[Federal Register Volume 82, Number 183 (Friday, September 22, 2017)]
[Notices]
[Pages 44473-44474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-20203]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81644; File No. SR-ICC-2017-008]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change Relating to the Clearance of Additional 
Credit Default Swap Contracts

September 18, 2017.

I. Introduction

    On June 13, 2017, ICE Clear Credit LLC (``ICC'') 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 revise the ICC 
Rulebook (the ``Rules'') in order to provide for the clearance of 
additional Standard Emerging Market Sovereign CDS contracts (together, 
``EM Contracts''). The proposed rule change was published for comment 
in the Federal Register on July 3, 2017.\3\ The Commission did not 
receive comments on the proposed rule change. On August 17, 2017, the 
Commission designated a longer period for Commission action on the 
proposed rule change.\4\ For the reasons discussed below, the 
Commission is approving the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-81029 (June 27, 
2017), 82 FR 30931 (July 3, 2017) (SR-ICC-2017-008) (``Notice'').
    \4\ Securities Exchange Act Release No. 34-81413 (August 17, 
2017), 82 FR 40026
     (August 23, 2017) (SR-ICC-2017-008).
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II. Description of the Proposed Rule Change

    The purpose of this rule change is to provide the basis for ICC to 
clear additional credit default swap contracts. Specifically, ICC has 
proposed amending Subchapter 26D of its Rules to provide for the 
clearance of additional EM Contracts by including the Kingdom of Saudi 
Arabia and the Republic of Kazakhstan in the list of specific Eligible 
SES Reference Entities in Rule 26D-102. ICC represents that these 
additional EM Contracts have

[[Page 44474]]

terms consistent with the other EM Contracts approved for clearing at 
ICC and governed by Subchapter 26D of the Rules.\5\ ICC has also 
represented that clearing of the additional EM Contracts will not 
require any changes to ICC's Risk Management Framework or other 
policies and procedures constituting rules within the meaning of the 
Act.\6\
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    \5\ Notice, 82 FR at 30931.
    \6\ Id. at 30931-32.
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III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act directs the Commission to approve a 
proposed rule change of a self-regulatory organization if the 
Commission finds that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such self-regulatory organization.\7\ Section 
17A(b)(3)(F) of the Act \8\ requires that, 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, 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.
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    \7\ 15 U.S.C. 78s(b)(2)(C).
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds that the rule change is consistent with the 
requirements of Section 17A of the Act \9\ and the rules and 
regulations thereunder applicable to ICC. The Commission has reviewed 
the terms and conditions of these contracts and has determined that 
they are substantially similar to the other contracts listed in 
Subchapter 26D of the ICC Rules, all of which ICC currently clears, the 
key difference being that the underlying reference obligations will be 
issuances by the Kingdom of Saudi Arabia and the Republic of 
Kazakhstan, the new Eligible SES Reference Entities. Moreover, the 
Commission has reviewed the Notice and ICC's Rules, policies and 
procedures, which provide that the additional EM Contracts will be 
cleared pursuant to ICC's existing clearing arrangements and related 
financial safeguards, protections and risk management procedures.\10\ 
In addition, the Commission has evaluated information submitted by ICC, 
including data on volume, open interest, and the number of ICC clearing 
participants (``CPs'') that currently trade in the additional EM 
Contracts as well as certain model parameters for the additional EM 
Contracts. Based on this review, the Commission finds that ICC's rules, 
policies, and procedures are reasonably designed to price and measure 
the potential risk presented by these products; collect financial 
resources in proportion to such risk; and liquidate these products in 
the event of a CP default. Thus, the Commission finds that acceptance 
of the additional EM Contracts, on the terms and conditions set out in 
ICC's Rules, is consistent with the prompt and accurate clearance of 
and settlement of securities transactions and derivative agreements, 
contracts and transactions cleared by ICC, the safeguarding of 
securities and funds in the custody or control of ICC, and the 
protection of investors and the public interest, within the meaning of 
Section 17A(b)(3)(F) of the Act.\11\
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    \9\ 15 U.S.C. 78q-1.
    \10\ Notice, 82 FR at 30932.
    \11\ 15 U.S.C. 78q-1(b)(3)(F).
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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 \12\ and the 
rules and regulations thereunder.
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    \12\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\13\ that the proposed rule change (File No. SR-ICC-2017-008) be, 
and hereby is, approved.\14\
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    \13\ 15 U.S.C. 78s(b)(2).
    \14\ 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).
    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-20203 Filed 9-21-17; 8:45 am]
 BILLING CODE 8011-01-P