[Federal Register Volume 85, Number 131 (Wednesday, July 8, 2020)]
[Notices]
[Pages 41082-41087]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14627]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89211; File No. SR-ICEEU-2020-002]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of Partial Amendment No. 1 and Order Granting Accelerated 
Approval of Proposed Rule Change, as Modified by Partial Amendment No. 
1, Relating to the ICE Clear Europe Investment Management Procedures 
and Treasury and Banking Services Policy

July 1, 2020.

I. Introduction

    On May 13, 2020, 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 
(the ``Act''),\1\ and Rule 19b-4,\2\ a proposed rule change to amend 
its Investment Management Procedures (the ``Procedures'') and its 
Treasury and Banking Services Policy, which would be renamed the 
Liquidity and Investment Management Policy (the ``Policy''). The 
proposed rule change was published for comment in the Federal Register 
on May 26, 2020.\3\ The Commission did not receive comments regarding 
the proposed rule change. On June 9, 2020, ICE Clear Europe filed 
Partial Amendment No. 1 to the proposed rule change.\4\ The Commission 
is publishing this notice to solicit comments on Partial Amendment No. 
1 from interested persons and, for the reasons discussed below, is 
approving the proposed rule change, as modified by Partial Amendment 
No. 1 (hereinafter the ``proposed rule change'') on an accelerated 
basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Self-Regulatory Organizations; ICE Clear Europe Limited; 
Notice of Filing of Proposed Rule Change, Security-Based Swap 
Submission or Advance Notice Relating to the ICE Clear Europe 
Investment Management Procedures and Treasury and Banking Services 
Policy (to be renamed Liquidity and Investment Management Policy), 
Exchange Act Release No. 88907 (May 19, 2020); 85 FR 31571 (May 26, 
2020) (SR-ICEEU-2020-002).
    \4\ Partial Amendment No.1 amended the Procedures, which are 
confidential Exhibit 5A to the filing, to specify that the ICE Clear 
Europe Treasury and Finance teams would conduct daily monitoring of 
investments against concentration limits and investment criteria.
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    As discussed below, the proposed rule change would amend the 
Procedures and the Policy following findings of an annual review 
conducted by ICE Clear Europe.\5\ The Procedures explain ICE Clear 
Europe's permitted investments and related concentration limits when 
investing ICE Clear Europe's cash, while the Policy set outs the 
overall principles that ICE Clear Europe applies to investing its cash. 
Broadly speaking, the amendments would expand the Procedures and the 
Policy to: (i) Apply them to investments of ICE Clear Europe's 
contributions to default resources (referred to below as ``skin in the 
game'') and capital that ICE Clear Europe maintains pursuant to 
applicable regulatory requirements (referred to below as ``regulatory 
capital''); (ii) facilitate ICE Clear Europe's use of central bank 
deposits; (iii) allow ICE Clear Europe to invest in additional types of 
instruments and rely on ICE Clear Europe's authorized investments in 
periods of insufficient market supply; (iv) permit ICE Clear Europe to 
use additional the types of collateral in reverse repurchase 
agreements; and (v) revise the process for monitoring, escalating, and 
remediating breaches, as well as the description of ICE Clear Europe's 
investment activities and board risk appetites.
---------------------------------------------------------------------------

    \5\ Capitalized terms not otherwise defined herein have the 
meanings assigned to them in the Procedures, the Policy, or the ICE 
Clear Europe rulebook, as applicable.
---------------------------------------------------------------------------

    In addition, the proposed rule change would make two minor changes 
to the Policy. As mentioned above, the proposed rule change would 
rename it the Liquidity and Investment Management Policy. The proposed 
rule

[[Page 41083]]

change would also delete the statement that the Policy constitutes ICE 
Clear Europe's liquidity risk management framework for purposes of 
EMIR. ICE Clear Europe is making this change because, for purposes of 
EMIR, its liquidity risk management framework also includes ICE Clear 
Europe's Liquidity Risk Management Procedures. Thus, this statement is 
incorrect.

