10152 Federal Register / Vol. 86, No. 31 / Thursday, February 18, 2021 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91114; File No. SR–ICEEU– 

2021–002] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Notice of Filing 

of Proposed Rule Change Relating to 

Amendments to the ICE Clear Europe 

Price Submission Disciplinary 

Framework 

February 11, 2021. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on February 

2, 2021, ICE Clear Europe Limited filed 

with the Securities and Exchange 

Commission the proposed rule changes 

described in Items I, II and III below, 

which Items have been prepared 

primarily by ICE Clear Europe. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The principal purpose of the 

proposed amendments is for ICE Clear 

Europe to modify its Price Submission 

Disciplinary Framework (to be renamed 

the ‘‘Price Submission Disciplinary 

Procedure’’, referred to herein as the 

‘‘Procedure’’) to update the review 

period for the Clearing House when 

investigating missed price submissions, 

permit an annual one-time waiver 

available to Clearing Members in respect 

of any instance in which a Clearing 

Member has failed to timely provide 

submissions for which they hold cleared 

open interest with the Clearing House (a 

‘‘Missed Submission’’). ICE Clear 

Europe is also proposing to modify 

provisions relating to governance and 

exception handling to conform to other 

Clearing House procedures and remove 

unnecessary appendices and make 

certain other updates and clarifications 

as discussed herein. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, ICE 

Clear Europe 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. ICE 

Clear Europe 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 

(a) Purpose 

ICE Clear Europe is proposing to 

amend its Price Submission 

Disciplinary Procedure to: (i) Remove 

the description of the End of Day Price 

Discovery Process as unnecessary since 

it is set forth in the existing CDS End 

of Day Price Discovery Policy; (ii) 

update the process in respect of Missed 

Submissions to provide that (a) a 

Clearing Member may be granted one 

waiver per product class in a calendar 

year for a Missed Submission, rather 

than one waiver over the course of the 

clearing membership, and (b) the 

Clearing House has an additional five 

days to review a Clearing Member’s 

response to an initial Notice of 

Investigation under Rule 1002(b) before 

sending the subsequent Letter of 

Mindedness under Rule 1002(f); (iii) 

update governance and exception 

handling provisions; and (iv) make 

various drafting clarifications and 

improvements. 

General Drafting Clarifications and 

Improvements 

By way of general drafting 

clarifications and improvements, the 

document title would be changed from 

‘‘Price Submission Disciplinary 

Framework’’ to ‘‘Price Submission 

Disciplinary Procedure’’. Former 

Section 2.2 (End of Day Price Discovery 

Process) and Appendix A would be 

removed as these matters are covered in 

the existing CDS End Of Day Price 

Discovery Policy (the ‘‘Policy’’), and 

current Section 2.3 would be 

renumbered 2.2. A cross-reference to the 

Policy would be added to Section 1.1. 

To aid with readability, the term ‘‘CDS 

Clearing Member’’ would be shortened 

to ‘‘CM’’ throughout the Procedure and 

several sentences would be shortened or 

reformulated with [sic] change to their 

substantive meanings. References to 

CDX products would be replaced by 

references to CDX indices, a more 

precise term. A reference to Markit 

Group Limited would be updated to its 

current name IHS Markit. 

Price Submission Disciplinary 

Procedure 

The stated purpose of the Procedure 

would be simplified and clarified to 

provide that the document outlines the 

procedure to be used internally by ICE 

Clear Europe when taking disciplinary 

action in relation to price submissions. 

The statement that spread submissions 

will be counted as Missed Submissions 

would be replaced by a statement that 

submissions not adhering to the format 

described in Section 2.2.3 of the End of 

Day Price Discovery Policy, which 

requires index submissions to follow 

market convention in terms of providing 

prices as spreads, and be either 

midpoint or bid-offer, will be counted as 

Missed Submissions. The legal basis 

description would be amended to 

include a cross reference to Rule 503(g), 

rather than restate the text of Rule 

503(g). 

