
[Federal Register: April 29, 2010 (Volume 75, Number 82)]
[Notices]               
[Page 22656-22663]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29ap10-129]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61973; File No. S7-16-09]

 
Order Extending Temporary Conditional Exemptions Under the 
Securities Exchange Act of 1934 in Connection With Request on Behalf of 
ICE Clear Europe, Limited Related to Central Clearing of Credit Default 
Swaps, and Request for Comments

April 23, 2010.

I. Introduction

    The Securities and Exchange Commission (``Commission'') has taken 
multiple actions \1\ designed to address concerns related to the market 
in credit default swaps (``CDS'').\2\ The over-the-counter (``OTC'') 
market for CDS has been a source of particular concern to us and other 
financial regulators, and we have recognized that facilitating the 
establishment of central counterparties (``CCPs'') for CDS can play an 
important role in reducing the counterparty risks inherent in the CDS 
market, and thus can help mitigate potential systemic impact. We have 
therefore found that taking action to help foster the prompt 
development of CCPs, including granting temporary conditional 
exemptions from certain provisions of the Federal securities laws, is 
in the public interest.\3\
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    \1\ See generally Securities Exchange Act Release No. 60372 
(Jul. 23, 2009), 74 FR 37748 (Jul. 29, 2009) (temporary exemptions 
in connection with CDS clearing by ICE Clear Europe Limited) (``2009 
ICE Clear Europe order''); Securities Exchange Act Release No. 60373 
(Jul. 23, 2009), 74 FR 37740 (Jul. 29, 2009) and Securities Exchange 
Act Release No. 61975 (Apr. 23, 2010) (temporary exemptions in 
connection with CDS clearing by Eurex Clearing AG); Securities 
Exchange Act Release No. 59578 (Mar. 13, 2009), 74 FR 11781 (Mar. 
19, 2009), Securities Exchange Act Release No. 61164 (Dec. 14, 
2009), 74 FR 67258 (Dec. 18, 2009) and Securities Exchange Act 
Release No. 61803 (Mar. 30, 2010), 75 FR 17181 (Apr. 5, 2010) 
(temporary exemptions in connection with CDS clearing by Chicago 
Mercantile Exchange Inc.); Securities Exchange Act Release No. 59527 
(Mar. 6, 2009), 74 FR 10791 (Mar. 12, 2009), Securities Exchange Act 
Release No. 61119 (Dec. 4, 2009), 74 FR 65554 (Dec. 10, 2009) and 
Securities Exchange Act Release No. 61662 (Mar. 5, 2010), 75 FR 
11589 (Mar. 11, 2010) (temporary exemptions in connection with CDS 
clearing by ICE Trust US LLC); Securities Exchange Act Release No. 
59164 (Dec. 24, 2008), 74 FR 139 (Jan. 2, 2009) (temporary 
exemptions in connection with CDS clearing by LIFFE A&M and 
LCH.Clearnet Ltd.) and other Commission actions discussed in several 
of these orders.
    In addition, we have issued interim final temporary rules that 
provide exemptions under the Securities Act of 1933 and the 
Securities Exchange Act of 1934 for CDS to facilitate the operation 
of one or more central counterparties for the CDS market. See 
Securities Act Release No. 8999 (Jan. 14, 2009), 74 FR 3967 (Jan. 
22, 2009) (initial approval); Securities Act Release No. 9063 (Sep. 
14, 2009), 74 FR 47719 (Sep. 17, 2009) (extension until Nov. 30, 
2010).
    Further, the Commission provided temporary exemptions in 
connection with Sections 5 and 6 of the Securities Exchange Act of 
1934 for transactions in CDS; these exemptions expired on March 24, 
2010. See Securities Exchange Act Release No. 59165 (Dec. 24, 2008), 
74 FR 133 (Jan. 2, 2009) (initial exemption); Securities Exchange 
Act Release No. 60718 (Sep. 25, 2009), 74 FR 50862 (Oct. 1, 2009) 
(extension until Mar. 24, 2010).
    \2\ A CDS is a bilateral contract between two parties, known as 
counterparties. The value of this financial contract is based on 
underlying obligations of a single entity (``reference entity'') or 
on a particular security or other debt obligation, or an index of 
several such entities, securities, or obligations. The obligation of 
a seller to make payments under a CDS contract is triggered by a 
default or other credit event as to such entity or entities or such 
security or securities. Investors may use CDS for a variety of 
reasons, including to offset or insure against risk in their fixed-
income portfolios, to take positions in bonds or in segments of the 
debt market as represented by an index, or to take positions on the 
volatility in credit spreads during times of economic uncertainty.
    Growth in the CDS market has coincided with a significant rise 
in the types and number of entities participating in the CDS market. 
CDS were initially created to meet the demand of banking 
institutions looking to hedge and diversify the credit risk 
attendant to their lending activities. However, financial 
institutions such as insurance companies, pension funds, securities 
firms, and hedge funds have entered the CDS market.
    \3\ See generally actions referenced in note 1, supra.
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    The Commission's authority over the OTC market for CDS is limited. 
Specifically, section 3A of the Securities Exchange Act of 1934 
(``Exchange Act'') limits the Commission's authority over swap 
agreements, as defined in section 206A of the Gramm-Leach-Bliley 
Act.\4\ For those CDS that are swap agreements, the exclusion from the 
definition of security in section 3A of the Exchange Act, and related 
provisions, will continue to apply. The Commission's action today does 
not affect these CDS, and this Order does not apply to them. For those 
CDS that are not swap agreements (``non-excluded CDS''), the 
Commission's action today provides temporary conditional exemptions 
from certain requirements of the Exchange Act.
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    \4\ 15 U.S.C. 78c-1. Section 3A excludes both a non-security-
based and a security-based swap agreement from the definition of 
``security'' under Section 3(a)(10) of the Exchange Act, 15 U.S.C. 
78c(a)(10). Section 206A of the Gramm-Leach-Bliley Act defines a 
``swap agreement'' as ``any agreement, contract, or transaction 
between eligible contract participants (as defined in section 1a(12) 
of the Commodity Exchange Act * * *) * * * the material terms of 
which (other than price and quantity) are subject to individual 
negotiation.'' 15 U.S.C. 78c note.
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    The Commission believes that using well-regulated CCPs to clear 
transactions in CDS provides a number of benefits by helping to promote 
efficiency and reduce risk in the CDS market, by contributing to the 
goal of market stability, and by requiring maintenance of records of 
CDS transactions that would aid the Commission's efforts to prevent and 
detect fraud and other abusive market practices.\5\
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    \5\ See generally actions referenced in note 1, supra.
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    In the 2009 ICE Clear Europe Order, the Commission provided 
temporary conditional exemptions to ICE Clear Europe, Limited (``ICE 
Clear Europe'') and certain other parties to permit ICE Clear Europe to 
clear and settle CDS transactions.\6\ The current exemptions

