[Federal Register Volume 84, Number 117 (Tuesday, June 18, 2019)]
[Notices]
[Pages 28372-28374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-12786]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86092; File No. SR-ICEEU-2019-008]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change Relating 
to Publication of a Circular Regarding the Interpretation of References 
to EU Legislation in the Clearing Rules Post-Brexit

June 12, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 28373]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 31, 2019, ICE Clear Europe Limited (``ICE Clear Europe'' or the 
``Clearing House'') 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)(1) thereunder,\4\ 
so that the proposal was immediately effective upon filing with the 
Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    ICE Clear Europe is proposing to publish a Circular, titled ICE 
Clear Europe: Interpretation of References to EU Legislation in the 
Clearing Rules Post-Brexit (the ``Circular''), to provide guidance as 
to the interpretation of references to European Union (``EU'') 
directives and regulations in the ICE Clear Europe Clearing Rules and 
Procedures in the event that the United Kingdom (``UK'') ceases to be 
an EU member state, in circumstances where no withdrawal agreement 
stipulating that EU laws will continue to apply in the UK has been 
agreed between the UK and the EU-27. The interpretation contained in 
the Circular will only apply under such circumstances.

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    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

(a) Purpose
    The purpose of the proposed Circular is to provide guidance with 
respect to the interpretation of certain provisions in the Rules and 
Procedures in the event that the UK ceases to be an EU member state, in 
circumstances where no withdrawal agreement has been agreed between the 
UK and the EU-27 stipulating that EU laws will continue to apply in the 
UK. In such circumstances, directly applicable EU directives and 
regulations will be incorporated into UK law with modifications on 
``exit day'' through the European Union (Withdrawal) Act 2018 (the 
``EUWA''), which would result in there being two versions of a directly 
applicable EU legislative act which may be applicable to the Rules: (1) 
The version as enacted in the EU, directly applicable throughout the EU 
(and, in certain cases, the EEA); and (2) the version incorporated into 
UK law (referred to as ``on-shored'').
    There are various references to EU directives and regulations in 
the Rules and Procedures; others may arise by implication by virtue of 
definitions such as that of ``Applicable Laws'' or ``Governmental 
Authority'' (Rule 101). ICE Clear Europe is proposing to publish the 
Circular to provide guidance as to the proper interpretation of such 
references in the event of the UK leaving the EU without withdrawal 
agreement that provides for continued applicability of EU law in the 
UK. The guidance is intended to be consistent with the views of legal 
practitioners in the UK with respect to references to EU directives and 
regulations in English law contracts generally, but applied to the 
particular definitions and situations that arise under the Rules and 
Procedures.
    The Circular sets out several principles that will be applied by 
ICE Clear Europe when interpreting references to an EU regulation or 
directive in its Rules:
    1. Where the reference concerns an obligation on, or otherwise 
applies to, the Clearing House or a UK Clearing Member:
    [cir] Where the reference is to an EU regulation, it should be 
interpreted as the regulation as it forms part of UK domestic law 
through section 3 of the EUWA, and as amended by UK law from time to 
time; and
    [cir] Where the reference is to an EU directive, it should be 
interpreted as the UK domestic law corresponding to the directive or 
provision thereof.
    2. Where the reference concerns an obligation on, or otherwise 
applies to, an EU Clearing Member:
    [cir] Where the reference is to an EU regulation, it should be 
interpreted as the regulation as it applies in the EU, and as amended 
by EU law from time to time; and
    [cir] Where the reference is to an EU directive, it should be 
interpreted as the EU directive, as amended by EU law from time to time 
and as implemented in the relevant member state of the EU Clearing 
Member.
    The Circular also addresses situations where both sets of laws 
apply, for example for entities established in the UK with an EU branch 
(or vice versa) or which continue to be regulated in both systems under 
cross-border licenses, the UK temporary permissions regime or other 
grandfathering arrangements. By way of example, it explains how Rule 
requirements that Clearing Members maintain sufficient capital and 
segregated accounts would require UK Clearing Members to comply with 
the on-shored version of the applicable regulatory requirements, while 
EU Clearing Members would be required to comply with the existing EU 
regulations.
    The Circular further sets out certain exceptions to these general 
principles relating to the following:
     A reference to an EU law relating to emission allowance 
units issued under the EU Emissions Trading Scheme should be 
interpreted to continue to refer to the EU law since the UK no longer 
participates in the scheme;
     References to EU member state laws transposing or 
implementing an EU directive will be read to include UK laws 
corresponding to that EU directive;
     Certain references relating to the European Market 
Infrastructure Regulation (Regulation (EU) No 648/2012) and related EU 
authorities will be read to continue to refer to relevant EU law and 
authorities, for example in the context of ICE Clear Europe's status as 
a third country central counterparty thereunder; and
     References relating to EU data protection legislation are 
excluded, since these are addressed separately in ICE Clear Europe 
Circular C19/053 dated March 15, 2019.
(b) Statutory Basis
    ICE Clear Europe believes that the proposed rule change is 
consistent with the requirements of Section 17A of the Act \5\ and the 
regulations thereunder applicable to it, including the standards under 
Rule 17Ad-22.\6\ In particular, Section 17A(b)(3)(F) of the Act \7\ 
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

