83 FR 58798 - Self-Regulatory Organizations; LCH SA; Notice of Filing and Immediate Effectiveness of Proposed Rule Change, as Modified by Amendment No. 1, Relating to a New Fee Incentive Scheme

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 225 (November 21, 2018)

Page Range		58798-58800
FR Document		2018-25342
Federal Register, Volume 83 Issue 225 (Wednesday, November 21, 2018)
[Federal Register Volume 83, Number 225 (Wednesday, November 21, 2018)]
[Notices]
[Pages 58798-58800]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-25342]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84602; File No. SR-LCH SA-2018-005]


Self-Regulatory Organizations; LCH SA; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change, as Modified by 
Amendment No. 1, Relating to a New Fee Incentive Scheme

November 15, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 31, 2018, Banque Centrale de Compensation, which conducts 
business under the name LCH SA (``LCH SA''), filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule change 
described in Items I, II and III below, which Items have been prepared 
by LCH SA. On November 15, 2018, LCH SA filed Amendment No. 1 to the 
proposed rule change.\3\ LCH SA filed the proposal pursuant to Section 
19(b)(3)(A) of the Act,\4\ and Rule 19b-4(f)(2) \5\ thereunder, so that 
the proposal was effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as modified by Amendment No. 1, from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, LCH SA added to Item II an additional 
description of the proposed fees.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(2).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change will introduce a new fee incentive scheme

[[Page 58799]]

for CDSClear client clearing activities applicable from October 31st, 
2018.

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    In its filing with the Commission, LCH SA included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. LCH SA has prepared summaries, set forth in sections A, 
B, and C below, of the most significant aspects of such statements.

A. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is for LCH SA to introduce 
and specify a clearing fees incentive scheme for clients of CDSClear 
members, including volume based discounts, in order to encourage the 
growth of the CDSClear client clearing franchise.
    Currently, CDSClear clearing members are charged a fee on their 
client clearing flows per EUR/USD million of gross notional cleared 
defined as follows:

                                                  Variable Fee
----------------------------------------------------------------------------------------------------------------
                              Client Clearing (Per million gross notional cleared)
-----------------------------------------------------------------------------------------------------------------
                                         Credit index                                             Credit index
   EUR indices      EUR single names    options-- EUR        US indices      US single names      option-- US
                                           indices                                                 indices *
----------------------------------------------------------------------------------------------------------------
        [euro]4           [euro]12           [euro]20                 $5                $17              [$20]
----------------------------------------------------------------------------------------------------------------
* Subject to regulatory approval.

    The proposed incentive scheme defines a fee rebate based on volumes 
in order to make it more attractive for new buy side clients to select 
CDSClear services and/or CDSClear existing clients to clear more by 
reducing the marginal cost of clearing past pre-defined volumes 
thresholds as detailed hereinafter and below in Exhibit 5.

               1. Quarterly Credit Index Option Thresholds
------------------------------------------------------------------------
       Notional cleared (quarterly)                     Fees
------------------------------------------------------------------------
From [euro]0 to [euro]2bn.................  Full published variable fees
                                             apply.
From over [euro]2bn to [euro]10bn.........  20% discount on published
                                             variable fees (applicable
                                             only above [ Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml) or
     Send an email to [email protected]. Please include 
File Number SR-LCH SA-2018-005 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-LCH SA-2018-005. This 
file number 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 submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change 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 such filings will also be available for inspection 
and copying at the principal office of LCH SA and on LCH SA's website 
at https://www.lch.com/resources/rules-and-regulations/proposed-rule-changes-0.
    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-2018-005 and should 
be submitted on or before December 12, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-25342 Filed 11-20-18; 8:45 am]
BILLING CODE 8011-01-P
58798 Federal Register / Vol. 83, No. 225 / Wednesday, November 21, 2018 / Notices

