Federal Register / Vol. 83, No. 141 / Monday, July 23, 2018 / Notices 34891 

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

2 17 CFR 240.19b–4. 

3Exchange Act Release No. 82496 (Jan. 12, 2018), 

83 FR 2855 (Jan. 19, 2018) (SR–ICEEU–2017–016) 

(‘‘Recovery Plan Notice’’); Exchange Act Release 

No. 82497 (Jan. 12, 2018), 83 FR 2847 (Jan. 19, 

2018) (SR–ICEEU–2017–017) (‘‘Wind-Down Plan 

Notice’’). 

4Exchange Act Release No. 82786 (Feb. 27, 2018), 

83 FR 9345 (Mar. 5, 2018) (SR–ICEEU–2017–016); 

Exchange Act Release No. 82782 (Feb. 27, 2018), 83 

FR 9351 (Mar. 5, 2018) (SR–ICEEU–2017–017). 

(ITAAC) closure notifications (ICNs) 

under paragraph 52.99(c)(1) of title 10 of 

the Code of Federal Regulations (10 

CFR), informing the NRC that the 

licensee has successfully performed the 

required inspections, tests, and 

analyses, and that the acceptance 

criteria are met for: 

VEGP Unit 3 ITAAC 

2.1.02.08c (31), 2.1.02.09b.i (42), 

2.1.02.12a.viii (60), 2.1.03.08 (80), 

2.1.03.14 (89), 2.2.03.08c.xiv (199), 

2.2.04.08b.ii (238), 2.2.04.09b.ii 

(243), 2.3.01.03.i (280), 2.3.03.03a 

(320), 2.3.03.03b (321), 2.3.03.03d 

(323), 2.3.04.08 (335), 2.3.04.09 

(336), 2.3.06.09a.i (372), 

2.3.06.09a.ii (373), 2.3.06.09b.i 

(374), 2.3.07.08.i (409), 2.3.08.02.ii 

(416), 2.3.09.03.iv (426), 2.3.11.02.i 

(450), 2.3.11.03a (453), 2.3.12.02 

(457), 2.3.14.03 (479), 2.4.02.03.i 

(500), 2.4.02.03.iii (502), 2.5.01.03h 

(518), 2.5.09.02 (576), 2.5.09.03 

(577), C.2.6.09.01 (658), C.2.6.12.01 

(671), C.2.6.12.02 (672), C.2.6.12.03 

(673), C.2.6.12.04 (674), C.2.6.12.05 

(675), 2.7.02.03b (704), 3.2.00.08 

(757), and C.3.8.01.01 (842). 

VEGP Unit 4 ITAAC 

2.1.02.08c (31), 2.1.02.09b.i (42), 

2.1.02.12a.viii (60), 2.1.03.02c (71), 

2.1.03.08 (80), 2.1.03.14 (89), 

2.2.03.08c.xiv (199), 2.2.04.08a.i 

(235), 2.2.04.08a.ii (236), 

2.2.04.08b.ii (238), 2.2.04.09b.ii 

(243), 2.3.01.03.i (280), 2.3.03.03b 

(321), 2.3.03.03d (323), 2.3.04.08 

(335), 2.3.04.09 (336), 2.3.06.09a.i 

(372), 2.3.06.09a.ii (373), 

2.3.06.09b.i (374), 2.3.07.08.i (409), 

2.3.08.02.ii (416), 2.3.09.03.iv (426), 

2.3.11.02.i (450), 2.3.11.03a (453), 

2.3.12.02 (457), 2.3.14.03 (479), 

2.4.02.03.i (500), 2.4.02.03.iii (502), 

2.5.01.03h (518), 2.5.02.07c (536), 

2.5.09.02 (576), 2.5.09.03 (577), 

C.2.6.09.01 (658), 2.7.02.03b (704), 

3.1.00.08 (737), 3.2.00.08 (757), and 

C.3.8.01.01 (842). 

The ITAAC for VEGP Unit 3 are in 

Appendix C of the VEGP Unit 3 

combined license (ADAMS Accession 

No. ML14100A106). The ITAAC for 

VEGP Unit 4 are in Appendix C of VEGP 

Unit 4 combined license (ADAMS 

Accession No. ML14100A135). 

II. NRC Staff Determination of 

Completion of ITAAC 

The NRC staff has determined that the 

specified inspections, tests, and 

analyses have been successfully 

completed, and that the specified 

acceptance criteria are met. The 

documentation of the NRC staff’s 

determination is in the ITAAC Closure 

Verification Evaluation Form (VEF) for 

each ITAAC. The VEF is a form that 

represents the NRC staff’s structured 

process for reviewing ICNs. Each ICN 

presents a narrative description of how 

the ITAAC was completed. The NRC’s 

ICN review process involves a 

determination on whether, among other 

things: (1) Each ICN provides sufficient 

information, including a summary of the 

methodology used to perform the 

ITAAC, to demonstrate that the 

inspections, tests, and analyses have 

been successfully completed; (2) each 

ICN provides sufficient information to 

demonstrate that the acceptance criteria 

of the ITAAC are met; and (3) any NRC 

inspections for the ITAAC have been 

completed and any ITAAC findings 

associated with that ITAAC have been 

closed. 

