Document ID: SEC-2019-0227-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Europe Limited
Posted Date: 2019-03-01T05:00Z

[Federal Register Volume 84, Number 41 (Friday, March 1, 2019)]
[Notices]
[Pages 7151-7153]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03625]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85187; File No. SR-ICEEU-2019-002]

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

February 25, 2019.
    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 February 15, 2019, 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 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) 
thereunder,\4\ so that the proposal was immediately effective upon 
filing. 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 to [sic] add delivery terms relating to the ICE Futures 
Europe (``ICE Futures Europe'' or ``IFEU'') Permian West Texas 
Intermediate Crude Oil Storage Futures Contracts (the 
``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 amending its Delivery Procedures to add a new 
Section 10 and a new Part DD regarding delivery procedures relating to 
a new Contract that will be traded on ICE Futures Europe and cleared by 
ICE Clear Europe.
    New Part DD sets out the delivery specifications and procedures for 
deliveries of storage capacity under the Contract. Delivery is effected 
by Magellan Crude Oil Pipeline Company, L.P. (``Magellan'') providing 
to the buyer a Capacity Allocation Contract (``CAC'') \6\ for storage 
of one or more increments of 1,000 barrels of Permian West Texas 
Intermediate crude oil for a named calendar month at Magellan's East 
Houston terminal (``MEH''). The amendments also establish standards for 
the storage provided, as well as relevant procedures for exchange of 
futures for physical transactions under exchange rules.
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    \6\ This is a standardized agreement between Magellan and a 
buyer providing the contractual right to use designated Permian WTI 
Storage in the delivery month as further detailed in the Permian WTI 
Storage Contract.
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    Part DD addresses certain the responsibilities of the Clearing 
House and relevant parties for delivery under the Contracts, 
supplementing the existing provisions of the Rules. Specifically, 
neither the Clearing House nor ICE Futures Europe are responsible for 
the performance of Magellan or any person operating MEH, nor do they 
give any undertaking or warranty to any person as to the effect of the 
Contract Terms and Delivery Procedures as regards title to Permian WTI 
Storage. Further, neither the Clearing House nor ICE Futures Europe 
will have any liability for the condition of the Magellan storage 
system or for the performance by Magellan or any person who operates 
such system of any responsibilities they may assume towards Clearing 
Members or other persons pursuant to the Contract Terms, except for 
liability for fraud or bad faith or liability which cannot lawfully be 
excluded. Neither the Clearing House nor ICE Futures Europe has any 
obligation to any person to ensure the accuracy or availability of any 
information in Magellan's records in relation to storage rights arising 
from CACs in relation to Permian WTI Storage.
    Part DD addresses delivery margin and invoicing with respect to the 
Contract and specifies certain details of the delivery process. 
Delivery of Contracts will be based on open contract positions at the 
close of trading on the last trading day for which physical delivery is 
specified. The procedures include a detailed timeframe for relevant 
notices of intent to deliver or receive, nominations of parties to 
delivery or receive, delivery confirmations, invoicing, release of 
delivery margin following completion of delivery and other matters.
    New Section 10 addresses alternative delivery procedures (ADP) that 
the parties to a Contract may agree in lieu of the standard delivery 
arrangements in Part DD and relevant exchange rules. Section 10 
addresses procedures for requesting such an alternative arrangement, 
disclosure of the counterparty (if amenable to an alternative 
arrangement), and confirmation and settlement of the alternative 
arrangement.

[[Page 7152]]

(b) Statutory Basis
    Section 17A(b)(3)(F) of the Act \7\ 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 crude oil storage futures contract that is being launched for 
trading by the ICE Futures Europe exchange. The amendments set out the 
obligations and roles of Clearing Members, the Clearing House and 
Magellan, the relevant storage facility for purposes of the Contracts. 
ICE Clear Europe believes that its financial resources, risk 
management, systems and operational arrangements are sufficient to 
support clearing of such products (and to address physical delivery 
under such contracts) and to manage the risks associated with such 
contracts. As a result, in ICE Clear Europe's view, the amendments will 
be consistent with the prompt and accurate clearance and settlement of 
the Contracts, and the protection of investors and the public interest 
consistent with the requirements of Section 17A(b)(3)(F) of the Act.\8\ 
In ICE Clear Europe's view, the amendments will 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).\9\
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    \7\ 15 U.S.C. 78q-1(b)(3)(F).
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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    In addition, Rule 17Ad-22(e)(10) \10\ 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 to allow for the delivery and settlement under the 
Contracts, taken together with the Rules and ICE Futures Europe 
exchange contract terms, set out the obligations and roles of Clearing 
Members, the Clearing House and Magellan, the relevant storage facility 
for purposes of the Contracts. The amendments also adopt relevant 
procedures for such deliveries, which will facilitate identifying, 
monitoring and managing risks associated with delivery.
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    \10\ 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 Contracts for trading on the ICE Futures Europe 
market. ICE Clear Europe believes that such contracts will provide 
opportunities for interested market participants to engage in trading 
activity in the Permian WTI storage 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 
amendments.

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 \11\ and paragraph (f) of Rule 19b-4 \12\ 
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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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-2019-002 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-2019-002. 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 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-2019-002 and should be 
submitted on or before March 22, 2019.

[[Page 7153]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-03625 Filed 2-28-19; 8:45 am]
 BILLING CODE 8011-01-P