Document ID: SEC-2021-0657-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Europe, Ltd.
Posted Date: 2021-05-07T04:00Z

[Federal Register Volume 86, Number 87 (Friday, May 7, 2021)]
[Notices]
[Pages 24689-24691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09643]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91740; File No. SR-ICEEU-2021-011]

Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change Relating 
to Amendments to the ICE Clear Europe Delivery Procedures

May 3, 2021.
    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 April 28, 2021, ICE Clear Europe Limited (``ICE Clear Europe'' or 
the ``Clearing House'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule changes described in 
Items I, II and III below, which Items have been prepared primarily by 
ICE Clear Europe. ICE Clear Europe filed the proposed rule change 
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(4)(ii) 
\4\ thereunder, such that the proposed rule was immediately effective 
upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(a).
    \4\ 17 CFR 240.19b-4(f)(4)(ii).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The principal purpose of the proposed amendments is for ICE Clear 
Europe to amend its Delivery Procedures (the ``Delivery Procedures'') 
in connection with the addition of delivery terms relating to the Ice 
Deliverable UK Emissions Contracts.\5\
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    \5\ Capitalized terms used but not defined herein have the 
meaning specified in the ICE Clear Europe Clearing Rules (the 
``Rules'').
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II. Clearing Agency'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 such statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

(a) Purpose
    ICE Clear Europe is proposing to amend its Delivery Procedures to 
add a new Part A1 regarding delivery procedures relating to a new ICE 
Deliverable UK Emissions Futures Contracts (``ICE Deliverable UK 
Emissions Contracts''), which include ICE Futures UKA Auction 
Contracts, ICE Futures UKA Futures Contracts and ICE Futures UKA Daily 
Contracts, that would be traded on ICE Futures Europe and cleared by 
ICE Clear Europe.
    Proposed Part A1 would set out the delivery specifications and 
procedures for deliveries under the ICE Deliverable UK Emissions 
Contracts.
    Proposed Part A1 would apply to ICE Deliverable UK Emissions 
Contracts which go to physical delivery on the expiry date and provides 
that deliveries under ICE Deliverable UK Emissions Contracts are 
effected upon (i) in the case of Seller effecting delivery, the 
completion of the transfer of the relevant UK Carbon Emissions 
Allowances, or ``UKAs'', from the relevant Nominating Holding Account 
of the Seller to the relevant Nominating Holding Account of the 
Clearing House, and (ii) in the case of the Buyer taking delivery, the 
completion of the transfer of the relevant UKAs from the Nominating 
Holding Account of the Clearing House to the relevant Nominating 
Holding Account of the Buyer. Such delivery takes place during the 
Delivery Period for the relevant Emissions Contracts in accordance with 
the ICE Futures Europe Rules. UKAs to be delivered must conform to the 
specifications in ICE Futures Europe Rules and the registry through 
which delivery may be made.
    Proposed Part A1 would address certain the responsibilities of the 
Clearing House and relevant parties for delivery under the ICE 
Deliverable UK Emissions Contracts. Routine delivery of ICE UKA Auction 
Contracts would be based on submission of delivery intentions via the 
Clearing House ECS system.
    Proposed Part A1 would further specify the pricing for delivery 
under

[[Page 24690]]

