Notice2021-13140
Security-Based Swap Data Repositories; ICE Trade Vault, LLC; Order Approving Application for Registration as a Security-Based Swap Data Repository
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 22, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 117 (Tuesday, June 22, 2021)</title>
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[Federal Register Volume 86, Number 117 (Tuesday, June 22, 2021)]
[Notices]
[Pages 32703-32714]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-13140]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92189; File No. SBSDR-2021-01]
Security-Based Swap Data Repositories; ICE Trade Vault, LLC;
Order Approving Application for Registration as a Security-Based Swap
Data Repository
June 16, 2021.
I. Introduction
On February 11, 2021, ICE Trade Vault, LLC (``ICE Trade Vault'')
filed with the Securities and Exchange Commission (``Commission'') an
application on Form SDR to register as a security-based swap data
repository (``SDR'') pursuant to Section 13(n)(1) of the Securities
Exchange Act of 1934 (``Exchange Act'') and 17 CFR 240.13n-1 (``Rule
13n-1'') thereunder,\1\ and as a securities information processor
(``SIP'') under Section 11A(b) of the Exchange Act.\2\ ICE Trade Vault
amended its application on March 10, March 11, and April 14, 2021
(collectively, the ``ITV Application''). ICE Trade Vault intends to
operate as a registered SDR for security-based swap (``SBS'')
transactions in the credit derivatives asset class.
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\1\ 15 U.S.C. 78m(n)(1); 17 CFR 240.13n-1. A copy of ICE Trade
Vault's application on Form SDR and all non-confidential exhibits
and amendments thereto are available for public viewing on the
Commission's website. In 2016, ICE Trade Vault submitted a prior
application for registration as an SDR. See Release No. 77699 (Apr.
22, 2016), 81 FR 25475 (Apr. 28, 2016); Release No. 34-81223 (July
27, 2017), 82 FR 35844 (Aug. 1, 2017). ICE Trade Vault withdrew this
prior application in 2018. See Letter from Kara Dutta, General
Counsel, ICE Trade Vault, Mar. 23, 2018, <a href="https://www.sec.gov/divisions/marketreg/sdr/ice-trade-vault-sdr-application-withdrawal-letter-032318.pdf">https://www.sec.gov/divisions/marketreg/sdr/ice-trade-vault-sdr-application-withdrawal-letter-032318.pdf</a>.
\2\ 15 U.S.C. 78k-1(b).
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The Commission published notice of the ITV Application in the
Federal Register for public comment on March 19, 2021,\3\ and the
Commission received in response one comment letter from the
International Swaps and Derivatives Association, Inc. (``ISDA'').\4\
While generally supportive of the ITV Application, the ISDA Letter
includes several requests related to regulatory reporting and public
dissemination, which are addressed in Part III.G. As discussed in Parts
III and IV below, the Commission has carefully reviewed the ITV
Application and the comment received. This order grants ICE Trade
Vault's application to register as an SDR in the asset classes noted
above, and as a SIP.
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\3\ Release No. 34-91331 (Mar. 16, 2021), 86 FR 14968 (Mar. 19,
2021) (``ICE Trade Vault Notice'').
\4\ Letter from Eleanor Hsu, Director, Data and Reporting, ISDA,
dated Apr. 9, 2021 (``ISDA Letter'').
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II. Background
A. SDR Registration, Duties, and Core Principles
Section 13(n) of the Exchange Act makes it unlawful for any person,
unless registered with the Commission, directly or indirectly, to make
use of the mails or any means or instrumentality of interstate commerce
to perform the functions of an SDR.\5\ To be registered and maintain
registration, an SDR must comply with certain requirements and core
principles described in Section 13(n), as well as any requirements that
the Commission may impose by rule or regulation.\6\ In 2015, the
Commission adopted 17 CFR 240.13n-1 to 13n-12 under the Exchange Act to
establish Form SDR, the procedures for registration as an SDR, and the
duties and core principles applicable to an SDR (``SDR Rules'').\7\ The
Commission provided a temporary exemption from compliance with the SDR
Rules and also extended exemptions from the provisions of the Dodd-
Frank Act set forth in a Commission order providing temporary
exemptions and other temporary relief from compliance with certain
provisions of the Exchange Act concerning security-based swaps, and
these temporary exemptions expired in 2017.\8\
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\5\ 15 U.S.C. 78m(n).
