Federal Register / Vol. 77, No. 58 / Monday, March 26, 2012 / Notices 17533 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 34–66341 

(January 24, 2012), 77 FR 7652 (February 13, 2012). 

In its filing with the Commission, ICE Clear Europe 

included statements concerning the purpose of and 

basis for the proposed rule change. The text of these 

statements is incorporated into the discussion of the 

proposed rule change in Section II below. 

4On January 12, 2012, ICE Clear Europe 

published circular no. C12/003 (available at: 

https://www.theice.com/publicdocs/clear_europe/

circulars/C12003.pdf), pursuant to which ICE Clear 

Europe used its authority under Rule 8.9 of the CDS 

Procedures to specify that, effective January 17, 

2012, all payments that had been settled via CLS 

including Upfront Fees, Quarterly Coupon 

Payments and Cash Credit Event Settlements would 

subsequently be settled in accordance with 

standard process set out in the Finance Procedures. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66628; File No. SR–ICEEU– 

2012–01] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Order Approving 

Proposed Rule Change To Revise 

Rules and Procedures Related to 

Certain Technical and Operational 

Changes Relating to Credit Default 

Swap Contracts 

March 20, 2012. 

I. Introduction 

On January 24, 2012, ICE Clear 

Europe Limited (‘‘ICE Clear Europe’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change SR–ICEEU–2012– 

01 pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

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

The proposed rule change was 

published for comment in the Federal 

Register on February 13, 2012.3 The 

Commission received no comment 

letters regarding the proposal. For the 

reasons discussed below, the 

Commission is granting approval of the 

proposed rule change. 

II. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The proposed changes were set out in 

revisions to the Rules and CDS 

Procedures that were described in 

circular no. C11/170 published on 

November 25, 2011 (available on the 

Internet Web site of ICE Clear Europe at: 

https://www.theice.com/publicdocs/

clear_europe/circulars/C11170_att1.pdf 

and https://www.theice.com/

publicdocs/clear_europe/circulars/

C11170_att2.pdf). According to ICE 

Clear Europe, the purpose of these rule 

changes is to allow the clearing agency 

to make certain technical operational 

changes relating to CDS Contracts (as 

defined at ICE Clear Europe Rule 101), 

including those that arise under its rules 

on an occasional basis as part of the 

end-of-day price submission process by 

Clearing Members. 

Specifically, these changes can be 

grouped into three categories: 

First, under ICE Clear Europe’s 

current rule framework, CDS Contracts 

that arise following the end-of-day 

pricing process give rise to non-cleared 

transactions that may later be submitted 

for clearing. However, since the 

applicable CDS Contract is typically 

intended to be cleared between the 

parties, and since trades that arise 

following end-of-day pricing arise at the 

direction of the clearing house, ICE 

Clear Europe believes that it is more 

efficient and reduces risk for such CDS 

Contract to arise upon notice by ICE 

Clear Europe, rather than to require the 

applicable parties to submit the CDS 

Contract later. Accordingly, the first 

change establishes Rule 401(a)(xi) to 

permit ICE Clear Europe to specify the 

time and terms of entry into a CDS 

Contract arising following the 

submission of end-of-day prices by a 

Clearing Member. Once ICE Clear 

Europe has notified the two affected 

clearing members of a contract under 

Rule 401(a)(xi), the contract will stand, 

unless it is voidable under Rule 404 (for 

example due to illegality or manifest 

error). This change gives rise to the 

majority of the proposed rule changes in 

the text of the ICE Clear Europe Rules 

and the CDS Procedures. As a practical 

matter, this change operationalizes a 

technical service by which the terms of 

a CDS Contract entered into following 

submission of end-of-day prices can be 

promptly cleared by ICE Clear Europe. 

In order to operationalize this change, 

certain conforming changes are 

required. For example, various Rules 

establishing procedures for other 

automatically effective CDS Contracts 

are amended to include new Rule 

401(a)(xi). 

