Document ID: SEC-2017-0809-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Europe Ltd.
Posted Date: 2017-05-19T04:00Z

[Federal Register Volume 82, Number 96 (Friday, May 19, 2017)]
[Notices]
[Pages 23080-23083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-10129]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80674; File No. SR-ICEEU-2017-007]

Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Proposed Rule Change, Security-Based Swap Submission or Advance 
Notice Relating to Amendments to the ICE Clear Europe Limited Articles 
of Association

May 15, 2017
    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 May 2, 2017, ICE Clear Europe Limited (``ICE Clear Europe'') 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. 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.
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change, Security-Based Swap Submission, or Advance Notice

    The principal purpose of the proposed rule change is to modify 
certain provisions of the ICE Clear Europe Articles of Association.

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change, Security-Based Swap Submission or 
Advance Notice

    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

[[Page 23081]]

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, Security-Based Swap Submission or 
Advance Notice

1. Purpose
    The purpose of the changes is to make certain amendments to ICE 
Clear Europe's Articles of Association (the ``Articles''). The 
amendments are generally intended to update the Articles to reflect the 
Clearing House's committee structure, to modify certain matters 
relating to the term of office of directors and to adopt certain new 
procedures addressing conflicts of interest of directors, as discussed 
in more detail herein.
    In article 1,\3\ a cross-reference to relevant parts of UK 
companies regulations has been updated. In article 3, certain 
definitions have been updated, including to add definitions for key 
existing committees: The Audit Committee, Board Risk Committee, 
Compensation Committee and Nominations Committee. The amendments also 
update the definition of Risk Committee to refer to product-specific 
Risk Committees (as distinct from the Board Risk Committee). A 
reference to the former UK Financial Services Authority has been 
updated to refer to the Bank of England, consistent with changes in the 
UK regulatory structure. A definition has also been added for the 
Senior Independent Director, as discussed below. Certain definitional 
provisions have also been clarified, including to remove unnecessary 
references to certain extraordinary resolutions. Article 4 has been 
updated to provide a cross-reference to regulations referred to in 
article 1.
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    \3\ References herein to the numbering of particular articles 
will be to the articles as amended.
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    Articles 7 and 8 have been revised to remove certain unnecessary 
distinctions between annual general meetings of members (i.e., 
shareholders) and extraordinary general meetings of members (given that 
the clearing house has a single shareholder). A typographical 
correction is made in article 12.
    In article 25, the minimum number of directors has been changed 
from two to six (the maximum of twelve is unchanged, as are the 
requirements with respect to independent directors). The clearing house 
currently has ten directors; as a result, this amendment is not 
expected to affect current operations of the board. Article 26 has been 
revised to reflect that selection of replacement or additional 
directors will be made following recommendation by the Nominations 
Committee. Article 29 provides for the board to appoint one of its 
independent directors as Senior Independent Director (and to revoke or 
termination such appointment at its discretion). The Senior Independent 
Director will serve as the lead independent director appointed in 
accordance with the UK Corporate Governance Code \4\ as in effect from 
time to time (to which the clearing house is subject).
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    \4\ Financial Reporting Council Limited, UK Corporate Governance 
Code (April 2016). The code sets out a code of conduct and best 
practices for governance matters for UK companies. Among other 
matters, the code states that the board should appoint one of the 
independent non-executive directors as a senior independent director 
``to provide a sounding board for the chairman and to serve as an 
intermediary for the other directors when necessary.'' The senior 
independent director should lead meetings of the non-executive 
directors, at least annually, to evaluate the performance of the 
Board chairman.
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    The amendments make certain changes to the procedures for 
staggering the retirement or rotation of independent directors. Under 
revised Articles 31 and 32, at a general meeting to be held each year, 
the two longest serving independent directors (who are not CDS 
directors) that have served at least three consecutive years on the 
board, at the discretion of the Nominations Committee, must retire from 
office, but may offer themselves for reappointment for a new three year 
term by the shareholder. An independent director may be so reappointed 
a maximum of two times for three year terms, unless the clearing house 
by resolution of its sole shareholder determines otherwise. The 
provisions for the retirement or rotation of CDS directors are 
unchanged. The revised retirement procedures do not apply to directors 
other than independent directors. Various conforming and clarifying 
changes have been made in article 33, which will provide that a 
director whose term ends at a general meeting may be reappointed and if 
not, may retain office until the meeting appoints a replacement (or 
until the end of the meeting if no replacement is named). In article 
34, standards for determining that a director has become incapacitated 
have been updated. The amendments also reduce from six to three the 
number of consecutive meetings that a director may miss before being 
removed on that basis.
    A new article 37 has been added to state explicitly that the 
directors will appoint the members of the relevant committees, as is 
current practice, consistent with the terms of reference for those 
committees, and that the committees will operate in accordance with 
such terms of reference. Article 43, which addresses delegation of 
board powers to committees, has been revised to refer explicitly to the 
Audit Committee, Board Risk Committee, Nominations Committee and 
Compensation Committee, and such other committees as the board 
determines may be required. A new article 48 has been added to require 
independent directors to disclose to the board all other directorships 
they hold, both prior to appointment and on an ongoing basis.
    Additional amendments have been made to the provisions of the 
Articles relating to conflicts of interest (and potential conflicts of 
interest) of directors to ensure that there is a clear procedure in 
place to deal with any such conflicts of interest (and potential 
conflicts of interest), consistent with the provisions of the UK 
Companies Act 2006. In article 52, the prohibition on a director 
participating in or voting on a decision in which he or she has an 
interest is modified (i) to eliminate a restriction that the interest 
be material and (ii) to provide additional exceptions where ICE Clear 
Europe by ordinary resolution of the shareholder disapplies the 
provision of the Articles that would prevent the director from 
participating in that decision or where the director's interest cannot 
reasonably be regarded as likely to give rise to a conflict of 
interest. A reference to the UK Companies Act 2006 is also corrected, 
and an unnecessary reference to that act is removed.
    The amendments also adopt a new article 53, which addresses certain 
conflicts of interests and potential conflicts of interest of directors 
that do not arise in relation to a transaction or agreement with ICE 
Clear Europe (without limiting the obligations of directors under 
applicable provisions of the UK Companies Act 2006). In the case of 
such a conflict that arises from the appointment or proposed 
appointment of a person as a director, the uninterested directors or 
the shareholder may nonetheless authorize the appointment of the 
director, and address the relevant situation, on such terms as they 
determine. In the case of other conflicts, the uninterested directors 
or the shareholder may choose to permit the relevant situation and the 
continued performance by the interested director of his or her duties, 
on such terms as they determine. The interested directors will not be 
counted in the

