Document ID: SEC-2012-0406-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Europe Ltd.
Posted Date: 2012-03-14T04:00Z

[Federal Register Volume 77, Number 50 (Wednesday, March 14, 2012)]
[Notices]
[Pages 15174-15179]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-6105]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66538; File No. SR-ICEEU-2012-03]

Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing and Order Granting Accelerated Approval of Proposed Rule 
Change To Revise Rules Related to Certain Operational Changes Relating 
to Timing, Effectiveness and Operation of Transfer Orders for Purposes 
of Compliance With Non-U.S. Legislation

March 8, 2012.
    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 March 6, 2012, ICE Clear Europe Limited (``ICE Clear Europe'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as 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 and to approve the proposed rule change 
on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    ICE Clear Europe is in regular communication with representatives 
of its Clearing Members, as that term is defined in the Rules of ICE 
Clear Europe \3\ (``Rules'') in relation to the operation of clearing 
processes and arrangements. From time-to-time, ICE Clear Europe must 
amend its Rules with reference to its home country and home region 
regulation. These changes follow recent amendments and changes to home 
country and home region regulation. Following consultation with its 
applicable home country regulators ICE Clear Europe has published these 
proposed rule changes, has carried out a public consultation process in 
respect of all of the changes described below, and has presented and 
agreed to the changes described below with its Clearing Members. These 
changes seek to clarify the timing and operation of various clearing 
processes, for existing clearing activities. Specifically, ICE Clear 
Europe is making changes to Part 12 of its Rules, which set out how 
certain transfer, clearing and settlement orders are treated for 
purposes of non-U.S. insolvency legislation, namely the U.K. Financial 
Markets and Insolvency (Settlement Finality) Regulations 1999 (the 
``U.K. Settlement Finality Rules'') and the EU Settlement Finality 
Directive (Directive 98/26/EC) (together with the U.K. Settlement 
Finality Rules, the ``Settlement Finality Legislation''). These 
proposed changes reflect changes to ICE Clear Europe's clearing and 
payment systems that have been proposed following designation by U.K. 
authorities as a ``designated system'' for purposes of such 
legislation; the proposed changes follow various meetings and 
discussions with the relevant U.K. authorities. These changes were 
published in ICE Clear Europe circular no. C11/169 on November 25, 
2011, available at: https://www.theice.com/publicdocs/clear_europe/circulars/C11169_att1.pdf.
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    \3\ See ICE Clear Europe Rule 101. The Rules are available on-
line at: https://www.theice.com/Rulebook.shtml?clearEuropeRulebook=. 
All capitalized terms not defined herein are defined in the Rules.
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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.\4\
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    \4\ The Commission has modified the text of the summaries 
prepared by ICE Clear Europe.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The principal purpose of the proposed rule change is for applicable 
provisions of the Rules to be updated to reflect technical details 
relating to the treatment of certain transfer, clearing

[[Page 15175]]