the ICE Deliverable UK Emissions Contracts and the method for 
calculation of invoices. The amendments would include delivery 
timetables, which would distinguish between ICE UKA Futures Contracts, 
the ICE UKA Daily Futures Contracts and the ICE UKA Auction Contracts. 
The timetables would each include a detailed timeframe for submission 
of Registry Account Details, submission of delivery intentions, 
submission of Transfer Requests to the relevant registry, payment and 
release of delivery Margin (if relevant), payment and other matters. 
Delivery timetables would also be set out for late and failed 
deliveries.
    Proposed Part A1 would also detail limitation of liability for the 
Clearing House. The Clearing House would not be liable as a result of 
the performance or non-performance of any Auction Seller, Auction 
Monitor, Administrator, GG ETS Regulator, Governmental Authority, 
Registry or UK Transaction Log, the validity of any UKA for purposes of 
meeting the requirements of the Scheme, any act or omission of any 
operator the Registry or UK Transaction Log or Authorised 
Representative of any other party, among other matters.
    In addition, Proposed Part A1 would address the posting of EFPs and 
EFSs in respect of the ICE UKA Futures Contracts. Finally, Proposed 
Part A1 would also address an alternative delivery procedure in the 
event of a transfer request failure relating to ICE Deliverable UK 
Emissions Contracts other than the ICE UKA Auction Contract, pursuant 
to which a Clearing Member may seek agreement of the Clearing House to 
make or take delivery beyond the point of failure on terms other than 
those required under ICE Futures Europe Rules.
(b) Statutory Basis
    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 safeguarding of securities and funds in the custody 
or control of the clearing agency or for which it is responsible, and 
the protection of investors and the public interest. The proposed 
amendments are designed to facilitate the clearing of a new physically 
settled UK emissions contracts that are being launched for trading by 
the ICE Futures Europe exchange. The amendments would set out the 
obligations and roles of Clearing Members and the Clearing House. ICE 
Clear Europe believes that its financial resources, risk management, 
systems and operational arrangements are sufficient to support clearing 
of such contract (and to address physical delivery under such contract) 
and to manage the risks associated with such contract. As a result, in 
ICE Clear Europe's view, the amendments would be consistent with the 
prompt and accurate clearance and settlement of the Contract as set out 
in the proposed Delivery Procedures amendments, and the protection of 
investors and the public interest consistent with the requirements of 
Section 17A(b)(3)(F) of the Act.\7\ (In ICE Clear Europe's view, the 
amendments would not affect the safeguarding of funds or securities in 
the custody or control of the clearing agency or for which it is 
responsible, within the meaning of Section 17A(b)(3)(F).\8\)
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    \6\ 15 U.S.C. 78q-1(b)(3)(F).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
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    In addition, Rule 17Ad-22(e)(10) \9\ requires that each covered 
clearing agency establish and maintain transparent written standards 
that state its obligations with respect to the delivery of physical 
instruments, and establish and maintain operational practices that 
identify, monitor and manage the risks associated with such physical 
deliveries. As discussed above, the amendments to the Delivery 
Procedures relating to the delivery and settlement under the ICE 
Deliverable UK Emissions Contracts and ICE Futures Europe exchange 
contract terms would set out the obligations and roles of Clearing 
Members and the Clearing House. The amendments would also adopt 
relevant procedures for such deliveries, which would facilitate 
identifying, monitoring and managing risks associated with delivery.
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    \9\ 17 CFR 240.17Ad-22(e)(10).
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(B) Clearing Agency's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed rule changes would 
have any impact, or impose any burden, on competition not necessary or 
appropriate in furtherance of the purposes of the Act. The changes are 
being proposed in order to update the Delivery Procedures in connection 
with the listing of the ICE Deliverable UK Emissions Contracts on the 
ICE Futures Europe market. ICE Clear Europe believes that such 
contracts would provide opportunities for interested market 
participants to engage in trading activity in the UK emissions market. 
ICE Clear Europe does not believe the amendments would adversely affect 
competition among Clearing Members, materially affect the cost of 
clearing, adversely affect access to clearing in Contracts for Clearing 
Members or their customers, or otherwise adversely affect competition 
in clearing services. Accordingly, ICE Clear Europe does not believe 
that the amendments would impose any impact or burden on competition 
that is not appropriate in furtherance of the purpose of the Act.

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants or Others

    Written comments relating to the proposed amendments have not been 
solicited or received by ICE Clear Europe. ICE Clear Europe will notify 
the Commission of any comments received with respect to the proposed 
rule change.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and paragraph (f) of Rule 19b-4 \11\ 
thereunder. 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 necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f).
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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-ICEEU-2021-011 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-2021-011. This 
file number should be included on the

[[Page 24691]]

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 website 
(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 website 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 will also be available for inspection and copying at the 
principal office of ICE Clear Europe and on ICE Clear Europe's website 
at https://www.theice.com/clear-europe/regulation.
    All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-ICEEU-2021-011 and should be 
submitted on or before May 28, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09643 Filed 5-6-21; 8:45 am]
BILLING CODE 8011-01-P