Document ID: SEC-2015-0651-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: ICE Clear Credit LLC
Posted Date: 2015-04-15T04:00Z

[Federal Register Volume 80, Number 72 (Wednesday, April 15, 2015)]
[Notices]
[Pages 20280-20282]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-08543]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74688; File No. SR-ICC-2015-006]

Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of 
Filing of Proposed Rule Change To Provide for the Clearance of an 
Additional Standard Emerging Market Sovereign Single Name

April 9, 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 March 27, 2015, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared primarily by ICC. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of the proposed rule change is to adopt rules that will 
provide the basis for ICC to clear an additional credit default swap 
contract. Specifically, ICC is proposing to amend Subchapter 26D of its 
rules to provide for the clearance of an additional Standard Emerging 
Market Sovereign CDS contract (``SES Contract''), namely Ukraine.
    ICC has been approved to clear twelve SES Contracts: The Federative 
Republic of Brazil, the United Mexican States, the Bolivarian Republic 
of Venezuela, the Argentine Republic, the Republic of Turkey, the 
Russian Federation, the Republic of Hungary, the Republic of South 
Africa, the Republic of Chile, the Republic of Peru, the Republic of 
Colombia, and the Republic of Poland.\3\

[[Page 20281]]

The proposed changes to the ICC Rules would provide for the clearance 
of an additional SES Contract, specifically Ukraine.
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    \3\ See Securities Exchange Act Release No. 34-65588 (Oct. 18, 
2011), 76 FR 65763 (Oct. 24, 2011) (File No. SR-ICC-2011-01) (order 
approving rule change to clear SES Contracts referencing the 
Federative Republic of Brazil, the United Mexican States, the 
Bolivian Republic of Venezuela, and the Argentine Republic); 
Securities Exchange Act Release No. 34-70849 (Nov. 12, 2013), 78 FR 
69167 (Nov. 18, 2013) (File No. SR-ICC-2013-07) (order approving 
rule change to clear SES Contracts referencing the Republic of 
Turkey and the Russian Federation); Securities Exchange Act Release 
No. 34-73220 (Sep. 25, 2014), 79 FR 59340 (Oct. 1, 2014) (File No. 
SR-ICC-2014-13) (order approving rule change to clear SES Contracts 
referencing the Republic of Hungary and the Republic of South 
Africa); and Securities Exchange Act Release No. 34-74593 (Mar. 26, 
2015), 80 FR 17538 (Apr. 1, 2015) (order approving rule change to 
clear SES Contracts referencing the Republic of Chile, the Republic 
of Peru, the Republic of Colombia, and the Republic of Poland).
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, ICC 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. ICC 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 adopt rules that will 
provide the basis for ICC to clear an additional credit default swap 
contract. ICC has been approved to clear twelve SES Contracts: The 
Federative Republic of Brazil, the United Mexican States, the 
Bolivarian Republic of Venezuela, the Argentine Republic, the Republic 
of Turkey, the Russian Federation, the Republic of Hungary, the 
Republic of South Africa, the Republic of Chile, the Republic of Peru, 
the Republic of Colombia, and the Republic of Poland. ICC proposes 
amending Subchapter 26D of its Rules to provide for the clearance of an 
additional SES Contract, specifically Ukraine. This additional SES 
Contract will be offered on the 2014 ISDA Credit Derivatives 
Definitions. The addition of the additional SES Contract will benefit 
the market for emerging market credit default swaps by providing market 
participants the benefits of clearing, including reduction in 
counterparty risk and safeguarding of margin assets pursuant to 
clearing house rules. Clearing of the additional SES Contract will not 
require any changes to ICC's Risk Management Framework or other 
policies and procedures constituting rules within the meaning of the 
Act.
    The additional SES Contract has terms consistent with the other SES 
Contracts approved for clearing at ICC and governed by Subchapter 26D 
of the ICC rules, namely the Federative Republic of Brazil, the United 
Mexican States, the Bolivarian Republic of Venezuela, the Argentine 
Republic, the Republic of Turkey, the Russian Federation, the Republic 
of Hungary, the Republic of South Africa, the Republic of Chile, the 
Republic of Peru, the Republic of Colombia, and the Republic of Poland. 
Minor revisions to Subchapter 26D (Standard Emerging Market Sovereign 
(``SES'') Single Name) are made to provide for clearing the additional 
SES Contract and are described as follows.
    Rule 26D-102 is modified to include Ukraine in the list of specific 
Eligible SES Reference Entities to be cleared by ICC.
    Section 17A(b)(3)(F) of the Act \4\ 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 clearance of the additional SES Contract will allow 
market participants an increased ability to manage risk. ICC believes 
that acceptance of this new contract, on the terms and conditions set 
out in the ICC Rules, is consistent with the prompt and accurate 
clearance of and settlement of securities transactions and derivative 
agreements, contracts and transactions cleared by ICC, the safeguarding 
of securities and funds in the custody or control of ICC, and the 
protection of investors and the public interest, within the meaning of 
Section 17A(b)(3)(F) of the Act.\5\
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    \4\ 15 U.S.C. 78q-1(b)(3)(F).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    Clearing of the additional SES Contract will also satisfy the 
requirements of Rule 17Ad-22.\6\ In particular, in terms of financial 
resources, ICC will apply its existing margin methodology to the 
additional SES Contract. ICC believes that this model will provide 
sufficient margin to cover its credit exposure to its clearing members 
from clearing this contract, consistent with the requirements of Rule 
17Ad-22(b)(2).\7\ In addition, ICC believes its Guaranty Fund, under 
its existing methodology, will, together with the required margin, 
provide sufficient financial resources to support the clearing of the 
new contract consistent with the requirements of Rule 17Ad-22(b)(3).\8\ 
ICC also believes that its existing operational and managerial 
resources will be sufficient for clearing of the additional SES 
Contract, consistent with the requirements of Rule 17Ad-22(d)(4),\9\ as 
the new contract is similar from an operational perspective to existing 
SES Contracts. Similarly, ICC will use its existing settlement 
procedures and account structures for the new contract, consistent with 
the requirements of Rule 17Ad-22(d)(5), (12) and (15) \10\ as to the 
finality and accuracy of its daily settlement process and avoidance of 
the risk to ICC of settlement failures. Finally, ICC will apply its 
existing default management policies and procedures for the new 
contract. ICC believes that these procedures allow for it to take 
timely action to contain losses and liquidity pressures and to continue 
meeting its obligations in the event of clearing member insolvencies or 
defaults in respect of the additional SES Contract, in accordance with 
Rule 17Ad-22(d)(11).\11\
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    \6\ 17 CFR 240.17Ad-22.
    \7\ 17 CFR 240.17Ad-22(b)(2).
    \8\ 17 CFR 240.17Ad-22(b)(3).
    \9\ 17 CFR 240.17Ad-22(d)(4).
    \10\ 17 CFR 240.17Ad-22(d)(5), (12) and (15).
    \11\ 17 CFR 240.17Ad-22(d)(11).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The additional SES Contract will be available to all ICC 
Participants for clearing. The clearing of the additional SES Contract 
by ICC does not preclude the offering of the additional SES Contract 
for clearing by other market participants. Accordingly, ICC does not 
believe that clearance of the additional SES Contract will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act.

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. ICC will notify the Commission of any written 
comments received by ICC.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

[[Page 20282]]

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-ICC-2015-006 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-ICC-2015-006. 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 Credit 
and on ICE Clear Credit's Web site at https://www.theice.com/clear-credit/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-ICC-2015-006 
and should be submitted on or before May 6, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-08543 Filed 4-14-15; 8:45 am]
 BILLING CODE 8011-01-P