satisfy the tier and thus receive a of the Act 16 and paragraph (f) of Rule cautioned that we do not redact or edit
discounted rate. The Exchange also 19b–4 thereunder.17 At any time within personal identifying information from
believes notwithstanding the proposed 60 days of the filing of the proposed rule comment submissions. You should
change, RMPL/RMPT Tier 1 still attracts change, the Commission summarily may submit only information that you wish
additional midpoint liquidity to the temporarily suspend such rule change if to make available publicly. All
Exchange, resulting in increased price it appears to the Commission that such submissions should refer to File
improvement opportunities for orders action is necessary or appropriate in the Number SR–CboeEDGA–2018–017 and
seeking an execution at the midpoint of public interest, for the protection of should be submitted on or before
the NBBO on the Exchange or investors, or otherwise in furtherance of December 12, 2018.
elsewhere. The Exchange notes that the purposes of the Act. For the Commission, by the Division of
routing through the Exchange is IV. Solicitation of Comments Trading and Markets, pursuant to delegated
voluntary. The Exchange also believes authority.18
that the proposed routing tier change is Interested persons are invited to
Eduardo A. Aleman,
non-discriminatory because it applies submit written data, views, and
Assistant Secretary.
uniformly to all members. arguments concerning the foregoing,
including whether the proposed rule [FR Doc. 2018–25340 Filed 11–20–18; 8:45 am]
B. Self-Regulatory Organization’s change is consistent with the Act. BILLING CODE 8011–01–P
Statement on Burden on Competition Comments may be submitted by any of
The Exchange does not believe that the following methods:
SECURITIES AND EXCHANGE
the proposed rule change will result in Electronic Comments COMMISSION
any burden on competition that is not
• Use the Commission’s internet
necessary or appropriate in furtherance
comment form (http://www.sec.gov/ [Release No. 34–84602; File No. SR–LCH
of the purposes of the Act, as amended. SA–2018–005]
rules/sro.shtml); or
Particularly, the proposed rates and • Send an email to rule-comments@
rebates would apply uniformly to all sec.gov. Please include File Number SR– Self-Regulatory Organizations; LCH
members, and members may opt to CboeEDGA–2018–017 on the subject SA; Notice of Filing and Immediate
disfavor the Exchange’s pricing if they line. Effectiveness of Proposed Rule
believe that alternatives offer them Change, as Modified by Amendment
better value. Accordingly, the Exchange Paper Comments No. 1, Relating to a New Fee Incentive
does not believe that the proposed • Send paper comments in triplicate Scheme
changes will impair the ability of to Secretary, Securities and Exchange
members or competing venues to November 15, 2018.
Commission, 100 F Street NE,
maintain their competitive standing in Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the
the financial markets. Further, excessive All submissions should refer to File Securities Exchange Act of 1934
fees would serve to impair an Number SR–CboeEDGA–2018–017. This (‘‘Act’’),1 and Rule 19b–4 thereunder,2
exchange’s ability to compete for order file number should be included on the notice is hereby given that on October
flow and members rather than subject line if email is used. To help the 31, 2018, Banque Centrale de
burdening competition. Moreover, the Commission process and review your Compensation, which conducts
proposed fee changes are designed to comments more efficiently, please use business under the name LCH SA (‘‘LCH
incentivize liquidity, which the only one method. The Commission will SA’’), filed with the Securities and
Exchange believes will benefit all post all comments on the Commission’s Exchange Commission (‘‘Commission’’)
market participants by encouraging a internet website (http://www.sec.gov/ the proposed rule change described in
transparent and competitive market. rules/sro.shtml). Copies of the Items I, II and III below, which Items
The Exchange operates in a highly submission, all subsequent have been prepared by LCH SA. On
competitive market in which market amendments, all written statements November 15, 2018, LCH SA filed
participants can readily direct their with respect to the proposed rule Amendment No. 1 to the proposed rule
order flow to competing venues. In such change that are filed with the change.3 LCH SA filed the proposal
an environment, the Exchange must Commission, and all written pursuant to Section 19(b)(3)(A) of the
continually review, and consider communications relating to the Act,4 and Rule 19b–4(f)(2) 5 thereunder,
adjusting, its fees and rebates to remain proposed rule change between the so that the proposal was effective upon
competitive with other exchanges. For Commission and any person, other than filing with the Commission. The
the reasons described above, the those that may be withheld from the Commission is publishing this notice to
Exchange believes that the proposed fee public in accordance with the solicit comments on the proposed rule
changes reflect this competitive provisions of 5 U.S.C. 552, will be change, as modified by Amendment No.
environment. available for website viewing and 1, from interested persons.
C. Self-Regulatory Organization’s printing in the Commission’s Public I. Clearing Agency’s Statement of the
Statement on Comments on the Reference Room, 100 F Street NE, Terms of Substance of the Proposed
Proposed Rule Change Received From Washington, DC 20549, on official Rule Change
Members, Participants, or Others business days between the hours of
The proposed rule change will
10:00 a.m. and 3:00 p.m. Copies of this
No written comments were either introduce a new fee incentive scheme
khammond on DSK30JT082PROD with NOTICES