The NRC staff’s determination of the 

successful completion of these ITAAC is 

based on information available at this 

time and is subject to the licensee’s 

ability to maintain the condition that 

the acceptance criteria are met. If the 

staff receives new information that 

suggests the staff’s determination on any 

of these ITAAC is incorrect, then the 

staff will determine whether to reopen 

that ITAAC (including withdrawing the 

staff’s determination on that ITAAC). 

The NRC staff’s determination will be 

used to support a subsequent finding, 

pursuant to 10 CFR 52.103(g), at the end 

of construction that all acceptance 

criteria in the combined license are met. 

The ITAAC closure process is not 

finalized for these ITAAC until the NRC 

makes an affirmative finding under 10 

CFR 52.103(g). Any future updates to 

the status of these ITAAC will be 

reflected on the NRC’s website at http:// 

www.nrc.gov/reactors/new-reactors/ 

oversight/itaac.html. 

This notice fulfills the staff’s 

obligations under 10 CFR 52.99(e)(1) to 

publish a notice in the Federal Register 

of the NRC staff’s determination of the 

successful completion of inspections, 

tests and analyses. 

Vogtle Electric Generating Plant Unit 3, 

Docket No. 5200025 

A complete list of the review status 

for VEGP Unit 3 ITAAC, including the 

submission date and ADAMS Accession 

Number for each ICN received, the 

ADAMS Accession Number for each 

VEF, and the ADAMS Accession 

Numbers for the inspection reports 

associated with these specific ITAAC, 

can be found on the NRC’s website at 

http://www.nrc.gov/reactors/newreactors/new-licensing-files/vog3- 

icnsr.pdf. 

Vogtle Electric Generating Plant Unit 4, 

Docket No. 5200026 

A complete list of the review status 

for VEGP Unit 4 ITAAC, including the 

submission date and ADAMS Accession 

Number for each ICN received, the 

ADAMS Accession Number for each 

VEF, and the ADAMS Accession 

Numbers for the inspection reports 

associated with these specific ITAAC, 

can be found on the NRC’s website at 

http://www.nrc.gov/reactors/newreactors/new-licensing-files/vog4- 

icnsr.pdf. 

Dated at Rockville, Maryland, this 18th day 

of July, 2018. 

For the Nuclear Regulatory Commission. 

Paul B. Kallan, 

Acting Chief, Licensing Branch 4, Division 

of Licensing, Siting, and Environmental 

Analysis, Office of New Reactors. 

[FR Doc. 2018–15683 Filed 7–20–18; 8:45 am] 

BILLING CODE 7590–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83651; File Nos. SR– 

ICEEU–2017–016 and SR–ICEEU–2017–017] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Order Approving 

Proposed Rule Changes Related to the 

ICE Clear Europe Recovery and WindDown Plans 

July 17, 2018. 

I. Introduction 

On December 29, 2017, ICE Clear 

Europe Limited (‘‘ICE Clear Europe’’) 

filed with the Securities and Exchange 

Commission, pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Exchange Act’’),1 and Rule 

19b–4 thereunder,2 proposed rule 

changes related to its Recovery Plan and 

Wind-Down Plan. The proposed rule 

changes were published for comment in 

the Federal Register on January 19, 

2018.3 On February 27, 2018, the 

Commission designated a longer period 

for Commission action on the proposed 

rule changes.4 On April 17, 2018, the 

Commission instituted proceedings 


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34892 Federal Register / Vol. 83, No. 141 / Monday, July 23, 2018 / Notices 

5 15 U.S.C. 78s(b)(2)(B). 

6Exchange Act Release No. 83055 (Apr. 17, 2018), 

83 FR 17575 (Apr. 20, 2018) (SR–ICEEU–2017–016 

and SR–ICEEU–2017–017). 

7The term ‘‘covered clearing agency’’ is defined 

in Rule 17Ad–22(a)(5), 17 CFR 240.17Ad–22(a)(5). 

8 17 CFR 240.17Ad–22(e)(3)(ii). 

9Standards for Covered Clearing Agencies, 

Exchange Act Release No. 78961 (Sep. 28, 2016), 81 

FR 70786, 70809 (Oct. 13, 2016) (‘‘CCA Standards 

Adopting Release’’). 

10The description of the Recovery Plan is 

substantially excerpted from the Recovery Plan 

Notice. 

11 In the Recovery Plan, ICE Clear Europe refers 

to its recovery tools, mechanisms, and options as 

‘‘Recovery Options.’’ The Commission has generally 

referred to these items as ‘‘recovery tools.’’ See CCA 

Standards Adopting Release, 81 FR at 70810. For 

the purposes of this Order, the term ‘‘recovery 

tools’’ is used to refer to Recovery Options. 

12Capitalized terms used but not defined herein 

have the meanings specified in the Rules. 

13The Commission’s analysis of the Recovery 

Plan is limited to the CDS clearing services 

provided by ICE Clear Europe, as the F&O clearing 

services are outside the Commission’s jurisdiction. 

under Section 19(b)(2)(B) 5 of the 

Exchange Act to determine whether to 

approve or disapprove the proposed 

rule changes.6 The Commission did not 

receive comments regarding the 

proposed rule changes. For the reasons 

discussed below, the Commission is 

approving the proposed rule changes. 