Price Submission Incentives 

In this section, a cross-reference to the 

deleted section 2.2 would be removed. 

Certain non-substantive drafting 

clarifications would be made to the 

discussion of Obvious Errors. 

Fixed Cash Assessments for Missed 

Submissions 

The amendments would provide that 

a CM in receipt of a Notice of 

Investigation issued in respect of an 

alleged Missed Submission will have 

five days to submit written comments. 

The amendments would provide for an 

additional five days for the Clearing 

House to review the Clearing Member’s 

comments before sending a Letter of 

Mindedness under Rule 1002(f). Such 

amendment would improve the process 

by affording the Clearing Member an 

opportunity to respond to the initial 

notice and giving the Clearing House 

time to assess the Clearing Member’s 

response before determining whether to 

take further action under the Rules. 

The amendments would also change 

the process for waiver of Missed 

Submissions (if a waiver is granted, no 

assessment would be due for the Missed 

Submission). Rather than a Clearing 

Member receiving one waiver over the 

course of its clearing membership for a 

Missed Submission, a Clearing Member 

would be eligible for one waiver per 

calendar year for Missed Submissions 

for single-name products and one 

waiver per calendar year for Missed 

Submissions for index products. 

Waivers would be limited to Missed 

Submissions caused by technical 

failures. The Clearing Members would 

be required to provide an adequate 

written explanation of the technical 

failure and summary of planned 

remedial actions. Only the first instance 

of a Missed Submission for the product 

category in any calendar year will be 

eligible for a waiver. 

Following the expiry of the ten day 

period from the Issuance of a Letter of 

Mindedness with respect to a Missed 


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Federal Register / Vol. 86, No. 31 / Thursday, February 18, 2021 / Notices 10153 

3 15 U.S.C. 78q–1. 

4 15 U.S.C. 78q–1(b)(3)(F). 

5 15 U.S.C. 78q–1(b)(3)(F). 

6 15 U.S.C. 78q–1(b)(3)(G). 

7 15 U.S.C. 78q–1(b)(3)(H). 

8 17 CFR 240.17Ad–22(e)(3)(i). 

9 Id. 

10 17 CFR 240.17Ad–22(e)(2). 

11 Id. 

Submission, where an assessment 

amount would be collected, a cash 

assessment notice would be issued, 

which would be calculated according to 

the cash assessment calculation details 

provided in the procedure. 

The amendments would also clarify 

the procedures by which a Clearing 

Member may assert that one or more 

Missed Submissions were due to 

extraordinary circumstances outside of 

its control, including to provide that the 

Head of Regulation and Compliance will 

determine whether such circumstances 

apply. 

Based on its experience with Missed 

Submissions, ICE Clear Europe believes 

the revised approach to waivers strikes 

a better balance than the current, onetime waiver, between the need for 

robust submissions under the Policy 

and the goal of not unnecessarily 

penalizing Clearing Members for 

technical failures. 

Document Governance and Exception 

Handling 

The amendments would include 

detail with respect to the governance 

and exception handling of the 

Procedure. Specifically, the Procedure 

would state that the document owner is 

responsible for ensuring that the 

Procedure remains up-to-date and is 

reviewed in accordance with the 

Clearing House’s governance processes. 

The Procedure would further provide 

that the document owner is to report 

material breaches or unapproved 

deviations from the Procedure to the 

document owner’s Head of Department, 

the Chief Risk Officer and the Head of 

Compliance (or their delegates) who 

together will determined if further 

escalation is required. Finally, 

exceptions to the Procedure would be 

approved in accordance with the 

Clearing House’s governance process for 

the Procedure. The approach to 

governance and exception handling is 

consistent with that of other ICE Clear 

Europe procedures. 

(b) Statutory Basis 

ICE Clear Europe believes that the 

proposed amendments to the Price 

Submission Disciplinary Procedure are 

consistent with the requirements of 

Section 17A of the Act 3 and the 

regulations thereunder applicable to it. 