[[Page 22657]]

are scheduled to expire on April 23, 2010, and ICE Clear Europe has 
requested that the Commission extend those exemptions.\7\
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    \6\ For purposes of this Order, ``Cleared CDS'' means a credit 
default swap that is submitted (or offered, purchased, or sold on 
terms providing for submission) to ICE Clear Europe, that is offered 
only to, purchased only by, and sold only to eligible contract 
participants (as defined in Section 1a(12) of the Commodity Exchange 
Act as in effect on the date of this Order (other than a person that 
is an eligible contract participant under paragraph (C) of that 
section)), and in which: (i) The reference entity, the issuer of the 
reference security, or the reference security is one of the 
following: (A) An entity reporting under the Exchange Act, providing 
Securities Act Rule 144A(d)(4) information, or about which financial 
information is otherwise publicly available; (B) a foreign private 
issuer whose securities are listed outside the United States and 
that has its principal trading market outside the United States; (C) 
a foreign sovereign debt security; (D) an asset-backed security, as 
defined in Regulation AB, issued in a registered transaction with 
publicly available distribution reports; or (E) an asset-backed 
security issued or guaranteed by the Federal National Mortgage 
Association (``Fannie Mae''), the Federal Home Loan Mortgage 
Corporation (``Freddie Mac'') or the Government National Mortgage 
Association (``Ginnie Mae''); or (ii) the reference index is an 
index in which 80 percent or more of the index's weighting is 
comprised of the entities or securities described in subparagraph 
(i). See definition in paragraph III.(e)(1) of this Order. As 
discussed above, the Commission's action today does not affect CDS 
that are swap agreements under Section 206A of the Gramm-Leach-
Bliley Act. See text at note 4, supra.
    \7\ See Letter from Russell Sacks, Shearman & Sterling LLP, to 
Elizabeth M. Murphy, Secretary, Commission, April 23, 2010 (``April 
2010 Request'').
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    Based on the facts presented and the representations made by ICE 
Clear Europe,\8\ and for the reasons discussed in this Order and 
subject to certain conditions, the Commission is extending each of the 
existing exemptions connected with CDS clearing by ICE Clear Europe: 
the temporary conditional exemption granted to ICE Clear Europe from 
clearing agency registration under Section 17A of the Exchange Act 
solely to perform the functions of a clearing agency for certain non-
excluded CDS transactions; the temporary conditional exemption of ICE 
Clear Europe and certain of its clearing members from the registration 
requirements of Sections 5 and 6 of the Exchange Act solely in 
connection with the calculation of mark-to-market prices for non-
excluded CDS cleared by ICE Clear Europe; the temporary conditional 
exemption of eligible contract participants and others from certain 
Exchange Act requirements with respect to non-excluded CDS cleared by 
ICE Clear Europe; and the temporary exemption from certain Exchange Act 
requirements granted to registered broker-dealers. This extension is 
temporary, and the exemptions will expire on November 30, 2010.
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    \8\ See id. The exemptions we are granting today are based on 
all of the representations made on behalf of ICE Clear Europe, which 
incorporate representations made on behalf of ICE Clear Europe as 
part of the request that preceded our earlier exemptions addressing 
CDS clearing by ICE Clear Europe. We recognize, however, that there 
could be legal uncertainty in the event that one or more of the 
underlying representations were to become inaccurate. Accordingly, 
if any of these exemptions were to become unavailable by reason of 
an underlying representation no longer being materially accurate, 
the legal status of existing open positions in non-excluded CDS that 
previously had been cleared pursuant to the exemptions would remain 
unchanged, but no new positions could be established pursuant to the 
exemptions until all of the underlying representations were again 
accurate.
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II. Discussion

    In its request for an extension, ICE Clear Europe represents that 
there have been no material changes to the operations of ICE Clear 
Europe and the representations in the 2009 ICE Clear Europe Order 
remain true in all material respects.\9\ These representations are 
discussed in detail in the 2009 ICE Clear Europe Order.
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    \9\ See April 2010 Request, supra note 7.
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A. ICE Clear Europe's CDS Clearing Activities to Date

    ICE Clear Europe has cleared proprietary CDS transactions of its 
clearing members since July 2009. As of March 16, 2010, ICE Clear 
Europe had cleared approximately [euroi]1.4 trillion notional amount of 
CDS contracts based on indices of securities.
    In December 2009, ICE Clear Europe commenced clearing CDS contracts 
based on individual reference entities or securities. As of March 16, 
ICE Clear Europe had cleared approximately [euroi]99 billion notional 
amount of CDS contracts based on individual reference entities or 
securities.

