Document ID: SEC-2015-0195-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Europe Ltd.
Posted Date: 2015-02-02T05:00Z

[Federal Register Volume 80, Number 21 (Monday, February 2, 2015)]
[Notices]
[Pages 5610-5611]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-01866]

[[Page 5610]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74148; File No. SR-ICEEU-2015-002]

Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change Relating 
to Clearance of New Government Bond Contracts

January 27, 2015.
    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 January 16, 2015, ICE Clear Europe Limited (``ICE Clear Europe'' or 
the ``Clearing House'') 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 primarily by ICE 
Clear Europe. ICE Clear Europe filed the proposal pursuant to Section 
19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(4)(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)(4)(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 proposed rule change is to modify 
certain aspects of the ICE Clear Europe Delivery Procedures in 
connection with Euro-Denominated Government Bond Contracts and Swiss 
Confederation Bond Contracts (collectively, the ``European Government 
Bond Contracts''), which are traded on the ICE Futures Europe market 
and cleared by ICE Clear Europe.

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 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 these statements.

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

    The purpose of the proposed rule change is to modify certain 
aspects of the ICE Clear Europe Delivery Procedures in connection with 
European Government Bond Contracts, which are traded on ICE Futures 
Europe and cleared by ICE Clear Europe. ICE Clear Europe does not 
otherwise propose to amend its clearing rules or procedures in 
connection with the European Government Bond Contracts.
    The amendments adopt new Parts U and V of the Delivery Procedures, 
which will be applicable to the European Government Bond Contracts in 
the case of physical delivery. Part U applies to Euro-Denominated 
Government Bond Contracts (a category that currently consists of 
futures contracts on German, Italian and Spanish government bonds). 
Part V applies to Swiss franc-denominated futures contracts on Swiss 
government bonds. The amendments also adopt new Part W of the Delivery 
Procedures, which addresses the treatment of certain cash claims, 
distributions, transformations or other events (collectively, ``debt 
events'') that may arise or occur with respect to a bond underlying a 
government bond contract during the delivery period.
    Each of new Parts U and V of the Delivery Procedures provides, 
among other matters, specifications for delivery of the applicable 
deliverable bonds under a European Government Bond Contract through the 
Clearing House's account at the relevant European securities settlement 
system (Euroclear, Clearstream Banking or SIX SIS AG, as applicable) 
for the particular government bonds. Each Part also provides relevant 
definitions and a detailed timetable for the respective notice, 
allocation, delivery and other obligations of the parties (and the 
Clearing House) in respect of delivery under the relevant contracts. 
The amendments further address invoicing and payment for delivery.
    New Part W of the Delivery Procedures addresses the occurrence of 
certain debt events with respect to the bonds underlying a government 
bond contract after the expiry date of the contract (and thus during 
the relevant delivery period for the contract). These include cash 
claims arising in relation to the underlying bond, the distribution of 
other obligations to a bondholder (such as a payment in kind), and/or a 
transformation of the underlying bond (for example pursuant to a 
currency redenomination or debt restructuring). Part W clarifies the 
rights and obligations of the buyer and seller under the relevant 
contract in respect of such an event (in general, the buyer under the 
contract will be entitled to the relevant cash claim, distribution or 
transformed obligation). Part W also provides certain limitations on 
the obligations and liability of the Clearing House with respect to a 
debt event. The amendments provide mechanics for notification of a debt 
event where an election is required to be made. The amendments also 
contain procedures to address failed deliveries and settlements in 
connection with debt events, as well as certain related tax 
liabilities.
    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 proposed delivery procedures for 
European Government Bond Contracts are similar to those of other ICE 
Futures Europe contracts currently cleared by ICE Clear Europe, 
including the UK government bond futures contracts. ICE Clear Europe 
believes that its existing financial resources, risk management, 
systems and operational arrangements are sufficient to support clearing 
of such products and physical delivery under such products (and will 
not be adversely affected by the proposed amendments to the Delivery 
Procedures).
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    \5\ 15 U.S.C. 78q-1.
    \6\ 17 CFR 240.17Ad-22.
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    Specifically, ICE Clear Europe believes that it will be able to 
manage the risks associated with physical delivery under the European 
Government Bond Contracts. The European Government Bond Contracts 
present a similar risk profile to other government bond futures 
contracts currently traded on ICE Futures Europe and cleared by ICE 
Clear Europe, and ICE Clear Europe believes that its existing risk 
management and margin framework is sufficient for purposes of risk 
management of the European

[[Page 5611]]

Government Bond Contracts and related deliveries.
    Similarly, ICE Clear Europe has established appropriate standards 
for determining the eligibility of contracts submitted to the Clearing 
House for clearing, and ICE Clear Europe believes that its existing 
systems are appropriately scalable to handle physical delivery under 
the European Government Bond Contracts, which is generally similar from 
an operational perspective to delivery under other ICE Futures Europe 
bond contracts currently cleared by ICE Clear Europe.
    For the reasons noted above, ICE Clear Europe believes that the 
proposed rule change is consistent with the requirements of Section 17A 
of the Act \8\ and regulations thereunder applicable to it.
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    \8\ 15 U.S.C. 78q-1.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed rule change will 
have any impact, or impose any burden, on competition not necessary or 
appropriate in furtherance of the Act. ICE Clear Europe is adopting the 
amendments to the Delivery Procedures in connection with European 
Government Bond Contracts traded 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 relating to European government bond futures. ICE Clear Europe 
does not believe the adoption of related Delivery Procedures amendments 
would adversely affect access to clearing for clearing members or their 
customers, or otherwise adversely affect competition in clearing 
services.

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 rule change 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) \9\ of the Act and Rule 19b-4(f)(4)(ii) \10\ 
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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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(4)(ii).
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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-2015-002 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-2015-002. 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.
    All comments received will be posted without change; the Commission 
does 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-2015-002 
and should be submitted on or before February 23, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-01866 Filed 1-30-15; 8:45 am]
BILLING CODE 8011-01-P