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[Federal Register Volume 79, Number 227 (Tuesday, November 25, 2014)]
[Notices]
[Pages 70251-70253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-27843]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73645; File No. SR-ICEEU-2014-22]

Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of Proposed Rule Change Relating to ICE Clear Europe Board 
Risk Committee

November 18, 2014.
    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 November 10, 2014, ICE Clear Europe Limited (``ICE Clear Europe'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared primarily by ICE Clear Europe. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The principal purpose of the proposed changes is to establish a 
risk committee (the ``Board Risk Committee'') which would advise the 
ICE Clear Europe Board (the ``Board'') on certain clearing house-wide 
risk management matters.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, ICE Clear Europe included 
statements concerning the purpose of and basis for the proposed rule 
change and discussed any comments it received on the proposed rule 
change. The text of these statements may be examined at the places 
specified in Item IV below. ICE Clear Europe has prepared summaries, 
set forth in sections A, B, and C below, of the most significant 
aspects of these statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

(a) Purpose
    The purpose of the amendments is for ICE Clear Europe to establish 
the Board Risk Committee. Establishment of the Board Risk Committee is 
required under Article 28 of the European Market Infrastructure 
Regulation (``EMIR''),\3\ which will apply to ICE Clear Europe as an 
authorized central counterparty. The Board Risk Committee will advise 
the Board with respect to various firm-wide risk management matters, 
with the goal of enabling the Board to ensure that ICE Clear Europe (i) 
implements and maintains agreed risk management procedures, processes 
and controls, (ii) provides appropriate access to participation in its 
clearing services and (iii) appropriately considers the interests of 
non-clearing member users of cleared products, including with respect 
to account segregation and collateral protection. The activities of the 
Board Risk Committee will relate to all categories of products cleared 
at ICE Clear Europe, and are in addition to ICE Clear Europe's existing 
product-specific risk committees (F&O, CDS and FX).
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    \3\ Regulation (EU) No 648/2012 of the European Parliament and 
of the Council of 4 July 2012 on OTC derivatives, central 
counterparties and trade repositories.
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    Pursuant to its terms of reference, the Board Risk Committee will 
report directly to the Board and receive and review all recommendations 
from each of the product-specific risk committees. The Board Risk 
Committee will undertake at least annual reviews of business risk 
mitigation procedures and controls and will have oversight of all risks 
facing ICE Clear Europe, including counterparty credit risk (across all 
clearing services) and non-counterparty credit risk matters, such as 
operational and liquidity risk. The Board Risk Committee will also 
advise the Board

[[Page 70252]]

