70904 Federal Register / Vol. 79, No. 229 / Friday, November 28, 2014 / Notices 

which has been admitted to membership in the 

Options Clearing Corporation pursuant to the 

provisions of the Rules of the Options Clearing 

Corporation.’’ 

4See Exchange Rule 900.2NY (87) defining 

‘‘User’’ as ‘‘any ATP Holder that is authorized to 

obtain access to the System pursuant to Rule 

902.1NY.’’ 

5See Securities Exchange Act Release No. 73280 

(October 1, 2014), 79 FR 60553. 

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

7On November 19, 2014, the Exchange consented 

to an extension of this time period until November 

29, 2014. See 15 U.S.C. 78s(b)(2)(A)(ii)(II). 

8 Id. 

9 17 CFR 200.30–3(a)(31). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 34–73347 

(Oct. 14, 2014), 79 FR 62683 (Oct. 20, 2014) (SR– 

ICC–2014–16). 

4 15 U.S.C. 78s(b)(2)(C). 

5 15 U.S.C. 78q–1(b)(3)(F). 

6 15 U.S.C. 78q–1. 

7 15 U.S.C. 78q–1(b)(3)(F). 

8 15 U.S.C. 78q–1. 

9 15 U.S.C. 78s(b)(2). 

behalf of the User.4 The proposed rule 

change was published for comment in 

the Federal Register on October 7, 

2014.5 On November 19, 2014, the 

Exchange also submitted Amendment 

No. 1 to the proposed rule change. The 

Commission received one comment on 

the proposed rule change. 

Section 19(b)(2) of the Act 6 provides 

that within 45 days of the publication of 

notice of the filing of a proposed rule 

change, or within such longer period up 

to 90 days as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or as to which the 

self-regulatory organization consents, 

the Commission shall either approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether the 

proposed rule change should be 

disapproved. The 45th day for this filing 

is November 21, 2014.7 The 

Commission is extending this 45-day 

time period. 

The Commission finds it appropriate 

to designate a longer period within 

which to take action on the proposed 

rule change so that it has sufficient time 

to consider this proposed rule change. 

The proposed rule change, if approved, 

would authorize the Exchange to share 

any User-designated risk settings in 

Exchange systems with the Clearing 

Member that clears transactions on 

behalf of the User. 

Accordingly, the Commission, 

pursuant to Section 19(b)(2) of the Act,8

designates January 5, 2015, as the date 

by which the Commission should either 

approve or disapprove, or institute 

proceedings to determine whether to 

disapprove, the proposed rule change 

(File No. SR–NYSEMKT–2014–81). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28082 Filed 11–26–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73666; File No. SR–ICC– 

2014–16] 

Self-Regulatory Organizations; ICE 

Clear Credit LLC; Order Approving 

Proposed Rule Change Related to 

ICC’s Use of House Initial Margin as an 

Internal Liquidity Resource 

November 21, 2014. 

I. Introduction 

On October 1, 2014, ICE Clear Credit 

LLC (‘‘ICC’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change SR–ICC–2014–16 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 October 20, 

2014.3 The Commission did not receive 

comments on the proposed rule change. 

For the reasons discussed below, the 

Commission is approving the proposed 

rule change. 

II. Description of the Proposed Rule 

Change 

ICC has stated that the purpose of the 

proposed rule change is to amend ICC 

Clearing Rule 402(j) to provide further 

clarity regarding ICC’s obligation to 

return any Clearing Participant’s House 

Initial Margin used as an internal 

liquidity resource. Under Rule 402(j), 

ICC may, in connection with a Clearing 

Participant default, (i) exchange House 

Initial Margin held in the form of cash 

for securities of equivalent value and/or 

(ii) exchange House Initial Margin held 

in the form of cash in one currency for 

cash of equivalent value in a different 

currency. The proposed rule change 

clarifies that the exchanges involving a 

Clearing Participant’s Initial Margin in 

its House Account will occur on a 

temporary basis and that ICC will 

reverse any such exchange as soon as 

practicable following the conclusion of 

event which gave rise to the liquidity 

need. ICC states that the duration of the 

liquidity event will likely be 

significantly shorter than the amount of 

time necessary to complete the default 

management process for the event 

which gave rise to the liquidity need. 

The proposed rule change will also 

delete general references to ICC’s 

liquidity policies and procedures and 

instead will use the defined term ‘‘ICE 

Clear Credit Procedures’’ found 

throughout the ICC Rules. 

III. Discussion and Commission 

Findings 

Section 19(b)(2)(C) of the Act 4 directs 

the Commission to approve a proposed 

rule change of a self-regulatory 

organization if the Commission finds 

that such proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to such selfregulatory organization. Section 

17A(b)(3)(F) of the Act 5 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. 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of Section 17A of the 

Act 6 and the rules and regulations 

thereunder applicable to ICC. The 

proposed modification to Rule 402(j) 

provides clarity regarding ICC’s 

obligation and timing to return any 

House Initial Margin used as an internal 

liquidity resource and is reasonably 

designed to allow ICC to manage its 

liquidity needs in the event of one or 

more Clearing Participant defaults. 

