[Federal Register Volume 85, Number 103 (Thursday, May 28, 2020)]
[Notices]
[Pages 32066-32067]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11404]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88929; File No. SR-ICC-2020-003]


Self-Regulatory Organizations; ICE Clear Credit LLC; Order 
Approving Proposed Rule Change Relating to the Clearance of Additional 
Credit Default Swap Contracts

May 21, 2020.

I. Introduction

    On March 26, 2020, ICE Clear Credit LLC (``ICC'') filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (the 
``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
revise the ICC Rulebook (the ``Rules'') \3\ to provide for the 
clearance of an additional Standard Emerging Market Sovereign CDS 
contract (the ``EM Contract'') and additional Standard Western European 
Sovereign CDS contracts (collectively, the ``SWES Contracts''). The 
proposed rule change was published for comment in the Federal Register 
on April 7, 2020.\4\ The Commission did not receive comments regarding 
the proposed rule change. For the reasons discussed below, the 
Commission is approving the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Capitalized terms used but not defined herein have the 
meanings specified in the Rules.
    \4\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice 
of Filing of Proposed Rule Change Relating to the Clearance of 
Additional Credit Default Swap Contracts; Exchange Act Release No. 
88537 (April 1, 2020); 85 FR 19551 (April 7, 2020) (``Notice'').
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II. Description of the Proposed Rule Change

    The principal purpose of the proposed rule change is to revise the 
Rules to provide for the clearance of an additional EM Contract and 
additional SWES Contracts.\5\ Specifically, ICC proposes amending 
Subchapter 26D of its Rules to provide for the clearance of the 
additional EM Contract, the Republic of Croatia. This additional EM 
Contract has terms consistent with the other EM Contracts approved for 
clearing at ICC and governed by Subchapter 26D of the Rules. Minor 
revisions to Subchapter 26D (Standard Emerging Market Sovereign 
(``SES'') Single Name) are made to provide for clearing the additional 
EM Contract. Specifically, in Rule 26D-102 (Definitions), ``Eligible 
SES Reference Entities'' is modified to include the Republic of Croatia 
in the list of specific Eligible SES Reference Entities to be cleared 
by ICC.
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    \5\ The description that follows is excerpted from the Notice, 
85 FR 19551.
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    Additionally, ICC proposes amending Subchapter 26I of its Rules to 
provide for the clearance of the additional SWES Contracts, the 
Republic of Finland and the Hellenic Republic. These additional SWES 
Contracts have terms consistent with the other SWES Contracts approved 
for clearing at ICC and governed by Subchapter 26I of the Rules. Minor 
revisions to Subchapter 26I (Standard Western European Sovereign Single 
Name) are made to provide for clearing the additional SWES Contracts. 
Specifically, in Rule 26I-102 (Definitions), ``Eligible SWES Reference 
Entities'' is modified to include the Republic of Finland and the 
Hellenic Republic in the list of specific Eligible SWES Reference 
Entities to be cleared by ICC.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act directs the Commission to approve a 
proposed 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.\6\ Section 17A(b)(3)(F) of the Act requires, among other 
things, that the rules of ICC be designed to promote the prompt and 
accurate clearance and settlement of securities transactions and, to 
the extent applicable, derivative agreements, contracts, and 
transactions, as well as to assure the safeguarding of securities and 
funds which are in the custody or control of ICC or for which it is 
responsible.\7\
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    \6\ 15 U.S.C. 78s(b)(2)(C).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds that the proposed rule change is consistent 
with Section 17A(b)(3)(F) of the Act.\8\ The Commission has reviewed 
the terms and conditions of these additional contracts proposed for 
clearing and has determined that they are substantially similar to the 
other contracts listed in Subchapters 26D and 26I of the ICC Rules, all 
of which ICC currently clears, with the key difference being that the 
underlying reference obligations will be issuances by the Republic of 
Croatia, the Republic of Finland, and the Hellenic Republic. Moreover, 
after reviewing the Notice and ICC's Rules, policies and procedures, 
the Commission finds that the additional EM and SWES Contracts will be 
cleared pursuant to ICC's existing clearing arrangements and related 
financial safeguards, protections and risk management procedures. In 
addition, based on its own experience and expertise, including a review 
of data on volume, open interest, and the number of ICC clearing 
participants (``CPs'') that currently trade in the additional EM and 
SWES Contracts as well as certain model parameters for the additional 
EM and SWES Contracts, the Commission finds that ICC's rules, policies, 
and procedures are reasonably designed to price and measure the 
potential risk presented by these products, collect financial resources 
in proportion to such risk, and liquidate these products in the event 
of a CP default, all of which should help ensure ICC's ability to 
maintain the financial resources it needs to provide its critical 
services and function as a central counter party, thereby promoting the 
prompt and accurate settlement of EM and SWES Contracts and other 
credit default swap transactions. For the same reasons, the Commission 
believes that the proposed rule change should help assure the 
safeguarding of securities or funds in the custody or control of ICC, 
and would be consistent with the protection of investors and the public 
interest.
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    \8\ 15 U.S.C. 78q-1(b)(3)(F).
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    Therefore, the Commission finds that acceptance of the additional 
EM and SWES Contracts, on the terms and conditions set out in ICC's 
Rules, is consistent with the prompt and accurate clearance and 
settlement of securities transactions and derivative agreements, 
contracts, and transactions cleared by ICC and the safeguarding of 
securities and funds in the custody or control of ICC, within the 
meaning of Section 17A(b)(3)(F) of the Act.\9\
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    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act, 
and in particular, with the requirements of Section 17A(b)(3)(F) of the 
Act.\10\
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    \10\ 15 U.S.C. 78q-1(b)(3)(F).
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    It is therefore ordered pursuant to Section 19(b)(2) of the Act 
\11\ that the proposed rule change (SR-ICC-2020-003), be, and hereby 
is, approved.\12\
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    \11\ 15 U.S.C. 78s(b)(2).
    \12\ 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).


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-11404 Filed 5-27-20; 8:45 am]
BILLING CODE 8011-01-P