II. Description of the Proposed Rule 

Changes 

As a ‘‘covered clearing agency,’’ 7 ICE 

Clear Europe 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 winddown of the covered clearing agency 

necessitated by credit losses, liquidity 

shortfalls, losses from general business 

risk, or any other losses.’’ 8 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 thereunder because 

such plans would constitute changes to 

a stated policy, practice, or 

interpretation of a covered clearing 

agency.9 Accordingly, a covered 

clearing agency, such as ICE Clear 

Europe, is required to file its plans for 

recovery and orderly wind-down with 

the Commission. 

A. Recovery Plan (ICEEU–2017–016) 10

ICE Clear Europe’s Recovery Plan, 

among other things, (a) identifies the 

critical services that ICE Clear Europe 

provides, (b) outlines a number of stress 

scenarios that may result in significant 

losses, a liquidity shortfall, suspension 

or failure of its critical services and 

related functions and systems, and 

damage to other market infrastructures, 

and (c) describes the recovery tools, 

mechanisms, and options that ICE Clear 

Europe may use to address a stress 

scenario and continue to provide its 

critical services.11 The Recovery Plan 

also addresses the roles and 

responsibility of the ICE Clear Europe 

Board of Directors (‘‘Board’’), 

management, and other personnel, 

including with respect to development, 

review and approval, testing and 

maintenance, and liaison with relevant 

regulatory authorities. Notably, the 

Recovery Plan is based on, and intended 

to be consistent with, ICE Clear Europe’s 

Clearing Rules (‘‘Rules’’), Procedures, 

and existing risk management 

frameworks, policies, and procedures.12

The elements of the Recovery Plan are 

described in further detail below. 

Critical Services and Functions. ICE 

Clear Europe determined that its futures 

and options (‘‘F&O’’) and credit default 

swap (‘‘CDS’’) product category clearing 

services, as well as its related treasury 

and banking services, are critical 

services.13 The Recovery Plan describes 

the methodology used by ICE Clear 

Europe to assess the criticality of 

services for the purpose of recovery 

planning. 

ICE Clear Europe also identified its 

‘‘front-end business functions’’ (i.e., 

those that are essential to the provision 

of its critical services) and the functions 

that support these critical services, 

including information technology 

services. Specifically, the Recovery Plan 

identifies the particular information 

technology systems and services used 

by ICE Clear Europe in providing its 

clearing services, including trade 

management systems, risk systems, and 

delivery systems. It also identifies the 

locations from which these services are 

provided and the party that provides the 

services, in cases where the services are 

provided by an affiliate or other third 

party. The Recovery Plan also identifies 

other key service providers on which 

ICE Clear Europe relies, including 

custodians, Concentration Banks, other 

approved payment banks, investment 

managers, and delivery services 

providers. Notably, the Recovery Plan 

considers the key services provided by 

ICE affiliates in support of ICE Clear 

Europe’s clearing activities, including 

information technology and risk 

management services. 

Stress Scenarios. The Recovery Plan 

analyzes different stress scenarios that 

may affect ICE Clear Europe’s ability to 

continue to provide its critical services. 

The two categories of stress scenarios in 

the Recovery Plan are default losses and 

non-default losses. ICE Clear Europe 

considers default losses to be losses 

suffered by ICE Clear Europe as a result 

of the default of one or more Clearing 

Members, and it considers non-default 

losses to be losses suffered by ICE Clear 

Europe from identified general business 

and operational risk events, investment 

losses, system outages, or world-wide or 

regional political or macroeconomic 

events. In both categories, ICE Clear 

Europe considers the effect of such 

losses on liquidity and the resulting risk 

of contagion. 

ICE Clear Europe uses a risk-based 

approach to analyzing its scenarios, 

which consists of different impact 

categories and severity levels. The 

Recovery Plan contemplates that the 

range of responses to a loss scenario, 

including the potential recovery tools 

used, will depend on the severity level. 

A low severity loss event would involve 

limited or no use of recovery tools, 

while a severe loss scenario would 

require use of all available recovery 

tools. 

Recovery Tools. The Recovery Plan 

identifies the likely recovery tools that 

ICE Clear Europe may implement 

depending upon the severity of the 

impact of the scenario at issue. The 

Recovery Plan is intended to be flexible 

and provide structure and guidance to 

management. It is not designed to be 

prescriptive, recognizing that the 

actions to be taken by ICE Clear Europe 

may vary depending on the 

circumstances which lead to the 

implementation of the Recovery Plan. 

The Recovery Plan outlines the 

situations and sequence in which each 

of the recovery tools is likely to be used, 

recognizing that ICE Clear Europe has 

discretion as to the particular actions to 

take in any particular loss scenarios. 

The Recovery Plan specifies the 

expected bases for using particular 

recovery tools. In general, ICE Clear 

Europe expects that the use of recovery 

tools will be in extreme circumstances 

where losses exceed its prefunded 

resources. 

The Recovery Plan considers a nonexhaustive list of available recovery 

tools in terms of a number of factors, 

including the speed with which each 

tool can be implemented, the impact of 

each tool on ICE Clear Europe, the 

impact of each tool on Clearing 

Members and their customers, and the 

effect of each tool on other market 

infrastructures. In general, for default 


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Federal Register / Vol. 83, No. 141 / Monday, July 23, 2018 / Notices 34893 

14See ICE Clear Europe Rules 908(c); 910. 

