30802 Federal Register / Vol. 83, No. 126 / Friday, June 29, 2018 / Notices 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

9 17 CFR 240.19b–4(f)(6). 

10 17 CFR 240.19b–4(f)(6)(iii). 

11For purposes only of waiving the 30-day 

operative delay, the Commission also has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 9 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 10

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has 

requested that the Commission waive 

the 30-day operative delay so that the 

proposed rule change may become 

operative upon filing. The proposed rule 

change merely relocates the co-location 

and direct connectivity rules in the 

Exchange’s Schedule of Fees and 

updates rule cross-references. 

Accordingly, the Commission believes 

that waiver of the 30-day operative 

delay is consistent with the protection 

of investors and the public interest and 

hereby waives the operative delay and 

designates the proposed rule change 

operative upon filing.11

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

change should be approved or 

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 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– 

MRX–2018–21 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–MRX–2018–21. 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 the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. 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–MRX–2018–21, and should 

be submitted on or before July 20, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13982 Filed 6–28–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83513; File No. SR–ICC– 

2018–006] 

Self-Regulatory Organizations; ICE 

Clear Credit LLC; Notice of Filing of 

Proposed Rule Change Relating to 

Amending the ICC Clearing Rules 

Regarding Mark-to-Market Margin 

June 25, 2018. 

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

Securities Exchange Act of 1934 1 and 

Rule 19b–4 2 thereunder, notice is 

hereby given that on June 13, 2018, ICE 

Clear Credit LLC (‘‘ICC’’) filed with the 

Securities and Exchange Commission 

the proposed rule change as described 

in Items I, II and III below, which Items 

have been prepared by ICC. 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, Security-Based Swap 

Submission, or Advance Notice 

The principal purpose of the 

proposed changes is to make changes to 

the ICC Clearing Rules (the ‘‘ICC Rules’’) 

to more clearly characterize Mark-toMarket Margin payments as settled-tomarket rather than collateralized-tomarket. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change, Security-Based 

Swap Submission, or Advance Notice 

In its filing with the Commission, ICC 

included statements concerning the 

purpose of and basis for the proposed 

rule change, security-based swap 

submission, or advance notice and 

discussed any comments it received on 

the proposed rule change, securitybased swap submission, or advance 

notice. The text of these statements may 

be examined at the places specified in 

Item IV below. ICC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change, Security-Based 

Swap Submission, or Advance Notice 

(a) Purpose 

ICC proposes revisions to Chapters 4, 

8, and 20 of the ICC Rules to more 

clearly characterize Mark-to-Market 

Margin payments as settlement 

payments (‘‘settled-to-market’’) rather 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 126 / Friday, June 29, 2018 / Notices 30803 

3Use of a settled-to-market model, rather than a 

collateralized-to-market model, is consistent with 

requirements applicable to a derivatives clearing 

organization, as interpreted by Commodity Futures 

Trading Commission (‘‘CFTC’’) staff. CFTC 

Interpretive Letter No. 17–51 (Oct. 12, 2017) 

(‘‘CFTC Letter’’). Use of a settled-to-market model 

also may result in more favorable capital treatment 

for positions in cleared derivatives for market 

participants that are subject to regulations of U.S. 

banking supervisors implementing the Basel III 

capital framework. See Office of the Comptroller of 

the Currency, Board of Governors of the Federal 

Reserve System, Federal Deposit Insurance 

Corporation, Regulatory Capital Treatment of 

Certain Centrally-cleared Derivative Contracts 

Under Regulatory Capital Rules (Aug. 14, 2017). 

4SR–ICC–2015–008. 

5See CFTC Letter, supra, for a discussion of the 

use of price alignment amount instead of price 

alignment interest. 6 15 U.S.C. 78q–1(b)(3)(F). 

than collateral (‘‘collateralized-tomarket’’). Under the settled-to-market 

model, the transfer of Mark-to-Market 

Margin constitutes a settlement of the 

contract’s outstanding exposure, with 

the receiving party taking outright title 

to the Mark-to-Market Margin and the 

transferring party retaining no rights to 

such margin. Under the collateralizedto-market model, the transfer of Markto-Market Margin constitutes a pledge of 

collateral, such that the transferring 

party has a right to reclaim the collateral 

and the receiving party has an 

obligation to return the collateral.3

ICC previously revised the Rules in 

2015 to clarify that Mark-to-Market 

Margin constituted a settlement 

payment. Such revisions did not result 

in a change in the manner in which 

Mark-to-Market Margin was calculated, 

paid or collected, and were intended to 

provide further clarity regarding the 

finality of ICC’s settlement cycle.4 ICC is 

proposing additional clarifying changes 

to the Rules. As with the prior changes, 

the proposed amendments do not 

change the manner in which Mark-toMarket Margin is calculated, or other 

current ICC operational practices. 