\6\ Id.
\7\ See Release No. 34-74246 (Feb. 11, 2015), 80 FR 14438, 14438
(Mar. 19, 2015) (``SDR Adopting Release''). In 2016, the Commission
subsequently amended 17 CFR 240.13n-4 to address third-party
regulatory access to SBS data obtained by an SDR. See Release No.
34-78716 (Aug. 29, 2016), 81 FR 60585 (Sep. 2, 2016).
\8\ See Release No. 34-80359 (Mar. 31, 2017), 82 FR 16867 (Apr.
6, 2017).
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The Commission also has adopted 17 CFR 242.900 to 909 under the
Exchange Act (collectively, ``Regulation SBSR''), which governs
regulatory reporting and public dissemination of security-based swap
transactions.\9\ Among other things, Regulation SBSR requires each
registered SDR to register with the Commission as a SIP,\10\ and the
Form SDR constitutes an application for registration as a SIP, as well
as an SDR.\11\
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\9\ Release No. 34-74244 (Feb. 11, 2015), 80 FR 14563 (Mar. 19,
2015); Release No. 34-78321 (July 14, 2016), 81 FR 53546 (Aug. 12,
2016) (``Regulation SBSR Adopting Release''). Regulation SBSR and
the SDR Rules are referred to collectively as the ``SBS Reporting
Rules.''
\10\ See 17 CFR 242.909.
\11\ See Form SDR, Instruction 2.
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In 2019, the Commission stated that implementation of the SBS
Reporting Rules can and should be done in a manner that carries out the
fundamental policy goals of the SBS Reporting Rules while minimizing
burdens as much as practicable.\12\ Noting ongoing concerns among
market participants about incurring unnecessary burdens and the
Commission's efforts to promote harmonization between the SBS Reporting
Rules and swap reporting rules, the Commission took the position that,
for four years following Regulation SBSR's Compliance Date 1 in each
asset class,\13\ certain actions with respect to the SBS Reporting
Rules would not provide a basis for a Commission enforcement
action.\14\ The no-action statement's relevance to ICE Trade Vault's
application for registration as an SDR and SIP is discussed further
below.
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\12\ Release No. 34-87780 (Dec. 18, 2019), 85 FR 6270, 6347
(Feb. 4, 2020) (``ANE Adopting Release'').
\13\ See id. Under Regulation SBSR, the first compliance date
(``Compliance Date 1'') for affected persons with respect to an SBS
asset class is the first Monday that is the later of: (i) Six months
after the date on which the first SDR that can accept transaction
reports in that asset class registers with the Commission; or (ii)
one month after the compliance date for registration of SBS dealers
and major SBS participants (``SBS entities''). Id. at 6346. The
compliance date for registration of SBS entities is October 6, 2021.
See id. at 6270, 6345.
\14\ See id. The specific rule provisions of the SBS Reporting
Rules affected by the no-action statement are discussed in Part
II.B.
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B. Standard for Registration
As noted above, to be registered with the Commission as an SDR and
maintain such registration, an SDR is required to comply with the
requirements and core principles described in Section 13(n) of the
Exchange Act, as well as with any requirement that the Commission may
impose by rule or regulation.\15\ In addition, Rule 13n-1(c)(3) under
the Exchange Act provides that the Commission shall grant the
registration of an SDR if it finds that the SDR is so organized, and
has the capacity, to be able to: (i) Assure the prompt, accurate, and
reliable performance of its functions as an SDR; (ii) comply with any
applicable provisions of the securities laws and the rules and
regulations
[[Page 32704]]
thereunder; and (iii) carry out its functions in a manner consistent
with the purposes of Section 13(n) of the Exchange Act and the rules
and regulations thereunder.\16\ The Commission shall deny the
registration of an SDR if it does not make any such finding.\17\
Similarly, to be registered with the Commission as a SIP, the
Commission must find that such applicant is so organized, and has the
capacity, to be able to assure the prompt, accurate, and reliable
performance of its functions as a SIP, comply with the provisions of
the Exchange Act and the rules and regulations thereunder, carry out
its functions in a manner consistent with the purposes of the Exchange
Act, and, insofar as it is acting as an exclusive processor, operate
fairly and efficiently.\18\
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\15\ See 15 U.S.C. 78m(n)(3).