and settlement orders for purposes of the Settlement Finality 
Legislation.
    The Rule changes affect Part 12 of the ICE Clear Europe Rules. In 
general, the rule changes create specific rules regarding: The creation 
of various Transfer Orders, which include certain Clearing Orders, and 
Settlement Orders (each as defined for purposes of the Rules); the 
times at which such orders become irrevocable; the manner by which non-
irrevocable Transfer Orders may be varied; and the manner by which 
Transfer Orders may be satisfied. Finally, certain definitions found in 
Part 12 of the Rules are amended to account for the Settlement Finality 
Legislation, and to correspond to other changes to Part 12. Each of 
these changes is described in detail as follows.
    Part 12 of the ICE Clear Europe Rules sets forth Rules that are 
designed to comply with the Settlement Finality Legislation. In order 
to update those rules to comply with the Settlement Finality 
Legislation, Rule 1202 is modified to change the manner by which 
immediate and automatic entry of various Payment Transfer Orders 
occurs.
    In this regard, various changes are made to Rule 1202.
    Rule 1202(a)(i) gives rise to a Payment Transfer Order at any time 
that a Contract is formed by virtue of the operation of ICE Clear 
Europe Rule 401. Under the rule changes, such Open Offer Payment 
Transfer Orders are renamed ``New Contract Payment Transfer Orders''. 
Rule 1202(a)(i) is also modified to exclude energy contracts arising 
under Rule 401(a)(vii), and any CDS Contract arising pursuant to Rule 
401(a)(x) pursuant to a Bilateral CDS Transaction submitted for Weekly 
Clearing.
    Rule 1202(a)(ii) gives rise to a Payment Transfer Order upon the 
Clearing House sending an instruction pursuant to Rule 302. Such 
Payment Transfer Orders are renamed ``Debit Payment Transfer Orders.''
    Rule 1202(a)(iii) gives rise to a Payment Transfer Order if and 
when the Clearing House sends an instruction by means of an electronic, 
telephone or other message means to an Approved Financial Institution 
to transfer a sum of money from a Clearing House Account to an account 
of the Clearing House at the Concentration Bank. Under The rule 
changes, such Payment Transfer Orders are renamed ``AFI-CB Payment 
Transfer Orders.''
    Rule 1202(a)(iv) creates a Payment Transfer Order where the 
Clearing House sends an instruction by means of an electronic, 
telephone or other message means to a Concentration Bank to transfer a 
sum of money from an account of the Clearing House at the Concentration 
Bank to a Clearing House Account. Under the rule changes, such Payment 
Transfer Orders are renamed ``CB-AFI Payment Transfer Orders.''
    Rule 1202(a)(v) gives rise to a Payment Transfer Order in the event 
that the Clearing House receives a notification pursuant to Rule 
1205(b). This form of Payment Transfer Order is called an 
``Insufficient Funds Payment Transfer Order.'' Under the rule changes, 
Rule 1202(a)(v) is deleted, as are other references to Insufficient 
Funds Payment Transfer Orders that exist elsewhere in Part 12.
    Rule 1202(e) sets forth the scope of Payment Transfer Orders. Under 
(i) in that Rule, in the case of an Open Offer Payment Transfer Order, 
the Payment Transfer Order applies and has effect in the amount due to 
or from the Clearing House pursuant to the Contract Terms as a result 
of the Contract to which the confirmation referred to in Rule 
1202(a)(i) relates arising. For any CDS Contract arising as a result of 
Trade Date Clearing, this will be the Initial Payment. In the case of a 
Credit/Debit Payment Transfer Order, AFI-CB Payment Transfer Order or 
CB-AFI Payment Transfer Order, the Payment Transfer Order applies and 
has effect in the amount specified in the relevant instruction referred 
