17534 Federal Register / Vol. 80, No. 62 / Wednesday, April 1, 2015 / Notices 

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

2 17 CFR 240.19b–4. 

3The proposed text omits a reference to 

‘‘options’’ that are [sic] currently in Rule 1021. 

4The proposed text adds a new reference to 

‘‘options’’ in Rule 832. 

5See NOM and BX Rules at Chapter III, Section 

12 entitled ‘‘Other Restrictions on Options 

Transactions and Exercises.’’ 

6See proposed Rule 1006(a) and (a)(i). 

7See proposed Rule 1006(a)(ii). The proposed 

new rule text will not distinguish between 

European and American settlement with regard to 

the ten (10) business day restriction. The current 

Phlx rule does make such a distinction. 

8 Id. 

9See proposed Rule 1006(a)(iii). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74592; File No. SR-Phlx2015–28] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Harmonization of Phlx Rules 

March 26, 2015. 

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 25, 

2015, NASDAQ OMX PHLX LLC 

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

Securities and Exchange Commission 

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

rule change as described in Items I, II, 

and III 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 

Rules 771 entitled ‘‘Excessive Trading of 

Members;’’ 832, entitled ‘‘Price 

Adjustment of Open Orders on ExDate;’’ and 1006 entitled ‘‘Other 

Restrictions on Exchange Options 

Transactions and Exercises.’’ The 

Exchange proposes to make minor 

amendments for rule conformity to 

Rules 1001, entitled ‘‘Position Limits;’’ 

1002 entitled ‘‘Exercise Limits;’’ 1003 

entitled ‘‘Reporting of Options 

Positions;’’ 1040 entitled ‘‘Failure to Pay 

Premium;’’ 1041 entitled ‘‘Options 

Contracts Of Suspended Members;’’ 

1042 ‘‘Exercise of Equity Option 

Contracts;’’ 1044 ‘‘Delivery and 

Payment;’’ 1048 ‘‘Stock Transfer Tax;’’ 

and 1090 entitled ‘‘Clerks.’’ The 

Exchange proposes to delete Rules 1021 

entitled ‘‘Excessive Dealing in Options;’’ 

1038 entitled ‘‘Open Orders on Ex-Date; 

’’ and 1045 ‘‘Officers and Employees 

Restricted.’’ 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://

nasdaqomxphlx.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 

The purpose of this proposed rule 

change is to update certain of the 1000 

series options rules to harmonize the 

Rulebook and modernize Exchange 

rules. The Exchange is also proposing to 

amend other non-options rules as well. 

The Exchange proposes to amend rule 

text, make minor technical amendments 

to certain rules, such as numbering, and 

to delete other rules. Each proposed rule 

change will be discussed in greater 

detail below. 

Amendment to Certain Exchange Rules 

The Exchange proposes to amend 

Rule 771, entitled ‘‘Excessive Trading of 

Members,’’ to combine rule text from 

Rule 1021 entitled ‘‘Excessive Dealing 

in Options. Both of these rules cover the 

same basic topic, excessive trading of 

members. Rule 1021 is specific to 

options, while Rule 771 is broader in 

nature. The Exchange proposes to add a 

new paragraph to Rule 771 which 

contains similar rule text to 

Commentary .01 of Rule 1021.3 The 

Exchange does not believe it is 

necessary to have two rules in the 

Rulebook which discuss the same 

restriction, therefore, the Exchange will 

delete Rule 1021. This rule change is 

proposed to harmonize the Rulebook. 

The Exchange proposes to amend 

Rule 832, entitled ‘‘Price Adjustment of 

Open Orders on Ex-Date,’’ to combine 

rule text from Rule 1038 entitled ‘‘Open 

Orders on Ex-Date.’’ Both of these rules 

cover the same basic topic, price 

adjustment of open orders on ‘‘Ex-Date.’’ 

Rule 1038 is specific to options, while 

Rule 832 is broader in nature. The 

Exchange proposes to add a new 

paragraph to Rule 832 which contains 

similar rule text to Rule 1038.4 The 

Exchange does not believe it is 

necessary to have two rules in the 

Rulebook which discuss the same 

restriction; therefore the Exchange will 

delete Rule 1038. This rule change is 

proposed to harmonize the Rulebook. 