\16\ 17 CFR 240.13n-1(c)(3).
\17\ Id.
\18\ See 15 U.S.C. 78k-1(b)(3).
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In determining whether an applicant meets the criteria set forth in
Rule 13n-1(c), the Commission will consider the information reflected
by the applicant on its Form SDR, as well as any additional information
obtained from the applicant. For example, Form SDR requires an
applicant to provide a list of the asset classes for which the
applicant is collecting and maintaining data or for which it proposes
to collect and maintain data, a description of the functions that it
performs or proposes to perform, general information regarding its
business organization, and contact information.\19\ Obtaining this
information and other information reflected on Form SDR and the
exhibits thereto--including the applicant's overall business structure,
financial condition, track record in providing access to its services
and data, technological reliability, and policies and procedures to
comply with its statutory and regulatory obligations--will enable the
Commission to determine whether to grant or deny an application for
registration.\20\ Furthermore, the information requested in Form SDR
will enable the Commission to assess whether the applicant is so
organized and has the capacity to comply and carry out its functions in
a manner consistent with the federal securities laws and the rules and
regulations thereunder, including the SBS Reporting Rules.\21\
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\19\ See SDR Adopting Release, supra note 7, at 14459.
\20\ See id. at 14458.
\21\ See id. at 14458-59.
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Consistent with the Commission's no-action statement in the ANE
Adopting Release,\22\ an entity wishing to register with the Commission
as an SDR must still submit an application on Form SDR, but can address
the rule provisions included in the no-action statement by discussing
how the SDR complies with comparable Commodity Futures Trading
Commission (``CFTC'') requirements.\23\ Accordingly, in such instances
the Commission will not assess an SDR application for consistency or
compliance with the rule provisions included in the Commission's no-
action statement. Specifically, the Commission identified the following
provisions as not providing a basis for an enforcement action against a
registered SDR for the duration of the relief provided in the
Commission statement: Under Regulation SBSR, aspects of 17 CFR
242.901(a), 901(c)(2) through (7), 901(d), 901(e), 902, 903(b), 906(a)
and (b), and 907(a)(1), (a)(3), and (a)(4) through (6); under the SDR
Rules, aspects of Section 13(n)(5)(B) of the Exchange Act and 17 CFR
240.13n-4(b)(3) thereunder, and aspects of 17 CFR 240.13n-5(b)(1)(iii);
and under Section 11A(b) of the Exchange Act, any provision pertaining
to SIPs.\24\ Thus, an SDR applicant will not need to include materials
in its application explaining how it would comply with the provisions
noted above, and could instead rely on its discussion about how it
complies with comparable CFTC requirements.\25\ The applicant may
instead represent in its application that it: (i) Is registered with
the CFTC as a swap data repository; (ii) is in compliance with
applicable requirements under the swap reporting rules; (iii) satisfies
the standard for Commission registration of an SDR under Rule 13n-1(c);
and (iv) intends to rely on the no-action statement included in the ANE
Adopting Release for the period set forth in the ANE Adopting Release
with respect to any SBS asset class or classes for which it intends to
accept transaction reports.\26\
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\22\ See supra notes 12-14 and accompanying text.
\23\ See supra note 14.
\24\ The ANE Adopting Release provides additional discussion of
the particular aspects of the affected rules that would not provide
a basis for an enforcement action. See ANE Adopting Release, supra
note 12, at 6347-48.
\25\ Id. at 6348.
\26\ Id. For example, an applicant need not describe in Exhibit
S its functions as a SIP.
