Document ID: SEC-2018-0021-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Europe Limited
Posted Date: 2018-01-04T05:00Z

[Federal Register Volume 83, Number 3 (Thursday, January 4, 2018)]
[Notices]
[Pages 551-553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-28437]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82415; File No. SR-ICEEU-2017-015]

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 Clearing Procedures for 
the Exercise of F&O Options Contracts

December 28, 2017.
    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 December 20, 2017, ICE Clear Europe Limited (``ICE Clear Europe'') 
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. 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

[[Page 552]]

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, Security-Based Swap Submission, or Advance Notice

    The principal purpose of the proposed amendments is to modify 
certain provisions of the ICE Clear Europe Procedures (the 
``Procedures'') \5\ applicable to the exercise of F&O option contracts 
in order to align the Procedures with recent changes to ICE Futures 
Europe (the ``Exchange'' or ``IFEU'') rules for certain energy option 
contracts (the ``Affected Contracts'').\6\
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    \5\ Capitalized terms used but not defined herein have the 
meanings specified in the Procedures or the ICE Clear Europe 
Clearing Rules.
    \6\ These contracts include ICE Futures West Texas Intermediate 
Light Sweet Crude Oil Options Contract; ICE Futures West Texas 
Intermediate Light Sweet Crude Oil (CAD Denominated) Options 
Contract; ICE Futures West Texas Intermediate Light Sweet Crude Oil 
Weekly Options Contract; ICE Futures New York Harbour Heating Oil 
Options Contract; and ICE Futures New York Harbour Unleaded Gasoline 
Blendstock (RBOB) Options Contract.
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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
    The purpose of the proposed changes is to amend certain provisions 
of the Procedures applicable to the exercise of F&O option contracts in 
order to align the Procedures with changes to the Exchange rules for 
the Affected Contracts.
    The amendments to the Procedures principally address the following 
matters:
Exercise of At-The-Money Options
    The Procedures are being revised to contemplate automatic exercise 
of call options that are at-the-money on the expiration date, where the 
relevant Exchange contract specifications so provide.
Exercise Instructions on the Expiration Date
    The Procedures are also being revised to contemplate that some 
options cannot be electively (as opposed to automatically) exercised or 
abandoned on the expiration date, where the relevant Exchange contract 
specifications so provide.
    Both sets of changes are intended to be consistent with the revised 
contract specifications for the Affected Contracts, which will feature 
automatic exercise of at-the-money call options and limitations on 
elective exercise on the expiration date.
    The amendments to the Procedures also contain various other updates 
and clarifications to option exercise procedures. The specified changes 
being made to the Procedures are as follows:
    In paragraph 5.1, a definition of `At The Money' has been added.
    Several provisions have been updated to change terminology from 
``manual exercise'' to ``elective exercise'' and clarify that elective 
exercise instructions or other notices may be submitted electronically 
in accordance with relevant technical specifications in effect 
(including via API) as well as manually via the ICE systems. These 
include paragraphs 5.2(b)(i), 5.3(a), 5.3(b), 5.4(a), 5.4(b) and 
5.5(c).
    Paragraph 5.2(c) has been revised to provide that the default 
settings to be applied for purpose of automatic exercise will be 
specified in the contract terms of the Exchange.
    In paragraph 5.3(b), a clarification has been made that that this 
section refers to early exercise only.
    In paragraph 5.5(b), amendments have been made to reflect that 
Exchange contract terms may state that automatic exercise will apply to 
at-the-money options, as discussed above.
    In paragraph 5.5(d), an unnecessary statement concerning 
consequences of failure to contact the clearing house regarding 
exercise difficulties has been removed.
    In paragraph 5.6, text has been added to include the determination 
of whether options are at and out of the money. Examples in paragraph 
5.6(b) have been removed as unnecessary and outdated in light of the 
current changes.
    Paragraph 5.7(a) has been amended to provide that the Exchange 
contract terms for a particular option will determine whether elective 
exercise and/or abandon notifications can be submitted on the relevant 
expiry date, as discussed above.
    In paragraph 5.7(b), minor changes have been made to improve and 
correct wording and report names.
(b) Statutory Basis
    ICE Clear Europe believes that the proposed amendments are 
consistent with the requirements of Section 17A of the Act \7\ and the 
regulations thereunder applicable to it, including the standards under 
Rule 17Ad-22.\8\
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    \7\ 15 U.S.C. 78q-1.
    \8\ 17 CFR 240.17Ad-22.
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    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. The proposed 
amendments align exercise procedures for F&O option contracts with 
recent changes to relevant Exchange rules, and make certain other 
updates to such procedures. Specifically, the amendments revise 
exercise procedures to permit automatic exercise of at-the-money call 
options and to provide limitations on elective exercise on expiry day, 
where provided in the Exchange rules. The changes thus facilitate 
prompt and accurate clearance and settlement of F&O option contracts, 
consistent with the relevant exchange rules.
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    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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    In addition, Rule 17Ad-22(e)(21) \10\ requires that each covered 
clearing agency establish, implement, maintain and enforce written 
policies and procedures reasonably designed to be efficient and 
effective in meeting the requirements of its participants and the 
markets it serves, among other matters. As discussed above, the 
amendments update exercise procedures with respect to option contracts 
to more effectively meet the requirements of its participants and the 
F&O option markets served by ICE Clear Europe, and align with 
particular Exchange rules.
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    \10\ 17 CFR 240.17Ad-22(e)(21)(i) and (iv).
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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 
modify certain provisions of the

[[Page 553]]

Procedures applicable to the exercise of options to align the 
Procedures with recent changes to the Exchange rules, and to make 
certain other clarifications and updates. ICE Clear Europe does not 
believe the amendments would affect competition among clearing members 
or adversely affect the cost of clearing, the market for clearing 
services generally or access to clearing in these products by clearing 
members or other market participants.

(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, Security-Based 
Swap Submission and Advance Notice and Timing for Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(4)(ii) \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)(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, 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-2017-015 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-2017-015. 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 
Section, 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-2017-015 and should be 
submitted on or before January 25, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-28437 Filed 1-3-18; 8:45 am]
 BILLING CODE 8011-01-P