In particular, Section 17A(b)(3)(F) of the 

Act 4 requires, 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, the 

safeguarding of securities and funds in 

the custody or control of the clearing 

agency or for which it is responsible, 

and the protection of investors and the 

public interest. 

The proposed changes to the Price 

Submission Disciplinary Procedure are 

designed to strengthen ICE Clear 

Europe’s arrangements and disciplinary 

procedures for managing Missed 

Submissions by Clearing Members and 

the relevant disciplinary procedures. 

The amendments provide an 

opportunity for a Clearing Member that 

has received to Notice of Investigation 

to provide comments, and for the 

Clearing House to review those 

comments before proceeding with 

disciplinary procedures. The 

amendments would also increase the 

Clearing House’s ability to provide a 

limited number of waivers for Missed 

Submissions from technical failures, 

from one waiver over the course of the 

clearing membership to one waiver per 

product class in a calendar year. The 

other proposed clarifications and 

changes to the Procedure enhance 

readability and ensure that the 

Procedure remains clear and up-to-date. 

In ICE Clear Europe’s view, the 

amendments will thus Through enhance 

the overall End of Day Price Submission 

process and the quality of submissions, 

which in turn supports the stability of 

the Clearing House and the prompt and 

accurate clearance and settlement of 

cleared contracts. The enhanced risk 

management is therefore also generally 

consistent with the protection of 

investors and the public interest in the 

safe operation of the Clearing House. 

(ICE Clear Europe would not expect the 

amendments to affect the safeguarding 

of securities and funds in ICE Clear 

Europe’s custody or control or for which 

it is responsible.) Accordingly, the 

amendments satisfy the requirements of 

Section 17A(b)(3)(F).5

In addition, in ICE Clear Europe’s 

view, the amended Procedure, like the 

current framework, would provide an 

appropriately tailored set of cash 

assessments for Missed Submissions, 

and waivers thereof, in light of the 

importance of end-of-day price 

submissions to the Clearing House’s risk 

management and settlement procedures. 

The Procedure is gthus consistent with 

the requirements of Section 17A(b)(3)(G) 

of the Act.6 The amendments also 

enhance the procedures for investing 

[sic] potential Missed Submissions, and 

for Clearing Members to submit 

comments with respect to 

investigations. In ICE Clear Europe’s 

view, this aspect of the Procedure is 

consistent with the requirements of 

Section 17A(b)(3)(H) of the Act.7

In addition, ICE Clear Europe believes 

the amendments satisfy Rule 17Ad– 

22(e)(3)(i),8 which requires the covered 

clearing agency 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 include risk 

management policies, procedures, and 

systems designed to identify, measure, 

monitor, and manage the range of risks 

that arise in or are borne by the covered 

clearing agency. The proposed 

amendments are intended to strengthen 

the End of Day Price Discovery Process 

by clarifying disciplinary procedures for 

Missed Submissions and the process for 

waivers. The inclusion of an 

opportunity for a Clearing Member’s 

response to an initial Notice of 

Investigation, and an opportunity for the 

Clearing House to review the response 

will better ensure that the Clearing 

House has sufficient time and 

information to assess a Clearing 

Member’s formal response in respect of 

a Missed Submission before 

determining whether to take further 

action under the Rules. ICE Clear 

Europe believes that the amendments to 

the Procedure are therefore consistent 

with the requirements of Rule 17Ad– 

22(e)(3)(i).9

Rule 17Ad–22(e)(2) 10 requires 

clearing agencies to establish reasonably 

designed policies and procedures to 

provide for governance arrangements 

that are clear and transparent and 

specify clear and direct lines of 

responsibility. The proposed 

amendments to the Procedure more 

clearly define the roles and 

responsibilities of the document owner, 

the Head of Department, the Chief Risk 

Officer and the Head of Compliance (or 

their delegates), consistent with 

governance arrangement for other ICE 

Clear Europe policies and procedures. 