Rather, such changes consist of 

additional revisions to terminology to 

further clarify the legal characterization 

that payments of Mark-to-Market Margin 

represent settlement rather than 

collateral payments. These clarifying 

changes result from further legal 

analysis with respect to ICC’s 

characterization of Mark-to-Market 

Margin payments as settlement rather 

than as posting of collateral, as 

requested by its Clearing Participants 

(‘‘CPs’’). The proposed revisions are 

described in detail as follows. 

ICC proposes revising Rule 401 to 

reference Mark-to-Market Margin 

Balance, a new term that is defined in 

Rule 404 and refers to the aggregate 

amount of Mark-to-Market Margin paid 

or received. The term is used in several 

calculations, avoids the need to repeat 

the definition, and allows ICC to more 

clearly and fully describe specifics 

pertaining to its Mark-to-Market Margin 

calculation in a single section without 

combining it with other concepts. ICC 

proposes adding language to Rule 

401(a), which governs House Margin, to 

state that ICC calculates a net amount of 

Mark-to-Market Margin by subtracting a 

CP’s Mark-to-Market Margin Balance 

from a CP’s Mark-to-Market Margin 

Requirement. ICC proposes 

corresponding changes referencing 

Mark-to-Market Margin Balance in Rule 

401(b)(ii), which covers Client-Related 

Mark-to-Market Margin. Such changes 

are not intended to modify the current 

calculation of Mark-to-Market Margin, 

or other operational practices, but, 

instead, replace certain specifics 

relating to ICC’s Mark-to-Market Margin 

calculation with the defined term. The 

amendments do not change the manner 

in which Initial Margin is calculated, 

posted and held. 

Further, ICC proposes to specify that 

a CP’s Mark-to-Market Margin Balance 

is adjusted by an amount called the 

price alignment amount in revised Rule 

401(g). Specifically, ICC proposes to 

state that it will pay or charge a CP price 

alignment amounts on any Mark-toMarket Margin and interest on any cash 

Initial Margin at a rate that may be 

negative. A price alignment amount is 

economically equivalent to the 

‘‘interest’’ that ICC pays or charges a CP 

for any net Mark-to-Market Margin 

transferred between the parties under 

current Rule 401(g). However, since the 

term interest may be more typically 

associated with collateral, ICC proposes 

to refer to such an amount as price 

alignment to avoid confusion over the 

proper characterization of Mark-toMarket Margin as settlement payments.5

Such change will not affect operations, 

since ICC will continue to pay or charge 

a CP an amount, which serves the same 

purpose and is calculated identically, 

for any net Mark-to-Market Margin 

transferred between the parties. ICC also 

proposes separate clarifying language to 

note that the rate at which it pays or 

charges such an amount may be 

negative, to more clearly address the 

possibility of negative market rate 

environments. 

ICC proposes to specifically reference 

the applicable category of margin to 

avoid confusion over the proper 

characterization of Mark-to-Market 

Margin under the ICC Rules. ICC 

proposes to update Rule 401(h) to refer 

to substitutions of Initial Margin, and 

Rule 401(l) to refer to settlement finality 

in relation to Mark-to-Market Margin. 

The proposed changes to Rule 402, 

which governs ICC’s rights with respect 

to the use of margin, exclude Mark-toMarket Margin from subsections (a) and 

(b), remove details relating to Mark-toMarket Margin from subsection (b), and 

specify subsection (c)’s applicability to 

Initial Margin. ICC proposes adding 

language to Rule 402(e) to more clearly 

state that Mark-to-Market Margin 

payments constitute a settlement. 

Further, ICC proposes adding new 

subsection (c) to Rule 404 to define 

Mark-to-Market Margin Balance as a 

sum equal to the Mark-to-Market Margin 

value transferred by the CP to ICC 

minus the Mark-to-Market Margin value 

transferred by ICC to the CP. To avoid 

uncertainty, ICC also proposes to 

specifically reference the applicable 

category of margin in Rule 406(c). 

Namely, ICC proposes to clarify that the 

requirements set forth in Rule 406(c) 

regarding Client-Related Positions apply 

to Initial Margin. 