Accordingly, the Commission believes 

that the proposed rule change is 

reasonably designed to promote the 

prompt and accurate clearance and 

settlement of securities transactions 

and, to the extent applicable, derivative 

agreements, contracts, and transactions, 

and 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, consistent 

with Section 17A(b)(3)(F) of the Act.7

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 8

and the rules and regulations 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,9 that the 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 229 / Friday, November 28, 2014 / Notices 70905 

10 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). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(4)(ii). 

proposed rule change (SR–ICC–2014– 

16) be, and hereby is, approved.10

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28079 Filed 11–26–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73667; File No. SR–ICEEU– 

2014–23] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Notice of Filing 

of Proposed Rule Change to Finance 

Procedures 

November 21, 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 

14, 2014, ICE Clear Europe Limited 

(‘‘ICE Clear Europe’’ or the ‘‘Clearing 

House’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change described in 

Items I, II and III below, which Items 

have been primarily prepared by ICE 

Clear Europe. ICE Clear Europe filed the 

proposal pursuant to Section 19(b)(3)(A) 

of the Act,3 and Rule 19b–4(f)(4)(ii) 4

thereunder, so that the proposal was 

effective upon filing with the 

Commission. 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 principal purpose of the 

proposed change is to permit certain 

third party collateral purchase 

arrangements. 

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 

1. Purpose 

The purpose of the proposed rule 

change is to modify the Finance 

Procedures to permit certain third party 

collateral purchase arrangements with 

respect to Triparty Collateral provided 

by F&O Clearing Members in respect of 

a Proprietary Account. Under such an 

arrangement, an F&O Clearing Member 

would, with the permission of the 

Clearing House, enter into a third party 

collateral purchase agreement (a 

‘‘Purchase Agreement’’) with the 

Clearing House and a third party 

collateral purchaser (the ‘‘TPCP’’) 

designated by the Clearing Member. The 

TPCP may be an affiliate of the Clearing 

Member. Under the terms of the 

Purchase Agreement, if the Clearing 

House declares the Clearing Member to 

be a Defaulter under the Rules, then the 

Clearing House will offer to sell that 

Clearing Member’s Triparty Collateral to 

the TPCP, for a specified price 

established by the Clearing House based 

on its determination of the market value 

of the collateral. The TPCP will have a 

specified period (expected to be two 

hours) to accept or reject the offer to 

sell. If the TPCP accepts the offer, the 

Clearing House will sell the Triparty 

Collateral to the TPCP at the specified 

price. The proceeds of such sale would 

be applied by the Clearing House in the 

default management process and net 

sum calculation in the same manner as 

any other liquidation of margin of a 

Defaulter. If the TPCP rejects the offer to 

sell, or does not respond within the 

specified period, the offer will expire, 

and the Clearing House will apply or 

liquidate the Triparty Collateral 

pursuant to the Rules as part of its usual 

default management process. 

These arrangements would not apply 

to (i) margin, collateral or permitted 

cover provided by F&O Clearing 

Members other than Triparty Collateral, 

(ii) any margin, collateral or permitted 

cover provided with respect to a 

customer account, or (iii) any margin, 

collateral or permitted cover provided 

by CDS or FX Clearing Members in 

respect of CDS or FX Contracts, 

respectively. 

The Clearing House proposes to 

permit third party collateral purchase 

arrangements to provide a pre-arranged 

alternative to collateral liquidation in 

the default management process for F&O 

Clearing Members. Certain F&O Clearing 

Members have requested that such 

arrangements be made available in order 

to facilitate their own collateral 

management activities. For example, 

ICE Clear Europe understands that for 

certain corporate groups, collateral to be 

transferred to the Clearing House may 

have been acquired by an affiliated 

entity (rather than the Clearing Member 

itself) through repurchase or similar 

transactions, and such entity may want 

to have the ability to reacquire the 

relevant collateral in order to settle such 

other transactions, even following a 

Clearing Member default. ICE Clear 

Europe has determined that the 

proposed collateral purchase 

arrangement is consistent with its own 

default management requirements. In 

this regard, if the TPCP accepts the 

offer, the Clearing House will be able to 

sell the relevant Triparty Collateral at 

the current market price, as determined 

by the Clearing House. The ability to 

sell such collateral to a willing buyer 

may avoid the need to liquidate such 

collateral in the market, and accordingly 

reduce time and transaction costs. In 

addition, the TPCP is granted only a 

short period of time (currently expected 

to be two hours) to respond to the 

Clearing House’s offer, and if it rejects 

the offer or does not respond within 

such period, the Clearing House retains 

all of its existing rights and remedies 

with respect to the Triparty Collateral. 

ICE Clear Europe thus does not believe 

the proposed two-hour delay would 

adversely affect its ability to liquidate 

collateral or otherwise manage the 

default of an F&O Clearing Member. 

To implement these arrangements, 

ICE Clear Europe proposes to adopt a 

new Paragraph 3.32 of the Finance 

Procedures, the text of which is as 

follows (new text underlined): 

3.32 At the request of an F&O 

Clearing Member, the Clearing House 

may, in its sole discretion, agree to enter 

into a collateral purchase agreement 

with a third party collateral purchaser 

and such F&O Clearing Member, under 

which the Clearing House will agree to 

offer for sale to the third party collateral 

purchaser Triparty Collateral deposited 

by such F&O Clearing Member for a 

Proprietary Account in respect of F&O 

Contracts, in the event of the F&O 

Clearing Member being declared a 

Defaulter under the Rules. The Clearing 

House shall have no obligation to enter 

into any such agreement, and the 

identity of any such third party 


tkelley on DSK3SPTVN1PROD with NOTICES