
[Federal Register Volume 79, Number 137 (Thursday, July 17, 2014)]
[Notices]
[Pages 41710-41711]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16785]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72596; File No. SR-ICC-2014-07]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change To Revise End-of-Day Price Discovery 
Policies and Procedures

July 11, 2014.

I. Introduction

    On May 22, 2014, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change SR-ICC-2014-07 pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder.\2\ The 
proposed rule change was published for comment in the Federal Register 
on June 10, 2014.\3\ The Commission received no comment letters 
regarding the proposed change. For the reasons discussed below, the 
Commission is granting approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-72306 (June 4, 2014), 
79 FR 33243 (June 10, 2014) (SR-ICC-2014-07).
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II. Description

    ICC is proposing to amend the ICC End-of-Day Price Discovery 
Policies and Procedures (``EOD Pricing Policy'') to revise the 
expectations surrounding the unwind of any Firm Trade transaction.
    ICC contends that the proposed revision to ICC's EOD Pricing Policy 
is intended to make the policy more readily enforceable, while 
maintaining the same or similar level of incentive for ICC Clearing 
Participants to provide quality price submissions.
    ICC contends that ICC Clearing Participants (``CPs'') may be 
required from time to time, under the ICC EOD Pricing Policy, to enter 
into trades with other CPs as part of the ICC end-of-day price 
discovery process (``Firm Trade''). ICC contends that it does not 
require CPs to maintain Firm Trades as outstanding positions for any 
particular length of time. Prior to the operation of this proposed rule 
change, ICC has stated that the ICC EOD Pricing Policy requires CPs 
that elect to unwind a Firm Trade to do so ``at the then-current market 
price.'' ICC contends that there are practical difficulties with 
objectively determining whether an unwind transaction was executed at 
the ``then-current market price'' and therefore such policy is 
difficult to enforce. ICC proposes via this rule change to revise

[[Page 41711]]

the ICC EOD Pricing Policy to replace references to the ``then-current 
market price'' with the requirement that unwind transactions be 
executed in a competitive manner. Further, ICC proposes via this rule 
change to add the requirement that, upon request, CPs be able to 
demonstrate to ICC's satisfaction that such unwind transaction was 
executed in a competitive manner. Additionally, ICC proposes to add a 
non-exclusive list of examples of how CPs may be able to demonstrate 
competitive execution of unwind transactions, for example: (i) 
Execution on an available trading venue (e.g., a SEF or DCM); (ii) 
multiple dealer quotes received and execution of the unwind transaction 
at the best quoted price; or (iii) placement of the unwind transaction 
with an interdealer broker with price terms and instructions 
commensurate with a competitive execution.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \4\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if the 
Commission finds that such proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such self-regulatory organization. Section 17A(b)(3)(F) 
of the Act \5\ requires, among other things, that the rules of a 
clearing agency are designed to promote the prompt and accurate 
clearance and settlement of securities transactions and, to the extent 
applicable, derivative agreements, contracts, and transactions, to 
assure the safeguarding of securities and funds which are in the 
custody or control of the clearing agency or for which it is 
responsible and, in general, to protect investors and the public 
interest.
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    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds that the proposed revision to ICC's EOD 
Pricing Policy is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to ICC, in particular, to 
Section 17(A)(b)(3)(F).\6\ The Commission finds that the update to 
ICC's EOD Pricing Policy regarding Firm Trade unwind transactions 
clarifies the policy while maintaining the same or similar level of 
incentive for CPs to provide quality price submissions. Because of the 
clarification of the Firm Trade unwind requirements and the potential 
increase in the enforceability thereof, CPs may have a greater 
incentive to submit quality price submissions. Since quality price 
submissions are an integral part of the end-of-day pricing process, the 
Commission finds that the proposed rule change therefore promotes the 
prompt and accurate clearance and settlement of securities transactions 
and, to the extent applicable, derivative agreements, contracts and 
transactions and contributes to the safeguarding of securities and 
funds which are in the custody or control of ICC or for which it is 
responsible in a manner consistent with the Act and the regulations 
thereunder applicable to ICC.
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    \6\ Id.
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \7\ and the 
rules and regulations thereunder.
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    \7\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-ICC-2014-07) be, and 
hereby is, approved.\9\
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    \8\ 15 U.S.C. 78s(b)(2).
    \9\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16785 Filed 7-16-14; 8:45 am]
BILLING CODE 8011-01-P


