Document ID: SEC-2023-0939-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Europe, Ltd.
Posted Date: 2023-08-29T04:00Z

[Federal Register Volume 88, Number 166 (Tuesday, August 29, 2023)]
[Notices]
[Pages 59547-59550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-18551]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98207; File No. SR-ICEEU-2023-022]

Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of Proposed Rule Change, as Modified by Amendment No. 1, 
Relating to Amendments to the Clearing Membership Policy and Clearing 
Membership Procedures

August 23, 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 August 8, 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 primarily prepared by 
ICE Clear Europe. On August 22, 2023, ICE Clear Europe filed Amendment 
No. 1 to the proposed rule change to make certain changes to the 
Exhibits 5A and 5B.\3\ The Commission is publishing this notice to 
solicit comments on the proposed rule change, as modified by Amendment 
No. 1 (hereafter ``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\ Amendment No. 1 amends the Exhibit 5A and Exhibit 5B to 
correctly reflect the addition of the Document Handling subsection 
to each document's Table of Contents. The proposed rule change 
includes an Exhibit 4A and Exhibit 4B. Exhibit 4A shows the change 
that Amendment No. 1 makes to Exhibit 5A, and Exhibit 4B does the 
same with respect to attit 5B.
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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 (i) modify its Clearing Membership Policy 
(``Policy'') \4\ to

[[Page 59548]]

update certain monitoring and document review procedures and to make 
certain drafting clarifications and (ii) amend its Clearing Membership 
Procedures (``Procedures'') to clarify the Clearing House's discretion 
with respect to certain requirements and to add notification 
requirements, among other changes. The updates would also make certain 
other non-substantive amendments.
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    \4\ Capitalized terms used but not defined herein have the 
meanings specified in the Policy and Procedures or, if not defined 
therein, the ICE Clear Europe Clearing Rules.
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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
I. Clearing Membership Policy
    In the discussion of the purpose of the Policy, the amendments 
would change an incorrect reference to ``model documents'' to 
``parameter documents'' (reflecting that relevant parameters will be 
set out in parameter documents). Further changes would clarify that 
Clearing Members are required to notify the Clearing House promptly 
when there is any change to its business which would have an impact on 
meeting the membership criteria. Additionally, the monitoring of 
membership criteria would be revised to reflect that the Clearing House 
conducts ongoing (rather than only quarterly or other periodic) 
monitoring of compliance with membership criteria. Ongoing monitoring 
for this purpose consists of continuous monitoring and additional 
trigger-based reviews, including relating to credit and AML/KYC risk 
and to daily operational matters (such as margin calls). References to 
quarterly reviews of financial position through Audited Annual 
Accounts, quarterly review of financial information, quarterly updates 
of the Counterparty Rating System (``CRS''), and the requirement to 
maintain a watch list would be removed (as such matters relate to 
credit issues that are addressed in the Clearing House's Counterparty 
Credit Risk Policy,\5\ and do not need to be referenced in this 
policy). A cross reference to the Clearing Membership Procedures and 
the Counterparty Credit Risk Policy for monitoring information would 
also be removed as unnecessary.
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    \5\ See Exchange Act Release No. 34-97169 (SR-ICEEU-2023-004) 
(March 20, 2023), 88 FR 17886 (March 24, 2023).
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    The amendments would also update document governance requirements, 
consistent with other ICE Clear Europe policies.\6\ Document review 
would be conducted by the document owner or relevant staff, with 
approval of the head of department (or their delegate) and the Chief 
Risk Officer (or their delegate). The amendments would specify that 