15 ICE Clear Europe Rules related to clearing 

member default generally discuss Default Auctions. 

See generally ICE Clear Europe Rules, Part 9. 

16See ICE Clear Europe Rule 905(c). 

17See ICE Clear Europe Rule 904. 

18See ICE Clear Europe Rule 919; see also 

Exchange Act Release 72551 (Jul. 8, 2014), 79 FR 

40805 (Jul. 14, 2014) (SR–ICEEU–2014–06). 

19By contrast, as described in the Wind-Down 

Plan Notice, ICE Clear Europe considers that a 

wind-down would result in the transfer or 

termination of both clearing services. See WindDown Plan Notice, 83 FR at 2847. 

20The description of the Wind-Down Plan is 

substantially excerpted from the Wind-Down Plan 

Notice. 

losses arising in CDS clearing, the 

relevant recovery tools include, 

consistent with the Rules, (i) power of 

assessment, (ii) Default Auctions, (iii) 

forced allocation, and (iv) porting of 

client positions. The power of 

assessment would permit ICE Clear 

Europe to charge non-defaulting CDS 

Clearing Members up to one times the 

amount of their Guaranty Fund 

Contributions at the end of the waterfall 

of financial resources for a CDS Clearing 

Member Default.14 A Default Auction 

would take place in accordance with the 

CDS Default Auction Procedures to 

remove a defaulting CDS Clearing 

Member’s positions and with the goal of 

regaining a matched book.15 To the 

extent the CDS Contracts of a defaulting 

CDS Clearing Member are not 

terminated, transferred, or closed out, 

ICE Clear Europe has the discretion to 

force allocation of those contracts by 

requiring the entry into new CDS 

Contracts between ICE Clear Europe and 

non-defaulting CDS Clearing 

Members.16 For a CDS Clearing Member 

with client-related positions, ICE Clear 

Europe may transfer or port those 

positions to a non-defaulting CDS 

Clearing Member.17

For non-default losses, recovery tools 

include (i) emergency liquidity 

facilities, (ii) investment loss allocation 

to Clearing Members, and (iii) service 

closure. With respect to investment loss 

allocation, pursuant to its Rules, ICE 

Clear Europe generally would be 

responsible for the first $90 million in 

investment losses, and any further 

investment losses would be mutualized 

among Clearing Members.18 With 

respect to service closure, because ICE 

Clear Europe provides separate clearing 

services for two product categories, it 

considers the closure of one service, and 

continuation of the other, as a possible 

recovery scenario.19

The Recovery Plan specifies the 

decision-making process for the use of 

the recovery tools separately for default 

and non-default loss scenarios. In most 

cases, under the Rules and Procedures, 

the ICE Clear Europe President and 

Managing Director (‘‘President’’), 

pursuant to authority delegated by the 

Board, is responsible for such decisions. 

In the case of default events, the 

decision making would consider the 

advice of the Default Management 

Committee. In practice, the President, 

where appropriate and time permitting, 

would be expected to consult with the 

Board or with individual Board 

members before taking significant 

actions. The President may also call an 

emergency Board meeting or make 

Board members aware of the current 

position. The President will report 

decisions to the Board at the next formal 

Board meeting. If the President is 

absent, the ICE Clear Europe Chief 

Operating Officer will act in the 

President’s place. 

The Recovery Plan also identifies 

early warning indicators and tools 

intended to notify ICE Clear Europe 

management that use of recovery tools 

may be required, and where possible, 

avoid the need for such actions. Such 

potential early warning indications of a 

potential loss scenario include repeated 

non-compliance by a Clearing Member 

with membership or other requirements, 

actions taken by regulators or other 

governmental authorities with respect to 

a Clearing Member, certain quantitative 

factors, restructuring, and similar 

events. The Recovery Plan also 

identifies particular means of 

monitoring for potential loss scenarios 

following such indications. The tools to 

potentially avoid the need for such 

actions include liquidity forecasting and 

monitoring, use of a conservative 

approach to counterparty credit 

analyses and establishment of margin 

and Guaranty Fund requirements, use of 

comprehensives risk metrics to monitor 

Clearing Member financial performance, 

back-testing and stress testing, and other 

assessments. 

Governance. The President is 

ultimately responsible for the Recovery 

Plan. The Recovery Plan was prepared 

with the active involvement of the 

management of ICE Clear Europe, and 

the Board has reviewed and approved 

the Recovery Plan. The ICE Clear 

Europe Head of Regulation is 

responsible for facilitating the overall 

production, implementation, and 

maintenance of the Recovery Plan. The 

ICE Clear Europe Board Audit 

Committee, Chief Risk Officer, Chief 

Operating Officer, and Executive Risk 

Committee also have roles in the 

implementation of the Recovery Plan. 

Relevant business units are 

responsible for ensuring that the 

Recovery Plan remains up-to-date and 

reviewed in accordance with internal 

review and governance control 

arrangements. On an annual basis, the 

ICE Clear Europe Head of Regulation 

will revise the Recovery Plan. Material 

changes to the Recovery Plan must be 

reviewed by ICE Clear Europe 

management and be subject to 

appropriate governance. The Recovery 

Plan is subject to annual review by the 

Board Audit Committee and the Board. 