regarding any arrangements that may materially impact the risk 
management of ICE Clear Europe, such as a significant change in its 
criteria for accepting clearing members, clearing in new markets, or 
outsourcing of certain functions. The advice of the Board Risk 
Committee is not required for the daily operations of ICE Clear Europe.
    The Board Risk Committee will be provided (in addition to other 
relevant information) with results and analysis of back-testing, 
sensitivity testing, stress testing and reverse stress testing in 
respect of any review of margin models, methodologies and/or the 
liquidity risk management framework. The Board Risk Committee will also 
consider any other issues that may be referred to it by the Board and/
or executive, including the exercise of discretion in relation to 
recovery arrangements under the Rules.
    In the course of its work the Board Risk Committee may obtain 
external legal or other independent advice and secure the attendance of 
third parties with relevant experience and expertise if it considers 
this necessary.
    The Board Risk Committee will consist of at least two and up to 
four Clearing Member representatives and at least two and up to four 
customer representatives, in each case appointed by the Chairman of the 
Board Risk Committee following consideration by the ICE Clear Europe 
Nominations Committee. The Chairman of the Board Risk Committee will be 
an independent non-executive director of ICE Clear Europe appointed by 
the Board and will be a full voting member of the committee. Any member 
of the Board Risk Committee may be removed by the Board without cause. 
The composition of the Board Risk Committee will be reviewed on an 
annual basis to determine whether the committee has appropriate 
representation of Clearing Members, customers and independent non-
executive directors, and appropriate representation of expertise and 
experience in relevant risk disciplines, including market, credit and 
operational risk. Based on this review, the Chairman may determine to 
request the resignation of one or more committee members and/or appoint 
one or more additional committee members to achieve such appropriate 
representation.
    The ICE Clear Europe Chief Risk Officer, President and other 
appropriate ICE Clear Europe staff members will attend Board Risk 
Committee meetings in a non-voting capacity. In addition, the chairs of 
any groups or committees involved in the development of risk policies 
and a representative from each of the markets cleared by ICE Clear 
Europe will have a right to attend, but not vote, at Board Risk 
Committee meetings. The Board Risk Committee may also invite external 
independent experts to attend meetings in a non-voting capacity. A 
quorum will be a minimum of four members, one of whom must be a 
customer representative and one of whom must be a Clearing Member 
representative. (The Chairman of the committee will count toward the 
quorum for this purpose.) Each Board Risk Committee member will have 
one vote and decisions of the Board Risk Committee will be made by a 
simple majority, provided that if the committee is evenly divided, the 
Chairman may cast a deciding vote (in addition to the Chairman's normal 
vote as a member of the committee). Meetings will be held as needed and 
at least quarterly.
(b) Statutory Basis
    ICE Clear Europe believes that the proposed rule change is 
consistent with the requirements of Section 17A of the Act \4\ and the 
regulations thereunder applicable to it, including the standards under 
Rule 17Ad-22.\5\ 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. The establishment of the Board Risk 
Committee is intended to enhance the governance structure and overall 
risk management of the Clearing House, in compliance with the 
requirements of EMIR. As described above, the Board Risk Committee is 
intended to advise the Board with respect to a range of enterprise-wide 
risk management matters across all product categories. It is also 
designed to provide appropriate representation for both Clearing 
Members and customers, and thereby to enable the Board to ensure that 
it provides appropriate access to participation in clearing services 
and that the interests of Clearing Members and customers are 
appropriately considered. As a result, ICE Clear Europe believes that 
the proposed rule change will promote the prompt and accurate clearance 
and settlement of cleared transactions, and in general is designed to 
protect investors and the public interest, within the meaning of 
Section 17A(b)(3)(F).\7\ In addition, the change is consistent with the 
requirements of Rule 17Ad-22(d)(8),\8\ which requires that a clearing 
agency have governance arrangements that are clear and transparent to 
fulfill the public interest requirements of Section 17A of the Act 
applicable to clearing agencies, to support the objectives of owners 
and participants, and to promote the effectiveness of the clearing 
agency's risk management procedures. As set forth above, the Board Risk 
Committee is intended to enhance the Board's ability to oversee 
enterprise-wide risk management for all product categories, and to 
provide representation to, and take into account the interests of, both 
Clearing Members and their customers.
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    \4\ 15 U.S.C. 78q-1.
    \5\ 17 CFR 240.17Ad-22.
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
    \7\ Id.
    \8\ 17 CFR 240.17Ad-22(d)(8).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed amendments would 
have any impact, or impose any burden, on competition not necessary or 
appropriate in furtherance of the purposes of the Act. The change will 
not affect the terms or conditions of any cleared contract or the 
standards or requirements for participation in or use of the Clearing 
House, and accordingly should not, in the Clearing House's view, affect 
the availability of clearing, access to clearing services or the costs 
of clearing for clearing members or other market participants. ICE 
Clear Europe further believes that the establishment of the Board Risk 
Committee will strengthen its risk management capabilities and 
governance, as required in order to comply with EMIR. As a result, ICE 
Clear Europe believes that any impact on competition is appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments relating to the proposed changes to the rules have 
not been solicited or received. ICE Clear Europe will notify the 
Commission of any written comments received by ICE Clear Europe.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days of such 
date (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

[[Page 70253]]

organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change; or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change 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 [email protected]. Please include 
File Number SR-ICEEU-2014-22 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-ICEEU-2014-22. 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 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 
10:00 a.m. and 3:00 p.m. Copies of such filings also will be available 
for inspection and copying at the principal office of ICE Clear Europe 
and on ICE Clear Europe's Web site at https://www.theice.com/clear-europe/regulation.
    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-ICEEU-2014-22 
and should be submitted on or before December 16, 2014.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27843 Filed 11-24-14; 8:45 am]
BILLING CODE 8011-01-P
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