A. Applying the Procedures and the Policy to Investments of ICE Clear 
Europe's Skin in the Game and Regulatory Capital

    The proposed rule change would amend the Procedures and the Policy 
so that both documents cover investment of ICE Clear Europe's skin in 
the game and regulatory capital. Currently, the Procedures state that 
their overall purpose is to set out the investments that are permitted 
when investing or securing cash received from Clearing Members and to 
set out constraints on those investments such as concentration limits, 
credit ratings, and maturity limits, as well as any additional 
considerations in times of insufficient market supply of approved 
investments. The proposed rule change would amend this slightly to 
state that the Procedures address permitted investments and related 
concentration limits when investing or securing cash received from 
Clearing Members as well as when investing or securing ICE Clear 
Europe's skin in the game and regulatory capital.
    Next, the proposed rule change would rename Subsection 2.1 of the 
Procedures from Investment Management Objectives to Investment 
Management Objective and further amend this section to state that ICE 
Clear Europe's investment management objective is to safeguard the 
principal of the cash (which would include ICE Clear Europe's skin in 
the game and regulatory capital) rather than Clearing Members' cash, as 
currently stated. Consistent with expanding the scope of the Procedures 
to cover investments of ICE Clear Europe's skin in the game and 
regulatory capital, ICE Clear Europe is making this change so the 
Procedures as amended would not be limited to safeguarding Clearing 
Members' cash.
    Next, the proposed rule change would specify in the Procedures the 
instruments in which ICE Clear Europe would be permitted to invest its 
skin in the game and regulatory capital. With respect to skin in the 
game, the proposed rule change would specify that the table of 
authorized investments applicable to investments of Clearing Member 
cash would also apply to skin in the game, and thus ICE Clear Europe 
would be allowed to invest its skin in the game in the same manner as 
it invests Clearing Member cash, as discussed further below.
    With respect to regulatory capital, the proposed rule change would 
add a table of authorized investments to the Procedures that would 
apply to investments of ICE Clear Europe's regulatory capital. This 
table would list the instruments in which ICE Clear Europe may invest 
its regulatory capital. For each instrument, the table would further 
specify: (i) The maximum issuer or counterparty concentration limits; 
(ii) the maximum portfolio concentration limits; (iii) the maximum 
maturity; and (iv) the minimum credit ratings of the instrument or 
allowed issuers of the instrument. Under this proposed new table, ICE 
Clear Europe would be able to invest its regulatory capital in direct 
purchases of US, UK, and EU sovereign bonds and US, UK, and EU 
government agency bonds, each with a maximum maturity of 90 days. The 
US and UK sovereign and government agency bonds would have no issuer 
concentration limit and a portfolio concentration limit of 20% (for 
sovereign bonds) and 25% (for government agency bonds) of the total USD 
or GBP balance, as applicable, in a single issue. The EU sovereign and 
government agency bonds would have a maximum counterparty concentration 
limit of 25% of the Euro balance in a single issuer. The proposed new 
table would further require that US sovereign bonds issued by the US 
government, UK sovereign bonds be issued by the UK government, and EU 
sovereign bonds be issued by the German, French, Belgian or Dutch 
governments. The minimum credit ratings for all government agency bonds 
would be AA-from at least two rating organizations.
    Finally, the proposed rule change would amend the Policy consistent 
with these changes to the Procedures. Specifically, in Section 1 of the 
Policy, the proposed rule change would amend the statement that the 
Policy sets out the principles applied to the cash and collateral 
management functions of ICE Clear Europe for Clearing Member assets by 
deleting the specific reference to Clearing Member assets. As amended, 
the purpose of the Policy would be to set out the principles applied to 
the cash and collateral management functions of ICE Clear Europe. The 
proposed rule change is thus amending the scope of the policy so that 
it is not limited to Clearing Member assets, which is necessary given 
that the Procedures, as amended, would apply to ICE Clear Europe's 
investment of its skin in the game and regulatory capital. Similarly, 
the proposed rule change would amend Section 2 of the Policy to clarify 
that ICE Clear Europe's investment management functions include 
investing ICE Clear Europe's skin in the game and regulatory capital, 
consistent with the change to the Procedures described above. Finally, 
the proposed rule change would amend Section 3.3.1 of the Policy, which 
currently refers to ICE Clear Europe's investment management objective 
of safeguarding the principal of Clearing Members' cash, to refer to 
safeguarding the principal of the cash, because use of the general term 
``cash'' would include ICE Clear Europe's skin in the game and 
regulatory capital.