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III. Review of ICE Trade Vault's Application Under SBS Reporting Rules
As noted above, ICE Trade Vault intends to operate as a registered
SDR for the credit derivatives asset class.\27\ ICE Trade Vault states
that its core duties are: (i) Acceptance and confirmation of data; (ii)
recordkeeping; (iii) public reporting; (iv) maintaining data privacy
and integrity; and (v) permitting access to regulators.\28\ It notes
that its fundamental purpose is to provide transparency to the SBS
market and publicly disseminate trade information.\29\ In its
application, ICE Trade Vault represents that it is provisionally
registered with the CFTC as a swap data repository, is in compliance
with applicable requirements under the CFTC reporting rules applicable
to a registered swap data repository, and intends to rely on the
Commission's position outlined in the ANE Adopting Release for
applicable reporting rules and SBSDR duties for the period set forth
therein.\30\ Below is a review of the representations made in the
application materials against the SBS Reporting Rules, taking into
account ICE Trade Vault's reliance on the Commission's position
outlined in the ANE Adopting Release.
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\27\ See Security-Based SDR Service Disclosure Document, Ex.
V.2; see also Swap Data Repository Rulebook, Security-Based Swap
Data Reporting Annex, Ex. HH.2, sec. 4.1.
\28\ See id.
\29\ See id.
\30\ See Form SDR, Application Letter from Trabue Bland,
President, ICE Trade Vault, dated Mar. 10, 2021, at 1, 2.
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A. Organization and Governance
1. Summary of ICE Trade Vault's Application
ICE Trade Vault is a Delaware limited liability company, and is a
wholly owned subsidiary of Intercontinental Exchange Holdings, Inc.,
which, in turn, is a wholly owned subsidiary of Intercontinental
Exchange, Inc. (``ICE''), a publicly traded company.\31\ As a general
matter, the number of directors and composition of the Board of
Directors (``ITV Board'') shall be determined by ICE, as the sole
member of ICE Trade Vault.\32\ Currently, the ITV Board consists of at
least three directors, all of whom are appointed by ICE.\33\ The ITV
Board is composed of individuals selected from the following groups:
[[Page 32705]]
Members of senior management or the Board of Directors of ICE,
independents and employees of ICE Trade Vault's users with derivatives
industry experience.\34\ ICE considers several factors in determining
the composition of the ITV Board, including whether directors, both
individually and collectively, possess the required integrity,
experience, judgment, commitment, skills and expertise to exercise
their obligations of oversight and guidance over an SDR and a swap data
repository regulated by the CFTC.\35\ Additionally, in accordance with
Exchange Act Rule 13n-4(c)(2), ICE Trade Vault provides users with the
opportunity to participate in the process for nominating the ICE Trade
Vault independent director and with the right to petition for
alternative candidates.\36\ At least one director will at all times be
``independent'' in accordance with applicable provisions of the New
York Stock Exchange Listed Company Manual.\37\ Two officers of ICE
Trade Vault's parent, ICE, currently serve as the non-independent
directors.\38\ ICE shall periodically review the composition of the ITV
Board to assure that the level of representation of directors is
appropriate for the interests of these constituencies in ICE Trade
Vault.\39\
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\31\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 9. ICE is a holding company whose subsidiaries operate
exchanges, clearing houses, and data services for financial and
commodity markets. ICE operates global marketplaces for trading and
clearing a broad array of securities and derivatives contracts
across major asset classes, including energy and agricultural
commodities, interest rates, equities, equity derivatives, credit
derivatives, bonds, and currencies.
\32\ See Board of Directors Governance Principles, Ex. D.3.
\33\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 9; see also Swap Data Repository Rulebook, Security-Based
Swap Data Reporting Annex, Ex. HH.2, sec. 2.1; Board of Directors
Governance Principles, Ex. D.3.
\34\ See Board of Directors Governance Principles, Ex. D.3.
\35\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 9; see also Swap Data Repository Rulebook, Security-Based
Swap Data Reporting Annex, Ex. HH.2, sec. 2.1; Board of Directors
Governance Principles, Ex. D.3.
\36\ See id.
\37\ See id.
\38\ See id.
\39\ See Board of Directors Governance Principles, Ex. D.3.