B. Extended Temporary Conditional Exemption From Clearing Agency 
Registration Requirement

    On July 23, 2009, in connection with its efforts to facilitate the 
establishment of one or more central counterparties (``CCP'') for 
Cleared CDS, the Commission issued the 2009 ICE Clear Europe Order, 
which conditionally exempted ICE Clear Europe from clearing agency 
registration under Section 17A of the Exchange Act on a temporary 
basis. Subject to the conditions in the 2009 ICE Clear Europe Order, 
ICE Clear Europe is permitted to act as a CCP for Cleared CDS by 
novating trades of non-excluded CDS that are securities and generating 
money and settlement obligations for participants without having to 
register with the Commission as a clearing agency. The 2009 ICE Clear 
Europe Order is effective until April 23, 2010.
    In the 2009 ICE Clear Europe Order, the Commission recognized the 
need to facilitate the prompt establishment of ICE Clear Europe as a 
CCP for CDS transactions. The Commission also recognized the need to 
ensure that important elements of Section 17A of the Exchange Act,\10\ 
which sets forth the framework for the regulation and operation of the 
U.S. clearance and settlement system for securities, apply to the non-
excluded CDS market. Accordingly, the temporary exemption in the 2009 
ICE Clear Europe Order were subject to a number of conditions designed 
to enable Commission staff to monitor ICE Clear Europe's clearance and 
settlement of CDS transactions.\11\ Moreover, the temporary exemption 
in the 2009 ICE Clear Europe Order in part was based on ICE Clear 
Europe's representation that it met the standards set forth in the 
Committee on Payment and Settlement Systems (``CPSS'') and 
International Organization of Securities Commissions (``IOSCO'') report 
entitled: Recommendations for Central Counterparties (``RCCP'').\12\ 
The RCCP establishes a framework that requires a CCP to have: (i) The 
ability to facilitate the prompt and accurate clearance and settlement 
of CDS transactions and to safeguard its users' assets; and (ii) sound 
risk management, including the ability to appropriately determine and 
collect clearing fund and monitor its users' trading. This framework is 
generally consistent with the requirements of Section 17A of the 
Exchange Act.
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    \10\ 15 U.S.C. 78q-1.
    \11\ See Securities Exchange Act Release No. 60372 (Jul. 23, 
2009), 74 FR 37748 (Jul. 29, 2009).
    \12\ The RCCP was drafted by a joint task force (``Task Force'') 
composed of representative members of IOSCO and CPSS and published 
in November 2004. The Task Force consisted of securities regulators 
and central bankers from 19 countries and the European Union. The 
U.S. representatives on the Task Force included staff from the 
Commission, the Federal Reserve Board, and the Commodity Futures 
Trading Commission.
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    The Commission believes that continuing to facilitate the central 
clearing of CDS transactions through a temporary conditional exemption 
from Section 17A will continue to provide important risk management and 
systemic benefits by avoiding an interruption in those CCP clearance 
and settlement services. Any interruption in CCP clearance and 
settlement services for CDS transactions would eliminate in the future 
the benefits ICE Clear Europe provides to the non-excluded CDS market. 
Accordingly, and consistent with our findings in the 2009 ICE Clear 
Europe Order and for the reasons described herein, we find pursuant to 
Section 36 of the Exchange Act \13\ that it is necessary and 
appropriate in the public interest and is consistent with the 
protection of investors for the Commission to extend, through November 
30, 2010, the relief provided from the clearing agency registration 
requirements of Section 17A by the 2009 ICE Clear Europe Order.
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    \13\ 15 U.S.C. 78mm. Section 36 of the Exchange Act authorizes 
the Commission to conditionally or unconditionally exempt any 
person, security, or transaction, or any class or classes of 
persons, securities, or transactions, from any provision or 
provisions of the Exchange Act or any rule or regulation thereunder, 
by rule, regulation, or order, to the extent that such exemption is 
necessary or appropriate in the public interest, and is consistent 
with the protection of investors.
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    Our action today balances the aim of facilitating ICE Clear 
Europe's continued service as a CCP for non-excluded CDS transactions 
with ensuring that important elements of

[[Page 22658]]

Commission oversight are applied to the non-excluded CDS market. The 
temporary conditional exemptions will permit the Commission to continue 
to develop direct experience with the non-excluded CDS market. During 
the extended exemptive period, the Commission will continue to monitor 
closely the impact of the CCPs on the CDS market. In particular, the 
Commission will seek to assure itself that ICE Clear Europe does not 
act in an anticompetitive manner or indirectly facilitate 
anticompetitive behavior with respect to fees charged to members, and 
the dissemination of market data.
    This temporary conditional extension of the 2009 ICE Clear Europe 
Order also is designed to assure that--as ICE Clear Europe has 
represented--information will continue to be available to market 
participants about the terms of the CDS cleared by ICE Clear Europe, 
the creditworthiness of ICE Clear Europe or any guarantor, and the 
clearance and settlement process for CDS.\14\ The Commission believes 
continued operation of ICE Clear Europe consistent with the conditions 
of this Order will facilitate the availability to market participants 
of information that should enable them to make better informed 
investment decisions and better value and evaluate their Cleared CDS 
and counterparty exposures relative to a market for CDS that is not 
centrally cleared.
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    \14\ The Commission believes that it is important in the CDS 
market, as in the market for securities generally, that parties to 
transactions should have access to financial information that would 
allow them to evaluate appropriately the risks relating to a 
particular investment and make more informed investment decisions. 
See generally Policy Statement on Financial Market Developments, The 
President's Working Group on Financial Markets, March 13, 2008, 
available at: http://www.treas.gov/press/releases/reports/
pwgpolicystatemktturmoil_03122008.pdf.
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    This temporary extension of the 2009 ICE Clear Europe Order is 
subject to a number of conditions that are designed to enable 
Commission staff to continue to monitor ICE Clear Europe's clearance 
and settlement of CDS transactions and help reduce risk in the CDS 
market. These conditions require that ICE Clear Europe: (i) Make 
available on its Web site its annual audited financial statements; (ii) 
preserve records related to the conduct of its Cleared CDS clearance 
and settlement services for at least five years (in an easily 
accessible place for the first two years); (iii) supply information 
relating to its Cleared CDS clearance and settlement services to the 
Commission and provide access to the Commission to conduct on-site 
inspections of facilities, records and personnel related to its Cleared 
CDS clearance and settlement services as may be reasonably requested by 
the Commission and provide access to the Commission to conduct on-site 
inspections of facilities, records, and personnel related to its 
Cleared CDS clearance and settlement services, subject to cooperation 
with the FSA and upon terms and conditions agreed between the FSA and 
the Commission; (iv) notify the Commission about material disciplinary 
actions taken against any of its members utilizing its Cleared CDS 
clearance and settlement services, and about the involuntary 
termination of the membership of an entity that is utilizing ICE Clear 
Europe's Cleared CDS clearance and settlement services; (v) notify the 
Commission not less than one day prior to effectiveness or 
implementation of changes to rules, procedures, and any other material 
events affecting its Cleared CDS clearance and settlement services, or, 
in exigent circumstances, as promptly as reasonably practicable under 
the circumstances; (vi) provide the Commission with reports prepared by 
independent audit personnel that are generated in accordance with risk 
assessment of the areas set forth in the Commission's Automation Review 
Policy Statements \15\ and its annual audited financial statements 
prepared by independent audit personnel; and (vii) provide notice to 
the Commission regarding the suspension of services or inability to 
operate facilities in connection with Cleared CDS clearance and 
settlement services at the same time it provides notice to the FSA.
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    \15\ See Automated Systems of Self-Regulatory Organizations, 
Exchange Act Release No. 27445 (November 16, 1989), File No. S7-29-
89, and Automated Systems of Self-Regulatory Organizations (II), 
Exchange Act Release No. 29185 (May 9, 1991), File No. S7-12-91.
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    In addition, this temporary extension of the 2009 ICE Clear Europe 
Order is conditioned on ICE Clear Europe, directly or indirectly, 
making available to the public on terms that are fair and reasonable 
and not unreasonably discriminatory: (i) All end-of-day settlement 
prices and any other prices with respect to Cleared CDS that ICE Clear 
Europe may establish to calculate mark-to-market margin requirements 
for ICE Clear Europe Clearing Members; and (ii) any other pricing or 
valuation information with respect to Cleared CDS as is published or 
distributed by ICE Clear Europe.\16\
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    \16\ As a CCP, ICE Clear Europe collects and processes 
information about CDS transactions, prices, and positions. Public 
availability of such information can improve fairness, efficiency, 
and competitiveness in the market. Moreover, with pricing and 
valuation information relating to Cleared CDS, market participants 
would be able to derive information about underlying securities and 
indices, potentially improving the efficiency and effectiveness of 
the securities markets.
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C. Extended Temporary Conditional Exemption From Exchange Registration 
Requirements