B. Facilitating Use of Central Bank Deposits and Other Amendments to 
Investment Considerations

    The proposed rule change would amend the list of overall investment 
considerations found in Section 2 of the Procedures to facilitate ICE 
Clear Europe's use of central bank deposits and make other updates. The 
overall investment considerations are a list of criteria that ICE Clear 
Europe considers when making investments. Currently, the overall 
investment considerations are that investments may only be made with 
Approved Financial Institutions (including investment agents and 
investment counterparties); at least 50% of the investable portfolio in 
each currency should be invested in overnight reverse repurchase 
agreements; the portfolio of non-overnight investments should have a 
variety of maturity dates; funds from customers of Futures Commission 
Merchant (``FCM'') Clearing Members must be segregated from those of 
other Clearing Members, be held in Permitted Depositories, and only 
invested in overnight reverse repos and direct purchases of US 
sovereign obligations; and purchased securities are intended to be held 
until maturity in order to minimize the impact of market risk. The 
proposed rule change would amend this list of investment considerations 
to add a statement that investments must be denominated in Euros, Great 
British Pounds, or Dollars, which currencies would match the 
investments permitted under the Procedures. The proposed rule change 
would also delete the requirement that at least 50% of the investable 
portfolio in each currency should be invested in overnight reverse 
repurchase agreements and replace it with a requirement that no more 
than 5% of the investible funds should be held as unsecured cash each 
calendar month. ICE Clear Europe is making this change to facilitate 
its use of central bank accounts to hold cash, which would be 
considered secured and thus

[[Page 41084]]

outside of the 5% limit. Moreover, the proposed rule change would amend 
the requirement regarding investment of funds from customers of FCM 
Clearing Members to change the wording slightly by, for example, 
changing ``O/N'' to ``overnight'' and changing ``Obligations'' to 
``Bonds.'' Finally, the proposed rule change would shorten the wording 
of the requirement regarding holding purchased securities but would 
retain the substance that ICE Clear Europe intends to hold purchased 
securities until maturity.

C. Allowing ICE Clear Europe to Invest in Additional Types of 
Instruments and Relying on ICE Clear Europe's Authorized Investments in 
Periods of Insufficient Market Supply

    The proposed rule change would amend the Procedures to expand the 
investments in which ICE Clear Europe may invest Clearing Member cash 
and would, as discussed above, allow ICE Clear Europe to invest its 
skin in the game in these same instruments. Currently the Procedures 
contain a table that lists each instrument in which ICE Clear Europe 
may invest Clearing Member cash. This table then describes, for each 
instrument for investment: (i) The maximum issuer or counterparty 
concentration limits; (ii) the maximum portfolio concentration limits; 
(iii) the maximum maturity; and (iv) the minimum credit ratings of the 
instrument or allowed issuers of the instrument. The proposed rule 
change would retain this table and the permitted investments currently 
listed there: Reverse repurchase agreements; US, UK, and EU sovereign 
obligations; central bank obligations; and commercial bank obligations. 
The proposed rule change would revise the table by expanding it to 
cover investments of skin in the game and adding US, UK, and EU 
government agency bonds as instruments for investment. The proposed 
rule change would specify the maximum issuer or counterparty 
concentration limits, the maximum portfolio concentration limits, the 
maximum maturity, and the minimum credit ratings for these government 
agency bonds. The proposed rule change also would change sovereign 
``obligations'' to sovereign ``bonds''; change central bank 
``obligations'' to central bank ``deposits''; and specify that the 
concentration limits for reverse repos apply per counterparty family. 
Similarly, the proposed rule change would specify for purchases of EU 
sovereign bonds that the maximum issuer limits apply per EU government 
issuer and would eliminate the minimum credit rating and instead 
require that the German, French, Belgian, or Dutch governments issue 
the bonds. Similarly, the proposed rule change would eliminate the 
minimum credit rating for US and UK sovereign bonds and instead only 
require that the US or UK government issue the bonds. Finally, with 
respect to commercial bank obligations the proposed rule change would 
also change ``obligations'' to ``deposits'' and would revise the entry 
for maximum issuer or counterparty concentration limits to note that 
for commercial banks, these limits are set separately as unsecured cash 
limits for financial service providers (which are set out in ICE Clear 
Europe's Unsecured Credit Limits Procedures).
    The proposed rule change also would amend the Glossary section of 
the Procedures to make changes consistent with those described above. 
Specifically, the proposed rule change would remove the terms Central 
Bank Obligations and Commercial Bank Obligations as no longer necessary 
because the amended Procedures would refer to central bank deposits and 
commercial bank deposits instead. The proposed rule change would revise 
the term EU Sovereign Obligations to the more general defined term, 
Government Agency Bonds, which would be defined as bonds issued by or 
that have their principal and interest fully guaranteed by their 
government. The proposed rule change also would clarify the wording of 
the definition for the term Permitted Investment Counterparties for FCM 
Customer Funds. Similar to the changes described above, the proposed 
rule change would revise references to UK Sovereign Obligations and US 
Sovereign Obligations to UK Sovereign Bonds and US Sovereign Bonds. 
Finally, the proposed rule change would add a definition for 
Supranational Obligations, which, as described above, the proposed rule 
change would add to the list of permitted collateral for repurchase 
transactions.
    Finally, the Procedures currently contain a section that describes 
the investments that ICE Clear Europe could make in periods where the 
market supply of authorized investments is not sufficient to meet ICE 
Clear Europe's investment needs. The proposed rule change would delete 
this section from the Procedures. ICE Clear Europe no longer considers 
this section necessary because it believes that the amended table of 
authorized investments and associated limits, as described above, would 
provide sufficient flexibility to permit ICE Clear Europe to manage 
changes in supply of particular types of investments.