In addition, a new paragraph (c) has 

been added to Rule 602 which deems 

Clearing Members not to be in violation 

of Position Limits (as defined in the 

Rules) as a result of CDS Contracts that 

arise by notice of ICE Clear Europe. Rule 

602(c) provides a procedure under 

which the Clearing Member can close 

out such a position within five business 

days of the applicable Position Limit 

adoption or determination date. In this 

manner, both the policy of ensuring the 

pricing process through automatically 

effective trades and the policy of 

ensuring Position Limits are respected. 

ICE Clear Europe notes that these 

provisions relating to accommodation of 

Clearing Members in respect of Position 

Limits that may be applicable to CDS 

Contracts that are automatically 

effective applies not only to Rule 

401(a)(xi), but also to Rules 401(a)(v), 

(vi), and (x). In the case of Rule 

401(a)(v), new Rule 602(c) would apply 

to CDS Contracts that arise from 

transactions generated by ICE Futures 

Europe or the ICE OTC Operator as a 

result of the operation of their contra 

trade, error trade, invalid trade, 

cancelled trade, error correction or 

similar policies and rules and 

procedures relating thereto or otherwise. 

In the case of Rule 401(a)(vi), new Rule 

602(c) would apply to CDS Contracts 

that form as a result of another Contract 

being invoiced back by ICE Clear 

Europe. Finally, in the case of Rule 

401(a)(x), new Rule 602(c) would apply 

to CDS Contracts arising pursuant to 

Rule 903(a)(xii), which generally 

governs the creation of new CDS 

Contracts between ICE Clear Europe and 

non-defaulting Clearing Members to 

replace any remaining CDS Contracts of 

a defaulting Clearing Member. 

Under the second category of changes, 

settlement and coupon payments under 

CDS Contracts will take place through 

the ICE Clear Europe’s payment banking 

network used for other cleared products, 

and not through the CLS Bank 

International (‘‘CLS’’) system. At 

present, Section 8.9 of the CDS 

Procedures provides that where a CDS 

Contract is to be settled in 

circumstances in which Rule 1514 (CDS 

Alternative Delivery or Settlement 

Procedure) does not apply, relevant cash 

payments between ICE Clear Europe and 

CDS Clearing Members will take place 

through The Depository Trust and 

Clearing Corporation using CLS, unless 

otherwise specified by ICE Clear Europe 

in a circular prior to the date on which 

such cash payments are due. However, 

following consultation with Clearing 

Members, ICE Clear Europe has 

determined it is more efficient if 

settlement and coupon payments are 

effected through ICE Clear Europe’s 

current payment system (which is also 

permitted by the current CDS 

Procedures). ICE Clear Europe has 

determined to harmonize the system 

described at Section 8.9 of the CDS 

Procedures into a single payment 

system. This is achieved through the 

deletion of Section 8.9 of the CDS 

Procedures.4 It should be noted that this 

proposed change also serves to further 

harmonize the ICE Clear Europe Rules 

and CDS Procedures with those of ICE 

Clear Credit LLC, the U.S.-based 


tkelley on DSK3SPTVN1PROD with NOTICES
17534 Federal Register / Vol. 77, No. 58 / Monday, March 26, 2012 / Notices 

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

6 15 U.S.C. 78q–1(b)(3)(F). 

7 15 U.S.C. 78q–1. 

8 15 U.S.C. 78s(b)(2). 

9 In approving the proposed rule change, the 

Commission considered the proposal’s impact on 

efficiency, competition and capital formation. 15 

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

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The text of the proposed rule change is attached 

as Exhibit 5 to DTC’s filing, which is available at 

www.dtcc.com/downloads/legal/rule_filings/2012/ 

dtc/2012-02.pdf. 

4The Commission has modified the text of the 

summaries prepared by DTC. 

5The term ‘‘Maturity Presentment’’ is defined in 

Rule 1 of DTC’s Rules and Procedures as a Delivery 

Versus Payment of matured MMI securities from the 

account of a presenting participant to the 

designated paying agent account for that issue as 

provided for in Rule 9(C) and as specified in DTC’s 

procedures. 

6Rule 1 of DTC’s Rules and Procedures defines 

the term ‘‘MMI Issuing Agent’’ generally as a 

participant acting as an issuing agent for an issuer 

with respect to a particular issue of MMI securities 

of that issuer and an ‘‘MMI Paying Agent’’ generally 

as a participant acting as a paying agent for an 

clearing agency affiliate of ICE Clear 

Europe. 