to in Rule 1202(a). This Rule is amended to specify the change in name 
from ``Open Offer Payment Transfer Order'' to ``New Contract Payment 
Transfer Order.'' No substantive change is made to Rule 1202(e).
    Rule 1202(b) sets forth the circumstances under which a Securities 
Transfer Order arises. Under Rule 1202(b)(i), a Position Transfer 
Order, which is a form of Securities Transfer Order, arises only if 
both of the Clearing Members are Participants. Under the rule changes, 
Rule 1202(b)(i)(A) is modified such that the Securities Transfer Order 
arises if the Clearing House, the relevant Market, and the two Clearing 
Members involved have already agreed to a transfer, assignment or 
novation of Contracts from one Clearing Member to another pursuant to 
Rule 408(a)(i). Rule 1202(b)(i)(a) is modified to include parenthetical 
text that both Clearing Members must be Participants for purposes of 
this Rule 1202(b)(i). This change is not substantive. Rule 
1202(b)(i)(B) permits a Securities Transfer Order to arise if the 
Clearing House has declared an Event of Default under Rule 901 and any 
Contracts to which a Defaulter is party are proposed to be transferred 
from the Defaulter to another Clearing Member pursuant to the Clearing 
House's powers under Rule 902, Rule 903 or otherwise. Rule 
1202(b)(i)(B) is modified to specify that the Clearing Member to whom 
the Defaulter's position is being transferred must be a Participant for 
purposes of the creation of a Securities Transfer Order. The scope of 
Position Transfer Orders under Rule 1202(f) is unchanged: each Position 
Transfer Order applies and has effect in respect of the Contracts to be 
transferred, assigned or novated.
    Additional means of creating Securities Transfer Orders are added 
at Rules 1202(b)(ii) through (b)(vi). These Securities Transfer Orders 
are new to Part 12 of the Rules.
    Under Rule 1202(b)(ii) a ``Collateral Transfer Order'' arises if 
and when the Clearing House accepts, through the ICE Systems, that a 
Clearing Member has validly requested either the transfer of Non-Cash 
Collateral to the order of the Clearing House, or a transfer to that 
Clearing Member or to its order of Non-Cash Collateral. Under Rule 
1202(g), a Collateral Transfer Order applies and has effect in respect 
of the Non-Cash Collateral to be transferred to or to the order of the 
Clearing House or Clearing Member.
    Under Rule 1202(b)(iii), a Securities Transfer Order arises when 
the Clearing House has received full, complete and correct information 
in relation to an ICE OTC Block Transaction or ICE Futures Europe Block 
Transaction from the relevant Market. Such Securities Transfer Orders 
are designated ``Energy Block Clearing Orders.'' In accordance with 
Rule 1202(h) Energy Block Clearing Orders apply and have effect in 
respect of the ICE OTC Transaction or ICE Futures Europe Transaction in 
question and any resulting Energy Contract.
    A Securities Transfer Order arises under Rule 1202(b)(iv) in 
respect of a Bilateral CDS Transaction submitted for Weekly Clearing if 
the Clearing House provides a report of such transaction to a Clearing 
Member after it has checked whether a Bilateral CDS Transaction 
submitted for Clearing is consistent with the records submitted by 
another Clearing Member and with the records in Deriv/SERV. Such a 
Securities Transfer Order is designated a ``Weekly CDS Clearing 
Order.''
    Under Rule 1202(b)(v), a Securities Transfer Order arises in 
respect of a Bilateral CDS Transaction that is submitted for Trade Date 
Clearing if the Clearing House issues an acceptance notice in 
accordance with Rule 401(a)(ix) to a Clearing Member through the ICE 
System. Such a Securities Transfer Order is designated a ``Trade Date 
CDS Clearing Order.'' Trade Date