D. Permitting ICE Clear Europe To Use Additional Types of Collateral in 
Reverse Repurchase Agreements

    The Procedures currently set out a table that describes the 
collateral acceptable for a reverse repurchase agreement, which 
specifies the currency of the agreement, the currency of the 
collateral, the credit rating, the securities used as collateral, and 
the haircut applied by ICE Clear Europe. The proposed rule change would 
amend this table to allow ICE Clear Europe to use additional collateral 
in repurchase agreements. Currently, the Procedures permit the use of 
EU, UK, and US sovereign obligations as collateral. As amended, the 
Procedures would continue to permit the use of EU, UK, and US sovereign 
bonds, as well as EU, UK, and US supranational obligations and US 
government agency bonds. The proposed rule change would keep the 
current required credit rating of AA-/Aa3 and the current required 2% 
haircut. The proposed rule change also would expand the scope of 
permitted collateral to allow cross-currency repo agreements, such as 
an agreement denominated in Euros with collateral in UK pounds or 
dollars. For these cross-currency repurchase agreements, and 
transactions involving supranational obligations and US government 
agency bonds, the haircut would be 4%.
    While expanding the collateral permitted under repurchase 
agreements, the proposed rule change also would amend the Procedures to 
specify that ICE Clear Europe's preferred form of collateral is 
sovereign bonds in the same currency as the reverse repurchase 
transaction. The proposed rule change also would amend the Procedures 
to require that ICE Clear Europe's Head of Treasury and Chief Risk 
Officer review the use of non-preferred collateral monthly.
    Finally, in the section describing additional considerations for 
reverse repurchase agreements, the proposed rule change would revise 
some of the wording by changing the reference to ICE Clear Europe's 
Treasury and Banking Services group to Treasury and simplifying the 
description of maturity definitions.

E. Monitoring, Escalating, and Remediating Breaches, Investment 
Activities, and Board Risk Appetites

    Finally, the proposed rule change would revise the process for 
monitoring, escalating, and remediating breaches of investment criteria 
and concentration limits, revise the description of ICE

[[Page 41085]]

Clear Europe's investment activities, and revise the description of 
board risk appetites.
    Currently, the Procedures require that breaches of the 
concentration limits be escalated to the Risk Oversight Department and 
Compliance team and that the investment portfolio be rebalanced to 
return within the concentration limits. The proposed rule change would 
amend this slightly to require that both breaches of the concentration 
limits and investment criteria be escalated and further to require that 
the investment portfolio be rebalanced to comply with the concentration 
limits and investment criteria. Moreover, the proposed rule change 
would add a requirement that ICE Clear Europe's Treasury and Finance 
teams, on a daily basis, monitor investments against the concentration 
limits and investment criteria.
    Similarly, in both the background section of the Policy and Section 
6, the proposed rule change would replace specific references to ICE 
Clear Europe's Treasury and Banking Services team and their activities 
to refer generally to ICE Clear Europe and its liquidity and investment 
management activities. ICE Clear Europe is making this change to 
reflect the fact that other groups at ICE Clear Europe, such as 
Finance, perform the liquidity and investment management activities 
that are within the scope of the Policy.
    Finally, the proposed rule change would delete a statement in the 
background section of the Policy that ICE Clear Europe's Treasury and 
Banking Services team operates within the risk appetites set by the 
board and in compliance with applicable regulations. As discussed, the 
Policy would apply to other groups at ICE Clear Europe and not just the 
Treasury Banking Services Team. Moreover, ICE Clear Europe believes 
this specific statement is unnecessary because board-adopted risk 
appetites apply to all activities of ICE Clear Europe anyway.