ICE Clear Europe believes that the 

amendments to the Procedure are 

therefore consistent with the 

requirements of Rule 17Ad–22(e)(2).11


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10154 Federal Register / Vol. 86, No. 31 / Thursday, February 18, 2021 / Notices 

12 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 89062 

(June 12, 2020), 85 FR 36907. Comments received 

on the proposed rule change are available on the 

Commission’s website at: https://www.sec.gov/ 

comments/sr-cboe-2020-050/srcboe2020050.htm. 

4 In Amendment No. 1, the Exchange: (1) Limited 

the scope of its original proposal, which would 

have permitted orders for the accounts of market 

makers with an appointment in any class to be 

solicited for the initiating order in an AIM or FLEX 

AIM auction in that class, to only allow market 

makers with an appointment in SPX to be solicited 

for the initiating order in an AIM or FLEX AIM 

auction in SPX; and (2) provided additional data, 

justification, and support for its modified proposal. 

The full text of Amendment No. 1 is available on 

the Commission’s website at: https://www.sec.gov/ 

comments/sr-cboe-2020-050/srcboe2020050- 

7382058-218888.pdf. 

(B) Clearing Agency’s Statement on 

Burden on Competition 

ICE Clear Europe does not believe the 

proposed amendments would have any 

impact, or impose any burden, on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. The amendments 

are being adopted to update and clarify 

the Price Submission Disciplinary 

Procedure and would apply equally to 

all CDS Clearing Members. As a result, 

ICE Clear Europe does not expect that 

the proposed changes will adversely 

affect access to clearing or the ability of 

Clearing Members, their customers or 

other market participants to continue to 

clear contracts. ICE Clear Europe also 

does not believe the amendments would 

materially affect the cost of clearing or 

otherwise impact competition among 

Clearing Members or other market 

participants or limit market 

participants’ choices for selecting 

clearing services. Accordingly, ICE Clear 

Europe does not believe the 

amendments would impose any burden 

on competition not necessary or 

appropriate in furtherance of the 

purpose of the Act. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants or Others 

Written comments relating to the 

proposed amendments have not been 

solicited or received by ICE Clear 

Europe. ICE Clear Europe will notify the 

Commission of any written comments 

received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

the proposed rule change or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, security-based swap submission 

or advance notice is consistent with the 

Act. 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– 

ICEEU–2021–002 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–ICEEU–2021–002. 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 ICE Clear Europe and on ICE 

Clear Europe’s website at https://

www.theice.com/notices/ 

Notices.shtml?regulatoryFilings. 

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–ICEEU–2021–002 

and should be submitted on or before 

March 11, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–03217 Filed 2–17–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91116; File No. SR–CBOE– 

2020–050] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Order Approving a 

Proposed Rule Change, as Modified by 

Amendment Nos. 1 and 2, To Amend 

Rules 5.37 and 5.73 Related to the 

Solicitation of Market Makers for SPX 

Initiating Orders in the Automated 

Improvement Mechanism and FLEX 

Automated Improvement Mechanism 

February 11, 2021. 

I. Introduction 

On June 3, 2020, Cboe Exchange, Inc. 

(‘‘Exchange’’ or ‘‘Cboe’’) 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 

permit orders for the accounts of market 

makers with an appointment in S&P 

500® Index Options (‘‘SPX’’) to be 

solicited for the initiating order 

submitted for execution against an 

agency order into an Automated 

Improvement Mechanism (‘‘AIM’’) 

auction or a FLEX AIM auction. The 

proposed rule change was published for 

comment in the Federal Register on 

June 18, 2020.3 On July 2, 2020, the 

Exchange submitted Amendment No. 1 

to the proposed rule change, which 

replaced and superseded the proposed 

rule change in its entirety.4 On July 22, 

2020, the Exchange submitted 


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