The Exchange proposes to amend 

Rule 1006 entitled ‘‘Other Restrictions 

on Exchange Options Transactions and 

Exercises,’’ to harmonize this rule with 

NASDAQ Stock Market LLC (‘‘NOM’’) 

and NASDAQ OMX BX, Inc. (‘‘BX’’) 

rules at Chapter III, Section 12.5 The 

Exchange believes the NOM and BX 

rules are more specific with respect to 

restrictions as compared to the Phlx 

rule. The proposed rule likewise 

imposes restrictions on transactions or 

exercises in one or more series of 

options, similar to the Phlx rule.6 A 

similar restriction exists in the current 

Phlx rule with respect to the ten 

business days prior to the expiration 

date of a given series of options, other 

than index options, which shall include 

such expiration date for an option 

contract that expires on a business day.7

Specifically the proposed rule would 

note, ‘‘[n]otwithstanding the foregoing, 

during the ten (10) business days prior 

to the expiration date of a given series 

of options, other than index options, 

which shall include such expiration 

date for an option contract that expires 

on a business day, no restriction on 

exercise under this Section may be in 

effect with respect to that series of 

options. With respect to index options, 

restrictions on exercise may be in effect 

until the opening of business on the 

business day of their expiration or, in 

the case of an option contract expiring 

on a day that is not a business day, on 

the last business day before the 

expiration date.’’ 8

The Exchange proposes to add 

specific language concerning exercise of 

American-style cash-settled index 

options, which shall be prohibited 

during any time when trading in such 

options is delayed, halted, or 

suspended.9 The Exchange proposes to 

provide the following exceptions 

(1) The exercise of an American-style, 

cash-settled index option may be 

processed and given effect in 

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Federal Register / Vol. 80, No. 62 / Wednesday, April 1, 2015 / Notices 17535 

10See proposed Rule 1006(a)(iii). 

11See proposed Rule 1006(b)(i). 

12See proposed Rule 1006(b)(ii). 

13See proposed Rule 1006(b)(iii). 

14Phlx Rule 1045(a) requires every salaried 

officer or employee of the Exchange and every 

salaried officer or employee of any corporation in 

which the Exchange owns the majority of the stock 

to promptly report to the Exchange every purchase 

or sale for his own account or the account of others 

of any security which is the underlying security of 

any option contract admitted to dealings on the 

Exchange. Today, Phlx employees are subject to the 

NASDAQ Code of Ethics, which refers to the Global 

Trading Policy which requires an annual and other 

periodic reporting of securities holdings to the 

Exchange. Phlx Rule 1045(b) provides that no 

salaried officer or employee of the Exchange or 

salaried officer or employee of any corporation in 

which the Exchange owns the majority of the 

Continued 

accordance with and subject to the 

Rules of The Options Clearing 

Corporation while trading in the option 

is delayed, halted, or suspended if it can 

be documented, in a form prescribed by 

Phlx Regulation, that the decision to 

exercise the option was made during 

allowable time frames prior to the delay, 

halt, or suspension; 

(2) Exercises of expiring Americanstyle, cash-settled index options shall 

not be prohibited on the business day of 

expiration, or in the case of an option 

contract expiring on a day that is not a 

business day, the last business day prior 

to their expiration; 

(3) Exercises of American-style, cashsettled index options shall not be 

prohibited during a trading halt that 

occurs at or after 4 p.m. Eastern time. In 

the event of such a trading halt, 

exercises may occur through 4:20 p.m. 

Eastern time. .[sic] In addition, if trading 

resumes following such a trading halt 

pursuant to the procedures described in 

Rules 1047 and 1047A, exercises may 

occur during the resumption of trading 

and for five (5) minutes after the close 

of the resumption of trading. The 

provisions of this subparagraph 

(a)(iii)(3) are subject to the authority of 

the Board to impose restrictions on 

transactions and exercises pursuant to 

paragraph (a) of this Rule; and 

(4) Phlx may determine to permit the 

exercise of American-style, cash-settled 

index options while trading in such 

options is delayed, halted, or 

suspended.10

Further, whenever the issuer of a 

security underlying a call option traded 

on Phlx is engaged or proposes to 

engage in a public underwritten 

distribution (‘‘public distribution’’) of 

such underlying security or securities 

exchangeable for or convertible into 

such underlying security, the 

underwriters may request that Phlx 

impose restrictions upon all opening 

writing transactions in such options at 

a ‘‘discount’’ where the resulting short 

position will be uncovered (‘‘uncovered 

opening writing transactions’’). The rule 

notes conditions which are necessary 

for the imposition of restrictions, such 

as: 

(1) Less than a majority of the 

securities to be publicly distributed in 

such distribution are being sold by 

existing security holders; 