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\ For the reasons given below, the Commission finds that 
the proposed rule change is consistent with Section 17A(b)(3)(F) of the 
Act \7\ and Rule 17Ad-22(e)(1), (e)(2)(v), and (e)(16).\8\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(2)(C).
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
    \8\ 17 CFR 240.17Ad-22(e)(1), (e)(2)(v), (e)(16).
---------------------------------------------------------------------------

A. Consistency With Section 17A(b)(3)(F) of the Act

    Section 17A(b)(3)(F) of the Act requires, among other things, that 
the rules of ICE Clear Europe 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 ICE Clear Europe or for 
which it is responsible.\9\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The Commission believes that, by applying the Procedures and the 
Policy to investments of ICE Clear Europe's skin in the game and 
regulatory capital, the proposed rule change should help to ensure that 
such skin in the game and regulatory capital are invested in accordance 
with the principles and processes specified in the Procedures and the 
Policy. Because these principles and processes generally should help to 
ensure that cash is invested reasonably, conservatively, and in a 
manner that protects against loss, the Commission believes that 
application of the Procedures and the Policy to ICE Clear Europe's skin 
in the game and regulatory capital should help to safeguard the skin in 
the game and regulatory capital against loss. Further, because the loss 
of ICE Clear Europe's skin in the game and regulatory capital could 
impair its ability to operate and therefore clear and settle 
transactions and safeguard securities and funds, the Commission 
believes that this aspect of the proposed rule change should help to 
facilitate the prompt the prompt and accurate clearance and settlement 
of securities transactions and assure the safeguarding of securities 
and funds which are in the custody or control of ICE Clear Europe or 
for which it is responsible, and, therefore, is consistent with Section 
17A(b)(3)(F) of the Act.\10\
---------------------------------------------------------------------------

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

    Similarly, the Commission believes that by facilitating the use of 
central bank deposits; the investment in US, UK, and EU government 
agency bonds, and the use of additional collateral in reverse 
repurchase agreements and cross-currency transactions, the proposed 
rule change should expand ICE Clear Europe's permitted investments to 
include investments that should be generally reasonable and 
conservative and have minimal credit, market, and liquidity risks. 
Moreover, the Commission believes that the other changes to the 
authorized investments discussed above, i.e., changing the wording from 
``obligations'' to ``bonds'' and ``deposits'', specifying for purchases 
of EU sovereign bonds that the maximum issuer limits apply per EU 
government issuer, eliminating the minimum credit rating for US, UK, 
and EU sovereign bonds, and relying on ICE Clear Europe's authorized 
investments and associated limits in periods of insufficient market 
supply, should not reduce the reasonableness or conservativeness of ICE 
Clear Europe's permitted investments. Thus, the Commission believes 
these aspects of the proposed rule change should provide ICE Clear 
Europe additional investment options that should help to safeguard skin 
in the game, regulatory capital, and clearing member cash against loss. 
Because the loss of skin in the game, regulatory capital, and clearing 
member cash could impair ICE Clear Europe's ability to operate and 
therefore clear and settle transactions and safeguard securities and 
funds, the Commission believes that these aspects of the proposed rule 
change should be consistent with Section 17A(b)(3)(F) of the Act.\11\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The Commission further believes the changes described above 
regarding breaches and the personnel involved in ICE Clear Europe's 
investment activities should help to ensure compliance with the 
Procedures consistent Section 17A(b)(3)(F) of the Act.\12\ 
Specifically, in requiring that both breaches of concentration limits 
and investment criteria be escalated and that the investment portfolio 
be rebalanced in remediation of a breach, the Commission believes that 
the proposed rule change should help to ensure adherence to the limits 
and criteria as well as remediation when they are breached. Moreover, 
in requiring that ICE Clear Europe's Treasury and Finance teams monitor 
the concentration limits and investment criteria daily, and that ICE 
Clear Europe's Head of Treasury and Chief Risk Officer review the use 
of non-preferred collateral monthly, the Commission believes the 
proposed rule change should help to facilitate adherence to the 
Procedures, the remediation of breaches, and monitoring to prevent 
breaches from happening in the first place. Because, as discussed 
above, the Commission believes that the Procedures should help to 
ensure that ICE Clear Europe's investments of