[[Page 15176]]

CDS Clearing Orders and Weekly CDS Clearing Orders are together 
designated as ``CDS Clearing Orders.'' Under Rule 1202(i), each CDS 
Clearing Order shall apply and have effect in respect of the Bilateral 
CDS Transaction in question and any resulting CDS Contract.
    Under Rule 1202(b)(vi), a ``CDS Physical Settlement Order'' arises 
in one of two situations. Under Rule 1202(b)(vi)(A), a CDS Physical 
Settlement Order arises if the Clearing House is provided with a copy 
of a notice delivered by a Matched CDS Buyer to a Matched CDS Seller in 
a Matched Pair of a Notice of Physical Settlement in respect of Matched 
CDS Contracts, where the Notice of Physical Settlement specifies an 
instrument to be delivered that is an SFD Security. Under Rule 
1202(b)(vi)(B), a CDS Physical Settlement Order will arise when the 
Clearing House is provided with a copy of a notice delivered by a 
Matched CDS Buyer to a Matched CDS Seller in a Matched Pair of a NOPS 
Amendment Notice in respect of Matched CDS Contracts, where the NOPS 
Amendment Notice specifies an instrument to be delivered that is an SFD 
Security but where the Notice of Physical Settlement (including, as 
amended by any previous NOPS Amendment Notice) had specified an 
instrument that is not an SFD Security as the instrument that was to be 
delivered. Since CDS Physical Settlement Orders, as described in Rule 
1202(b)(vi), arise in respect of Matched Pairs, then, correspondingly, 
under Rule 1202(j), two separate CDS Physical Settlement Orders apply 
and have effect separately in respect of each of the CDS Contracts in 
the Matched Pair that are subject to a physical settlement obligation, 
and the instrument to be delivered pursuant thereto.
    Rule 1202(k) sets forth the scope of each Transfer Order in respect 
of the persons against whom such Transfer Order has effect. In this 
respect, Existing Rule 1202(g) (now renumbered Rule 1202(k)) is 
unchanged in respect of New Contract Payment Transfer Orders, Credit/
Debit Payment Transfer Orders, AFI-CB Payment Transfer Orders or CB-AFI 
Payment Transfer Orders. This Rule is, however, amended to specify the 
change in name from ``Open Offer Payment Transfer Order'' to ``New 
Contract Payment Transfer Order.''
    Rule 1202(k) is also amended to set forth the scope (in respect of 
the persons against whom such Transfer Order has effect) of Collateral 
Transfer Orders, Energy Block Clearing Transfer Orders, CDS Clearing 
Orders, and CDS Physical Settlement Orders. Each of Rules 1202(k)(v) 
through (viii) is new text.
    Under Rule 1202(k)(v), a Collateral Transfer Order has effect 
against and between each of the following Persons: (A) The Clearing 
Member that is the transferor of the Non-Cash Collateral in question; 
(B) any Custodian of the Clearing Member or the Clearing House; and (C) 
the Clearing House.
    Under Rule 1202(k)(vi), in the case of an Energy Block Clearing 
Order, such Energy Block Clearing Order has effect against and between 
each of the following Persons: (A) each Clearing Member that has 
submitted or confirmed details of the ICE OTC Block Transaction or ICE 
Futures Europe Block Transaction; (B) any Affiliate of the Clearing 
Member that was party to an ICE OTC Block Transaction or ICE Futures 
Europe Block Transaction and which is an Indirect Participant (if any); 
and (C) the Clearing House.
    Under Rule 1202(k)(vii), a CDS Clearing Order has effect against 
and between the following Persons: (A) Each Clearing Member that has 
submitted or confirmed details of the Bilateral CDS Transaction; (B) 
any Affiliate of a Clearing Member that is or was party to a Bilateral 
CDS Transaction and which is an Indirect Participant (if any); and (C) 
the Clearing House.
    Under Rule 1202(k)(viii), a CDS Physical Settlement Order will have 
effect against and between the following Persons: (A) Each Clearing 
Member in the Matched Pair; and (B) the Clearing House.
    In order to ensure that Intermediary Financial Institutions are 
also subject to any Transfer Order, new Rule 1202(l) sets forth that 
where a Transfer Order applies to an Approved Financial Institution, it 
also applies to and is effective against any Intermediary Financial 
Institution used by that Approved Financial Institution.
    Rule 1203 sets forth the time(s) at which a Transfer Order becomes 
irrevocable. With respect to Credit/Debit Payment Transfer Orders, AFI-
CB Payment Transfer Orders, and CB-AFI Payment Transfer Orders, no 
substantial change is made: Rules 1203(a) through (c) specify that such 
Transfer Orders become irrevocable at the time that the specified party 
sends a message confirming that the relevant payment will be made. 
These Rules are amended solely to add, in each case, that such Transfer 
Orders also become irrevocable at the time that the specified party 
sends a message confirming that the relevant payment has been made.
    Under Rule 1203(d) as it read prior to amendment, an Open Offer 
Payment Transfer Order becomes irrevocable upon an Approved Financial 
Institution sending specified form of message confirming that the 
relevant payment will be made. This Rule is amended to specify the 
change in name from Open Offer Payment Transfer Order to New Contract 
Payment Transfer Order, and to specify that such Transfer Order becomes 
irrevocable when the specified party sends a specified form of message 
confirming that amount to which the New Contract Payment Transfer Order 
relates (as specified in Rule 1202(e)(i), described above) will be or 
has been made.
    Rule 1203(e) sets forth when a Position Transfer Order becomes 
irrevocable. Under that Rule, prior to amendment, a Position Transfer 
Order would become irrevocable at the time when the definitive record 
of the long or short position of the Clearing Member (that is the 
assignee, transferee or person that assumes rights, liabilities and 
obligations pursuant to a novation) is updated as a result of a 
successful position transfer clearing run in the ICE Systems to reflect 
the transfer of Contracts given effect pursuant to the Position 
Transfer Order. This Rule is amended to change the designation from 
``long or short position'' to the defined term ``Open Contract 
Position,'' and it is also amended to ensure that the definitive record 
referenced may be updated to show assignment or novation in addition to 
transfer of Contracts which are given effect pursuant to the Position 
Transfer Order.
    Rules 1203(f) through (j) set forth the irrevocability standards 
for Collateral Transfer Orders, Energy Block Transfer Orders, CDS 
Clearing Orders, and CDS Physical Settlement Orders. Rules 1203(f) 
through (j) are new rule text.
    Under Rule 1203(f), a Collateral Transfer Order becomes irrevocable 
at the earlier of two times: either when the Clearing House receives 
the Non-Cash Collateral, or when any related securities transfer order 
(which relates to the same subject matter as the Collateral Transfer 
Order but which a securities transfer order in a designated system for 
purposes of the Settlement Finality Legislation which is not the 
Designated System) becomes irrevocable.
    Under Rule 1203(g), an Energy Block Clearing Order becomes 
irrevocable at the time that the Clearing House becomes party to 
resulting Contracts with the Clearing Members in question, pursuant to 
Rule 401(a)(iii) or (iv).
    Under Rule 1203(h), a CDS Clearing Order shall become irrevocable 
when the time specified pursuant to the Procedures occurs for the 
acceptance of the resulting CDS Contracts in question, pursuant to Rule 
401(a)(x).