(2) the underwriters agree to notify 

Phlx Regulation upon the termination of 

their stabilization activities; and 

(3) the underwriters initiate 

stabilization activities in such 

underlying security on a national 

securities exchange when the price of 

such security is either at a ‘‘minus’’ or 

‘‘zero minus’’ tick.11

Upon receipt of such a request and 

determination that the conditions listed 

above are met, Phlx Regulation shall 

impose the requested restrictions as 

promptly as possible but no earlier than 

fifteen (15) minutes after members or 

member organizations shall have been 

notified and shall terminate such 

restrictions upon request of the 

underwriters or when Phlx Regulation 

otherwise discovers that stabilizing 

transactions by the underwriters has 

been terminated.12 An uncovered 

opening writing transaction in a call 

option will be deemed to be effected at 

a ‘‘discount’’ when the premium in such 

transaction is either: in the case of a 

distribution of the underlying security 

not involving the issuance of rights and 

in the case of a distribution of securities 

exchangeable for or convertible into the 

underlying security, less than the 

amount by which the underwriters’ 

stabilization bid for the underlying 

security exceeds the exercise price of 

such option; or in the case of a 

distribution being offered pursuant to 

rights, less than the amount by which 

the underwriters’ stabilization bid in the 

underlying security at the subscription 

price exceeds the exercise price of such 

option.13

The Exchange believes that adopting 

the NOM and BX rules provides greater 

specificity with respect to restrictions 

on options transactions and exercises. 

Minor Technical Amendments to 

Options Rules 

The Exchange proposes to amend 

Rule 1001, entitled ‘‘Position Limits,’’ to 

remove the header ‘‘Commentary’’ from 

the rule and replace it with consecutive 

numbering. The remainder of the 

changes correct cross-references to the 

newly renumbered sections, remove 

extraneous dashes and add a period and 

outside parentheses to the numbering in 

the rule text to conform the text to the 

portion that is not in the Commentary 

today. 

The Exchange proposes to amend 

Rule 1002 entitled ‘‘Exercise Limits,’’ to 

similarly remove the header 

‘‘Commentary’’ from the rule and 

replace it with consecutive lettering. 

The Exchange proposes to amend 

Rule 1003 entitled ‘‘Reporting of 

Options Positions,’’ to remove the 

footnote in the rule and instead place 

the language in the footnote within the 

body of the rule. A minor grammatical 

correction was made to remove a dash 

in this section in the word ‘‘market 

maker.’’ 

The Exchange proposes to amend 

Rule 1040 entitled ‘‘Failure to Pay 

Premium,’’ to capitalize the certain 

terms and also utilize a newly defined 

term ‘‘OCC’’ throughout the rule. 

The Exchange proposes to amend 

Rule 1041 entitled ‘‘Options Contracts 

Of Suspended Members,’’ to utilize a 

newly defined term ‘‘OCC’’ throughout 

the rule. 

The Exchange proposes to amend 

Rule 1042 ‘‘Exercise of Equity Option 

Contracts,’’ to define the term ‘‘CEA’’ 

within the Rule and to remove the 

header ‘‘Commentary’’ and renumber 

the remainder of the rule. The Exchange 

is also proposing to remove a specific 

reference to The Options Clearing 

Corporation’s Articles and instead refer 

to the by-laws more generally and 

utilize a newly defined term ‘‘OCC’’ 

throughout the rule. 

The Exchange proposes to amend 

Rule 1044 ‘‘Delivery and Payment,’’ to 

utilize a newly defined term ‘‘OCC’’ 

throughout the rule. 

The Exchange proposes to amend 

Rule 1048 ‘‘Stock Transfer Tax, utilize 

a newly defined term ‘‘OCC’’ throughout 

the rule. 

The Exchange proposes to amend 

Rule 1090 entitled ‘‘Clerks,’’ update a 

reference to an outdated ‘‘DOT 

machine’’ and replace that reference 

with the updated term ‘‘order handling 

entry device.’’ The Exchange also 

proposes to remove the header 

‘‘Commentary’’ and renumber the 

remainder of the rule. 

Deleted Rules 

The Exchange proposes to delete 

Rules 1021 entitled ‘‘Excessive Dealing 

in Options;’’ and 1038 entitled ‘‘Open 

Orders on Ex-Date;’’ because these Rules 

are being combined with Rules 771 and 

832, respectively, as described above. 

