Document ID: SEC-2018-1668-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Europe Limited
Posted Date: 2018-10-26T04:00Z

[Federal Register Volume 83, Number 208 (Friday, October 26, 2018)]
[Notices]
[Pages 54154-54155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-23388]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84463; File No. SR-ICEEU-2018-016 ]

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

October 22, 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 October 10, 2018, 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 prepared primarily 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)(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.
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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).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The principal purpose of the proposed amendments is for ICE Clear 
Europe to amend its Delivery Procedures (the ``Delivery Procedures'') 
\5\ with respect to the delivery terms relating to the ICE Futures 
Europe (``ICE Futures Europe'' or ``IFEU'') Permian West Texas 
Intermediate Crude Oil Futures Contract.
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    \5\ Capitalized terms used but not defined herein have the 
meanings specified in the ICE Clear Europe Delivery Procedures.
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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
    ICE Clear Europe is amending its Delivery Procedures to add a new 
Part CC addressing delivery under a new Permian West Texas Intermediate 
Crude Oil Futures Contract (the ``Permian WTI Contract'') that will be 
traded on ICE Futures Europe and cleared by ICE Clear Europe, and to 
make certain related changes. ICE Clear Europe does not otherwise 
propose to amend its Clearing Rules (the ``Rules'') \6\ or Procedures 
in connection with these changes.
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    \6\ Capitalized terms used but not defined herein have the 
meanings specified in the Rules.
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    New Part CC of the Delivery Procedures provides specifications and 
procedures for deliveries under the Permian WTI Contract, which will 
take place at the Magellan Crude Oil Pipeline Company, L.P. 
(``Magellan'') East Houston terminal (``MEH''). Consistent with the 
exchange contract terms, the buyer and seller must be approved shippers 
with delivery documentation with Magellan. Delivery may be effected 
through orders for inter-facility transfer, in-line (or in-system) 
transfer or in-tank transfer of title, in accordance with relevant 
Magellan documentation and tariffs, as set out in Part CC and the 
relevant exchange contract terms. The amendments also establish 
standards for delivery quality, as well as relevant procedures for 
exchange of futures for physical transactions under exchange rules.
    Part CC addresses certain the responsibility of the Clearing House 
and relevant parties for delivery under the Permian WTI Contracts, 
supplementing the existing provisions of the Rules. Specifically, 
neither the Clearing House nor ICE Futures Europe are responsible for 
the performance of Magellan or any person operating MEH nor do they 
make any representation regarding the authenticity, validity or 
accuracy of any delivery tender notice, confirmation of transfer or any 
other notice, document, file, record or instrument used or delivered 
pursuant to the Rules and Procedures.
    The amendments address delivery margin and relevant contract 
security with respect to Permian WTI Contracts. The amendments specify 
certain details of the delivery process. Delivery of ICE Permian WTI 
Contracts will be based on open contract positions at the close of 
trading on the last trading day for which physical delivery is 
specified. A delivery schedule must be agreed between Magellan and the 
Buyer and Seller. The procedures include a detailed timeframe for 
relevant notices of intent to deliver or receive, nominations of 
parties to delivery or receive, delivery confirmations, invoicing, 
release of delivery margin following completion of delivery and other 
matters.
    The amendments also contemplate the use of alternative delivery 
procedures for Permian WTI Contracts, under which the buyer and seller 
under a contract may agree to arrange delivery and payment for a 
specific tender outside of the exchange rules and in lieu of the 
standard delivery arrangements and procedures. The amendments set out 
notice and other requirements for such alternative delivery procedures.
    ICE Clear Europe is also adding a new section 16.7 requiring 
Clearing Members, Buyers, Seller, Transferors and Transferees that make 
or take delivery pursuant to a Contract to comply with requirements 
relating to filing, notification, reporting, registration, 
certification or authorization under Applicable Laws or from the 
Delivery Facility.
(b) Statutory Basis
    Section 17A(b)(3)(F) of the Act \7\ 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,

[[Page 54155]]

and the protection of investors and the public interest. The proposed 
amendments are designed to facilitate the clearing of a new physically 
settled oil futures contract, the Permian WTI Contract, that is being 
launched for trading by the ICE Futures Europe exchange. The amendments 
set out the obligations and roles of Clearing Members, the Clearing 
House and Magellan, the facility used for physical delivery under the 
Permian WTI Contracts. ICE Clear Europe believes that its financial 
resources, risk management, systems and operational arrangements are 
sufficient to support clearing of such products (and to address 
physical delivery under such contracts) and to manage the risks 
associated with such contracts. As a result, in ICE Clear Europe's 
view, the amendments will be consistent with the prompt and accurate 
clearance and settlement of the Permian WTI Contracts, and the 
protection of investors and the public interest consistent with the 
requirements of Section 17A(b)(3)(F) of the Act.\8\ (In ICE Clear 
Europe's view, the amendments will not affect the safeguarding of funds 
or securities in the custody or control of the clearing agency or for 
which it is responsible, within the meaning of Section 
17A(b)(3)(F).\9\)
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    \7\ 15 U.S.C. 78q-1(b)(3)(F).
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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    In addition, Rule 17Ad-22(e)(10) \10\ requires that each covered 
clearing agency establish and maintain transparent written standards 
that state its obligations with respect to the delivery of physical 
instruments, and establish and maintain operational practices that 
identify, monitor and manage the risks associated with such physical 
deliveries. As discussed above, the amendments to the Delivery 
Procedures to allow for the delivery and settlement of ICE Permian WTI 
Contracts, taken together with the Rules and ICE Futures Europe 
exchange contract terms, set out the obligations of the Clearing House 
and other parties with respect to delivery under the Permian WTI 
Contract. The amendments also adopt procedures for such deliveries, 
which will facilitate identifying, monitoring and managing risks 
associated with delivery.
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    \10\ 17 CFR 240.17Ad-22(e)(10).
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(B) Clearing Agency's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed rule changes 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 update the Delivery Procedures in connection 
with the listing of the ICE Permian WTI Contract for trading on the ICE 
Futures Europe market. ICE Clear Europe believes that such contracts 
will provide additional opportunities for interested market 
participants to engage in trading activity in the Permian WTI market. 
ICE Clear Europe does not believe the amendments would adversely affect 
competition among Clearing Members, materially affect the cost of 
clearing, adversely affect access to clearing in ICE Permian WTI 
Contracts for Clearing Members or their customers, or otherwise 
adversely affect competition in clearing services. Accordingly, ICE 
Clear Europe does not believe that the amendments would impose any 
impact or burden on competition that is not appropriate in furtherance 
of the purpose 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 
amendments.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \11\ and paragraph (f) of Rule 19b-4 \12\ 
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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f).
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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-2018-016 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-2018-016. 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/clear-europe/regulation#rule-filings. 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-2018-016 and should be submitted 
on or before November 16, 2018.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-23388 Filed 10-25-18; 8:45 am]
 BILLING CODE 8011-01-P