    When we initially provided exemptions in connection with CDS 
clearing by ICE Clear Europe, we granted a temporary conditional 
exemption to ICE Clear Europe from the requirements of sections 5 and 6 
of the Exchange Act, and the rules and regulations thereunder, in 
connection with ICE Clear Europe's calculation of mark-to-market prices 
for open positions in Cleared CDS. We also temporarily exempted ICE 
Clear Europe participants from the prohibitions of section 5 to the 
extent that they use ICE Clear Europe to effect or report any 
transaction in Cleared CDS in connection with ICE Clear Europe's 
calculation of mark-to-market prices for open positions in Cleared CDS. 
Section 5 of the Exchange Act contains certain restrictions relating to 
the registration of national securities exchanges,\17\ while section 6 
provides the procedures for registering as a national securities 
exchange.\18\
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    \17\ In particular, section 5 states:
    It shall be unlawful for any broker, dealer, or exchange, 
directly or indirectly, to make use of the mails or any means or 
instrumentality of interstate commerce for the purpose of using any 
facility of an exchange * * * to effect any transaction in a 
security, or to report any such transactions, unless such exchange 
(1) is registered as a national securities exchange under section 6 
of [the Exchange Act], or (2) is exempted from such registration * * 
* by reason of the limited volume of transactions effected on such 
exchange * * * .
    15 U.S.C. 78e.
    \18\ 15 U.S.C. 78f. Section 6 of the Exchange Act also sets 
forth various requirements to which a national securities exchange 
is subject.
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    We granted these temporary exemptions to facilitate the 
establishment of ICE Clear Europe's end-of-day settlement price 
process. ICE Clear Europe had represented that in connection with its 
clearing and risk management process it would calculate an end-of-day 
settlement price for each Cleared CDS in which an ICE Clear Europe 
participant has a cleared position, based on prices submitted by the 
participants. As part of this mark-to-market process, ICE Clear Europe 
has periodically required its clearing members to execute certain CDS 
trades at the price at which certain quotations of the clearing members 
lock or cross. ICE Clear Europe represents that it continues to 
periodically require clearing members to execute certain CDS trades in 
this manner.
    As discussed above, we have found in general that it is necessary 
or appropriate in the public interest, and is

[[Page 22659]]

consistent with the protection of investors, to facilitate continued 
CDS clearing by ICE Clear Europe. Consistent with that finding--and in 
reliance on ICE Europe's representation that the end-of-day settlement 
pricing process, including the periodically required trading, is 
integral to its risk management--we further find that it is necessary 
or appropriate in the public interest, and is consistent with the 
protection of investors that we exercise our authority under section 36 
of the Exchange Act to extend, through November 30, 2010, ICE Clear 
Europe's temporary exemption from sections 5 and 6 of the Exchange Act 
in connection with its calculation of mark-to-market prices for open 
positions in Cleared CDS, and ICE Clear Europe's clearing members' 
temporary exemption from section 5 with respect to such trading 
activity.
    The temporary exemption for ICE Clear Europe will continue to be 
subject to three conditions. First, ICE Clear Europe must report the 
following information with respect to its calculation of mark-to-market 
prices for Cleared CDS to the Commission within 30 days of the end of 
each quarter, and preserve such reports during the life of the 
enterprise and of any successor enterprise:
     The total dollar volume of transactions executed during 
the quarter, broken down by reference entity, security, or index; and
     The total unit volume and/or notional amount executed 
during the quarter, broken down by reference entity, security, or 
index.
    Second, ICE Clear Europe must establish and maintain adequate 
safeguards and procedures to protect participants' confidential trading 
information. Such safeguards and procedures shall include: (a) Limiting 
access to the confidential trading information of participants to those 
employees of ICE Clear Europe who are operating the system or 
responsible for its compliance with this exemption or any other 
applicable rules; and (b) establishing and maintaining standards 
controlling employees of ICE Clear Europe trading for their own 
accounts. ICE Clear Europe must establish and maintain adequate 
oversight procedures to ensure that the safeguards and procedures 
established pursuant to this condition are followed.\19\
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    \19\ We are making a technical modification to this condition to 
provide that ICE Clear Europe must ``establish and maintain'' the 
applicable safeguards and procedures (in lieu of the current 
exemption's use of terminology such as ``adopt and implement'') to 
reflect the fact that ICE Clear Europe already is relying on this 
settlement pricing process.
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    Third, ICE Clear Europe must comply with the conditions to the 
temporary exemption from Section 17A of the Exchange Act in this Order, 
given that this exemption is granted in the context of our goal of 
continuing to facilitate ICE Clear Europe's ability to act as a CCP for 
non-excluded CDS, and given ICE Clear Europe's representation that the 
end-of-day settlement pricing process, including the periodically 
required trading, will enhance the reliability of the submitted end-of-
day prices.
    The Commission also is continuing to temporarily exempt each ICE 
Clear Europe clearing member, through November 30, 2010, from the 
prohibition in Section 5 of the Exchange Act to the extent that such 
ICE Clear Europe clearing member uses any facility of ICE Clear Europe 
to effect any transaction in Cleared CDS, or to report any such 
transaction, in connection with ICE Clear Europe calculation of mark-
to-market prices for open positions in Cleared CDS. Absent an 
exemption, section 5 would prohibit any ICE Clear Europe clearing 
member that is a broker or dealer from effecting transactions in 
Cleared CDS on ICE Clear Europe, which will rely on this Order for an 
exemption from exchange registration. The Commission believes that 
temporarily exempting ICE Clear Europe clearing members from the 
restriction in section 5 is necessary and appropriate in the public 
interest and is consistent with the protection of investors because it 
will facilitate their use of ICE Clear Europe's CCP for Cleared CDS, 
which for the reasons set forth in this Order the Commission believes 
to be beneficial. Without also temporarily exempting ICE Clear Europe 
clearing members from this section 5 requirement, the Commission's 
temporary exemption of ICE Clear Europe from sections 5 and 6 of the 
Exchange Act would be ineffective, because ICE Clear Europe clearing 
members that are brokers or dealers would not be permitted to effect 
transactions on ICE Clear Europe in connection with the end-of-day 
settlement price process.