ICC proposes clarifications and 

conforming changes to Chapters 8 and 

20 of the ICC Rules. ICC proposes 

clarifying language in Rule 801(a)(i) to 

refer to the transfer of Mark-to-Market 

Margin to avoid confusion over the 

proper characterization of Mark-toMarket Margin as settlement payments, 

since ICC considers the loss after the 

application of Initial Margin and taking 

into account settlement of Mark-toMarket Margin to be uncollateralized 

loss. Under the proposed updates, Rule 

808 includes a conforming reference to 

Mark-to-Market Margin Balance. The 

proposed changes to Rule 810(e) replace 

terminology that is commonly used in 

conjunction with collateral to avoid 

confusion over the proper 

characterization of Mark-to-Market 

Margin as settlement payments. ICC 

proposes to clarify in Rule 20– 

605(c)(i)(B), which specifies the 

resources to be used to cover losses with 

respect to Client-Related Positions, that 

ICC will use the defaulting CP’s ClientRelated Mark-to-Market Margin, to the 

extent not previously applied to pay 

Mark-to-Market Margin to other CPs. 

(b) Statutory Basis 

Section 17A(b)(3)(F) of the Act 6

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; to assure the 

safeguarding of securities and funds 

which are in the custody or control of 

the clearing agency or for which it is 


sradovich on DSK3GMQ082PROD with NOTICES
30804 Federal Register / Vol. 83, No. 126 / Friday, June 29, 2018 / Notices 

7 Id. 

8 Id. 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

responsible; and to comply with the 

provisions of the Act and the rules and 

regulations thereunder. ICC believes 

that the proposed rule changes are 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to ICC, in 

particular, to Section 17A(b)(3)(F),7

because ICC believes that the proposed 

rule changes will promote the prompt 

and accurate clearance and settlement of 

securities transactions, derivatives 

agreements, contracts, and transactions, 

and contribute to the safeguarding of 

securities and funds associated with 

security-based swap transactions in 

ICC’s custody or control, or for which 

ICC is responsible. The proposed 

changes to the ICC Rules are consistent 

with the current calculation of Mark-toMarket Margin and related operational 

practices and are intended to more 

clearly reflect the legal characterization 

of Mark-to-Market Margin payments as 

settlement rather than collateral 

payments. The proposed changes are 

designed to add certainty to ICC’s Rules 

by incorporating clarifying language and 

changes to avoid a potential 

mischaracterization of Mark-to-Market 

Margin payments. The proposed 

revisions will provide market 

participants with certainty surrounding 

ICC’s treatment of Mark-to-Market 

Margin, which will facilitate 

compliance with market participants’ 

own capital requirements and therefore 

further the public interest. As such, the 

proposed changes provide additional 

clarity and transparency in the ICC 

Rules and are designed to promote the 

prompt and accurate clearance and 

settlement of securities transactions, 

derivatives agreements, contracts, and 

transactions within the meaning of 

Section 17A(b)(3)(F) 8 of the Act. 

(B) Clearing Agency’s Statement on 

Burden on Competition 

ICC does not believe the proposed 

rule changes would have any impact, or 

impose any burden, on competition. 

The changes, which further clarify that 

payments of Mark-to-Market Margin 

represent settlement rather than 

collateral payments, result in no 

operational changes and apply 

uniformly across all market participants. 

Therefore, ICC does not believe the 

proposed rule changes impose any 

burden on competition that is 

inappropriate in furtherance of the 

purposes of the Act. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change, Security-Based Swap 

Submission, or Advance Notice 

Received From Members, Participants or 

Others 

Written comments relating to the 

proposed rule change have not been 

solicited or received. ICC will notify the 

Commission of any written comments 

received by ICC. 

III. Date of Effectiveness of the 

Proposed Rule Change, Security-Based 

Swap Submission, or Advance Notice 

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 

such 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– 

ICC–2018–006 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–ICC–2018–006. 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, security-based swap 

submission, or advance notice that are 

filed with the Commission, and all 

written communications relating to the 

proposed rule change, security-based 

swap submission, or advance notice 

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 Credit and on ICE 

Clear Credit’s website at https://

www.theice.com/clear-credit/regulation. 

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–ICC–2018–006 and 

should be submitted on or before July 

20, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13985 Filed 6–28–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83514; File No. SR–GEMX– 

2018–22) 

Self-Regulatory Organizations; Nasdaq 

GEMX, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Relocate the 

Exchange’s Rules Pertaining to CoLocation and Direct Connectivity 

June 25, 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 June 13, 

2018, Nasdaq GEMX, LLC (‘‘GEMX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 


sradovich on DSK3GMQ082PROD with NOTICES