The Exchange is also proposing to 

delete Rule 1045 ‘‘Officers and 

Employees Restricted,’’ which is 

covered in detail by the Exchange’s 

Code of Ethics.14 Rule 1045 does not 

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17536 Federal Register / Vol. 80, No. 62 / Wednesday, April 1, 2015 / Notices 

corporate stock may purchase or sell for his own 

account or for the account of others any option 

contract which entitles the purchaser to purchase 

or sell any security described in paragraph (a) of 

Rule 1045 or any foreign currency option contract 

admitted to dealings on the Exchange. The 

NASDAQ Code of Ethics refers to the Global 

Trading Policy which prohibits employees from 

holding or trading certain securities noted on the 

prohibited list. The prohibited list prohibits 

employees from holding or trading certain 

securities because those companies have dealings 

on the Exchange. The Code of Ethics is more 

expansive in scope as compared to Phlx Rule 1045. 

15 15 U.S.C. 78f(b). 

16 15 U.S.C. 78f(b)(5). 

17See note 5. 

18See note 25. 

19 Id. 

20 15 U.S.C. 78s(b)(3)(a)(ii). 

21 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

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. 

apply to members, but rather applies to 

employees of the Exchange. The 

Exchange has policies and procedures 

which are applicable to employees 

which are not contained in the 

Rulebook. The Exchange believes that 

this rule, which does not apply to 

members, is not necessary to retain in 

the Rulebook. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 15 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 16

in particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. The Exchange believes 

that these proposed rule changes will 

harmonize and modernize the Phlx 

Rulebook. 

The proposed rule changes to amend 

various options rules should harmonize 

the Exchange’s Rulebook by removing 

duplicate rules by combining general 

Phlx rules with options rules, 

conforming the language in certain rules 

by defining terms within the rules and 

removing Commentary sections and 

instead renumbering the rule; and 

deleting unnecessary rules. It is in the 

interests of the protection of investors to 

eliminate any confusion among market 

participants with respect to the 

Rulebook. The rule changes are 

intended to provide a clearer Rulebook 

in order that market participants are 

aware of their obligations. The Exchange 

believes that these amendments will 

make clear the manner in which the 

Exchange operates and thereby remove 

impediments to and provide free and 

open markets. 

The Exchange’s proposed deletion of 

Rule 1045 would not impact members 

because this rule applies solely to 

employees of the Exchange. The 

Exchange has policies and procedures 

which are applicable to employees 

which are not contained in the 

Rulebook. The Exchange believes that 

this rule, which does not apply to 

members, is not necessary to retain in 

the Rulebook. The proposed amendment 

to Rule 1006 to adopt similar NOM and 

BX Rules 17 will provide members with 

additional specificity with respect to 

restrictions on options transactions and 

exercises, similar to the current practice 

at NOM and BX. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

The Exchange’s proposed amendments 

seek to harmonize the Rulebook by 

combining duplicative rules, 

conforming the text of the rules and also 

deleting unnecessary rules. Certain of 

these amendments apply to all 

members, equity and options, and other 

rules related to options, apply 

specifically to options members. The 

rules uniformly apply to members 

transacting a specific product. The 

proposed amendments do not unduly 

burden competition on the Exchange. 

The proposed amendment to Rule 

1006 will provide members with a rule 

substantially similar to rules on NOM 

and BX.18 The Exchange believes that 

adopting the NOM and BX rules 19 will 

assist the Exchange in competing more 

effectively with respect to options. 

The proposed deletion of Rule 1045 

applies specifically to employees of the 

Exchange. This rule does not impact the 

competition among members transacting 

business on the Exchange but rather 

concerns the operation of the Exchange 

and conduct of its employees. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)(ii) of the Act 20 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.21

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: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) 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 

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– 

Phlx–2015–28 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–Phlx–2015–28. 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 Web site (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 

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Federal Register / Vol. 80, No. 62 / Wednesday, April 1, 2015 / Notices 17537 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 34–74213 

(February 5, 2015), 80 FR 7661 (February 11, 2015) 

(SR–ICEEU–2015–004). 

4See Securities Exchange Act Release No. 34– 

71920 (April 9, 2014), 79 FR 21331 (April 15, 2015) 

(SR–ICEEU–2014–04) (order approving proposed 

rule change to clear Western European sovereign 

CDS contracts referencing Ireland, the Republic of 

Italy, the Portuguese Republic and the Kingdom of 

Spain) and Securities Exchange Act Release No. 34– 

73737 (December 4, 2014), 79 FR 73372 (December 

10, 2014) (SR–ICEEU–2014–18) (order approving 

proposed rule change to clear additional Western 

European sovereign CDS contracts referencing 

Kingdom of Belgium and the Republic of Austria) 

(collectively, the ‘‘Prior WE Sovereigns Orders’’). 