D. Extended and Revised Temporary Conditional General Exemption for ICE 
Clear Europe and Certain Eligible Contract Participants

    As we recognized when we initially provided temporary exemptions in 
connection with CDS clearing by ICE Clear Europe, applying the full 
panoply of Exchange Act requirements to participants in transactions in 
non-excluded CDS likely would deter some participants from using CCPs 
to clear CDS transactions. We also recognized that it is important that 
the antifraud provisions of the Exchange Act apply to transactions in 
non-excluded CDS, particularly given that OTC transactions subject to 
individual negotiation that qualify as security-based swap agreements 
already are subject to those provisions.\20\
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    \20\ While Section 3A of the Exchange Act excludes ``swap 
agreements'' from the definition of ``security,'' certain antifraud 
and insider trading provisions under the Exchange Act explicitly 
apply to security-based swap agreements. See (a) paragraphs (2) 
through (5) of section 9(a), 15 U.S.C. 78i(a), prohibiting the 
manipulation of security prices; (b) section 10(b), 15 U.S.C. 
78j(b), and underlying rules prohibiting fraud, manipulation or 
insider trading (but not prophylactic reporting or recordkeeping 
requirements); (c) section 15(c)(1), 15 U.S.C. 78o(c)(1), which 
prohibits brokers and dealers from using manipulative or deceptive 
devices; (d) sections 16(a) and (b), 15 U.S.C. 78p(a) and (b), which 
address disclosure by directors, officers and principal 
stockholders, and short-swing trading by those persons, and rules 
with respect to reporting requirements under Section 16(a); (e) 
section 20(d), 15 U.S.C. 78t(d), providing for antifraud liability 
in connection with certain derivative transactions; and (f) section 
21A(a)(1), 15 U.S.C. 78u-1(a)(1), related to the Commission's 
authority to impose civil penalties for insider trading violations.
    ``Security-based swap agreement'' is defined in Section 206B of 
the Gramm-Leach-Bliley Act as a swap agreement in which a material 
term is based on the price, yield, value, or volatility of any 
security or any group or index of securities, or any interest 
therein.
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    As a result, we concluded that it is appropriate in the public 
interest and consistent with the protection of investors to apply 
temporarily substantially the same framework to transactions by market 
participants in non-excluded CDS that applies to transactions in 
security-based swap agreements. Consistent with that conclusion, we 
temporarily exempted ICE Clear Europe, and certain members and eligible 
contract participants, from a number of Exchange Act requirements, 
subject to certain conditions, while excluding certain enforcement-
related and other provisions from the scope of the exemption.
    We believe that continuing to facilitate the central clearing of 
CDS transactions by ICE Clear Europe through this type of temporary 
exemption will provide important risk management benefits and systemic 
benefits. Accordingly, pursuant to Section 36 of the Exchange Act, the 
Commission finds that it is necessary or appropriate in the public 
interest and is consistent with the protection of investors to exercise 
its authority to grant an exemption through November 30, 2010 from 
certain requirements under the Exchange Act.
    As before, this temporary conditional exemption applies to ICE 
Clear Europe, any ICE Clear Europe Clearing

[[Page 22660]]

Member \21\ which is not a broker or dealer registered under section 
15(b) of the Exchange Act (other than paragraph (11) thereof), and any 
eligible contract participants \22\ other than: Eligible contract 
participants that receive or hold funds or securities for the purpose 
of purchasing, selling, clearing, settling or holding Cleared CDS 
positions for other persons; \23\ eligible contract participants that 
are self-regulatory organizations or eligible contract participants 
that are registered brokers or dealers.\24\
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    \21\ For purposes of this Order, an ``ICE Clear Europe Clearing 
Member'' means any clearing member of ICE Clear Europe that submits 
Cleared CDS to ICE Clear Europe for clearance and settlement 
exclusively (i) for its own account or (ii) for the account of an 
affiliate that controls, is controlled by, or is under common 
control with the clearing member of ICE Clear Europe. See definition 
in paragraph III.(e)(1) of this Order.
    \22\ This exemption in general applies to eligible contract 
participants, as defined in section 1a(12) of the Commodity Exchange 
Act as in effect on the date of this Order, other than persons that 
are eligible contract participants under paragraph (C) of that 
section.
    \23\ Solely for purposes of this requirement, an eligible 
contract participant would not be viewed as receiving or holding 
funds or securities for the purpose of purchasing, selling, 
clearing, settling, or holding Cleared CDS positions for other 
persons, if the other persons involved in the transaction would not 
be considered ``customers'' of the eligible contract participant 
under the analysis used for determining whether certain persons 
would be considered ``customers'' of a broker-dealer under Exchange 
Act Rule 15c3-3(a)(1). For these purposes, and for the purpose of 
the definition of ``Cleared CDS,'' the terms ``purchasing'' and 
``selling'' mean the execution, termination (prior to its scheduled 
maturity date), assignment, exchange, or similar transfer or 
conveyance of, or extinguishing the rights or obligations under, a 
Cleared CDS, as the context may require. This is consistent with the 
meaning of the terms ``purchase'' or ``sale'' under the Exchange Act 
in the context of security-based swap agreements. See Exchange Act 
Section 3A(b)(4).
    \24\ A separate temporary exemption addresses the Cleared CDS 
activities of registered broker-dealers. See Part II.E, infra. 
Solely for purposes of this Order, a registered broker-dealer, or a 
broker or dealer registered under Section 15(b) of the Exchange Act, 
does not refer to someone that would otherwise be required to 
register as a broker or dealer solely as a result of activities in 
Cleared CDS in compliance with this Order.
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    As before, under this temporary conditional exemption, and solely 
with respect to Cleared CDS, those persons generally are exempt from 
the provisions of the Exchange Act and the rules and regulations 
thereunder that do not apply to security-based swap agreements. Thus, 
those persons would still be subject to those Exchange Act requirements 
that explicitly are applicable in connection with security-based swap 
agreements.\25\ In addition, all provisions of the Exchange Act related 
to the Commission's enforcement authority in connection with violations 
or potential violations of such provisions would remain applicable.\26\ 
In this way, the temporary conditional exemption would apply the same 
Exchange Act requirements in connection with non-excluded CDS as apply 
in connection with OTC credit default swaps.
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    \25\ See note 20, infra.
    \26\ Thus, for example, the Commission retains the ability to 
investigate potential violations and bring enforcement actions in 
the Federal courts as well as in administrative proceedings, and to 
seek the full panoply of remedies available in such cases.
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    Consistent with the 2009 ICE Clear Europe Order, this temporary 
conditional exemption does not extend to: The exchange registration 
requirements of Exchange Act sections 5 and 6; \27\ the clearing agency 
registration requirements of Exchange Act section 17A; the requirements 
of Exchange Act sections 12, 13, 14, 15(d), and 16; \28\ the 
Commission's administrative proceeding authority under paragraphs (4) 
and (6) of Exchange Act section 15(b),\29\ and the rules and 
regulations thereunder that apply to a broker or dealer that is not 
registered with the Commission; or certain provisions related to 
government securities.\30\
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    \27\ These are subject to a separate temporary class exemption. 
See note 1, supra. A national securities exchange that effects 
transactions in Cleared CDS would continue to be required to comply 
with all requirements under the Exchange Act applicable to such 
transactions. A national securities exchange could form subsidiaries 
or affiliates that operate exchanges exempt under that order. Any 
subsidiary or affiliate of a registered exchange could not 
integrate, or otherwise link, the exempt CDS exchange with the 
registered exchange including the premises or property of such 
exchange for effecting or reporting a transaction without being 
considered a ``facility of the exchange.'' See Section 3(a)(2), 15 
U.S.C. 78c(a)(2).
    This Order also includes a separate temporary exemption from 
Sections 5 and 6 in connection with the mark-to-market process of 
ICE Clear Europe, discussed above, at note 17 and accompanying text.
    \28\ 15 U.S.C. 78l, 78m, 78n, 78o(d), 78p. Eligible contract 
participants and other persons instead should refer to the interim 
final temporary rules issued by the Commission. See note 1, supra.
    \29\ Exchange Act Sections 15(b)(4) and 15(b)(6), 15 U.S.C. 
78o(b)(4) and (b)(6), grant the Commission authority to take action 
against broker-dealers and associated persons in certain situations.
    \30\ This exemption specifically does not extend to the Exchange 
Act provisions applicable to government securities, as set forth in 
Section 15C, 15 U.S.C. 78o-5, and its underlying rules and 
regulations. The exemption also does not extend to related 
definitions found at paragraphs (42) through (45) of Section 3(a), 
15 U.S.C. 78c(a). The Commission does not have authority under 
Section 36 to issue exemptions in connection with those provisions. 
See Exchange Act Section 36(b), 15 U.S.C. 78mm(b).
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    We are modifying this temporary conditional exemption by providing 
that ICE Clear Europe clearing members must be in material compliance 
with ICE Clear Europe rules to be eligible to take advantage of this 
exemption from Exchange Act requirements. This should promote 
compliance with the applicable CCP rules.