document review, at a minimum, would encompass regulatory compliance, 
documentation and purpose, implementation, use and open items from 
prior reviews. The results of the review would be reported to the 
Executive Risk Committee (and in certain cases, to the Model Oversight 
Committee). The document owner would aim to remediate any findings, 
complete internal governance and obtain regulatory approvals (as 
applicable) before the next annual review. The amendments would also 
state explicitly that changes to the Policy would need to be approved 
in accordance with the Clearing House governance process and take 
effect after completion of all necessary internal and regulatory 
approvals.
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    \6\ See, e.g., The Counterparty Credit Risk Policy and 
Procedures as described in Exchange Act Release No. 34-97169, SR 
ICEEU-2023-004 (March 20, 2023) 88 FR 17886 (March 24, 2023); the 
Investment Management Procedures as described in Exchange Act 
Release No. 34-97528, SR ICEEU-2023-009 (May 19, 2023) 88 FR 33949 
(May 25, 2023); the Futures and Options Default Management Policy as 
described in Exchange Act Release No. 34-97383, SR ICEEU-2023-012 
(Apr. 26, 2023) 88 FR 27539 (May 2, 2023).
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    Certain other non-substantive typographical and similar corrections 
would also be made in the Policy, such as using the correct name of the 
Clearing Membership Policy.
II. Clearing Membership Procedures
    ICE Clear Europe is proposing to amend its Clearing Membership 
Procedures to make certain clarifications and updates, including for 
consistency with the amendments to the Policy described above. Under 
the discussion of the application process, the amendments would 
specifically require notifications by Clearing Members of changes to 
their business that may impact the membership criteria, consistent with 
the change to the Policy described above. Additionally, under the 
diligence process, the amendments would clarify that the applicant 
would be required to provide sufficient evidence, details and 
information as required by the Rules. The proposed amendment would also 
state that the membership team would ensure that all applicants would 
be added to the applicable schedule of insured entities by the ICE 
Group insurer.
    The amendments would remove a provision that the Product Risk 
Committee would be notified of new applications, after approval of an 
application by the Executive Risk Committee. ICE Clear Europe does not 
believe notification of applications to the Product Risk Committee is 
necessary in light of the duties and functions of those committees. The 
proposed amendments would also clarify that the Circular confirming 
approval is issued once the application is approved. In addition, the 
amendments would make non-substantive clarifications concerning the 
requirement for Clearing Members to respond in a timely manner to any 
additional information requested by the Clearing House.
    The proposed changes would also clarify and make consistent 
throughout the Procedures certain provisions relating to decisions that 
may be taken or requirements that may be imposed by the Clearing House 
in its discretion. Specifically, the amendments would clarify ICE Clear 
Europe's absolute legal discretion in making certain determinations, 
imposing additional requirements and granting exceptions relating to 
the minimum capital requirement, acceptability of subordinated loans, 
acceptability of controller guarantee, requirements for additional cash 
or collateral and the size of additional guaranty fund assessments. The 
amendments would similarly clarify that the Clearing House will define 
the maximum period between in-depth counterparty reviews and the 
threshold for taking further action on negative changes in Clearing 
Member financial condition in its absolute discretion. ICE Clear Europe 
does not believe these amendments change its existing authority, but 
rather state more explicitly the scope of its discretion, which remains 
subject to the Rules and applicable law.
    The discussion of document governance and oversight in the Policy 
and Procedures would be replaced with a new Document Governance and 
Exception Handling section that is substantially the same as that 
described above for the Policy, and is consistent

