Document ID: SEC-2014-1047-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Europe Ltd.
Posted Date: 2014-06-24T04:00Z

[Federal Register Volume 79, Number 121 (Tuesday, June 24, 2014)]
[Notices]
[Pages 35823-35825]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-14658]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72421; File No. SR-ICEEU-2014-07]

Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of Proposed Rule Change Related to List of Permitted Cover

June 18, 2014.
    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 June 5, 2014, ICE Clear Europe Limited (``ICE Clear Europe'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change described in Items I, II and III below, which 
Items have been primarily prepared by ICE Clear Europe. ICE Clear 
Europe filed the proposal pursuant to Section 19(b)(3)(A) of the 
Act,\3\ and Rule 19b-4(f)(4)(ii) \4\ thereunder, so that the proposal 
was 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. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The principal purpose of the change is to limit the use of non-USD 
collateral for original margin requirements by FCM/BD Clearing Members 
in connection with customer transactions in the F&O product category.

II. Self-Regulatory Organization'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 these statements.

[[Page 35824]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of the rule change is to limit the use of non-USD 
collateral for original margin requirements by FCM/BD Clearing Members 
in connection with customer transactions in the F&O product category, 
in order to address certain U.S. and E.U. regulatory requirements. 
Specifically, following implementation of this change, ICE Clear Europe 
will no longer accept cash or non-cash collateral denominated in 
currencies other than U.S. dollars to meet original margin requirements 
for the DCM Customer Account of FCM/BD Clearing Members (also known as 
the ``W'' account or ``Section 4d(a) account''), which is subject to 
the segregation requirements of Section 4d(a) and (b) of the Commodity 
Exchange Act and the Commodity Futures Trading Commission's regulations 
thereunder.
    In addition, in connection with this change, FCM/BD Clearing 
Members will be required to withdraw non-USD variation margin balances 
credited to the Section 4d(a) account on a daily basis and cannot use 
such balances to cover original margin requirements in that account. 
(On U.S. holidays, margin calls in respect of the Section 4d(a) account 
will be made in a non-USD currency, but non-USD cash balances must be 
replaced with USD cash or assets on the following business day.) 
Various operational changes are required to be made to implement these 
requirements.
    FCM/BD Clearing Members may continue to use eligible non-USD cash 
and assets to cover proprietary account margin requirements and margin 
requirements relating to the Non-DCM/Swap Customer Account (also known 
as the customer secured account or ``Rule 30.7'' account). The changes 
described herein will not apply to Clearing Members other than FCM/BD 
Clearing Members.
    ICE Clear Europe proposes to implement the changes on June 10, 
2014, subject to completion of regulatory approvals.
    ICE Clear Europe is adopting these changes in order to comply with 
a combination of requirements under the Commodity Exchange Act and 
rules thereunder and E.U. regulatory requirements which, when 
implemented, will make it impractical for ICE Clear Europe to hold and 
invest non-USD original margin balances in the Section 4d(a) account.
    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, including the standards under 
Rule 17Ad-22,\6\ and are consistent with the prompt and accurate 
clearance of 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.\7\ ICE Clear Europe believes that limiting 
original margin for the Section 4d(a) account to USD denominated assets 
will not adversely affect ICE Clear Europe's financial resources to 
support clearing of contracts in such account. In particular, ICE Clear 
Europe is not changing its margin methodology in respect of such 
account, and does not believe that the change in permitted original 
margin currency will affect the overall value of its financial 
resources. ICE Clear Europe is also not changing the size or 
composition of its F&O Guaranty Fund.
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    \5\ 15 U.S.C. 78q-1.
    \6\ 17 CFR 240.17Ad-22.
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    Similarly, ICE Clear Europe does not believe that the change in 
permitted original margin currency for the Section 4d(a) account will 
adversely affect its ability to manage the risks of positions in that 
account. ICE Clear Europe is not altering its risk management policies 
in connection with this change, and believes that it will be able to 
manage any incremental currency risk that may arise as a result of the 
margin change in accordance with its existing risk management policies.
    For the reasons noted above, ICE Clear Europe believes that the 
proposed rule changes are consistent with the requirements of Section 
17A of the Act and regulations thereunder applicable to it.

B. Self-Regulatory Organization'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 Act. ICE Clear Europe 
recognizes that the change may impose costs on certain FCM/BD Clearing 
Members, or their customers, that were previously providing original 
margin for the Section 4d(a) account in the form of non-USD assets and 
will now have to provide USD-denominated assets. However, in light of 
the amounts involved, ICE Clear Europe does not believe the change will 
significantly burden clearing members or their customers, and further 
believes that the change is appropriate in light of the regulatory 
constraints on holding and investment of non-USD original margin for 
such account discussed above.

C. Self-Regulatory Organization'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 and Timing for 
Commission Action

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A) \8\ of the Act and Rule 19b-4(f)(4)(ii) \9\ 
thereunder because it effects a change in an existing service of a 
registered clearing agency that primarily affects the clearing 
operations of the clearing agency with respect to products that are not 
securities, including futures that are not security futures, swaps that 
are not security-based swaps or mixed swaps, and forwards that are not 
security forwards, and does not significantly affect any securities 
clearing operations of the clearing agency or any rights or obligations 
of the clearing agency with respect to securities clearing or persons 
using such securities-clearing service. 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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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(4)(ii).
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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:

[[Page 35825]]

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-2014-07 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-2014-07. 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 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 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/notices/Notices.shtml?regulatoryFilings.
    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-2014-07 
and should be submitted on or before July 15, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-14658 Filed 6-23-14; 8:45 am]
BILLING CODE 8011-01-P