[[Page 41086]]

regulatory capital, skin in the game, and Clearing Member cash are 
conservative and subject to reasonable protections, and therefore ICE 
Clear Europe is able to clear and settle transactions and safeguard 
funds, the Commission believes that these aspects of the proposed rule 
change, in facilitating compliance with the Procedures, are consistent 
with Section 17A(b)(3)(F) of the Act.\13\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78q-1(b)(3)(F).
    \13\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Finally, the Commission believes the other changes to the Policy 
described above should help to ensure the accuracy of the Policy 
consistent Section 17A(b)(3)(F) of the Act.\14\ Amending the Policy to 
replace specific references to ICE Clear Europe's Treasury and Banking 
Services team and their activities to refer generally to ICE Clear 
Europe and its liquidity and investment management activities and to 
delete a statement that ICE Clear Europe's Treasury and Banking 
Services team operates within the risk appetites set by the board and 
in compliance with applicable regulations should help to ensure the 
Policy accurately reflects the operations of ICE Clear Europe. 
Similarly, by renaming the Policy and deleting an inaccurate statement 
that the Policy constitutes ICE Clear Europe's liquidity risk 
management framework for purposes of EMIR, the Commission believes that 
the proposed rule change should help to ensure that the Policy is 
accurate and up-to-date. Because, as discussed above, the Policy should 
help to ensure that ICE Clear Europe's investments of regulatory 
capital, skin in the game, and Clearing Member cash are subject to 
reasonable protections, and therefore ICE Clear Europe is able to clear 
and settle transactions and safeguard funds, the Commission believes 
that these aspects of the proposed rule change, in ensuring the 
accuracy of the Policy, are consistent with Section 17A(b)(3)(F) of the 
Act.\15\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78q-1(b)(3)(F).
    \15\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Therefore, for these reasons, the Commission finds that the 
proposed rule change should promote the prompt and accurate clearance 
and settlement of securities transactions and assure the safeguarding 
of securities and funds in ICE Clear Europe's custody and control, 
consistent with the Section 17A(b)(3)(F) of the Act.\16\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(1)

    Rule 17Ad-22(e)(1) requires that ICE Clear Europe 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 a 
relevant jurisdictions.\17\ As discussed above, the proposed rule 
change would delete an inaccurate statement in the Policy that the 
Policy constitutes ICE Clear Europe's liquidity risk management 
framework for purposes of EMIR. This statement is inaccurate because, 
for purposes of EMIR, ICE Clear Europe's liquidity risk management 
framework is not limited to the Policy. Thus, in making this change, 
the Commission believes that the proposed rule change should help to 
ensure that ICE Clear Europe has an enforceable legal basis for its 
activities under EMIR. For this reason, the Commission finds that the 
proposed rule change is consistent with Rule 17Ad-22(e)(1).\18\
---------------------------------------------------------------------------

    \17\ 17 CFR 240.17Ad-22(e)(1).
    \18\ 17 CFR 240.17Ad-22(e)(1).
---------------------------------------------------------------------------

C. Consistency With Rule 17Ad-22(e)(2)(v)

    Rule 17Ad-22(e)(2)(v) requires that ICE Clear Europe establish, 
implement, maintain and enforce written policies and procedures 
reasonably designed to provide governance arrangements that, among 
other things, specify clear and direct lines of responsibility.\19\ As 
discussed above, the proposed rule change would require that ICE Clear 
Europe's Treasury and Finance teams monitor the concentration limits 
and investment criteria daily. The Commission believes that this aspect 
of the proposed rule change should help to establish a clear and direct 
line of responsibility, in assigning the Treasury and Finance teams the 
responsibility for daily monitoring. Similarly, the proposed rule 
change would require that ICE Clear Europe's Head of Treasury and Chief 
Risk Officer review the use of non-preferred collateral monthly. The 
Commission believes this proposed change should help to place clear and 
direct responsibility on ICE Clear Europe's Head of Treasury and Chief 
Risk Officer. For these reasons, the Commission finds that the proposed 
rule change is consistent with Rule 17Ad-22(e)(2)(v).\20\
---------------------------------------------------------------------------