[[Page 59549]]

with other Clearing House policies recently adopted or modified.\7\
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    \7\ See, e.g., The Counterparty Credit Risk Policy and 
Procedures as described in Exchange Act Release No. 34-97169, SR 
ICEEU-2023-004 (March 20, 2023) 88 FR 17886 (March 24, 2023); the 
Investment Management Procedures as described in Exchange Act 
Release No. 34-97528, SR ICEEU-2023-009 (May 19, 2023) 88 FR 33949 
(May 25, 2023); the Futures and Options Default Management Policy as 
described in Exchange Act Release No. 34-97383, SR ICEEU-2023-012 
(Apr. 26, 2023) 88 FR 27539 (May 2, 2023).
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(b) Statutory Basis
    ICE Clear Europe believes that the proposed amendments to the 
Clearing Membership Policy and Procedures are consistent with the 
requirements of section 17A of the Act \8\ and the regulations 
thereunder applicable to it. In particular, section 17A(b)(3)(F) of the 
Act \9\ 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.
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    \8\ 15 U.S.C. 78q-1.
    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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    The proposed changes to the Clearing Membership Policy and 
Procedures are intended to update and more clearly document the 
Clearing House's procedures for reviewing applications for clearing 
membership, criteria for membership, and on-going monitoring of 
membership of ICE Clear Europe. The amendments update the Policy to 
better reflect the ongoing monitoring of Clearing Members and to update 
document governance processes. The amendments to the Procedures clarify 
the discretion that ICE Clear Europe has to make certain 
determinations, clarify certain notification requirements, and make 
other drafting improvements. The amendments would therefore facilitate 
the prompt and accurate clearing of cleared contracts and protect 
investors and the public interest in the sound operations of the 
Clearing House, consistent with the requirements of section 
17A(b)(3)(F).\10\ Further, the amendments will not affect the 
safeguarding of securities and funds in the custody or control of the 
Clearing House or for which it is responsible, within the meaning 
section 17A(b)(3)(F).\11\
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    \10\ 15 U.S.C. 78q-1(b)(3)(F).
    \11\ 15 U.S.C. 78q-1(b)(3)(F).
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    The amendments to the Procedures are also consistent with relevant 
provisions of Rule 17Ad-22.\12\ Rule 17Ad-22(e)(18) provides that 
``[e]ach covered clearing agency shall establish, implement, maintain 
and enforce written policies and procedures reasonable designed to, as 
applicable [. . .] establish objective, risk-based and publicly 
disclosed criteria for participation, which permit fair and open access 
by direct . . . participants . . . require participants to have 
sufficient financial resources and robust operational capacity to meet 
obligations arising from participation in the clearing agency, and 
monitor compliance with such participation requirements on an ongoing 
basis''.\13\ As set forth above, the amendments to the Clearing 
Membership Procedures are intended to clarify and enhance the Clearing 
House's procedures and policies as they relate to Clearing Membership 
application and monitoring processes. The amendments do not 
substantively change the requirements for membership or the related 
Rules, but rather update the Policy and Procedures to reflect the 
Clearing House's current practices, and make other updates to improve 
clarity, including to state more clearly the Clearing House's 
discretion to make certain determinations as part of the application 
process. The amendments will facilitate the Clearing House's ability to 
implement and monitor its participation requirements. In ICE Clear 
Europe's view, the amendments are therefore consistent with the 
requirements of Rule 17Ad-22(e)(18).\14\
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    \12\ 17 CFR 240.17 Ad-22.
    \13\ 17 CFR 240.17 Ad-22(e)(18).
    \14\ 17 CFR 240.17Ad-22(e)(18).
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    Rule 17Ad-22(e)(2) further provides that ``[e]ach covered clearing 
agency shall establish, implement, maintain and enforce written 
policies and procedures reasonable designed to, as applicable [. . .] 
provide for governance arrangements that are (i) clear and transparent, 
(ii) clearly prioritize the safety and efficiency of the covered 
clearing agency; and (iii) support the public interest requirement in 
section 17A of the Act'' \15\ among other requirements. As set forth 
above, the amendments update the documentation governance, review and 
approval provisions, in a manner consistent with other ICE Clear Europe 
policies and procedures. As such, in ICE Clear Europe's view, the 
amendments are consistent with the requirements of Rule 17Ad-
22(e)(2).\16\
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    \15\ 17 CFR 240.17Ad-22(e)(2).
    \16\ 17 CFR 240.17Ad-22(e)(2).
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(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 amendments 
are being adopted to update and clarify the Clearing Membership Policy 
and Procedures, which relates to the Clearing House's internal 
processes for implementation, reviewing and ongoing monitoring of its 
membership requirements and criteria. No substantive changes are being 
made to the membership requirements themselves or the Rules. 
Accordingly, ICE Clear Europe does not believe the amendments would 
affect the ability of an applicant to become a Clearing Member, the 
costs of clearing, the ability of market participants to access 
clearing, or the market for clearing services generally. Therefore, ICE 
Clear Europe does not believe the proposed rule change imposes any 
burden on competition that is inappropriate in furtherance of the 
purposes 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 amendments have not been 
solicited or received by ICE Clear Europe. ICE Clear Europe will notify 
the Commission of any written comments received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change 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 such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 59550]]

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml) or
     Send an email to [email protected]. Please include 
file number SR-ICEEU-2023-022 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-2023-022. 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 website (https://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 
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 website at https://www.theice.com/clear-europe/regulation.
    Do not include personal identifiable information in submissions; 
you should submit only information that you wish to make available 
publicly. We may redact in part or withhold entirely from publication 
submitted material that is obscene or subject to copyright protection. 
All submissions should refer to File Number SR-ICEEU-2023-022 and 
should be submitted on or before September 19, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-18551 Filed 8-28-23; 8:45 am]
BILLING CODE 8011-01-P