[Federal Register Volume 86, Number 31 (Thursday, February 18, 2021)]
[Notices]
[Pages 10152-10154]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-03217]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91114; File No. SR-ICEEU-2021-002]


Self-Regulatory Organizations; ICE Clear Europe Limited; Notice 
of Filing of Proposed Rule Change Relating to Amendments to the ICE 
Clear Europe Price Submission Disciplinary Framework

February 11, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on February 2, 2021, ICE Clear Europe Limited filed with the 
Securities and Exchange Commission the proposed rule changes described 
in Items I, II and III below, which Items have been prepared primarily 
by ICE Clear Europe. 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.
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The principal purpose of the proposed amendments is for ICE Clear 
Europe to modify its Price Submission Disciplinary Framework (to be 
renamed the ``Price Submission Disciplinary Procedure'', referred to 
herein as the ``Procedure'') to update the review period for the 
Clearing House when investigating missed price submissions, permit an 
annual one-time waiver available to Clearing Members in respect of any 
instance in which a Clearing Member has failed to timely provide 
submissions for which they hold cleared open interest with the Clearing 
House (a ``Missed Submission''). ICE Clear Europe is also proposing to 
modify provisions relating to governance and exception handling to 
conform to other Clearing House procedures and remove unnecessary 
appendices and make certain other updates and clarifications as 
discussed herein.

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
    ICE Clear Europe is proposing to amend its Price Submission 
Disciplinary Procedure to: (i) Remove the description of the End of Day 
Price Discovery Process as unnecessary since it is set forth in the 
existing CDS End of Day Price Discovery Policy; (ii) update the process 
in respect of Missed Submissions to provide that (a) a Clearing Member 
may be granted one waiver per product class in a calendar year for a 
Missed Submission, rather than one waiver over the course of the 
clearing membership, and (b) the Clearing House has an additional five 
days to review a Clearing Member's response to an initial Notice of 
Investigation under Rule 1002(b) before sending the subsequent Letter 
of Mindedness under Rule 1002(f); (iii) update governance and exception 
handling provisions; and (iv) make various drafting clarifications and 
improvements.
General Drafting Clarifications and Improvements
    By way of general drafting clarifications and improvements, the 
document title would be changed from ``Price Submission Disciplinary 
Framework'' to ``Price Submission Disciplinary Procedure''. Former 
Section 2.2 (End of Day Price Discovery Process) and Appendix A would 
be removed as these matters are covered in the existing CDS End Of Day 
Price Discovery Policy (the ``Policy''), and current Section 2.3 would 
be renumbered 2.2. A cross-reference to the Policy would be added to 
Section 1.1. To aid with readability, the term ``CDS Clearing Member'' 
would be shortened to ``CM'' throughout the Procedure and several 
sentences would be shortened or reformulated with [sic] change to their 
substantive meanings. References to CDX products would be replaced by 
references to CDX indices, a more precise term. A reference to Markit 
Group Limited would be updated to its current name IHS Markit.
Price Submission Disciplinary Procedure
    The stated purpose of the Procedure would be simplified and 
clarified to provide that the document outlines the procedure to be 
used internally by ICE Clear Europe when taking disciplinary action in 
relation to price submissions. The statement that spread submissions 
will be counted as Missed Submissions would be replaced by a statement 
that submissions not adhering to the format described in Section 2.2.3 
of the End of Day Price Discovery Policy, which requires index 
submissions to follow market convention in terms of providing prices as 
spreads, and be either midpoint or bid-offer, will be counted as Missed 
Submissions. The legal basis description would be amended to include a 
cross reference to Rule 503(g), rather than restate the text of Rule 
503(g).
Price Submission Incentives
    In this section, a cross-reference to the deleted section 2.2 would 
be removed. Certain non-substantive drafting clarifications would be 
made to the discussion of Obvious Errors.
Fixed Cash Assessments for Missed Submissions
    The amendments would provide that a CM in receipt of a Notice of 
Investigation issued in respect of an alleged Missed Submission will 
have five days to submit written comments. The amendments would provide 
for an additional five days for the Clearing House to review the 
Clearing Member's comments before sending a Letter of Mindedness under 
Rule 1002(f). Such amendment would improve the process by affording the 
Clearing Member an opportunity to respond to the initial notice and 
giving the Clearing House time to assess the Clearing Member's response 
before determining whether to take further action under the Rules.
    The amendments would also change the process for waiver of Missed 
Submissions (if a waiver is granted, no assessment would be due for the 
Missed Submission). Rather than a Clearing Member receiving one waiver 
over the course of its clearing membership for a Missed Submission, a 
Clearing Member would be eligible for one waiver per calendar year for 
Missed Submissions for single-name products and one waiver per calendar 
year for Missed Submissions for index products. Waivers would be 
limited to Missed Submissions caused by technical failures. The 
Clearing Members would be required to provide an adequate written 
explanation of the technical failure and summary of planned remedial 
actions. Only the first instance of a Missed Submission for the product 
category in any calendar year will be eligible for a waiver.
    Following the expiry of the ten day period from the Issuance of a 
Letter of Mindedness with respect to a Missed

