Document ID: SEC-2023-0212-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Europe Ltd.
Posted Date: 2023-02-22T05:00Z

[Federal Register Volume 88, Number 35 (Wednesday, February 22, 2023)]
[Notices]
[Pages 10950-10952]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-03581]

[[Page 10950]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96934; File No. SR-ICEEU-2023-005]

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

February 15, 2023.
    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 2, 2023, 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 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) 
thereunder,\4\ such that the proposed rule change 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    ICE Clear Europe Limited (``ICE Clear Europe'' or the ``Clearing 
House'') proposes to amend its Delivery Procedures (``Delivery 
Procedures'' or ``Procedures'') to add a new Part II thereto (``Part 
II'') to address new ICE Futures Europe Dutch TTF Natural Gas Futures 
(each a ``Contracts'' and together the ``Contracts''), natural gas 
futures contracts that will be traded at ICE Futures Europe and cleared 
by ICE Clear Europe. The proposed updates would also make a conforming 
change elsewhere in the Delivery Procedures.\5\
---------------------------------------------------------------------------

    \5\ Capitalized terms used but not defined herein have the 
meanings specified in the Delivery Procedures or, if not defined 
therein, the ICE Clear Europe Clearing Rules.
---------------------------------------------------------------------------

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
Background
    ICE Clear Europe is proposing to add a new Part II to the Delivery 
Procedures as well as a conforming change elsewhere in the Delivery 
Procedures. Part II would apply to the Contracts, which are to be 
traded on ICE Futures Europe and cleared at ICE Clear Europe.\6\ The 
amended Delivery Procedures would provide the delivery specifications 
and processes related to delivery under the Contracts. The proposed 
Delivery Procedures are intended to become operative on February 20, 
2023, subject to regulatory approval.
---------------------------------------------------------------------------

    \6\ ICE Clear Europe also currently clears a similar TTF natural 
gas futures contract traded on the ICE Endex market. That ICE Endex 
contract will continue to be cleared separately from, and will not 
be fungible with, the Contracts and is addressed by a separate 
existing part of the Delivery Procedures (although the Delivery 
Procedures for the two contracts are substantially similar).
---------------------------------------------------------------------------

    Delivery under the Contracts would be settled by the transfer of 
rights to natural gas at the TTF (a notional point within the Dutch 
natural gas Transmission System at which the balancing of the amounts 
of natural gas takes place) from a Transferor nominated by the Seller 
to the Clearing House and from the Clearing House to a Transferee 
nominated by the Buyer. The amendments would provide that the Clearing 
Members grant authority to ICE Clear Europe to make Trade Nominations 
on their behalf in connection with deliveries under Contracts. Clearing 
Members would not be required, and would not be able, to send Trade 
Nominations themselves.
    The amendments would set out relevant definitions related to 
delivery under the contract, including those relating to TTF and the 
Transmission System. The amendments would further specify certain 
details of the delivery process for the Contracts including 
denominations of relevant quantity, settlement price, relevant time 
zones, timing of cessation of trading and certain requirements for 
exchange of futures for physical and swap transactions under exchange 
rules.
    The amendments would also address the responsibilities of the 
Clearing House and relevant parties for delivery under Contracts, as 
well as certain limitations of liability for the Clearing House. 
Specifically, the Clearing House would not be responsible for the 
performance or non-performance of GTS (the transmission system 
operator), including of its obligations under the GTS Rules. 
Additionally, neither the Buyer, Seller nor their Transferees or 
Transferors would have any claim against the Clearing House for any 
loss, cost, damage or expense incurred or suffered as a result of the 
condition or operation of the Transmission System or any part thereof 
or the performance or non-performance of GTS except as otherwise 
expressly provided in the ICE Futures Europe Rules.
    The amendments would provide details related to delivery contract 
security, which is the delivery margin to be provided by Buyer and 
Seller, and which would take into account the possibility of costs or 
charges arising from the balancing regime under the TSC. The Clearing 
House would be permitted to alter the calculation of each of the 
Buyer's Security and the Seller's Security at any time or make 
adjustments in respect of a specific Seller or Buyer.
    The amendments would include delivery timetables with detailed 
timeframes and descriptions of the processes for delivery under 
Contracts, and such timetables would set out, among other processes, 
the time for cessation of trading, provision of Buyer's and Seller's 
Security, submission of delivery intentions, confirmation reports, 
notifications to the nomination agent, payment, top-up of security, 
invoicing, and other matters. The amendments would also include 
delivery tables with detailed times and processes relating to failed 
delivery under Contracts. In respect of invoicing, the amendments would 
detail how amounts included in invoices prepared by the Clearing House 
would be calculated for confirmed deliveries and failed deliveries of 
each Contract, and address the credit notes issued to Buyer's in 
respect of failed deliveries.
    In addition, the amendments would provide a summary of the reports 
produced by the Clearing House in respect of each Contract and made 
available to Buyers and Sellers electronically.
    The amendments would also update Section 5.1 of the Delivery 
Procedures to include ICE Futures Europe Dutch TTF Natural Gas Futures 
Contract in the list of contracts under which, subject to delivery 
obligations, sellers and buyers