The scenarios and actions that support 

the Recovery Plan are subject to Board 

approval annually. 

Ad hoc reviews of the Recovery Plan 

may be commissioned if the business 

materially changes, such as the 

introduction of a new service. Material 

changes to the Recovery Plan or the 

scenarios, including those brought about 

by market events, are subject to Board 

approval, following their review and 

discussion by the Board Audit 

Committee. Deviations from the 

Recovery Plan are required to be 

reported to the Board. 

B. Wind-Down Plan (ICEEU–2017– 

017) 20

ICE Clear Europe’s Wind-Down Plan 

is intended to address scenarios in 

which ICE Clear Europe determines to 

wind-down, in an orderly fashion, its 

clearing services. The Wind-Down Plan 

is based on, and intended to be 

consistent with, the Rules and 

Procedures, as well as its existing risk 

management frameworks, policies, and 

procedures. 

The Wind-Down Plan addresses three 

particular categories of scenarios in 

which wind-down may occur. First, in 

a non-insolvency scenario, the Board 

would voluntarily decide to wind-down 

the clearing business. For example, the 

Board may determine that ICE Clear 

Europe’s business model has become 

unviable. Second, in an insolvency 

scenario not linked to a Clearing 

Member default, ICE Clear Europe 

would be wound down as a result of a 

severe loss unrelated to Clearing 

Member default that could not be 

addressed through the Recovery Plan or 

other means that permit continued 

operations. Third, in an insolvency 

scenario linked to a Clearing Member 

default, ICE Clear Europe would be 

wound down as a result of losses from 

the default of one or more Clearing 

Members that could not be addressed 

through the Recovery Plan or other 

means that permit continued operation, 

in accordance with relevant default 

rules. 

The Wind-Down Plan identifies a 

variety of options for wind-down, 

depending on the scenario involved. In 

the case of an insolvency of ICE Clear 


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34894 Federal Register / Vol. 83, No. 141 / Monday, July 23, 2018 / Notices 

21 ICE Clear Europe can take different actions 

with respect to its two product categories, and in 

the event of a transfer, F&O clearing need not be 

transferred to the same clearing house as CDS 

clearing. 

22 15 U.S.C. 78s(b)(2)(C). 

23 15 U.S.C. 78q–1(b)(3)(F). 

24 17 CFR 240.17Ad–22(e)(2); (e)(3)(ii); (e)(15)(i)– 

(ii). 

25 15 U.S.C. 78q–1(b)(3)(F). 26 15 U.S.C. 78q–1(b)(3)(F). 

Europe as a result of non-default losses, 

the Wind-Down Plan contemplates that 

all open contracts will be terminated 

and net sums calculated to be payable 

to or from each Clearing Member for 

each account category. 

For a voluntary wind-down or a winddown following a Clearing Member 

default, the Wind-Down Plan 

contemplates that, for each product 

category, ICE Clear Europe will either 

transfer clearing to another clearing 

house or terminate clearing.21 The 

ability to transfer clearing will depend 

on whether the relevant market and 

market participants desire, and are able, 

to continue trading and clearing of the 

relevant product through another 

clearing house, and on whether another 

clearing house can be found to take the 

product. Following the transfer and/or 

termination of clearing, ICE Clear 

Europe will wind-down the remaining 

aspects of its business and contractual 

relationships. 

Once there is a possibility of winddown, or the Board has agreed in 

principle to a wind-down, a WindDown Planning Committee, including 

senior management, would be 

established. The committee would be 

tasked with exploring with Clearing 

Members, exchanges, alternative 

clearing houses, and regulators the 

relevant approaches to wind-down, with 

a goal of minimizing adverse impact on 

Clearing Members. The Wind-Down 

Plan outlines a number of 

considerations for both termination and 

transfer options that the committee 

should consider. The committee would 

report to the Board. This consultation 

process is designed to reflect the fact 

that, in a wind-down situation, the 

Wind-Down Plan would likely be 

affected by numerous additional 

considerations and could require 

adjustment and modification to match 

specific circumstances. 

Any decision to wind-down is 

expected to be considered over a period 

of months. Such a decision would 

involve consultation with members, 

potential alternative clearing houses, 

exchanges, and regulators, and it would 

require Board approval. The WindDown Plan contemplates that a specific 

execution plan will be developed for 

any wind-down, based on the relevant 

situation. 

