Document ID: SEC-2016-2086-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Europe, Ltd.
Posted Date: 2016-11-29T05:00Z

[Federal Register Volume 81, Number 229 (Tuesday, November 29, 2016)]
[Notices]
[Pages 86048-86050]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28634]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79375; File No. SR-ICEEU-2016-013]

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

November 22, 2016.
    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 November 9, 2016, 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 primarily prepared by ICE Clear Europe. ICE Clear 
Europe filed the proposed rule changes pursuant to Section 19(b)(3)(A) 
of the Act,\3\ and Rule 19b-4(f)(i) and (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)(i) and (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 changes is to modify certain aspects 
of the ICE Clear Europe Finance Procedures.

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

(a) Purpose
    The purpose of the amendments is to modify certain aspects of the 
ICE Clear Europe Finance Procedures. In paragraph 2.1 of the Finance 
Procedures, amendments are made to add South African rand (``ZAR'') as 
a currency eligible for Variation Margin and settlement payments for 
financials and softs contracts which settle in such currency. Other 
conforming changes have been made in the Finance Procedures (including 
in paragraph 4) to reflect the addition of ZAR as an eligible currency 
for such purposes. As with the other currencies currently eligible to 
be used as Variation Margin and settlement payments for financials and 
softs contracts, ZAR will be subject to haircuts determine [sic] 
pursuant to the [sic] Finance Procedures and existing ICE Clear Europe 
haircut policies. [sic] A typographical error and erroneous cross-
reference have also been corrected in paragraph 2.2.
    In paragraph 6.1(e) of the Finance Procedures, the daily deadline 
for a Clearing Member to provide manual cash settlement instructions 
for same-day USD payments has been extended from 16:00 to 16:45 (London 
time). ICE Clear Europe is making this change to accommodate a request 
of Clearing Members, and does not believe it will adversely affect the 
Clearing House's treasury or other operations. In paragraph 
6.1(i)(vii), a change has been made to clarify that end-of-day or ad 
hoc payments by a Clearing Member to the Clearing House may include, in 
addition to other listed categories of payments, transfers of Surplus 
Collateral.
    Amendments have been made to paragraph 8.3 of the Finance 
Procedures, which generally provides that the Clearing House will not 
recognize any value for non-cash collateral (such as securities 
collateral) within a specified period prior to its redemption or 
maturity. Under the existing rule, this period commences one business 
day prior to redemption or maturity. The amendments adopt a different 
approach for UK government bonds, for which the period will commence 
seven business days prior to redemption or maturity. This approach is 
designed to reflect limitations imposed by the relevant securities 
settlement system on the transfer of UK government bonds during the 
seven business day period prior to redemption or maturity.
    In paragraph 11.3(b), which addresses procedures for transfer of 
non-cash permitted cover, an incorrect statement that the Clearing 
House does not support cross-border or inter-settlement facility 
settlements, bridge transactions or similar transactions has been 
removed. In paragraph 11.4, certain account details and matching 
deadlines for particular securities transfer systems

[[Page 86049]]

would be removed from the Finance Procedures. ICE Clear Europe would 
instead publish such information (as updated from time to time) on its 
Web site. This change would avoid the need to amend the Finance 
Procedures to reflect future changes in operational settlement details.
    Paragraph 13.9 has been revised to remove an erroneous reference to 
a letter of credit.
(b) 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, 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\ The amendments are intended to update and 
clarify certain provisions of the Finance Procedures relevant to 
settlement payments and use of non-cash permitted cover. As discussed 
above, the amendments address the acceptance of ZAR for variation 
margin and settlement payments for certain financials and softs 
contracts. The amendments also modify the treatment of UK government 
bonds for valuation purposes to reflect certain restrictions on 
transfer of such bonds in the period immediately prior to redemption or 
settlement. In ICE Clear Europe's view, the amendments will generally 
enhance the procedures for settlement of cash and non-cash permitted 
cover, and thus promote the prompt and accurate clearance and 
settlement of cleared contracts. As a result, ICE Clear Europe believes 
the amendments are consistent with the requirements of Section 17A of 
the Act and the regulations thereunder.
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    \5\ 15 U.S.C. 78q-1.
    \6\ 17 CFR 240.17Ad-22. [sic]
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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(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 purpose of the Act. ICE 
Clear Europe is adopting the amendments to the Finance Procedures in 
order to clarify certain aspects of the settlement of cash and non-cash 
permitted cover for cleared contracts . . . [sic] ICE Clear Europe does 
not believe the amendments would materially affect the cost of 
clearing, adversely affect access to clearing in these products for 
Clearing Members or their customers, or otherwise adversely affect 
competition in clearing services. The changes will apply to all 
Clearing Members. Although certain changes may affect the cost of using 
UK government bonds as collateral (during the period immediately prior 
to redemption or maturity of such collateral), those changes are, in 
ICE Clear Europe's view, necessary and appropriate to reflect 
limitations on transfer of such bonds in such period. As a result, ICE 
Clear Europe believes that any impact or burden on competition from 
such amendments would be appropriate in furtherance of the purpose of 
the Act.

(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)(i) and (ii) 
\9\ thereunder. Certain aspects of the amendments effect 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. Other 
aspects of the amendments effect a change in an existing service of a 
registered clearing agency that does not adversely affect the 
safeguarding of securities or funds in the custody or control of the 
clearing agency or for which it is responsible, and does not 
significantly affect the respective rights or obligations of the 
clearing agency or persons using its 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).
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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-2016-013 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-2016-013. 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/clear-europe/regulation#rule-filings.
    All comments received will be posted without change; the Commission 
does

[[Page 86050]]

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-2016-013 and should be 
submitted on or before December 20, 2016.

    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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-28634 Filed 11-28-16; 8:45 am]
BILLING CODE 8011-01-P