[[Page 10951]]

can nominate transferors and transferees.
(b) Statutory Basis
    ICE Clear Europe believes that the proposed amendments to the 
Delivery Procedures are consistent with the requirements of Section 17A 
of the Act \7\ and the regulations thereunder applicable to it. In 
particular, Section 17A(b)(3)(F) of the Act \8\ 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 
changes to the Delivery Procedures are designed to establish delivery 
procedures relating to ICE Futures Europe Dutch TTF Natural Gas Futures 
Contracts, which will be traded on ICE Futures Europe and cleared at 
ICE Clear Europe. The amendments would set out the role, 
responsibilities and liabilities of the Clearing House, Clearing 
Members and designated transferors and transferees in the physical 
delivery process, in line with Delivery Procedures for other types of 
deliverable energy futures contracts. Contracts providing for delivery 
under Part II will be cleared by the Clearing House in the 
substantially same manner as other types of deliverable energy futures 
contracts, and will be supported by ICE Clear Europe's existing F&O 
financial resources, risk management, systems and operational 
arrangements. Accordingly, ICE Clear Europe believes that its financial 
resources, risk management, systems and operational arrangements are 
sufficient to support clearing of such contracts and to manage the 
risks associated with such contracts. As a result, in ICE Clear 
Europe's view, the amendments would 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.\9\ (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).\10\)
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78q-1.
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
    \9\ 15 U.S.C. 78q-1(b)(3)(F).
    \10\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    In addition, Rule 17Ad-22(e)(10) \11\ provides that ``[e]ach 
covered clearing agency shall establish, implement, maintain and 
enforce written policies and procedures reasonably designed to, as 
applicable [. . .] 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 would establish a new 
set of procedures applicable to the delivery and settlement of ICE 
Futures Europe Dutch TTF Natural Gas Futures Contracts. The procedures 
would address, among other matters, delivery specifications for such 
contracts, the obligations and roles of Clearing Members and the 
Clearing House, certain limitations of liability for the Clearing 
House, and certain other documentation and timing matters. Clearance of 
the Contracts would otherwise be supported by ICE Clear Europe's 
existing financial resources, risk management, systems and operational 
arrangements. The amendments thus appropriately clarify the role and 
responsibilities of the Clearing House and Clearing Members with 
respect to physical delivery. As a result, ICE Clear Europe believes 
the amendments are consistent with the requirements of Rule 17Ad-
22(e)(10).\12\
---------------------------------------------------------------------------

    \11\ 17 CFR. 240.17Ad-22(e)(10).
    \12\ 17 CFR. 240.17Ad-22(e)(10).
---------------------------------------------------------------------------

(B) Clearing Agency'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 proposed 
amendments to the Delivery Procedures are intended to establish a new 
set of procedures applicable to the delivery and settlement of ICE 
Futures Europe Dutch TTF Natural Gas Futures Contracts in connection 
with the listing of such contracts for trading on the ICE Futures 
Europe market. ICE Clear Europe believes that such contracts would 
provide additional opportunities for interested market participants to 
engage in trading activity in the relevant Dutch natural gas 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 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 amendment has 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 \13\ and paragraph (f) of Rule 19b-4 \14\ 
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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, security-based swap submission or advance notice 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-2023-005 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-2023-005. 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

[[Page 10952]]

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-2023-005 and should be 
submitted on or before March 15, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-03581 Filed 2-21-23; 8:45 am]
BILLING CODE 8011-01-P