III. Discussion and Commission 

Findings 

Section 19(b)(2)(C) of the Exchange 

Act directs the Commission to approve 

a proposed rule change of a selfregulatory organization if it finds that 

such proposed rule change is consistent 

with the requirements of the Exchange 

Act and the rules and regulations 

thereunder applicable to such 

organization.22 For the reasons given 

below, the Commission finds that the 

proposed rule changes are consistent 

with Section 17A(b)(3)(F) of the 

Exchange Act 23 and Rules 17Ad– 

22(e)(2), 17Ad–22(e)(3)(ii), and 17Ad– 

22(e)(15)(i)–(ii) thereunder.24

A. Consistency With Section 

17A(b)(3)(F) of the Exchange Act 

Section 17A(b)(3)(F) of the Exchange 

Act requires, among other things, that 

the rules of ICE Clear Europe be 

designed to promote the prompt and 

accurate clearance and settlement of 

securities transactions and, to the extent 

applicable, derivative agreements, 

contracts, and transactions, as well as to 

assure the safeguarding of securities and 

funds which are in the custody or 

control of ICE Clear Europe or for which 

it is responsible, and, in general, to 

protect investors and the public 

interest.25

As described above, the Recovery 

Plan would identify the steps that ICE 

Clear Europe could take in recovery and 

the governance framework applicable to 

taking such steps. It would analyze the 

anticipated impact of the recovery tools, 

the incentives created by such tools, and 

the risks associated with using such 

tools. The Recovery Plan would also 

explain how the tools used in the plan 

are transparent, measurable, 

manageable, and controllable. The 

Commission believes that by identifying 

the steps ICE Clear Europe could take 

and the tools it would use to bring about 

recovery in the face of losses, the 

Recovery Plan would increase the 

likelihood that recovery would be 

orderly, efficient, and successful. By 

increasing the likelihood of an orderly, 

efficient, and successful recovery, the 

Commission believes that the Recovery 

Plan would enhance ICE Clear Europe’s 

ability to maintain the continuity of its 

critical services (including its clearance 

of CDS transactions) during, through, 

and following periods of extreme stress 

giving rise to the need for recovery, 

thereby promoting the prompt and 

accurate settlement of CDS transactions. 

The Commission also believes that the 

Recovery Plan would help assure the 

safeguarding of securities or funds in 

the custody or control of ICE Clear 

Europe by reducing the likelihood of a 

disorderly or unsuccessful recovery that 

could disrupt access to such securities 

or funds. For the same reason, the 

Commission believes the Recovery Plan 

would be consistent with the protection 

of investors and the public interest. 

Similarly, the Commission believes 

that the Wind-Down Plan would 

enhance ICE Clear Europe’s ability to 

promote the prompt and accurate 

clearance and settlement of securities 

transactions and to safeguard securities 

and funds in its control by establishing 

a plan to effectuate an orderly winddown. Specifically, the Wind-Down 

Plan’s governance process and notice 

provisions would facilitate the orderly 

close-out of positions and potential 

transfer of positions to other clearing 

houses, which the Commission believes 

would enhance ICE Clear Europe’s 

ability to maintain and continue the 

prompt and accurate clearance and 

settlement of CDS transactions by 

assuring that such transactions are 

closed-out and transferred to other 

clearing houses in an orderly and 

transparent manner. Moreover, by 

specifying in advance the steps ICE 

Clear Europe would take in a winddown, the Wind-Down Plan would help 

assure an efficient and orderly winddown of ICE Clear Europe. The 

Commission believes that this, in turn, 

would help assure the safeguarding of 

securities or funds in the custody or 

control of ICE Clear Europe by reducing 

the likelihood of an inefficient or 

disorderly wind-down, which could 

disrupt access to such securities or 

funds. 

Therefore, the Commission finds that 

the proposed rule changes would 

promote the prompt and accurate 

clearance and settlement of securities 

transactions, assure the safeguarding of 

securities and funds in ICE Clear 

Europe’s custody and control, and, in 

general, protect investors and the public 

interest, consistent with the Section 

17A(b)(3)(F) of the Exchange Act.26

B. Consistency With Rule 17Ad–22(e)(2) 

Rule 17Ad–22(e)(2) requires that ICE 

Clear Europe 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 Exchange Act 


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Federal Register / Vol. 83, No. 141 / Monday, July 23, 2018 / Notices 34895 

27 17 CFR 240.17Ad–22(e)(2). 

28 17 CFR 240.17Ad–22(e)(2). 

29 17 CFR 240.17Ad–22(e)(3)(ii). 

30 17 CFR 240.17Ad–22(e)(3)(ii). 

31 17 CFR 240.17Ad–22(e)(3)(ii). 

32 17 CFR 240.17Ad–22(e)(3)(ii). 

33 17 CFR 240.17Ad–22(e)(3)(ii). 

34 17 CFR 240.17Ad–22(e)(3)(ii). 

35 17 CFR 240.17Ad–22(e)(15)(i)–(ii). 

36See Recovery Plan Notice, 83 FR at 2858. 

37See Wind-Down Plan Notice, 83 FR at 2849. 

applicable to clearing agencies, and the 

objectives of owners and participants.27

The Recovery Plan would identify 

clear lines of responsibility for its 

preparation and final approval. The 

Recovery Plan would also provide 

specificity and a sound process for 

receiving input from various parties at 

ICE Clear Europe. The Commission 

believes that these lines of control and 

the transparency about the 

implementation and preparation of the 

Recovery Plan will contribute to 

establishing, implementing, 

maintaining, and enforcing clear and 

transparent governance arrangements 

that support the public interest 

requirements in Section 17A of the 

Exchange Act applicable to clearing 

agencies, and the objectives of owners 

and participants. 