filing will also be available for
solicited or received. inspection and copying at the principal 18 17 CFR 200.30–3(a)(12).
III. Date of Effectiveness of the office of the Exchange. All comments 1 15 U.S.C. 78s(b)(1).
Proposed Rule Change and Timing for received will be posted without change. 2 17 CFR 240.19b–4.

Commission Action Persons submitting comments are 3 In Amendment No. 1, LCH SA added to Item II

an additional description of the proposed fees.
The foregoing rule change has become 16 15 U.S.C. 78s(b)(3)(A). 4 15 U.S.C. 78s(b)(3)(A).
effective pursuant to Section 19(b)(3)(A) 17 17 CFR 240.19b–4(f). 5 17 CFR 240.19b–4(f)(2).

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Federal Register / Vol. 83, No. 225 / Wednesday, November 21, 2018 / Notices 58799

for CDSClear client clearing activities may be examined at the places specified specify a clearing fees incentive scheme
applicable from October 31st, 2018. in Item IV below. LCH SA has prepared for clients of CDSClear members,
summaries, set forth in sections A, B, including volume based discounts, in
II. Clearing Agency’s Statement of the and C below, of the most significant order to encourage the growth of the
Purpose of, and Statutory Basis for, the aspects of such statements.
Proposed Rule Change CDSClear client clearing franchise.
A. Clearing Agency’s Statement of the Currently, CDSClear clearing
In its filing with the Commission, Purpose of, and Statutory Basis for, the members are charged a fee on their
LCH SA included statements concerning Proposed Rule Change client clearing flows per EUR/USD
the purpose of and basis for the million of gross notional cleared defined
proposed rule change and discussed any 1. Purpose
as follows:
comments it received on the proposed The purpose of the proposed rule
rule change. The text of these statements change is for LCH SA to introduce and

VARIABLE FEE
Client Clearing
(Per million gross notional cleared)

EUR Credit index options— US Credit index option—
EUR single names US single names
indices EUR indices indices US indices *

Ö4 Ö12 Ö20 $5 $17 [$20]
* Subject to regulatory approval.