[[Page 15177]]

    Under Rule 1203(i), a CDS Physical Settlement Order shall become 
irrevocable at the earliest of three times: first, when the Matched CDS 
Buyer in the Matched Pair has submitted irrevocable instructions to a 
securities system, depository, nominee or custodian for the transfer of 
securities to or to the account of the Matched CDS Seller; second, at 
the time at which the instrument subject to physical settlement is 
delivered or assigned or at which physical settlement obligations are 
otherwise discharged; or third, if the Matched CDS Buyer or Matched CDS 
Seller has (in the absence of any Matching Reversal Notice or not later 
than one Business Day after any Matching Reversal Notice) given notice 
to the Clearing House in accordance with Rule 1511 or the Procedures 
(as applicable) that the relevant Matched Pair have settled the 
relevant Matched CDS Contracts.
    Rule 1204 sets forth the rules regarding cancellation and variation 
of Transfer Orders. The following amendments are made to Rule 1204 to 
correspond to the amendments noted above.
    Rule 1204(a)(i) provides a residual category of rules for 
determination of cancellation. That residual category is where the 
Transfer Order in question is affected by manifest or proven error. 
While Rule 1204(a)(i) is new text, it generally tracks the 
circumstances permitting cancellation of Transfer Orders found in Rule 
1206 (as the same is written prior to amendment). Rule 1206 is now 
deleted, as cancellation and variation of Transfer Orders is 
consolidated into Rule 1204.
    Rule 1204(a)(ii) through (v) set forth cancellation and variation 
rules for New Contract Payment Transfer Orders, Credit/Debit Payment 
Transfer Orders, Position Transfer Orders, Weekly CDS Clearing Orders, 
CDS Clearing Orders, Physical Settlement Orders, or Energy Block 
Clearing Orders.
    Under Rule 1204(a)(ii), New Contract Payment Transfer Orders, 
Credit/Debit Payment Transfer Orders, or Position Transfer Orders may 
be cancelled or varied if they are void ab initio pursuant to Rule 403, 
avoided pursuant to Rule 404, or amended as a result of the Clearing 
House exercising its discretion pursuant to Rule 104 or otherwise 
pursuant to the Rules.
    Without prejudice to the generality of Rule 1204(a)(i), Rule 
1204(a)(iii) sets forth that cancellation or variation, in the case of 
a Weekly CDS Clearing Order, may occur if an error or omission is noted 
by or notified to the Clearing House prior to the Acceptance Time or 
the data relating to any Bilateral CDS Transaction to which the Weekly 
CDS Clearing Order relates is otherwise capable of being amended in 
accordance with the Procedures. Rule 1204(a)(iii) is new text.
    Under Rule 1204(a)(iv), variation or cancellation may occur, in the 
case of a CDS Physical Settlement Order, if a NOPS Amendment Notice is 
validly delivered by the Matched CDS Buyer in accordance with Rule 1505 
and Rule 1509. Rule 1204(a)(iv) is new text.
    Without prejudice to the generality of Rule 1204(a)(i), (ii) or 
(iii), under Rule 1204(a)(v), variation or cancellation may occur, in 
the case of an Energy Block Clearing Order or CDS Clearing Order, if 
such Order relates to a Transaction which is not eligible for Clearing 
or which is not accepted for Clearing by the Clearing House. Rule 
1204(a)(v) is new text.
    Under Rule 1204(b) prior to amendment, neither the validity nor the 
irrevocability of any Transfer Order would of itself be affected by any 
event described in Rule 1204(a) occurring. This Rule is amended to 
ensure that it is subject to new Rules 1205(d), (f), and (g) relating 
to termination of Transfer Orders. Rules 1205(d), (f), and (g) are 
described below.
    Rule 1204(c) states that the terms of all Transfer Orders that have 
