Document ID: SEC-2018-0551-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Europe Ltd.
Posted Date: 2018-04-06T04:00Z

[Federal Register Volume 83, Number 67 (Friday, April 6, 2018)]
[Notices]
[Pages 14903-14905]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-07011]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82979; File No. SR-ICEEU-2018-005]

Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to Amendments to the Futures & Options Guaranty Fund Policy

April 2, 2018.
    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 19, 2018, 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 prepared by ICE Clear Europe. ICE Clear Europe filed 
the proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ 
and Rule 19b-4(f)(4)(ii) thereunder,\4\ so that the proposal was 
immediately effective upon filing with the Commission. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.\5\
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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).
    \5\ Capitalized terms used herein but not otherwise defined have 
the meaning set forth in the ICE Clear Europe rulebook, which is 
available at https://www.theice.com/clear-europe/regulation#rulebook.
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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

    ICE Clear Europe proposes to make certain amendments to its 
policies relating to its Clearing House Futures & Options (``F&O'') 
Initial Contribution to default resources.

[[Page 14904]]

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 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

(a) Purpose
    ICE Clear Europe is taking certain steps to increase its Clearing 
House F&O Initial Contribution to default resources. The Clearing House 
F&O Initial Contribution is used to cover losses arising from the 
default of an F&O Clearing Member, and would be applied following the 
use of the defaulter's own margin and guaranty fund contributions, and 
prior to the application of guaranty fund contributions of non-
defaulting F&O Clearing Members. Currently, the Clearing House F&O 
Initial Contribution is set in the F&O Guaranty Fund Policy (the 
``Policy'') at a fixed level. ICE Clear Europe is proposing to modify 
the Policy to remove the fixed level, and to provide that ICE Clear 
Europe will notify Clearing Members by circular of its contribution 
level in effect from time to time.
    In connection with these changes, ICE Clear Europe expects to 
increase the Clearing House F&O Initial Contribution, and will notify 
F&O Clearing Members of the exact amount by circular.
    The increased Clearing House F&O Initial Contribution reflects an 
agreement among ICE Clear Europe and the exchanges for which it 
currently clears F&O Contracts (ICE Futures Europe, ICE Futures U.S., 
Inc., ICE Endex Markets B.V. and ICE Endex Gas Spot Ltd.) that those 
exchanges should contribute to the aggregate Clearing House F&O Initial 
Contribution. (The exchange contributions will be in addition to ICE 
Clear Europe's existing contribution.) In ICE Clear Europe's view, the 
exchange contributions will enhance the risk practices of, and the risk 
sharing between, the exchanges, the F&O Clearing Members, and ICE Clear 
Europe itself, and create an incentive for exchanges to operate fair 
and orderly markets and to build liquidity in stressed market 
conditions. Under this approach, each exchange will make a contribution 
pursuant to a formula based on the average F&O guaranty fund 
contribution of F&O Clearing Members, subject to a minimum 
contribution. The clearing services agreements between ICE Clear Europe 
and each of the relevant exchanges will be amended to reflect this 
requirement.
(b) Statutory Basis
    ICE Clear Europe believes that the proposed amendments are 
consistent with the requirements of Section 17A of the Act \6\ and the 
regulations thereunder applicable to it, including the standards under 
Rule 17Ad-22.\7\ Section 17A(b)(3)(F) of the Act \8\ 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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    \6\ 15 U.S.C. 78q-1.
    \7\ 17 CFR 240.17Ad-22.
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
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    As discussed above, the amendments are designed to increase the 
Clearing House's overall financial resources to cover losses from a 
default of an F&O Clearing Member. In particular, the amendments 
increase the amount of F&O default resources that will be available to 
be applied after the exhaustion of the defaulting Clearing Member's 
margin and guaranty fund contributions, and prior to the use of 
guaranty fund contributions of non-defaulting Clearing Members. 
Moreover, the amendments enhance the protection of guaranty fund 
contributions made by non-defaulting F&O Clearing Members by reducing 
the likelihood that ICE Clear Europe would need to use such 
contributions in the event of an F&O Clearing Member default. The 
amendments thus support the prompt and accurate clearance and 
settlement of cleared transactions and the protection of Clearing 
Members and other market participants. As a result, in ICE Clear 
Europe's view, the amendments are consistent with the requirements of 
Section 17A(b)(3)(F) of the Act.\9\ For similar reasons, ICE Clear 
Europe believes that the amendments are also consistent with the 
requirements of Rule 17Ad-22(b)(3) \10\ and Rule 17Ad-22(e)(4).\11\
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    \9\ 15 U.S.C. 78q-1(b)(3)(F).
    \10\ 17 CFR 240.17Ad-22(b)(3).
    \11\ 17 CFR 240.17Ad-22(e)(4).
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    In addition, as noted above, the amendments are designed to enhance 
the overall risk management of the Clearing House by aligning the risk 
objectives of the exchanges that submit F&O Contracts for clearing with 
those of the Clearing House. In particular, the amendments, by 
requiring a contribution from such exchanges, are intended to create an 
incentive for those exchanges to operate fair and orderly markets and 
to build liquidity in stressed market conditions. In ICE Clear Europe's 
view, the amendments are thus consistent with the risk management 
requirements of Rule 17Ad-22(e)(3).\12\ The amendments will apply to 
all exchanges based on an objective formula for determining the 
contribution, and accordingly are not designed to permit unfair 
discrimination among particular exchanges, or market participants using 
such exchanges, within the meaning of Section 17A(b)(3)(F) of the 
Act.\13\
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    \12\ 17 CFR 240.17Ad-22(e)(3).
    \13\ 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 rule change would 
have any impact, or impose any burden, on competition not necessary or 
appropriate in furtherance of the purposes of the Act. The changes are 
being proposed in order to enhance the Clearing House's overall F&O 
default resources, and better align the risk objectives of the Clearing 
House and the exchanges for which it clears. Although the amendments 
will impose additional costs on such exchanges through the required 
exchange contribution, ICE Clear Europe believes that such additional 
costs appropriately reflect the risk brought to the Clearing House from 
F&O Contracts traded on such exchanges. Such contributions would apply 
to all exchanges that submit F&O contracts to the Clearing House, based 
on an objective formula, and are not intended to disadvantage any 
particular submitting exchange or trading venue. In addition, the 
amendments will not directly impose additional costs on F&O Clearing 
Members or market participants. Although exchanges could pass certain 
additional costs to F&O Clearing Members or other market participants 
through exchange fees, ICE Clear Europe does not believe this 
possibility would adversely affect competition among Clearing Members

[[Page 14905]]

or other market participants, or otherwise affect the appropriateness 
of the exchange contributions in light of the considerations set out 
above. In ICE Clear Europe's view, the amendments would also not affect 
access to clearing or the market for cleared services generally. As a 
result, ICE Clear Europe believes that any impact on competition is 
appropriate 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 comments received with respect to the proposed 
rule change.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \14\ and paragraph (f) of Rule 19b-4 \15\ 
thereunder. 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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-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, 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 [email protected]. Please include 
File Number SR-ICEEU-2018-005 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-2018-005. 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 (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent 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 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 10:00 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 website at https://www.theice.com/notices/Notices.shtml?regulatoryFilings.
    All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-ICEEU-2018-005 and should be 
submitted on or before April 27, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-07011 Filed 4-5-18; 8:45 am]
 BILLING CODE 8011-01-P