate settlement of EM Contracts and other credit default swap
transactions. For the same reasons, the Commission believes that the
rule change would help assure the safeguarding of securities or funds
in the custody or control of ICC, and would be consistent with the
protection of investors and the public interest.
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\10\ 15 U.S.C. 78q-1.
\11\ Notice, 83 FR at 31245.
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Therefore, the Commission finds that acceptance of the additional
EM Contract, on the terms and conditions set out in ICC's Rules, is
consistent with the prompt and accurate clearance 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.\12\
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\12\ 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
proposed rule change is consistent with the requirements of the Act and
in particular with the requirements of Section 17A of the Act,\13\ and
the rules and regulations thereunder.
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\13\ 15 U.S.C. 78q-1.
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It is therefore ordered pursuant to Section 19(b)(2) of the Act
\14\ that the proposed rule change (SR-ICC-2018-007) be, and hereby is,
approved.\15\
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\14\ 15 U.S.C. 78s(b)(2).
\15\ 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.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-20434 Filed 9-19-18; 8:45 am]
BILLING CODE 8011-01-P

Federal Register / Vol. 83, No. 183 / Thursday, September 20, 2018 / Notices 47665

including whether the proposed rule SECURITIES AND EXCHANGE list of specific Eligible SES Reference
change is consistent with the Act. COMMISSION Entities to be cleared by ICC. ICC has
Comments may be submitted by any of also represented that clearing of the
[Release No. 34–84130; File No. SR–ICC–
the following methods: 2018–007]
additional EM Contract will not require
any changes to ICC’s Risk Management
Electronic Comments Framework or other policies and
Self-Regulatory Organizations; ICE
• Use the Commission’s internet Clear Credit LLC; Order Approving procedures constituting rules within the
comment form (http://www.sec.gov/ Proposed Rule Change Relating to the meaning of the Securities Exchange Act
rules/sro.shtml); or Clearance of an Additional Credit of 1934 (‘‘Act’’).7
• Send an email to rule-comments@ Default Swap Contract
sec.gov. Please include File Number SR– III. Discussion and Commission
CBOE–2018–064 on the subject line. September 14, 2018. Findings
Section 19(b)(2)(C) of the Act directs
Paper Comments I. Introduction
the Commission to approve a proposed
• Send paper comments in triplicate On June 13, 2018, ICE Clear Credit rule change of a self-regulatory
to Secretary, Securities and Exchange LLC (‘‘ICC’’) filed with the Securities organization if it finds that such
Commission, 100 F Street NE, and Exchange Commission proposed rule change is consistent with
Washington, DC 20549–1090. (‘‘Commission’’), pursuant to Section the requirements of the Act and the
All submissions should refer to File 19(b)(1) of the Securities Exchange Act rules and regulations thereunder
Number SR–CBOE–2018–064. This file of 1934 1 and Rule 19b–4 thereunder,2 a applicable to such organization.8
number should be included on the proposed rule change to revise the ICC Section 17A(b)(3)(F) of the Act requires,
subject line if email is used. To help the Rulebook (the ‘‘Rules’’) 3 to provide for among other things, that the rules of a
Commission process and review your the clearance of an additional Standard registered clearing agency be designed
comments more efficiently, please use Emerging Market Sovereign CDS to promote the prompt and accurate
only one method. The Commission will contract (‘‘EM Contract’’). The proposed clearance and settlement of securities
post all comments on the Commission’s rule change was published for comment transactions, assure the safeguarding of
internet website (http://www.sec.gov/ in the Federal Register on July 3, 2018.4 securities and funds which are in the
rules/sro.shtml). Copies of the The Commission did not receive custody or control of the clearing agency
submission, all subsequent comments regarding the proposed rule for which it is responsible and, in
amendments, all written statements change. On August 16, 2018, the general, to protect investors and the
with respect to the proposed rule Commission designated a longer period public interest.9
change that are filed with the for Commission action on the proposed The Commission finds that the rule
Commission, and all written rule change.5 For the reasons discussed change is consistent with Section
communications relating to the below, the Commission is approving the 17A(b)(3)(F) of the Act 10 and the rules
proposed rule change between the proposed rule change. and regulations thereunder applicable to
Commission and any person, other than II. Description of the Proposed Rule ICC. The Commission has reviewed the
those that may be withheld from the Change terms and conditions of this contract
public in accordance with the and has determined that it is
The proposed rule change will
provisions of 5 U.S.C. 552, will be substantially similar to the other
provide the basis for ICC to clear an
available for website viewing and contracts listed in Subchapter 26D of
additional credit default swap contract.
printing in the Commission’s Public the ICC Rules, all of which ICC
ICC proposes to amend Subchapter 26D
Reference Room, 100 F Street NE, currently clears, the key difference
of its Rules to provide for the clearance
Washington, DC 20549 on official being that the underlying reference
of an additional EM Contract, the
business days between the hours of obligations will be issuances by the
Lebanese Republic. ICC represents that
10:00 a.m. and 3:00 p.m. Copies of the Lebanese Republic. Moreover, after
this additional EM Contract has terms
filing also will be available for reviewing the Notice and ICC’s Rules,
consistent with the other EM Contracts
inspection and copying at the principal policies and procedures, the
approved for clearing at ICC and is
office of the Exchange. All comments Commission finds that the additional
governed by Subchapter 26D of the
received will be posted without change. EM Contract will be cleared pursuant to
Rules.6 Minor revisions to Subchapter
Persons submitting comments are ICC’s existing clearing arrangements and
26D (Standard Emerging Market
cautioned that we do not redact or edit related financial safeguards, protections
Sovereign (‘‘SES’’) Single Name) are
personal identifying information from and risk management procedures.11 In
being made to provide for clearing the
comment submissions. You should addition, based on its own experience
additional EM Contract. Specifically, in
submit only information that you wish and expertise, including a review of
Rule 26D–102 (Definitions), ‘‘Eligible
to make available publicly. All data on volume, open interest, and the
SES Reference Entities’’ is modified to
submissions should refer to File number of ICC clearing participants
include the Lebanese Republic in the
Number SR–CBOE–2018–064 and (‘‘CPs’’) that currently trade in the
should be submitted on or before 1 15 U.S.C. 78s(b)(1).
additional EM Contract as well as
October 11, 2018. 2 17 CFR 240.19b–4. certain model parameters for the
For the Commission, by the Division of 3 Capitalized terms used herein but not otherwise additional EM Contract, the
Trading and Markets, pursuant to delegated defined have the meaning set forth in the ICC Rules. Commission finds that ICC’s rules,
amozie on DSK3GDR082PROD with NOTICES1