[[Page 28374]]

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 Circular would provide 
guidance with respect to the interpretation of the Rules that would 
apply to EU and UK Clearing Members and ICE Clear Europe upon the UK 
departure from the EU if there is no withdrawal agreement that provides 
for EU law to continue to apply in the UK. The interpretation would 
thus facilitate continued clearing by EU and UK Clearing Members in 
compliance with applicable law in relevant jurisdictions and promote 
the prompt and accurate clearance and settlement of transactions by 
such persons. As such, the interpretation is consistent with the 
safeguarding of securities and funds in the custody or control of the 
Clearing House or for which it is responsible, the protection of 
investors and the public interest.
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    \5\ 15 U.S.C. 78q-1.
    \6\ 17 CFR 240.17Ad-22.
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    Moreover, the interpretation is consistent with Rule 17Ad-
22(e)(1),\8\ which requires that each covered clearing agency 
establish, implement, maintain and enforce written policies and 
procedures reasonably designed to provide for a well-founded, clear, 
transparent, and enforceable legal basis for each aspect of its 
activities in all relevant jurisdictions. As discussed herein, the 
interpretation is designed to ensure that references to EU legislation 
in the Rules and Procedures are properly interpreted should the UK 
cease to be an EU member state with no withdrawal agreement stipulating 
that EU laws will continue to apply in the UK. The guidance set out in 
the Circular would facilitate continued clearing in light of the 
requirements of UK and EU law in those circumstances and would minimize 
the potential for disputes and legal uncertainty. ICE Clear Europe does 
not expect that the interpretation will adversely impact its ability to 
comply with the Act or any standards under Rule 17Ad-22.\9\
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    \8\ 17 CFR 240.17Ad-22(e)(1).
    \9\ 17 CFR 240.17Ad-22.
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(B) Clearing Agency's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed guidance in the 
Circular would have any impact, or impose any burden, on competition 
not necessary or appropriate in furtherance of the purpose of the Act. 
The guidance is will not change the substantive requirements of any 
Rules or Procedures but will clarify the proper interpretation of 
references to EU legislation in order to facilitate that the Clearing 
House and EU and UK Clearing Members continue to adhere to applicable 
laws and regulations. ICE Clear Europe does not believe the 
interpretation will in itself materially affect the cost of, or access 
to, clearing. As a result, ICE Clear Europe does not believe the 
proposed the rule change imposes any burden on competition that is 
inappropriate in furtherance of the purposes of the Act.

(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 
rule change.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and paragraph (f) of Rule 19b-4 \11\ 
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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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f).
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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 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-ICEEU-2019-008 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-2019-008. 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 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 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/clear-europe/regulation.
    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-2019-008 and should be 
submitted on or before July 9, 2019.

    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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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-12786 Filed 6-17-19; 8:45 am]
 BILLING CODE 8011-01-P