The Wind-Down Plan similarly would 

identify clear lines of responsibility for 

the invocation, monitoring, and 

approval of the Wind-Down Plan and, 

ultimately, a wind-down. It would 

enhance transparency as well by 

providing for communication to and 

consultation with Clearing Members 

and other users of ICE Clear Europe’s 

services. The Commission believes that 

this aspect of the Wind-Down Plan 

would represent clear and transparent 

governance arrangements. 

Therefore, the Commission finds that 

the proposed rule changes would 

establish clear and transport governance 

arrangements for the Recovery Plan and 

the Wind-Down Plan, consistent with 

Rule 17Ad–22(e)(2).28

C. Consistency With Rule 17Ad– 

22(e)(3)(ii) 

Rule 17Ad–22(e)(3)(ii) requires that 

ICE Clear Europe 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 ICE Clear 

Europe, which includes plans for the 

recovery and orderly wind-down of ICE 

Clear Europe necessitated by credit 

losses, liquidity shortfalls, losses from 

general business risk, or any other 

losses.29

The information the Recovery Plan 

would provide about the steps that ICE 

Clear Europe would take, and the tools 

it would use, to effectuate a recovery of 

ICE Clear Europe would enhance ICE 

Clear Europe’s ability to recover from 

credit losses, liquidity shortfalls, general 

business risk losses, or other losses, 

consistent with Rule 17Ad– 

22(e)(3)(ii).30 Specifically, the Recovery 

Plan information would enable ICE 

Clear Europe to prepare in advance for 

and practice the use of such tools, 

which the Commission believes would 

enhance ICE Clear Europe’s ability to 

use such tools effectively to carry-out a 

successful recovery. In addition, by 

establishing a single source of 

information about, and steps needed to 

effectuate, a recovery of ICE Clear 

Europe, the Recovery Plan would allow 

ICE Clear Europe personnel to effectuate 

a recovery in a consistent and 

coordinated fashion, which could 

thereby increase the likelihood of a 

successful recovery. Moreover, the 

Commission believes that by identifying 

and assessing available recovery tools, 

the Recovery Plan would enhance ICE 

Clear Europe’s ability to use such tools 

effectively to bring about a recovery by 

identifying in advance which tools may 

be most effective for different situations 

or needs, consistent with Rule 17Ad– 

22(e)(3)(ii).31

Similarly, in providing detailed 

information about the governance 

requirements related to triggering and 

implementing the Wind-Down Plan, as 

noted above, the Wind-Down Plan 

would enhance ICE Clear Europe’s 

ability to effectuate an orderly winddown, consistent with Rule 17Ad– 

22(e)(3)(ii).32 Specifically, by setting out 

in advance the steps ICE Clear Europe 

would take to trigger and effectuate a 

wind-down, the Wind-Down Plan 

would enable ICE Clear Europe to 

prepare in advance for and practice the 

steps needed to effectuate a wind-down, 

which the Commission believes would 

enhance ICE Clear Europe’s ability to 

use the Wind-Down Plan effectively to 

carry-out an orderly wind-down. In 

addition, by establishing a single source 

of information about, and steps needed 

to effectuate, a wind-down of ICE Clear 

Europe, the Wind-Down Plan would 

allow ICE Clear Europe personnel to 

effectuate a wind-down in a consistent 

and coordinated fashion, and would 

thereby increase the likelihood of an 

orderly wind-down. Finally, the WindDown Plan would identify the legal 

basis for ICE Clear Europe’s actions with 

respect to a potential wind-down, 

including relevant Rule citations, which 

the Commission believes would further 

facilitate a well-reasoned, legal, and 

orderly wind-down process by 

providing ICE Clear Europe with a 

single source of information and steps 

needed for a wind-down, consistent 

with Rule 17Ad–22(e)(3)(ii).33

Therefore, the Commission finds that 

the proposed rule changes would be 

plans for the orderly recovery and winddown of ICE Clear Europe, consistent 

with Rule 17Ad–22(e)(3)(ii).34

D. Consistency With Rule 17Ad– 

22(e)(15)(i)–(ii) 

Rules 17Ad–22(e)(15)(i)–(ii) require 

ICE Clear Europe to establish, 

implement, maintain and enforce 

written policies and procedures 

reasonably designed to identify, 

monitor, and manage its general 

business risk and hold sufficient liquid 

net assets funded by equity to cover 

potential general business losses so that 

ICE Clear Europe can continue 

operations and services as a going 

concern if those losses materialize, 

including by (i) determining 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 winddown, as appropriate, of its critical 

operations and services if such action is 

taken and (ii) holding liquid net assets 

funded by equity equal to the greater of 

either (x) six months of ICE Clear 

Europe’s current operating expenses, or 

(y) the amount determined by the board 

of directors to be sufficient to ensure a 

recovery or orderly wind-down of 

critical operations and services.35

The Recovery Plan would include 

quantitative information to demonstrate 

how ICE Clear Europe would determine 

the amount of equity capital that would 

be at least sufficient to cover the costs 

of a recovery of its critical clearing 

services under the Recovery Plan, and 

ICE Clear Europe stated in the Recovery 

Plan Notice that it holds that amount of 

equity capital.36 Similarly, the WindDown Plan contemplates that any winddown could be completed within six 

months and discusses how ICE Clear 

Europe would be able to meet its 

liquidity requirements during a winddown. Further, in the Wind-Down Plan 

Notice, ICE Clear Europe states that it 

holds equity capital at least sufficient to 

cover the costs of a wind-down of its 

clearing services under the Wind-Down 

Plan during that six-month period.37

Based on these determinations and its 

review of the underlying information 

and analysis in the plans, the 

Commission finds that the plans would 


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34896 Federal Register / Vol. 83, No. 141 / Monday, July 23, 2018 / Notices 

38 17 CFR 240.17Ad–22(e)(15)(i)–(ii). 