The proposed incentive scheme The thresholds apply to quarterly services provided by LCH SA, within
defines a fee rebate based on volumes in notional cleared and the potential the meaning of Section 17A(b)(3)(D) of
order to make it more attractive for new resulting rebate will be applied on the the Act.
buy side clients to select CDSClear bill for the last month of the quarter.
The first quarterly notionals to be B. Clearing Agency’s Statement on
services and/or CDSClear existing Burden on Competition
clients to clear more by reducing the reviewed will be the Q4 2018 ones.
The proposed fee discount scheme Section 17A(b)(3)(I) of the Act
marginal cost of clearing past pre-
will be effective until 31st December requires that the rules of a clearing
defined volumes thresholds as detailed
2020. agency not impose any burden on
hereinafter and below in Exhibit 5. Finally, the proposed incentive competition not necessary or
scheme will also exempt from clearing appropriate in furtherance of the
1. QUARTERLY CREDIT INDEX OPTION fees the registration of clients’ positions purposes of the Act.8 LCH SA does not
THRESHOLDS at CDSClear resulting from the transfer believe that the proposed rule change
of such positions from another CCP. would impose any burden on
Notional cleared competition.
Fees 2. Statutory Basis
(quarterly) As noted above, LCH SA believes that
Section 17A(b)(3)(D) of the Act the fees and related discounts have been
From Ö0 to Ö2bn ....... Full published vari- requires that the rules of a clearing
able fees apply. set up at an appropriate level given the
agency provide for the equitable costs and expenses to LCH SA in
From over Ö2bn to 20% discount on pub-
Ö10bn. lished variable fees
allocation of reasonable dues, fees, and offering and maintaining the relevant
(applicable only other charges.6 client clearing services.
above ×2bn). LCH SA has determined that the Additionally, the fees and related
Over Ö10bn ............... No further fees apply. proposed fees are reasonable and discounts will apply equally to all
appropriate to charge to offer and clients of all clearing members of
maintain CDSClear client clearing CDSClear.
2. QUARTERLY CREDIT INDEX services. Further, LCH SA does not believe that
THRESHOLDS In particular, LCH SA believes that the proposed rule change would have a
the volume-based discounts for burden on competition because it does
Notional cleared CDSClear client clearing activities have not adversely affect the ability of such
Fees
(quarterly) been set up at an appropriate level given Clearing Members or other market
the costs and expenses to LCH SA in participants generally to engage in
From Ö0 to Ö30bn ..... Full published vari- providing such services. cleared transactions or to access clearing
able fees apply. LCH SA believes that imposing such services.
Over Ö30bn ............... No further fees apply. clearing fees is consistent with the
requirements of Section 17A of the Act 7 C. Clearing Agency’s Statement on
and the regulations thereunder Comments on the Proposed Rule
3. QUARTERLY CORPORATE SINGLE Change Received From Members,
NAME THRESHOLDS applicable to it and in particular
Participants or Others
khammond on DSK30JT082PROD with NOTICES

provides for the equitable allocation of
Notional cleared reasonable fees, dues, and other charges Written comments relating to the
Fees among clearing members and market proposed rule change have not been
(quarterly)
participants by ensuring that Members solicited or received. LCH SA will
From Ö0 to Ö4bn ....... Full published fees pay reasonable fees and dues for the notify the Commission of any written
variable apply. comments received by LCH SA.
Over Ö4bn ................. No further fees apply. 6 15 U.S.C. 78q–1(b)(3)(D).
7 15 U.S.C. 78q–1. 8 15 U.S.C. 78q–1(b)(3)(I).

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58800 Federal Register / Vol. 83, No. 225 / Wednesday, November 21, 2018 / Notices