not become irrevocable shall each be subject to a condition (which, if 
not satisfied, shall enable the Clearing House to exercise its rights 
under Rule 1204) that the circumstances described above in Rule 1204(a) 
have not occurred. Rule 1204(c) is new text.
    Rule 1204(d) describes the procedure for Transfer Order Variation. 
Under that Rule, if any of the circumstances described in Rule 1204(a) 
has occurred, then the amount payable, Contracts to be transferred or 
to arise or SFD Securities or Non-Cash Collateral to be delivered 
pursuant to the affected Transfer Order may at the discretion of ICE 
Clear Europe be increased, decreased or otherwise varied (as necessary) 
to reflect payments, transfers, Contracts, assignments, novations, SFD 
Securities, Non-Cash Collateral or deliveries that would have been 
required under specified circumstances. Specifically, the variation 
permitted by ICE Clear Europe is that which would have been required: 
(i) In the case of Rule 1204(a)(i) applying, had there been no error; 
(ii) in the case of Rule 1204(a)(ii)(A), Rule 1204(a)(ii)(B) or Rule 
1204(a)(v) applying as described above, had no Contract or Transaction 
ever arisen or occurred; (iii) in the case of Rule 1204(a)(ii)(C) 
applying as described above, had the Contract always been subject to 
such amended terms as are agreed or determined; (iv) in the case of 
Rule 1204(a)(iii) applying as described above, had the details of the 
Bilateral CDS Transaction always been corrected or amended as permitted 
in accordance with the Procedures; or (v) in the case of Rule 
1204(a)(iv) applying as described above, and the NOPS Amendment Notice 
specifies an instrument to be delivered that is an SFD Security, as if 
the Notice of Physical Settlement had been originally issued as amended 
pursuant to the NOPS Amendment Notice. This text replaces the earlier 
procedure for variation by ICE Clear Europe, which permitted variation 
to amounts that would have been required, in the case of the 
application of Rule 1204(a)(i) or (ii), had no Contract or Transaction 
ever arisen or occurred, and in the case of application of Rule 
1204(a)(iii), had the Contract always been subject to such amended 
terms as are agreed or determined.
    Rule 1204(e) is unchanged in that a Transfer Order Variation may be 
effected only by the Clearing House delivering a notice of amendment of 
an existing Transfer Order to all affected Participants. However, the 
rule amendments clarify that valid delivery of a NOPS Amendment Notice 
in accordance with Rules 1505 and 1509 by a Matched CDS Buyer in a 
Matched Pair is deemed to constitute notice by the Clearing House for 
purposes of Rule 1204(e) in respect of a Transfer Order Variation to a 
CDS Physical Settlement Order, if the NOPS Amendment Notice specifies 
an instrument to be delivered that is an SFD Security.
    Rule 1204(f) replaces former Rule 1206(a) relating to cancellation 
of Transfer Orders in lieu of Variation. Under Rule 1204(f), if any of 
the circumstances described in Rule 1204(a) has occurred, then the 
Transfer Order in question may at the discretion of the Clearing House 
alternatively be cancelled. Any such cancellation may under Rule 
1204(f) be effected by the Clearing House serving a notice of 
cancellation on all affected Participants. Rule 1204(f) also clarifies 
that in respect of an Energy Block Clearing Order or CDS Clearing 
Order, such notice shall be deemed to have been given if the Clearing 
House (or, in the case of an Energy Block Clearing Order, any Market) 
rejects a Transaction for Clearing.
    Under Rule 1204(g), which is new text, a CDS Physical Settlement 
Order shall be cancelled immediately and automatically if and when a 
copy is provided to the Clearing House of a validly delivered NOPS 
Amendment