39 17 CFR 240.17Ad–22(e)(15)(i)–(ii). 

40 15 U.S.C. 78q–1(b)(3)(F). 

41 17 CFR 240.17Ad–22(e)(2); (e)(3)(ii); (e)(15)(i)– 

(ii). 

42 In approving the proposed rule change, the 

Commission considered the proposal’s impacts on 

efficiency, competition, and capital formation. 15 

U.S.C. 78c(f). 

43 In approving the proposed rule change, the 

Commission considered the proposal’s impacts on 

efficiency, competition, and capital formation. 15 

U.S.C. 78c(f). 

44 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 3Phlx Rule 1081(c)(ii). 

indicate the potential cost and length of 

recovery, as well as the ability to 

effectuate a wind-down within six 

months of the decision at a lower cost 

than the amount of its liquid resources, 

consistent with Rule 17Ad–22(e)(15)(i)– 

(ii).38

Therefore, the Commission finds that 

the proposed rule changes would 

determine the length of time required to 

achieve a recovery or orderly winddown of ICE Clear Europe and the 

associated costs and would further 

ensure that ICE Clear Europe holds 

liquid net assets greater than these costs, 

consistent with Rule 17Ad–22(e)(15)(i)– 

(ii).39

III. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule changes are consistent with the 

requirements of the Exchange Act, and 

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

Exchange Act 40 and Rules 17Ad– 

22(e)(2), 17Ad–22(e)(3)(ii), 17Ad– 

22(e)(15)(i)–(ii) thereunder.41

It is therefore ordered pursuant to 

Section 19(b)(2) of the Exchange Act 

that the proposed rule change (SR– 

ICEEU–2017–016) be, and hereby is, 

approved.42

It is therefore ordered pursuant to 

Section 19(b)(2) of the Exchange Act 

that the proposed rule change (SR– 

ICEEU–2017–017) be, and hereby is, 

approved.43

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.44

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–15644 Filed 7–20–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83653; File No. SR– 

NASDAQ–2018–052] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend The 

Nasdaq Options Market LLC (‘‘NOM’’) 

Rules Relating to Market Maker 

Quotations 

July 17, 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 July 2, 

2018, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend The 

Nasdaq Options Market LLC (‘‘NOM’’) 

Rules at Chapter VII, Section 6 related 

to Market Maker quotations. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaq.cchwallstreet.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange 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. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Nasdaq proposes to amend the current 

rule text of Chapter VII, Section 6(d), 

related to quoting obligations, to 

restructure the current rule to conform 

to rule text utilized on Nasdaq Phlx 

LLC.3 The Exchange does not propose to 

amend the current quoting obligations, 

rather the Exchange proposes to more 

clearly state the current quoting 

obligations utilizing the same format as 

Phlx Rule 1081(c). 

Chapter VII, Section 6(d) 

The Exchange proposes to amend 

Chapter VII, Section 6(d) to remove the 

word ‘‘continuous’’ from this first 

sentence in the rule. The Exchange is 

removing the word ‘‘continuous’’ 

because the Exchange notes that Market 

Makers quote a percentage of the day 

and therefore the word continuous may 

not accurately reflect the manner in 

which Market Makers quote on NOM. 

The Exchange proposes to retitle 

Section 6(d) as ‘‘Intra-day Quotes.’’ 

The Exchange also proposes to 

remove the word ‘‘continuous’’ from 

Chapter V, Section 3(d)(iv) [sic] and 

replace that word with ‘‘intra-day.’’ The 

Exchange also proposes to amend 

Chapter X, Section 7(c) to replace the 

words ‘‘continuous bids and offers’’ 

with ‘‘intra-day quoting.’’ 

Chapter VII, Section 6(d)(i) 

The Exchange proposes to amend 

Chapter VII, Section 6(d)(i) to delete the 

first sentence of this paragraph, ‘‘On a 

daily basis, a Market Maker must during 

regular market hours make markets 

consistent with the applicable quoting 

requirements specified in these rules, on 

a continuous basis in options in which 

the Market Maker is registered.’’ The 

Exchange believes that a Market Maker’s 

obligation to enter bids and offers for 

the options to which it is registered is 

currently noted in proposed Chapter 

VII, Section 6(d). The Exchange 

proposes to specifically detail a Market 

Maker’s quoting obligations in the 

proposed rule text and therefore 

believes that this sentence is not 

necessary because the following 

sentence replaces this sentence with the 

exception of the intra-day aspect as 

described below. 

The Exchange proposes to add new 

rule text to Chapter VII, Section 6(d)(i). 

The first new sentence will provide ‘‘A 

Market Maker must enter bids and offers 


amozie on DSK3GDR082PROD with NOTICES1