[Federal Register Volume 84, Number 146 (Tuesday, July 30, 2019)]
[Notices]
[Pages 36987-36989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-16094]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86457; File No. SR-LCH SA-2019-004]


Self-Regulatory Organizations; LCH SA; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change, as Modified by 
Amendments No. 1 and No. 2, Relating to the Extension to Clients of 
CDSClear of the Fee Applicable by LCH SA on the Amount of Allocated 
Securities Collateral

July 24, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 9, 2019, Banque Centrale de Compensation, which conducts 
business under the name LCH SA (``LCH SA''), filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule change 
described in Items I, II and III below, which Items

[[Page 36988]]

have been prepared by LCH SA. On July 10, 2019, LCH SA filed Amendment 
No. 1 to the proposed rule change.\3\ On July 24, 2019, LCH SA filed 
Amendment No. 2 to the proposed rule change.\4\ LCH SA filed the 
proposal pursuant to Section 19(b)(3)(A) of the Act,\5\ and Rule 19b-
4(f)(2) \6\ thereunder, so that the proposal was effective upon filing 
with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change, as modified by Amendments 
No. 1 and No. 2 (hereafter referred to as the ``proposed rule 
change''), from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 corrected a technical issue with the initial 
filing of the proposed rule change but did not make any changes to 
the substance of the filing or the text of the proposed rule change.
    \4\ Amendment No. 2 provided a confidential Exhibit 3 to further 
substantiate statements made in the filing but did not make any 
changes to the substance of the filing or the text of the proposed 
rule change.
    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change, Security-Based Swap Submission, or Advance Notice

    The proposed rule change will extend to the clients of LCH SA 
CDSClear service the current fee applicable on the amount of allocated 
securities collateral posted by any clearing member or any other client 
of LCH SA.

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

    In its filing with the Commission, LCH SA 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. LCH SA 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, Security-Based Swap Submission, or 
Advance Notice

1. Purpose
    As specified in the table below, the current LCH SA fee grid 
charges a 10bp fee on the amount of allocated securities collateral, 
except for clients of LCH SA CDSClear service, which are free of 
charge.

                                   Current LCH SA CDSClear Collateral Fee Grid
----------------------------------------------------------------------------------------------------------------
                                                                        Cash collateral fee/spread
             Currency               Unsecured overnight --------------------------------------------------------
                                           index                 House                       Client
----------------------------------------------------------------------------------------------------------------
EUR..............................  EONIA...............  30 bps..............  15 bps.
GBP..............................  SONIA...............  35 bps..............  20 bps.
USD..............................  FEDFUND.............  30 bps..............  15 bps.
----------------------------------------------------------------------------------------------------------------
Allocated securities collateral fee/spread               House...............  Client
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
                                                         10 bps..............  Free of charge.
----------------------------------------------------------------------------------------------------------------

    The purpose of the proposed fee change is to align the CDSClear fee 
grid with other LCH SA business lines and introduce a new fee amount 
for securities collateral posted by CDSClear clients.
    No amendments to the LCH SA CDS Clearing Rules are required to 
effect these changes.
    As specified in Exhibit 5, the proposed change is for LCH SA 
CDSClear to charge a 10bp fee on the amount of allocated securities 
posted as collateral by the clients using CDSClear service.
2. Statutory Basis
    Section 17A(b)(3)(D) of the Act requires that the rules of a 
clearing agency provide for the equitable allocation of reasonable 
dues, fees, and other charges.\7\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

    LCH SA believes that proposing such clearing fee change is 
consistent with the requirements of Section 17A of the Act \8\ and the 
regulations thereunder applicable to it, and in particular provides for 
the equitable allocation of reasonable fees, dues, and other charges 
among clearing members and market participants by ensuring that 
clearing members and clients pay reasonable fees and dues for the 
services provided by LCH SA, within the meaning of Section 17A(b)(3)(D) 
of the Act.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

    The proposed clearing fee change is already applicable by LCH SA on 
the amount of allocated securities collateral posted by all clearing 
members and clients of Non-US Business'.\9\ The objective is to extend 
it to clients using CDSClear service and apply it equally to all market 
participants within the CCP.
---------------------------------------------------------------------------

    \9\ See the definition under Order Granting Application for 
Registration as a Clearing Agency and Request for Exemptive Relief, 
Order, Securities Exchange Act Release No. 34-79707; File No. 600-36 
(Dec. 29, 2016), 82 FR 1398 (Jan. 5, 2017) (available at https://www.federalregister.gov/documents/2017/01/05/2016-31940/self-regulatory-organizations-lch-sa-order-granting-application-for-registration-as-a-clearing).
---------------------------------------------------------------------------

    Further, LCH SA believes that the proposed fee amount is reasonable 
and has been set up at an appropriate level given the costs, expenses 
and revenues (to be) generated to LCH SA in providing such services.

B. Clearing Agency's Statement on Burden on Competition

    Section 17A(b)(3)(I) of the Act requires that the rules of a 
clearing agency not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.\10\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

    LCH SA does not believe that the proposed rule change would impose 
any burden on competition, as it is already applicable within the CCP 
and will also be extended to clients using CDSClear service for 
consistency purposes.
    Additionally, the proposed fee change will apply equally to all 
CDSClear clearing members and clients as well and does not adversely 
affect the ability of such clients or other market participants 
generally to engage in cleared transactions or to access clearing 
services.
    Further, LCH SA believes that the fee amount has been set up at an 
appropriate level given the costs and

[[Page 36989]]

expenses to LCH SA in offering the relevant clearing services.

C. Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants or Others

    Written comments relating to the proposed rule change have not been 
solicited or received but a consultation has been conducted with and 
feedback sought from CDSClear members. No comment or question has been 
received following this consultation. LCH SA will notify the Commission 
of any written comments received by LCH SA.

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

    The foregoing proposed rule change has become effective upon filing 
pursuant to Section 19(b)(3)(A) \11\ of the Act and Rule 19b-4(f)(2) 
\12\ thereunder because it establishes a fee or other charge imposed by 
LCH SA on its Clearing Members. At any time within 60 days of the 
filing of the proposed rule change, the Commission summarily may 
temporarily suspend such proposed 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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:
     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-LCH SA-2019-004 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-LCH SA-2019-004. 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 Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filings will also be available for inspection 
and copying at the principal office of LCH SA and on LCH SA's website 
at https://www.lch.com/resources/rules-and-regulations/proposed-rule-changes-0. 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-LCH SA-2019-004 and should 
be submitted on or before August 20, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-16094 Filed 7-29-19; 8:45 am]
BILLING CODE 8011-01-P