[[Page 15178]]

Notice specifying an instrument for delivery which is not an SFD 
Security.
    Rule 1204(h) replaces former Rule 1206(b) relating to the ability 
of ICE Clear Europe to take steps giving rise to a new Transfer Order 
of opposite effect to an existing Transfer Order that is subject to the 
events of Rule 1204(a). Rule 1204(h) retains the ability of the 
Clearing House to take steps giving rise to a new Transfer Order of 
opposite effect to an existing Transfer Order or part thereof if any of 
the events described in Rule 1204(a) occur. However, the Rule as 
amended states that no Transfer Order Variation shall preclude the 
cancellation of a Transfer Order in any circumstances in which a 
Transfer Order may alternatively be cancelled by the Clearing House, 
and also that the ability of the Clearing House to cancel a Transfer 
Order shall not preclude a Transfer Order Variation from taking effect.
    Rule 1205 sets forth the provisions for termination (satisfaction) 
of Transfer Orders. Rules 1205(a) and (b), which are formerly 
designated Rules 1207(a) and (b), are unchanged, except that the term 
``terminate'' is replaced with ``be satisfied'' to denote the 
satisfaction (rather than ``termination'') of such Orders. Also, the 
provisions of Rule 1205(b) are modified to clarify that each Position 
Transfer Order shall be satisfied immediately and automatically at the 
same time that it becomes irrevocable under Rule 1203 (whereupon all 
Contracts to which the Transfer Order in question relates will have 
been transferred, assigned or novated pursuant to the Rules).
    Rules 1205(c) through (g) describe satisfaction of Collateral 
Transfer Orders, CDS Clearing Orders, Energy Block Clearing Orders, CDS 
Physical Settlement Orders, Credit/Debit Payment Transfer Orders, and 
New Contract Payment Transfer Orders.
    Rule 1205(c) sets out the procedures for satisfaction of Collateral 
Transfer Orders. This Rule comprises new text. Under the Rule, each 
Collateral Transfer Order shall be satisfied immediately and 
automatically at the later of two times: either when the Clearing House 
receives the Non-Cash Collateral in its account, or when the definitive 
record of the Permitted Cover transferred by the Clearing Member that 
is the transferor is updated in the ICE Systems to reflect the 
successful transfer of Non-Cash Collateral to or to the order of the 
Clearing House pursuant to the Collateral Transfer Order.
    Under Rule 1205(d), the procedures for satisfaction of CDS Clearing 
Orders or Energy Block Clearing Orders are set forth. Rule 1205(d) is 
new. Under this Rule, CDS Clearing Orders or Energy Block Clearing 
Orders are satisfied immediately and automatically at the same time 
that the relevant resulting Contracts arise under Rule 401(a).
    The satisfaction of CDS Physical Settlement Orders is described in 
new Rule 1205(e). Under that Rule, a CDS Physical Settlement Order is 
satisfied immediately and automatically at the time when ICE Clear 
Europe updates its records of the relevant CDS Contracts in the ICE 
Systems to reflect that either physical delivery of the security in 
question has been completed or the delivery obligations of the parties 
under the relevant CDS Contracts have otherwise been discharged or 
settled.
    Rule 1205(f) amends and replaces prior Rule 1207(c). Under Rule 
1207(c), if a Credit/Debit Payment Transfer Order or Insufficient Funds 
Payment Transfer Order becomes irrevocable in respect of the same 
obligation to which an Open Offer Payment Transfer Order relates, the 
Open Offer Payment Transfer Order shall automatically be terminated and 
shall not become irrevocable. Under Rule 1205(f) as it is amended, the 
reference to Insufficient Funds Payment Transfer Order is deleted, the 
term Open Offer Payment Transfer Order is renamed New Contract Payment 
Transfer Order, and the term ``terminated'' is replaced with 
``satisfied.'' Further, the amendment acknowledges that New Contract 
Payment Transfer Orders will generally terminate in accordance with 
Rule 1205(f) when standard clearing and payment processes apply.
    Under Rule 1205(g), a New Contract Payment Transfer Order relating 
to an Energy Contract shall be satisfied immediately and automatically 
if and at the point that the relevant Energy Transaction or Contract is 
transferred or allocated to another Clearing Member pursuant to Rule 
401(a)(viii) or Rule 408(a)(ii). This replaces former Rule 1207(d), 
under which an Open Offer Payment Transfer Order is terminated 
immediately and automatically if and at the point that the relevant 
Transaction is transferred or allocated to another Clearing Member 
pursuant to Rule 401(a)(viii) or Rule 408(a)(ii).
    ICE Clear Europe has engaged in a public consultation process in 
relation to all the changes, pursuant to the Circulars referred to 
above, and as required under U.K. legislation. ICE Clear Europe has 
received no opposing views or comments in relation to the proposed rule 
amendments.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed rule change would 
have any impact, or impose any burden on competition.