[[Page 23082]]

quorum for, and will not be allowed to vote on, any decision of the 
directors on such matters. The uninterested directors may act on such 
matters even if there are insufficient directors to meet the normal 
quorum and voting requirements. The resolution adopted by the 
uninterested directors or the shareholder may, for example, permit the 
interested directors to vote, exclude the interested directors from all 
information and discussion about the relevant situation, and/or impose 
additional duties of confidentiality on the interested directors. The 
authorization of an interested director situation can be withdrawn or 
modified at any time. The article also contains requirements on 
directors to provide notice of potential conflicts and specifies 
certain other procedures and documentation requirements.
    In article 55, clarifications are made that a director may not 
retrospectively waive notice of a meeting more than seven days after 
the meeting is held. The revised article also clarifies that the chair 
will not have a second or casting vote (in the case of an equally 
divided vote) if the chair is not otherwise to be counted for quorum or 
voting purposes (such as because of a conflict of interest). In revised 
article 60, the requirements for action by written resolution of 
directors have been clarified to provide that all directors entitled to 
vote on the matter (rather than all directors entitled to receive 
notice of a board meeting) must consent to the action.
    The recordkeeping requirements in article 63 have been revised to 
provide that the company must keep a written record of all unanimous or 
majority decisions of the directors for at least 10 years. Article 69 
has been revised to refer to a special rather than extraordinary 
resolution.
    Certain other non-substantive corrections and clarifications have 
been made in the Articles. For example, various references to persons 
throughout the Articles have been revised to be gender-neutral. Various 
articles have also been renumbered in light of the changes discussed 
above, and related cross-references have been updated.
2. Statutory Basis
    ICE Clear Europe believes that the changes described herein are 
consistent with the requirements of Section 17A of the Act \5\ and the 
regulations thereunder applicable to it, and in particular are 
consistent with 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 ICE Clear Europe or for which it 
is responsible and the protection of investors and the public interest, 
within the meaning of Section 17A(b)(3)(F) of the Act.\6\ As discussed 
above, the changes are intended to clarify and update certain aspects 
of ICE Clear Europe's Articles, particularly around the committee 
structure, retirement and rotation of independent directors and 
conflicts of interest of directors. In ICE Clear Europe's view, these 
amendments will enhance the clearing house's overall governance 
framework, and thus facilitate the efficient operation of the clearing 
house and the prompt and accurate clearance and settlement of 
transactions and the public interest, within the meaning of the Act. 
For these reasons, the amendments will also promote governance 
arrangements that are clear and transparent to fulfill the public 
interests requirements in Section 17A of the Act applicable to clearing 
agencies, support the objectives of owners and participants and promote 
the effectiveness of the clearing agency's risk management procedures, 
within the meaning of Rule 17Ad-22(d)(8). Furthermore, the amendments 
will support governance arrangements that fulfill the requirements of 
Rule 17Ad-22(e)(2), including that the directors have appropriate 
experience and skills to discharge their duties and responsibilities, 
and that the governance arrangements specify clear and direct lines of 
responsibility.
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    \5\ 15 U.S.C. 78q-1.
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Clearing Agency's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed changes to the rules 
would have any impact, or impose any burden, on competition not 
necessary or appropriate in furtherance of the purpose of the Act. The 
amendments relate to ICE Clear Europe's internal governance structure 
relating to the board of directors and similar matters. ICE Clear 
Europe does not believe that these changes will impose any additional 
costs on Clearing Members or other market participants. ICE Clear 
Europe further does not believe that the amendments will adversely 
affect access to clearing by Clearing Members or their customers or 
otherwise adversely affect Clearing Members or market participants or 
the market for clearing services generally.

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

    Written comments relating to the proposed changes to the rules have 
not been solicited or received. ICE Clear Europe will notify the 
Commission of any written comments received by ICE Clear Europe.

III. Date of Effectiveness of the Proposed Rule Change, Security-Based 
Swap Submission and Advance Notice and Timing for Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.
    The proposal shall not take effect until all regulatory actions 
required with respect to the proposal are completed.

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 rule-comments@sec.gov. Please include 
File Number SR-ICEEU-2017-007 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-2017-007. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent

[[Page 23083]]

amendments, all written statements with respect to the proposed rule 
change, security-based swap submission or advance notice that are filed 
with the Commission, and all written communications relating to the 
proposed rule change, security-based swap submission or advance notice 
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 Web site 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 Web site at https://www.theice.com/clear-europe/regulation#rule-filings.
    All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-ICEEU-2017-007 
and should be submitted on or before June 9, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-10129 Filed 5-18-17; 8:45 am]
 BILLING CODE 8011-01-P