E. Extended Temporary General Exemption for Certain Registered Broker-
Dealers

    The 2009 ICE Clear Europe Order included a limited conditional 
exemption from Exchange Act requirements to registered broker-dealers 
in connection with their activities involving Cleared CDS. In crafting 
this temporary conditional exemption, we balanced the need to avoid 
creating disincentives to the prompt use of CCPs against the critical 
role that certain broker-dealers play in promoting market integrity and 
protecting customers (including broker-dealer customers that are not 
involved with CDS transactions).
    In light of the risk management and systemic benefits in continuing 
to facilitate CDS clearing by ICE Clear Europe through targeted 
exemptions to registered broker-dealers, the Commission finds pursuant 
to Section 36 of the Exchange Act that it is necessary or appropriate 
in the public interest and is consistent with the protection of 
investors to exercise its authority to extend this temporary registered 
broker-dealer exemption from certain Exchange Act requirements through 
November 30, 2010.\31\
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    \31\ The temporary exemption addressed above with regard to ICE 
Clear Europe, certain clearing members and certain eligible contract 
participants are not available to persons that are registered as 
broker-dealers with the Commission (other than those that are notice 
registered pursuant to Exchange Act Section 15(b)(11)). Exchange Act 
Section 15(b)(11) provides for notice registration of certain 
persons that effect transactions in security futures products. 15 
U.S.C. 78o(b)(11).
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    Consistent with the temporary exemptions discussed above, and 
solely with respect to Cleared CDS, we are temporarily exempting 
registered broker-dealers from provisions of the Exchange Act and the 
rules and regulations thereunder that do not apply to security-based 
swap agreements. As discussed above, we are not excluding registered 
broker-dealers from Exchange Act provisions that explicitly apply in 
connection with security-based swap agreements or from related 
enforcement authority provisions.\32\ As above, and

[[Page 22661]]

for similar reasons, we are not exempting registered broker-dealers 
from: sections 5, 6, 12, 13, 14, 15(b)(4), 15(b)(6), 15(d), 16 and 17A 
of the Exchange Act.\33\
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    \32\ See notes 20 and 26, supra. As noted above, broker-dealers 
also would be subject to Section 15(c)(1) of the Exchange Act, which 
prohibits brokers and dealers from using manipulative or deceptive 
devices, because that provision explicitly applies in connection 
with security-based swap agreements. In addition, to the extent the 
Exchange Act and any rule or regulation thereunder imposes any other 
requirement on a broker-dealer with respect to security-based swap 
agreements (e.g., requirements under Rule 17h-1T to maintain and 
preserve written policies, procedures, or systems concerning the 
broker or dealer's trading positions and risks, such as policies 
relating to restrictions or limitations on trading financial 
instruments or products), these requirements would continue to apply 
to broker-dealers' activities with respect to Cleared CDS.
    \33\ We also are not exempting those members from provisions 
related to government securities, as discussed above.
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    Further we are not exempting registered broker-dealers from the 
following additional provisions under the Exchange Act: (1) Section 
7(c),\34\ regarding the unlawful extension of credit by broker-dealers; 
(2) Section 15(c)(3),\35\ regarding the use of unlawful or manipulative 
devices by broker-dealers; (3) Section 17(a),\36\ regarding broker-
dealer obligations to make, keep and furnish information; (4) Section 
17(b),\37\ regarding broker-dealer records subject to examination; (5) 
Regulation T,\38\ a Federal Reserve Board regulation regarding 
extension of credit by broker-dealers; (6) Exchange Act Rule 15c3-1, 
regarding broker-dealer net capital; (7) Exchange Act Rule 15c3-3, 
regarding broker-dealer reserves and custody of securities; (8) 
Exchange Act Rules 17a-3 through 17a-5, regarding records to be made 
and preserved by broker-dealers and reports to be made by broker-
dealers; and (9) Exchange Act Rule 17a-13, regarding quarterly security 
counts to be made by certain exchange members and broker-dealers.\39\ 
Registered broker-dealers must comply with these provisions in 
connection with their activities involving non-excluded CDS because 
these provisions protect investors, provide safeguards with respect to 
the financial responsibility and related practices of broker-dealers, 
and safeguard against fraud and abuse.\40\
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    \34\ 15 U.S.C. 78g(c).
    \35\ 15 U.S.C. 78o(c)(3).
    \36\ 15 U.S.C. 78q(a).
    \37\ 15 U.S.C. 78q(b).
    \38\ 12 CFR 220.1 et seq.
    \39\ Solely for purposes of this temporary exemption, in 
addition to the general requirements under the referenced Exchange 
Act sections, registered broker-dealers shall only be subject to the 
enumerated rules under the referenced Exchange Act sections.
    \40\ See 15 U.S.C. 78o(c)(3) (directing the Commission to 
establish minimum financial responsibility requirements for broker-
dealers, including rules relating to the acceptance of custody, the 
use of customers' securities and the carrying and use of customers' 
deposits or credit balances).
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G. Solicitation of Comments

