Document ID: SEC-2015-0289-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Credit LLC
Posted Date: 2015-02-18T05:00Z

[Federal Register Volume 80, Number 32 (Wednesday, February 18, 2015)]
[Notices]
[Pages 8730-8731]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-03229]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74256; File No. SR-ICC-2014-21]

Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change To Provide for the Clearance of 
Additional Standard Western European Sovereign Single Names

February 11, 2015.

I. Introduction

    On December 16, 2014, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change SR-ICC-2014-21 pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder.\2\ The 
proposed rule change was published for comment in the Federal Register 
on January 2, 2015.\3\ The Commission received one comment.\4\ For the 
reasons discussed below, the Commission is approving the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-73941 (Dec. 24, 
2014), 80 FR 75 (Jan. 2, 2015) (File No. SR-ICC-2014-21).
    \4\ See Comment from Anonymous, dated January 23, 2015, 
available at http://www.sec.gov/comments/sr-icc-2014-21/icc201421-1.htm (stating ``Good Idea'').
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II. Description of the Proposed Rule Change

    ICC proposes to adopt rules that will provide the basis for ICC to 
clear additional credit default swap (``CDS'') contracts. Specifically, 
ICC is proposing to amend Section 26I of its Rules to provide for the 
clearance of additional Standard Western European Sovereign CDS 
contracts (collectively, ``SWES Contracts''). ICC has been approved to 
clear four SWES Contracts: the Republic of Ireland, the Italian 
Republic, the Portuguese Republic, and the Kingdom of Spain.\5\ The 
proposed changes to the ICC Rules would provide for the clearance of 
additional SWES Contracts, specifically the Kingdom of Belgium and the 
Republic of Austria (the ``Additional SWES Contracts'').
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    \5\ See Exchange Act Release No. 34-72941(Nov. 5, 2014), 79 FR 
67213 (Nov. 12, 2014) (File No. SR-ICC-2014-14) (order approving 
rule change to clear other Western European sovereign CDS contracts) 
(the ``Prior WES Order'').
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    ICC states that these Additional SWES Contracts will be offered on 
the 2003 and 2014 ISDA Credit Derivatives Definitions. ICC believes 
that the addition of these SWES Contracts will benefit the market for 
credit default swaps on Western European sovereigns by providing market 
participants the benefits of clearing, including reduction in 
counterparty risk and safeguarding of margin assets pursuant to 
clearing house rules. According to ICC, the clearing of the additional 
SWES Contracts will not require any changes in ICC's risk management 
framework (including relevant policies) or margin model. ICC represents 
that the Additional SWES Contracts have terms consistent with the other 
SWES Contracts which ICC has been approved to clear and which will be 
governed by Subchapter 26I of the ICC rules, namely the Republic of 
Ireland, the Italian Republic, the Portuguese Republic, and the Kingdom 
of Spain.
    ICC proposes minor revisions to Subchapter 26I (Standard Western 
European Sovereign (``SWES'') Single Name) to provide for clearing the 
additional SWES Contracts. Rule 26I-102 will be modified to include the 
Kingdom of Belgium and the Republic of Austria in the list of specific 
Eligible SWES Reference Entities to be cleared by ICC. Additionally, in 
ICC Rule 26D-102 (Definitions), the definition of ``Eligible SES 
Reference Entity'' will be modified to correct a typographical error 
and correctly identify the reference entity for a cleared product as 
Hungary (as opposed to the Republic of Hungary).

III. Comments

    The Commission received one comment supporting approval of the 
proposed rule change. In this anonymous comment, the author expressed 
general support for the proposal but did not opine on any particular 
aspects of the proposal or offer any specific comment beyond a 
statement of general support.

IV. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \6\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if the 
Commission finds that such proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such self-regulatory organization. Section 17A(b)(3)(F) 
of the Act \7\ requires, among other things, that the rules of a 
clearing agency are designed to promote the prompt and accurate 
clearance and settlement of securities transactions and, to the extent 
applicable, derivative agreements, contracts, and transactions, to 
assure the safeguarding of securities and funds which are in the 
custody or control of the clearing agency or for which it is 
responsible and, in general, to protect investors and the public 
interest.
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    \6\ 15 U.S.C. 78s(b)(2)(C).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds that clearing of the Additional SWES Contracts 
is consistent with the requirements of Section 17A of the Act \8\ and 
regulations thereunder applicable to it, including the standards under 
Rule 17Ad-22.\9\ The proposed change will provide for clearing of 
Additional SWES Contracts in the same manner as other SWES Contracts. 
Specifically, the new contracts will be cleared, and the risk 
associated with clearing the new contracts will be appropriately 
managed, pursuant to ICC's existing margin and guaranty fund 
methodology, operational and managerial procedures, settlement 
procedures and default management policies. The Commission believes 
that the proposal is therefore designed to promote the prompt and 
accurate clearance and settlement of securities transactions and 
derivative agreements, contracts and transactions cleared by ICC, to 
assure the safeguarding of securities and funds in the custody or 
control of ICC, and to protect investors and the public interest, 
within the meaning of is designed to promote the prompt and accurate

[[Page 8731]]

clearance and settlement of securities transactions, consistent with 
Section 17A(b)(3)(F) of the Act.\10\
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    \8\ 15 U.S.C. 78q-1.
    \9\ 17 CFR 240.17Ad-22.
    \10\ 15 U.S.C. 78q-1(b)(3)(F).
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V. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \11\ and the 
rules and regulations thereunder.
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    \11\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-ICC-2014-21) be, and hereby 
is, approved.\13\
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    \12\ 15 U.S.C. 78s(b)(2).
    \13\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-03229 Filed 2-17-15; 8:45 am]
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