The third category of changes 

involves various cross-reference and 

typographical amendments to the 

processes for submission of CDS 

Contracts. The typographical changes 

are as follows: (i) Section 4.2 of the CDS 

Procedures, the words ‘‘Bilateral CDS 

Contract’’ are changed to ‘‘Bilateral CDS 

Transaction’’, and (ii) Section 8.4 of the 

CDS Procedures, the words ‘‘submission 

of’’ are added. According to ICE Clear 

Europe, these changes are made solely 

to correct typographical and crossreference drafting in the text of the 

Rules and make no substantive changes 

to the Rules. 

In its filing with the Commission, ICE 

Clear Europe indicated that it has 

engaged in extensive private 

consultation with its CDS Clearing 

Members involving both operational 

and legal consultation groups and has 

presented the changes to its CDS Risk 

Committee, which approved the 

changes. ICE Clear Europe has also 

engaged in a public consultation process 

in relation to all the changes, pursuant 

to the Circulars referred to above, and as 

required under applicable U.K. 

legislation. This public consultation 

involved the publication of such 

Circulars on a publicly accessible 

portion of the Internet Web site of ICE 

Clear Europe. ICE Clear Europe has 

received no opposing views from its 

Clearing Members in relation to the 

proposed rule amendments and 

received no responses to its public 

consultations during the consultation 

period. 

III. Discussion 

Section 19(b)(2)(B) of the Act directs 

the Commission to approve a proposed 

rule change of a self-regulatory 

organization if it finds that such 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to such organization.5 For 

example, Section 17A(b)(3)(F) of the 

Act 6 requires, among other things, that 

the rules of a clearing agency be 

designed to remove impediments to and 

perfect the mechanism of a national 

system for the prompt and accurate 

clearance and settlement of securities 

transactions and to assure the 

safeguarding of securities and funds in 

the custody or control of the clearing 

agency or for which it is responsible. 

If approved, the proposed rule change 

would allow ICE Clear Europe to 

implement certain operational changes 

related to the processing of CDS 

contracts, including with respect to (i) 

CDS Contracts that arise as a result of 

the end-of-day pricing process and (ii) 

and the process by which settlement 

and coupon payments under CDS 

Contracts will be made. After 

considering these changes, the 

Commission believes that the proposed 

rule change is consistent with Section 

17A(b)(3)(F) of the Act, including ICE 

Clear Europe’s obligation to ensure that 

its rules be designed to remove 

impediments to and perfect the 

mechanism of a national system for the 

prompt and accurate clearance and 

settlement of securities transactions. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposal is 

consistent with the requirements of the 

Act and in particular with the 

requirements of Section 17A of the Act 7

and the rules and regulations 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,8 that the 

proposed rule change (File No. SR– 

ICEEU–2012–01) be, and hereby is, 

approved.9

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–7203 Filed 3–23–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66630; File No. SR–DTC– 

2012–02] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing of Proposed Rule Change To 

Amend Rules Relating to the Issuance 

of and Maturity Presentment 

Processing for Money Market 

Instruments 

March 20, 2012. 

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 March 8, 

2012, The Depository Trust Company 

(‘‘DTC’’) 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 primarily by DTC. 

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 the Substance 

of the Proposed Rule Change 

The purpose of DTC’s proposed rule 

change is to amend DTC’s Settlement 

Service Guide to change certain 

deadlines associated with processing 

issuances and maturity presentments of 

money market instruments.3

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

DTC 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. DTC has prepared 

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

and (C) below, of the most significant 

aspects of these statements.4

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

The Maturity Presentment 5

processing for money market 

instruments (‘‘MMIs’’) is initiated 

automatically by DTC each morning for 

all of the MMIs maturing that day. The 

automatic process electronically sweeps 

all maturing positions of MMI CUSIPs 

from a participant’s accounts against 

credits in the amount of the payments 

to be received with respect to such 

presentments. The matured MMIs are 

delivered to the applicable issuing or 

paying agent (‘‘IPA’’),6 also a DTC 


tkelley on DSK3SPTVN1PROD with NOTICES