    When we granted the 2009 ICE Clear Europe Order, we requested 
comment on all aspects of the exemptions. We received no comments in 
response. In connection with this Order extending the exemptions 
granted in connection with CDS clearing by ICE Clear Europe, we 
reiterate our request for comments on all aspects of the exemptions.
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/other.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number S7-16-09 on the subject line; or
     Use the Federal eRulemaking Portal (http://
www.regulations.gov/). Follow the instructions for submitting comments.

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 S7-16-09. This file number 
should be included on the subject line if e-mail is used. To help us 
process and review your comments more efficiently, please use only one 
method. We will post all comments on the Commission's Internet Web site 
(http://www.sec.gov/rules/other.shtml). Comments are also 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 a.m. and 3 p.m. All comments received will 
be posted without change; we do not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly.

III. Conclusion

    It is hereby ordered, pursuant to section 36(a) of the Exchange 
Act, that, through November 30, 2010:
    (a) Exemption from section 17A of the Exchange Act.
    ICE Clear Europe Limited (``ICE Clear Europe'') shall be exempt 
from section 17A of the Exchange Act solely to perform the functions of 
a clearing agency for Cleared CDS (as defined in paragraph (e)(1) of 
this Order), subject to the following conditions:
    (1) ICE Clear Europe shall make available on its Web site its 
annual audited financial statements.
    (2) ICE Clear Europe shall keep and preserve at least one copy of 
all documents, including all correspondence, memoranda, papers, books, 
notices, accounts, and other such records as shall be made or received 
by it relating to its Cleared CDS clearance and settlement services. 
These records shall be kept for at least five years and for the first 
two years shall be held in an easily accessible place.
    (3) ICE Clear Europe shall supply information and periodic reports 
relating to its Cleared CDS clearance and settlement services as may be 
reasonably requested by the Commission and, subject to cooperation with 
the FSA and upon such terms and conditions as may be agreed between the 
FSA and the Commission, shall provide access to the Commission to 
conduct on-site inspections of all facilities (including automated 
systems and systems environment), records, and personnel related to ICE 
Clear Europe's Cleared CDS clearance and settlement services.
    (4) ICE Clear Europe shall notify the Commission, on a monthly 
basis, of any material disciplinary actions taken against any of its 
members using its Cleared CDS clearance and settlement services, 
including the denial of services, fines, or penalties. ICE Clear Europe 
shall notify the Commission promptly when ICE Clear Europe terminates 
on an involuntary basis the membership of an entity that is using ICE 
Clear Europe's Cleared CDS clearance and settlement services. Both 
notifications shall describe the facts and circumstances that led to 
the ICE Clear Europe's disciplinary action.
    (5) ICE Clear Europe shall notify the Commission of all changes to 
its rules, procedures, and any other material events affecting its 
Cleared CDS clearance and settlement services, including its fee 
schedule and changes to risk management practices, not less than one 
day prior to effectiveness or implementation of such changes or, in 
exigent circumstances, as promptly as reasonably practicable under the 
circumstances. If ICE Clear Europe gives notice to, or seeks approval 
from, the FSA regarding any other changes to its rules regarding its 
Cleared CDS clearance and settlement services, ICE Clear Europe will 
also provide notice to the Commission. All such rule changes will be 
posted on ICE Clear Europe's Web site. Such notifications will not be 
deemed rule filings that require Commission approval.
    (6) ICE Clear Europe shall provide the Commission with reports 
prepared by independent audit personnel concerning its Cleared CDS 
clearance and settlement services that are generated in accordance with 
risk assessment of the areas set forth in the Commission's Automation 
Review Policy Statements. ICE Clear Europe

[[Page 22662]]