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Submission, where an assessment amount would be collected, a cash 
assessment notice would be issued, which would be calculated according 
to the cash assessment calculation details provided in the procedure.
    The amendments would also clarify the procedures by which a 
Clearing Member may assert that one or more Missed Submissions were due 
to extraordinary circumstances outside of its control, including to 
provide that the Head of Regulation and Compliance will determine 
whether such circumstances apply.
    Based on its experience with Missed Submissions, ICE Clear Europe 
believes the revised approach to waivers strikes a better balance than 
the current, one-time waiver, between the need for robust submissions 
under the Policy and the goal of not unnecessarily penalizing Clearing 
Members for technical failures.
Document Governance and Exception Handling
    The amendments would include detail with respect to the governance 
and exception handling of the Procedure. Specifically, the Procedure 
would state that the document owner is responsible for ensuring that 
the Procedure remains up-to-date and is reviewed in accordance with the 
Clearing House's governance processes. The Procedure would further 
provide that the document owner is to report material breaches or 
unapproved deviations from the Procedure to the document owner's Head 
of Department, the Chief Risk Officer and the Head of Compliance (or 
their delegates) who together will determined if further escalation is 
required. Finally, exceptions to the Procedure would be approved in 
accordance with the Clearing House's governance process for the 
Procedure. The approach to governance and exception handling is 
consistent with that of other ICE Clear Europe procedures.
(b) Statutory Basis
    ICE Clear Europe believes that the proposed amendments to the Price 
Submission Disciplinary Procedure are consistent with the requirements 
of Section 17A of the Act \3\ and the regulations thereunder applicable 
to it. In particular, Section 17A(b)(3)(F) of the Act \4\ 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 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.
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    \3\ 15 U.S.C. 78q-1.
    \4\ 15 U.S.C. 78q-1(b)(3)(F).
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    The proposed changes to the Price Submission Disciplinary Procedure 
are designed to strengthen ICE Clear Europe's arrangements and 
disciplinary procedures for managing Missed Submissions by Clearing 
Members and the relevant disciplinary procedures. The amendments 
provide an opportunity for a Clearing Member that has received to 
Notice of Investigation to provide comments, and for the Clearing House 
to review those comments before proceeding with disciplinary 
procedures. The amendments would also increase the Clearing House's 
ability to provide a limited number of waivers for Missed Submissions 
from technical failures, from one waiver over the course of the 
clearing membership to one waiver per product class in a calendar year. 
The other proposed clarifications and changes to the Procedure enhance 
readability and ensure that the Procedure remains clear and up-to-date. 
In ICE Clear Europe's view, the amendments will thus Through enhance 
the overall End of Day Price Submission process and the quality of 
submissions, which in turn supports the stability of the Clearing House 
and the prompt and accurate clearance and settlement of cleared 
contracts. The enhanced risk management is therefore also generally 
consistent with the protection of investors and the public interest in 
the safe operation of the Clearing House. (ICE Clear Europe would not 
expect the amendments to affect the safeguarding of securities and 
funds in ICE Clear Europe's custody or control or for which it is 
responsible.) Accordingly, the amendments satisfy the requirements of 
Section 17A(b)(3)(F).\5\
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    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    In addition, in ICE Clear Europe's view, the amended Procedure, 
like the current framework, would provide an appropriately tailored set 
of cash assessments for Missed Submissions, and waivers thereof, in 
light of the importance of end-of-day price submissions to the Clearing 
House's risk management and settlement procedures. The Procedure is 
gthus consistent with the requirements of Section 17A(b)(3)(G) of the 
Act.\6\ The amendments also enhance the procedures for investing [sic] 