5For a description of previously approved 

changes to ICE Clear Europe’s risk management 

framework to accommodate clearing of Western 

European sovereign CDS contracts, see the Prior WE 

Sovereigns Orders. Id. ICE Clear Europe represents 

that it has performed a variety of empirical analyses 

related to clearing of the Additional WE Sovereign 

Contracts under its margin methodology, including 

back tests and stress tests. 

6 15 U.S.C. 78s(b)(2)(C). 

7 15 U.S.C. 78q–1(b)(3)(F). 

8 15 U.S.C. 78q–1. 

9 15 U.S.C. 78q–1(b)(3)(F). 

10 15 U.S.C. 78q–1. 

11 15 U.S.C. 78s(b)(2). 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site 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 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal offices of the 

Exchange. All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Phlx– 

2015–28, and should be submitted on or 

before April 22, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–07366 Filed 3–31–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74588; File No. SR–ICEEU– 

2015–004] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Order Approving 

Proposed Rule Change Relating to 

Additional European Sovereign CDS 

Contracts 

March 26, 2015. 

I. Introduction 

On January 27, 2015, ICE Clear 

Europe Limited (‘‘ICE Clear Europe’’) 

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 provide for the clearance of 

additional European sovereign credit 

default swap (‘‘CDS’’) contracts. The 

proposed rule change was published for 

comment in the Federal Register on 

February 11, 2015.3 The Commission 

did not receive comments on the 

proposed rule change. This order 

approves the proposed rule change. 

II. Description of the Proposed Rule 

Change 

The purpose of the proposed rule 

change is to provide for the clearing of 

Western European sovereign CDS 

contracts referencing four additional 

reference entities: The Kingdom of the 

Netherlands, the Republic of Finland, 

the Kingdom of Sweden and the 

Kingdom of Denmark (the ‘‘Additional 

WE Sovereign Contracts’’). ICE Clear 

Europe currently clears CDS contracts 

referencing six other Western European 

sovereigns: Ireland, the Republic of 

Italy, the Portuguese Republic, the 

Kingdom of Spain, the Kingdom of 

Belgium and the Republic of Austria.4

ICE Clear Europe believes clearance of 

the Additional WE Sovereign Contracts 

will benefit the markets for credit 

default swaps on Western European 

sovereigns by offering to market 

participants the benefits of clearing, 

including reduction in counterparty risk 

and safeguarding of margin assets 

pursuant to clearing house rules. 

ICE Clear Europe has stated that the 

Additional WE Sovereign Contracts will 

constitute ‘‘Non-STEC Single Name 

Contracts’’ for purposes of the CDS 

Procedures and, accordingly, will be 

governed by Paragraph 10 of the CDS 

Procedures consistent with the 

treatment of the other Western European 

sovereign CDS contracts currently 

cleared by ICE Clear Europe. ICE Clear 

Europe has represented that clearing of 

the Additional WE Sovereign Contracts 

will not require any changes to ICE 

Clear Europe’s existing Clearing Rules 

and Procedures, risk management 

framework (including relevant policies), 

or margin model.5

III. Discussion and Commission 

Findings 

Section 19(b)(2)(C) of the Act 6 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. Section 

17A(b)(3)(F) of the Act 7 requires, among 

other things, that the rules of a clearing 

agency are 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 responsible, and, in general, 

to protect investors and the public 

interest. 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with Section 17A of the Act 8

and the rules thereunder applicable to 

ICE Clear Europe. The proposed rule 

change will provide for clearing of the 

Additional WE Sovereign Contracts, 

which are similar to the other Western 

European sovereign CDS contracts 

currently cleared by ICE Clear Europe, 

in accordance with the existing rules 

and procedures applicable to Western 

European sovereign CDS contracts. 

Specifically, the Commission believes 

that ICE Clear Europe’s proposal to clear 

the Additional WE Sovereign Contracts 

pursuant to its current risk management 

framework (including margin and 

guaranty fund methodology), 

operational procedures, settlement 

procedures and default management 

policies is designed to promote the 

prompt and accurate clearance and 

settlement of securities transactions, 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, 

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

the Act.9

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 10 and the rules and regulations 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,11 that the 

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