shall provide the Commission with annual audited financial statements 
for ICE Clear Europe prepared by independent audit personnel.
    (7) ICE Clear Europe shall notify the Commission at the same time 
it notifies the FSA in accordance with FSA REC 3.15 and FSA REC 3.16 
regarding the suspension of services or inability to operate its 
facilities in connection with its Cleared CDS clearance and settlement 
services.
    (8) ICE Clear Europe, directly or indirectly, shall make available 
to the public on terms that are fair and reasonable and not 
unreasonably discriminatory: (i) All end-of-day settlement prices and 
any other prices with respect to Cleared CDS that ICE Clear Europe may 
establish to calculate mark-to-market margin requirements for ICE Clear 
Europe Clearing Members; and (ii) any other pricing or valuation 
information with respect to Cleared CDS as is published or distributed 
by ICE Clear Europe.
    (b) Exemption from Sections 5 and 6 of the Exchange Act
    (1) ICE Clear Europe shall be exempt from the requirements of 
Sections 5 and 6 of the Exchange Act and the rules and regulations 
thereunder in connection with its calculation of mark-to-market prices 
for open positions in Cleared CDS, subject to the following conditions:
    (i) ICE Clear Europe shall report the following information with 
respect to the calculation of mark-to-market prices for Cleared CDS to 
the Commission within 30 days of the end of each quarter, and preserve 
such reports during the life of the enterprise and of any successor 
enterprise:
    (A) The total dollar volume of transactions executed during the 
quarter, broken down by reference entity, security, or index; and
    (B) The total unit volume and/or notional amount executed during 
the quarter, broken down by reference entity, security, or index;
    (ii) ICE Clear Europe shall establish and maintain adequate 
safeguards and procedures to protect members' confidential trading 
information. Such safeguards and procedures shall include: (A) limiting 
access to the confidential trading information of members to those 
employees of ICE Clear Europe who are operating the system or 
responsible for its compliance with this exemption or any other 
applicable rules; and (B) establishing and maintaining standards 
controlling employees of ICE Clear Europe trading for their own 
accounts. ICE Clear Europe must establish and maintain adequate 
oversight procedures to ensure that the safeguards and procedures 
established pursuant to this condition are followed; and
    (iii) ICE Clear Europe shall satisfy the conditions of the 
temporary exemption from Section 17A of the Exchange Act set forth in 
paragraphs (a)(1)-(8) of this Order.
    (2) Any ICE Clear Europe Clearing Member shall be exempt from the 
requirements of Section 5 of the Exchange Act to the extent such ICE 
Clear Europe Clearing Member uses any facility of ICE Clear Europe to 
effect any transaction in Cleared CDS, or to report any such 
transaction, in connection with ICE Clear Europe's clearance and risk 
management process for Cleared CDS.
    (c) Exemption for ICE Clear Europe, ICE Clear Europe Clearing 
Members, and certain eligible contract participants.
    (1) Persons eligible. The exemption in paragraph (c)(2) is 
available to:
    (i) ICE Clear Europe;
    (ii) Any ICE Clear Europe Clearing Member (as defined in paragraph 
(e)(2) of this Order), which is not a broker or dealer registered under 
Section 15(b) of the Exchange Act (other than paragraph (11) thereof); 
and
    (iii) Any eligible contract participant (as defined in Section 
1a(12) of the Commodity Exchange Act as in effect on the date of this 
Order (other than a person that is an eligible contract participant 
under paragraph (C) of that section)), other than: (A) An eligible 
contract participant that receives or holds funds or securities for the 
purpose of purchasing, selling, clearing, settling, or holding Cleared 
CDS positions for other persons; (B) an eligible contract participant 
that is a self-regulatory organization, as that term is defined in 
Section 3(a)(26) of the Exchange Act; or (C) a broker or dealer 
registered under Section 15(b) of the Exchange Act (other than 
paragraph (11) thereof).
    (2) Scope of exemption.
    (i) In general. Subject to the conditions specified in paragraph 
(c)(3) of this subsection, such persons generally shall, solely with 
respect to Cleared CDS, be exempt from the provisions of the Exchange 
Act and the rules and regulations thereunder that do not apply in 
connection with security-based swap agreements. Accordingly, under this 
exemption, those persons would remain subject to those Exchange Act 
requirements that explicitly are applicable in connection with 
security-based swap agreements (i.e., paragraphs (2) through (5) of 
Section 9(a), Section 10(b), Section 15(c)(1), paragraphs (a) and (b) 
of Section 16, Section 20(d) and Section 21A(a)(1) and the rules 
thereunder that explicitly are applicable to security-based swap 
agreements). All provisions of the Exchange Act related to the 
Commission's enforcement authority in connection with violations or 
potential violations of such provisions also remain applicable.
    (ii) Exclusions from exemption. The exemption in paragraph 
(c)(2)(i), however, does not extend to the following provisions under 
the Exchange Act:
    (A) Paragraphs (42), (43), (44), and (45) of Section 3(a);
    (B) Section 5;
    (C) Section 6;
    (D) Section 12 and the rules and regulations thereunder;
    (E) Section 13 and the rules and regulations thereunder;
    (F) Section 14 and the rules and regulations thereunder;
    (G) Paragraphs (4) and (6) of Section 15(b);
    (H) Section 15(d) and the rules and regulations thereunder;
    (I) Section 15C and the rules and regulations thereunder;
    (J) Section 16 and the rules and regulations thereunder; and
    (K) Section 17A (other than as provided in paragraph (a)).
    (3) Conditions for ICE Clear Europe Clearing Members. Any ICE Clear 
Europe Clearing Members relying on this exemption must be in material 
compliance with the rules of ICE Clear Europe.
    (d) Exemption for certain registered broker-dealers.
    A broker or dealer registered under Section 15(b) of the Exchange 
Act (other than paragraph (11) thereof) shall be exempt from the 
provisions of the Exchange Act and the rules and regulations thereunder 
specified in paragraph (c)(2), solely with respect to Cleared CDS, 
except:
    (1) Section 7(c);
    (2) Section 15(c)(3);
    (3) Section 17(a);
    (4) Section 17(b);
    (5) Regulation T, 12 CFR 200.1 et seq.;
    (6) Rule 15c3-1;
    (7) Rule 15c3-3;
    (8) Rule 17a-3;
    (9) Rule 17a-4;
    (10) Rule 17a-5; and
    (11) Rule 17a-13.
    (e) Definitions.
    For purposes of this Order:
    (1) ``Cleared CDS'' shall mean a credit default swap that is 
submitted (or offered, purchased, or sold on terms providing for 
submission) to ICE Clear Europe, that is offered only to, purchased 
only by, and sold only to eligible contract participants (as defined in 
Section 1a(12) of the Commodity

[[Page 22663]]

Exchange Act as in effect on the date of this Order (other than a 
person that is an eligible contract participant under paragraph (C) of 
that section)), and in which:
    (i) The reference entity, the issuer of the reference security, or 
the reference security is one of the following:
    (A) An entity reporting under the Exchange Act, providing 
Securities Act Rule 144A(d)(4) information, or about which financial 
information is otherwise publicly available;
    (B) A foreign private issuer whose securities are listed outside 
the United States and that has its principal trading market outside the 
United States;
    (C) A foreign sovereign debt security;
    (D) An asset-backed security, as defined in Regulation AB, issued 
in a registered transaction with publicly available distribution 
reports; or
    (E) An asset-backed security issued or guaranteed by Fannie Mae, 
Freddie Mac or Ginnie Mae; or
    (ii) The reference index is an index in which 80 percent or more of 
the index's weighting is comprised of the entities or securities 
described in subparagraph (i).
    (2) ``ICE Clear Europe Clearing Member'' shall mean any clearing 
member of ICE Clear Europe that submits Cleared CDS to ICE Clear Europe 
for clearance and settlement exclusively (i) for its own account or 
(ii) for the account of an affiliate that controls, is controlled by, 
or is under common control with the clearing member of ICE Clear 
Europe.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-9932 Filed 4-28-10; 8:45 am]
BILLING CODE 8011-01-P