(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 rule change have been 
solicited by ICE Clear Europe pursuant to public consultation processes 
in the circulars referred to above. No comments have been received. The 
time period for the public consultation has closed so ICE Clear Europe 
does not expect to receive any further written comments as a result of 
this process. ICE Clear Europe will notify the Commission of any 
written comments received by ICE Clear Europe.

III. 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-2012-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-ICEEU-2012-03. 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

[[Page 15179]]

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 Section, 100 F Street NE., Washington, DC 20549, on official 
business days between the hours of 10 a.m. and 3 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/publicdocs/regulatory_filings/ICE_Clear_Europe_Settlement_Finality_Rule_Filing.pdf.
    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-2012-03 
and should be submitted on or before April 4, 2012.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    Section 19(b) of the Act \5\ directs the Commission to approve a 
proposed rule change of a self-regulatory organization if it finds that 
such proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to such 
organization. The Commission finds that the proposed rule change is 
consistent with the requirements of the Act, in particular the 
requirements of Section 17A of the Act,\6\ and the rules and 
regulations thereunder applicable to ICE Clear Europe. Specifically, 
the Commission finds that the proposed rule change is consistent with 
Section 17A(b)(3)(F) of the Act,\7\ which requires, among other things, 
that the rules of a registered clearing agency be designed to promote 
the prompt and accurate clearance and settlement of derivative 
agreements, contracts, and transactions because it will contribute to 
ICE Clear Europe ensuring settlement finality of certain transfer, 
clearing, and settlement orders under the Settlement Finality 
Legislation.
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    \5\ 15 U.S.C. 78s(b).
    \6\ 15 U.S.C. 78q-1. In approving this proposed rule change, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    ICE Clear Europe has requested that the Commission approve the 
proposed rule change on an accelerated basis for good cause shown. The 
Commission finds good cause for accelerating approval because these 
changes are required pursuant to the Settlement Finality Legislation. 
Specifically, these changes reflect modifications to ICE Clear Europe's 
clearing and payment systems that have been proposed following 
designation by U.K. authorities as a ``designated system'' for purposes 
of such legislation; the proposed changes follow various meetings and 
discussions with the relevant U.K. authorities. If ICE Clear Europe 
does not make the changes described in this rule proposal, ICE Clear 
Europe may be in contravention of home country and home region 
legislation.

V. Conclusion

    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
that the proposed rule change (SR-ICEEU-2012-03) be, and hereby is, 
approved on an accelerated basis.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Kevin O'Neill,
Deputy Secretary.
[FR Doc. 2012-6105 Filed 3-13-12; 8:45 am]
BILLING CODE 8011-01-P