
[Federal Register Volume 82, Number 121 (Monday, June 26, 2017)]
[Notices]
[Pages 28919-28920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-13231]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80978; File No. SR-ICEEU-2017-003]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of Amendment No. 1 and Order Approving Proposed Rule Change, 
as Modified by Amendment No. 1 Thereto, Relating to ICE Clear Europe's 
End-of-Day Price Discovery Policy

June 20, 2017.

I. Introduction

    On March 10, 2017, ICE Clear Europe Limited (``ICE Clear Europe'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change (SR-
ICEEU-2017-003) to amend ICE Clear Europe's CDS End-of-Day Price 
Discovery Policy (``EOD Price Discovery Policy'') to implement a new 
price submission process for Clearing Members. The proposed rule change 
was published for comment in the Federal Register on March 23, 2017.\3\ 
The Commission did not receive comments regarding the proposed changes. 
On May 1, 2017, the Commission extended the period in which to approve, 
disapprove, or institute proceedings to determine whether to disapprove 
the proposed rule change to June 21, 2017.\4\ On June 9, 2017, ICE 
Clear Europe filed Amendment No. 1 to the proposal.\5\ For the reasons 
discussed below, the Commission is approving the proposed rule changes, 
as modified by Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-80269 (March 17, 
2017), 82 FR 14925 (March 23, 2017) (SR-ICEEU-2017-003) 
(``Notice'').
    \4\ Securities Exchange Act Release No. 34-80566 (May 1, 2017), 
82 FR 21287 (May 5, 2017).
    \5\ ICE Clear Europe filed Amendment No. 1 to clarify that the 
implementation date for the proposed rule change will be July 10, 
2017, and to note that ICE Clear Europe will issue a circular 
confirming this timeline in advance of the July 10, 2017 
implementation date. Because Amendment No. 1 is a clarifying 
amendment that does not alter the substance of the propose rule 
change the Commission is not publishing it for comment.
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II. Description of the Proposed Rule Change

    ICE Clear Europe has proposed changes to its EOD Price Discovery 
Policy that are designed to implement a new price submission process. 
As part of its current price submission process, ICE Clear Europe 
requires Clearing Members to submit certain required price information 
to an intermediary, which ICE Clear Europe then obtains and uses as 
part of its price discovery process. The proposed rule changes would 
eliminate the use of the intermediary in the price submission process 
and instead require Clearing Members to submit required price 
information directly to ICE Clear Europe. In order to implement the 
direct price submission process, ICE Clear Europe proposed to amend its 
EOD Price Discovery Policy to (1) require Clearing Members establish 
direct connectivity with ICE Clear Europe and use a FIX API to provide 
ICE Clear Europe with the required price information, (2) add 
references to FIX API terminology, and (3) make revisions reflecting 
the replacement of existing trade date files with FIX API firm trade 
messages.\6\ Moreover, ICE Clear Europe proposed amending the Pricing 
Policy to note that ICE Clear Europe will send FIX API messages 
directly to Clearing Members, and to remove references to the 
intermediary and its ``Valuation Service API'' that ICE Clear Europe 
previously used.\7\ Although ICE Clear Europe proposed additional minor 
changes to the timing of various steps in the pricing process, these 
proposed changes would not affect the actual settlement submission 
windows.\8\
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    \6\ Notice, 82 FR at 14925.
    \7\ Id.
    \8\ Id.
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    In addition to the changes described above, ICE Clear Europe also 
proposed changes with respect to the format of information required to 
be submitted by Clearing Members for the CDX.NA.HY index. Moreover, ICE 
Clear Europe proposed modifications to the process for distributing 
end-of-day prices, which will result in ICE Clear Europe publishing 
separate messages setting forth end-of-day price information for single 
name and index CDS to Clearing Members.\9\
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    \9\ Id.

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[[Page 28920]]

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act directs the Commission to approve a 
propose rule change of a self-regulatory organization if it finds that 
such proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to such 
organization.\10\ Section 17A(b)(3)(F) of the Act requires, among other 
things, that the rules of a registered 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.\11\ Rule 17Ad-22(e)(17) requires, in 
relevant part, that a registered clearing agency establish, implement, 
maintain, and enforce written policies and procedures reasonably 
designed to manage the covered clearing agency's operational risk by 
identifying the plausible sources of operational risk, both internal 
and external, and mitigating their impact through the use of 
appropriate systems, policies, procedures, and controls, and by 
ensuring that systems have a high degree of security, resiliency, 
operational reliability, and adequate, scalable capacity.\12\
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    \10\ 15 U.S.C. 78s(b)(2)(C).
    \11\ 15 U.S.C. 78q-1(b)(3)(F).
    \12\ 17 CFR 240.17Ad-22(e)(17).
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    The Commission finds that the proposed rule change, which modifies 
ICE Clear Europe's EOD Price Discovery Policy to implement a direct 
price submission process for Clearing Members, is consistent with 
Section 17A of the Act and Rule 17Ad-22 thereunder. The proposed rule 
change is consistent with the requirements of Section 17A(b)(3)(F) that 
the rules of a registered 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. By reducing operational risk the proposed rule changes 
reduce the likelihood that ICE Clear Europe will be unable to complete 
its end-of-day price discovery process. Completion of the end-of-day 
price discovery process is a necessary and essential element in ICE 
Clear Europe's clearance and settlement processes. The Commission 
believes that the proposed changes should enhance ICE Clear Europe's 
ability to complete the necessary pricing process effectively and 
thereby promote the prompt and accurate clearance and settlement of 
derivative agreements, contracts and transactions consistent with 
Section 17A(b)(3)(F).
    For similar reasons, the proposed rule changes are also consistent 
with Rule 17Ad-22(e)(17) in that they are designed to reduce 
operational risk outside of ICE Clear Europe's control.\13\ The 
proposed rule changes are intended to reduce ICE Clear Europe's 
external operational risk by implementing an appropriate system that 
will allow ICE Clear Europe to exert greater control over the price 
submission process by requiring direct connection and communication 
between ICE Clear Europe and its Clearing Members instead of relying on 
an intermediary to collect price information needed for ICE Clear 
Europe's price discovery process. As a result, because ICE Clear Europe 
will be able to reduce its reliance on intermediaries, and thereby 
reduce operational risk that is outside of its control, the Commission 
finds that the proposed rule changes are consistent with the 
requirements of Rule 17Ad-22(e)(17).
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    \13\ Id.
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IV. Conclusion

    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
that the proposed rule change (SR-ICEEU-2017-003), as amended by 
Amendment No. 1 thereto, be, and hereby is, approved.\14\
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    \14\ 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.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-13231 Filed 6-23-17; 8:45 am]
BILLING CODE 8011-01-P