    \19\ 17 CFR 240.17Ad-22(e)(2)(v).
    \20\ 17 CFR 240.17Ad-22(e)(2)(v).
---------------------------------------------------------------------------

D. Consistency With Rule 17Ad-22(e)(16)

    Rule 17Ad-22(e)(16) requires that ICE Clear Europe establish, 
implement, maintain and enforce written policies and procedures 
reasonably designed to, among other things, safeguard its own and its 
Clearing Members' assets and invest such assets in instruments with 
minimal credit, market, and liquidity risks.\21\ As discussed above, 
the proposed rule change, by applying the Procedures and the Policy to 
investments of ICE Clear Europe's skin in the game and regulatory 
capital, should help to ensure that such skin in the game and 
regulatory capital are invested in accordance with the principles and 
processes specified in the Procedures and the Policy. In addition, the 
Commission believes that these principles and processes generally 
should help to ensure that cash is invested reasonably and in a manner 
that protects against loss. In addition, the proposed rule change would 
expand the investments permitted to ICE Clear Europe by amending the 
Procedures to facilitate the use of central bank deposits; US, UK, and 
EU government agency bonds; and additional collateral in reverse 
repurchase agreements as well as cross-currency transactions. The 
Commission believes these investments, as well as the investments 
currently permitted under the Procedures, constitute instruments with 
minimal credit, market, and liquidity risks. Therefore, in applying the 
Procedures and Policy to ICE Clear Europe's regulatory capital and skin 
in the game and expanding the permitted investments, the Commission 
believes the proposed rule change should help ICE Clear Europe to 
safeguard its own and its Clearing Members' assets and invest such 
assets in instruments with minimal credit, market, and liquidity risks. 
For these reasons, the Commission finds that the proposed rule change 
is consistent with Rule 17Ad-22(e)(16).\22\
---------------------------------------------------------------------------

    \21\ 17 CFR 240.17Ad-22(e)(16).
    \22\ 17 CFR 240.17Ad-22(e)(16).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as modified by Partial Amendment No. 1, 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-2020-002 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange

[[Page 41087]]

Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-ICEEU-2020-002. 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, as modified by 
Partial Amendment No. 1, that are filed with the Commission, and all 
written communications relating to the proposed rule change, as 
modified by Partial Amendment No. 1, 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 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-2020-002 and should be submitted on or before July 29, 2020.

V. Accelerated Approval of the Proposed Rule Change as Modified by 
Partial Amendment No. 1

    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\23\ to approve the proposed rule change, as modified by 
Partial Amendment No. 1, prior to the 30th day after the date of 
publication of Partial Amendment No. 1 in the Federal Register. As 
discussed above, Partial Amendment No. 1 updates the Procedures to 
assign ICE Clear Europe's Treasury and Finance teams responsibility for 
daily monitoring against the concentration limits and investment 
criteria. By so updating the Procedures, Partial Amendment No. 1 
provides for a more clear and comprehensive understanding of how ICE 
Clear Europe would monitor its adherence to the concentration limits 
and investment criteria, which helps to improve the Commission's review 
of the proposed rule change for consistency with the Act.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    For the reasons discussed above, the Commission finds that the 
proposed rule change, as modified by Partial Amendment No. 1, is 
consistent with the Act and the applicable rules thereunder. 
Accordingly, the Commission finds good cause for approving the proposed 
rule change, as modified by Partial Amendment No. 1, on an accelerated 
basis, pursuant to Section 19(b)(2) of the Exchange Act.\24\
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VI. 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 \25\ and Rules 17Ad-22(e)(1), (e)(2)(v), and (e)(16).\26\
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78q-1(b)(3)(F).
    \26\ 17 CFR 240.17Ad-22(e)(1), (e)(2)(v), (e)(16).
---------------------------------------------------------------------------

    IT IS THEREFORE ORDERED pursuant to Section 19(b)(2) of the Act 
\27\ that the proposed rule change, as modified by Partial Amendment 
No. 1 (SR-ICEEU-2020-002), be, and hereby is, approved on an 
accelerated basis.\28\
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78s(b)(2).
    \28\ 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.\29\
---------------------------------------------------------------------------

    \29\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-14627 Filed 7-7-20; 8:45 am]
BILLING CODE 8011-01-P