Available at https://www.theice.com/publicdocs/ policies, and procedures are reasonably
authority.14
clear_credit/ICE_Clear_Credit_Rules.pdf.
Eduardo A. Aleman, 4 Securities Exchange Act Release No. 34–83545
designed to price and measure the
Assistant Secretary. (June 28, 2018), 83 FR 31244 (July 3, 2018) (SR–
7 Id.
ICC–2018–007) (‘‘Notice’’).
[FR Doc. 2018–20433 Filed 9–19–18; 8:45 am] 8 15 U.S.C. 78s(b)(2)(C).
5 Securities Exchange Act Release No. 34–83864
BILLING CODE 8011–01–P (August 16, 2018), 83 FR 42540 (August 22, 2018) 9 15 U.S.C. 78q–1(b)(3)(F).
(SR–ICC–2018–007). 10 15 U.S.C. 78q–1.
14 17 CFR 200.30–3(a)(12). 6 Notice, 83 FR at 31245. 11 Notice, 83 FR at 31245.

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47666 Federal Register / Vol. 83, No. 183 / Thursday, September 20, 2018 / Notices

potential risk presented by this product, For the Commission, by the Division of position limit for conventional options
collect financial resources in proportion Trading and Markets, pursuant to delegated on the following exchange-traded funds
authority.16 (‘‘ETF’’): The Standard and Poor’s
to such risk, and liquidate this product
in the event of a CP default, all of which Eduardo A. Aleman, Depositary Receipts Trust (‘‘SPY’’),
should help ensure ICC’s ability to Assistant Secretary. iShares Russell 2000 ETF (‘‘IWM’’),
maintain the financial resources it needs [FR Doc. 2018–20434 Filed 9–19–18; 8:45 am] PowerShares QQQ Trust (‘‘QQQ’’),
to provide its critical services and BILLING CODE 8011–01–P iShares MSCI Emerging Markets ETF
function as a central counter party, (‘‘EEM’’), iShares China Large-Cap ETF
thereby promoting the prompt and (‘‘FXI’’), iShares MSCI EAFE ETF
SECURITIES AND EXCHANGE (‘‘EFA’’), iShares MSCI Brazil Capped
accurate settlement of EM Contracts and COMMISSION
other credit default swap transactions. ETF (‘‘EWZ’’), iShares 20+ Year
For the same reasons, the Commission [Release No. 34–84127; File No. SR–FINRA– Treasury Bond Fund ETF (‘‘TLT’’), and
2018–034] iShares MSCI Japan ETF (‘‘EWJ’’).
believes that the rule change would help
assure the safeguarding of securities or Below is the text of the proposed rule
Self-Regulatory Organizations; change. Proposed new language is in
funds in the custody or control of ICC, Financial Industry Regulatory
and would be consistent with the italics; proposed deletions are in
Authority, Inc.; Notice of Filing and brackets.
protection of investors and the public Immediate Effectiveness of a Proposed
interest. Rule Change To Amend Rule 2360 * * * * *
Therefore, the Commission finds that (Options) To Increase Position Limits 2360. Options
acceptance of the additional EM on Options on Certain Exchange-
Traded Funds (a) No Change.
Contract, on the terms and conditions
set out in ICC’s Rules, is consistent with September 14, 2018. (b) Requirements
the prompt and accurate clearance and Pursuant to Section 19(b)(1) of the (1) through (2) No Change.
settlement of securities transactions and Securities Exchange Act of 1934
derivative agreements, contracts, and (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 (3) Position Limits
transactions cleared by ICC, the notice is hereby given that on August
(A) Stock Options—
safeguarding of securities and funds in 31, 2018, Financial Industry Regulatory
the custody or control of ICC, and the Authority, Inc. (‘‘FINRA’’) filed with the (i) through (ii) No Change.
protection of investors and the public Securities and Exchange Commission (iii) Conventional Equity Options
interest, within the meaning of Section (‘‘SEC’’ or ‘‘Commission’’) the proposed a. For purposes of this paragraph (b),
17A(b)(3)(F) of the Act.12 rule change as described in Items I and standardized equity option contracts of