III. Date of Effectiveness of the Reference Room, 100 F Street NE, I. Self-Regulatory Organization’s
Proposed Rule Change and Timing for Washington, DC 20549, on official Description of the Proposed Rule
Commission Action business days between the hours of Change
The foregoing proposed rule change 10:00 a.m. and 3:00 p.m. Copies of such The Exchange proposes to amend its
has become effective upon filing filings will also be available for rules regarding the processing of minor
pursuant to Section 19(b)(3)(A) 9 of the inspection and copying at the principal rule violations. The scope of this filing
Act and Rule 19b–4(f)(2) 10 thereunder office of LCH SA and on LCH SA’s is limited solely to the application of the
because it establishes a fee or other website at https://www.lch.com/ proposed rule amendments to security
charge imposed by LCH SA on its resources/rules-and-regulations/ futures that may be traded on CFE.
Clearing Members. At any time within proposed-rule-changes-0. Although no security futures are
60 days of the filing of the proposed rule All comments received will be posted currently listed for trading on CFE, CFE
change, the Commission summarily may without change. Persons submitting may list security futures for trading in
temporarily suspend such proposed rule comments are cautioned that we do not the future. The text of the proposed rule
change if it appears to the Commission redact or edit personal identifying change is attached as Exhibit 4 to the
that such action is necessary or information from comment submissions. filing but is not attached to the
appropriate in the public interest, for publication of this notice.
You should submit only information
the protection of investors, or otherwise
that you wish to make available II. Self-Regulatory Organization’s
in furtherance of the purposes of the
publicly. All submissions should refer Statement of the Purpose of, and
Act.
to File Number SR–LCH SA–2018–005 Statutory Basis for, the Proposed Rule
IV. Solicitation of Comments and should be submitted on or before Change
Interested persons are invited to December 12, 2018.
submit written data, views, and In its filing with the Commission, CFE
For the Commission, by the Division of
arguments concerning the foregoing, included statements concerning the
Trading and Markets, pursuant to delegated
including whether the proposed rule purpose of and basis for the proposed
authority.11
change, as modified by Amendment No. rule change and discussed any
Eduardo A. Aleman, comments it received on the proposed
1, is consistent with the Act. Comments
Assistant Secretary. rule change. The text of these statements
may be submitted by any of the
following methods: [FR Doc. 2018–25342 Filed 11–20–18; 8:45 am] may be examined at the places specified
BILLING CODE 8011–01–P in Item IV below. CFE has prepared
Electronic Comments summaries, set forth in Sections A, B,
• Use the Commission’s internet and C below, of the most significant
comment form (http://www.sec.gov/ SECURITIES AND EXCHANGE aspects of such statements.
rules/sro.shtml) or COMMISSION A. Self-Regulatory Organization’s
• Send an email to rule-comments@
Statement of the Purpose of, and
sec.gov. Please include File Number SR– [Release No. 34–84601; File No. SR–CFE– Statutory Basis for, the Proposed Rule
LCH SA–2018–005 on the subject line. 2018–001] Change
Paper Comments
Self-Regulatory Organizations; Cboe 1. Purpose
• Send paper comments in triplicate Futures Exchange, LLC; Notice of
to Secretary, Securities and Exchange CFE Rule 714 (Imposition of Fines for
Filing of a Proposed Rule Change Minor Rule Violations) provides for the
Commission, 100 F Street NE,
Regarding Minor Rule Violations issuance of letters of caution or
Washington, DC 20549–1090.
All submissions should refer to File November 15, 2018.
summary fines for specified types of
Number SR–LCH SA–2018–005. This minor CFE rule violations instead of
Pursuant to Section 19(b)(7) of the addressing these violations through
file number should be included on the
Securities Exchange Act of 1934 formal disciplinary proceedings. Each
subject line if email is used. To help the
Commission process and review your (‘‘Act’’),1 notice is hereby given that on violation type under Rule 714 has a
comments more efficiently, please use October 31, 2018 Cboe Futures summary fine schedule that includes
only one method. The Commission will Exchange, LLC (‘‘CFE’’ or ‘‘Exchange’’) increasing monetary fines for
post all comments on the Commission’s filed with the Securities and Exchange subsequent violations by a party during
internet website (http://www.sec.gov/ Commission (‘‘SEC’’ or ‘‘Commission’’) a specified rolling time period and a
rules/sro.shtml). Copies of the the proposed rule change described in referral of that party to the CFE Business
submission, all subsequent Items I, II, and III below, which Items Conduct Committee once that party has
amendments, all written statements have been prepared by CFE. The committed a certain number of
with respect to the proposed rule Commission is publishing this notice to violations within that rolling time
change that are filed with the solicit comments on the proposed rule period. The referral to the BCC is so that
Commission, and all written change from interested persons. CFE a panel of the BCC (‘‘BCC Panel’’) may
communications relating to the also has filed this proposed rule change determine whether or not to authorize
proposed rule change between the with the Commodity Futures Trading the issuance of a statement of charges
Commission and any person, other than Commission (‘‘CFTC’’). CFE filed a against the party and proceed with a
written certification with the CFTC formal disciplinary proceeding with
khammond on DSK30JT082PROD with NOTICES

those that may be withheld from the
public in accordance with the under Section 5c(c) of the Commodity regard to the matter.
provisions of 5 U.S.C. 552, will be Exchange Act (‘‘CEA’’) 2 on October 31, CFE is making amendments to Rule
available for website viewing and 2018. 714 in conjunction with other rule
printing in the Commission’s Public amendments being made by CFE to its
11 17 CFR 200.30–3(a)(12). disciplinary rules, including to Rule
9 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(7). 714, that are not required to be
10 17 CFR 240.19b–4(f)(2). 2 7 U.S.C. 7a–2(c). submitted to the Commission pursuant

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Document Created: 2018-11-21 03:11:59
Document Modified: 2018-11-21 03:11:59
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 58798