potential Missed Submissions, and for Clearing Members to submit 
comments with respect to investigations. In ICE Clear Europe's view, 
this aspect of the Procedure is consistent with the requirements of 
Section 17A(b)(3)(H) of the Act.\7\
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    \6\ 15 U.S.C. 78q-1(b)(3)(G).
    \7\ 15 U.S.C. 78q-1(b)(3)(H).
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    In addition, ICE Clear Europe believes the amendments satisfy Rule 
17Ad-22(e)(3)(i),\8\ which requires the covered clearing agency to 
maintain a sound risk management framework for comprehensively managing 
legal, credit, liquidity, operational, general business, investment, 
custody, and other risks that arise in or are borne by the covered 
clearing agency which include risk management policies, procedures, and 
systems designed to identify, measure, monitor, and manage the range of 
risks that arise in or are borne by the covered clearing agency. The 
proposed amendments are intended to strengthen the End of Day Price 
Discovery Process by clarifying disciplinary procedures for Missed 
Submissions and the process for waivers. The inclusion of an 
opportunity for a Clearing Member's response to an initial Notice of 
Investigation, and an opportunity for the Clearing House to review the 
response will better ensure that the Clearing House has sufficient time 
and information to assess a Clearing Member's formal response in 
respect of a Missed Submission before determining whether to take 
further action under the Rules. ICE Clear Europe believes that the 
amendments to the Procedure are therefore consistent with the 
requirements of Rule 17Ad-22(e)(3)(i).\9\
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    \8\ 17 CFR 240.17Ad-22(e)(3)(i).
    \9\ Id.
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    Rule 17Ad-22(e)(2) \10\ requires clearing agencies to establish 
reasonably designed policies and procedures to provide for governance 
arrangements that are clear and transparent and specify clear and 
direct lines of responsibility. The proposed amendments to the 
Procedure more clearly define the roles and responsibilities of the 
document owner, the Head of Department, the Chief Risk Officer and the 
Head of Compliance (or their delegates), consistent with governance 
arrangement for other ICE Clear Europe policies and procedures. ICE 
Clear Europe believes that the amendments to the Procedure are 
therefore consistent with the requirements of Rule 17Ad-22(e)(2).\11\
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    \10\ 17 CFR 240.17Ad-22(e)(2).
    \11\ Id.

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(B) Clearing Agency's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed amendments would 
have any impact, or impose any burden, on competition not necessary or 
appropriate in furtherance of the purposes of the Act. The amendments 
are being adopted to update and clarify the Price Submission 
Disciplinary Procedure and would apply equally to all CDS Clearing 
Members. As a result, ICE Clear Europe does not expect that the 
proposed changes will adversely affect access to clearing or the 
ability of Clearing Members, their customers or other market 
participants to continue to clear contracts. ICE Clear Europe also does 
not believe the amendments would materially affect the cost of clearing 
or otherwise impact competition among Clearing Members or other market 
participants or limit market participants' choices for selecting 
clearing services. Accordingly, ICE Clear Europe does not believe the 
amendments would impose any burden on competition not necessary or 
appropriate in furtherance of the purpose 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 written comments received with respect to the 
proposed rule change.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, security-based swap submission or advance notice 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-2021-002 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-2021-002. 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 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 ICE Clear Europe and on ICE 
Clear Europe's website at https://www.theice.com/notices/Notices.shtml?regulatoryFilings.
    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-2021-002 and should be 
submitted on or before March 11, 2021.

    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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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-03217 Filed 2-17-21; 8:45 am]
BILLING CODE 8011-01-P