II below, which Items have been the put class and call class on the same
IV. Conclusion prepared by FINRA. FINRA has side of the market overlying the same
designated the proposed rule change as security shall not be aggregated with
On the basis of the foregoing, the
constituting a ‘‘non-controversial’’ rule conventional equity option contracts or
Commission finds that the proposed
change under paragraph (f)(6) of Rule FLEX Equity Option contracts overlying
rule change is consistent with the 19b–4 under the Act,3 which renders
requirements of the Act and in the same security on the same side of
the proposal effective upon receipt of the market. Conventional equity option
particular with the requirements of this filing by the Commission. The
Section 17A of the Act,13 and the rules contracts of the put class and call class
Commission is publishing this notice to on the same side of the market overlying
and regulations thereunder. solicit comments on the proposed rule the same security shall be subject to a
It is therefore ordered pursuant to change from interested persons. position limit of:
Section 19(b)(2) of the Act 14 that the I. Self-Regulatory Organization’s 1. through 5. No Change.
proposed rule change (SR–ICC–2018– Statement of the Terms of the Substance
007) be, and hereby is, approved.15 6. for selected conventional options
of the Proposed Rule Change on exchange-traded funds (‘‘ETF’’), the
FINRA is proposing to amend FINRA position limits are listed in the chart
Rule 2360 (Options) to increase the below:

Security underlying option Position limit

The DIAMONDS Trust (DIA) .................................................................................................................... 300,000 contracts.
The Standard and Poor’s Depositary Receipts Trust (SPY) ................................................................... [900,000]1,800,000 contracts.
The iShares Russell 2000 [Index Fund]ETF (IWM) ................................................................................. [500,000]1,000,000 contracts.
The PowerShares QQQ Trust (QQQ[Q]) ................................................................................................. [900,000]1,800,000 contracts.
The iShares MSCI Emerging Markets [Index Fund]ETF (EEM) .............................................................. [500,000]1,000,000 contracts.
iShares China Large-Cap ETF (FXI) ....................................................................................................... 500,000 contracts.
iShares MSCI EAFE ETF (EFA) .............................................................................................................. 500,000 contracts.
iShares MSCI Brazil Capped ETF (EWZ) ................................................................................................ 500,000 contracts.
iShares 20+ Year Treasury Bond Fund ETF (TLT) ................................................................................. 500,000 contracts.
iShares MSCI Japan ETF (EWJ) ............................................................................................................. 500,000 contracts.
amozie on DSK3GDR082PROD with NOTICES1

12 15 U.S.C. 78q–1(b)(3)(F). 15 In approving the proposed rule change, the 16 17 CFR 200.30–3(a)(12).
13 15 U.S.C. 78q–1. Commission considered the proposal’s impact on 1 15 U.S.C. 78s(b)(1).
14 15 U.S.C. 78s(b)(2). efficiency, competition, and capital formation. 15 2 17 CFR 240.19b–4.

U.S.C. 78c(f). 3 17 CFR 240.19b–4(f)(6).

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Document Created: 2018-09-20 02:09:21
Document Modified: 2018-09-20 02:09:21

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 47665