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The ITV Board oversees all risks relating to ICE Trade Vault.\40\
The powers and authority of the ITV Board include the ability to: (i)
Designate and authorize specific appointed officers to act on behalf of
the ITV Board; (ii) fix, determine and levy all fees, when necessary;
(iii) prepare and amend the Rulebook; (iv) act in emergencies; and (v)
delegate any such power to the appropriate party.\41\ The ITV Board
oversees ICE Trade Vault's SDR functions as well as other regulated
services that ICE Trade Vault provides, such as the swap data
repository registered with the CFTC.\42\
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\40\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 9; see also Swap Data Repository Rulebook, Security-Based
Swap Data Reporting Annex, Ex. HH.2, sec. 2.1; Board of Directors
Governance Principles, Ex. D.3.
\41\ See id.
\42\ See id.
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ICE Trade Vault's Chief Compliance Officer (``CCO'') is appointed
by the ITV Board and reports directly to the President of ICE Trade
Vault.\43\ The compensation, appointment, and removal of the CCO
requires the approval of a majority of the ITV Board.\44\ The CCO also
works directly with the ITV Board in certain instances, for example,
when resolving conflicts of interest.\45\ The CCO has supervisory
authority over all staff acting at the direction of the CCO and his or
her responsibilities include, but are not limited to: (i) Preparing and
signing a compliance report with a financial report that conforms to
the requirements of Exchange Act Rule 13n-11(f), which shall be
provided to the SEC annually in accordance with Exchange Act Rule 13n-
11(d); (ii) reviewing the compliance of ICE Trace Vault with respect to
the requirements and core principles described in Section 13(n) of the
Exchange Act and the applicable SEC regulations; and (iii) establishing
and administering written policies and procedures reasonably designed
to prevent violations of the Exchange Act, the core principles
applicable to SDRs and applicable law.\46\
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\43\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 9; see also Swap Data Repository Rulebook, Security-Based
Swap Data Reporting Annex, Ex. HH.2, sec. 2.1.1.
\44\ See id.
\45\ See id.
\46\ See id.
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ICE Trade Vault directors, officers and employees must comply with
the ICE Global Code of Business Conduct, which describes policies for,
among other things, handling conflicts of interest, prohibiting insider
trading, complying with the law and document management and retention
requirements.\47\ In addition, ICE Trade Vault prohibits any member of
the ITV Board or of any board committee which has authority to take
action for and in the name of ICE Trade Vault from knowingly
participating in such body's deliberations or voting in any matter
involving a named party in interest (a person or entity that is
identified by name as a subject of any matter being considered by the
ITV Board or a board committee) where such member (i) is a named party
in interest, (ii) is an employer, employee, or guarantor of a named
party in interest or an affiliate thereof, (iii) has a family
relationship (the person's spouse, former spouse, parent, stepparent,
child, stepchild, sibling, stepbrother, stepsister, grandparent,
grandchild, uncle, aunt, nephew, niece or in-law) with a named party in
interest or (iv) has any other significant, ongoing business
relationship with a named party in interest or an affiliate
thereof.\48\ The CCO shall determine whether any member of the
deliberating body is subject to a prohibition under its conflicts of
interest policies.\49\
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\47\ See ICE Global Code of Business Conduct, Ex. D.4.
\48\ See Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.1, sec. 2.10.2.
\49\ See Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.2, sec. 2.10.4.
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2. Discussion
Section 13(n)(7)(B) of the Exchange Act and Rule 13n-4(c)(2)
thereunder require an SDR to establish governance arrangements that are
transparent to fulfill public interest requirements and to support the
objectives of the Federal Government, owners, and participants.\50\ In
addition, Rule 13n-4(c)(2) requires an SDR to (i) establish well-
defined governance arrangements that include a clear organizational
structure with effective internal controls; (ii) establish governance
arrangements that provide for fair representation of market
participants; (iii) provide representatives of market participants,
including end-users, with the opportunity to participate in the process
for nominating directors and with the right to petition for alternative
candidates; and (iv) establish, maintain, and enforce written policies
and procedures reasonably designed to ensure that senior management and
each member of the board or committee that has authority to act on
behalf of the board possess requisite skills and expertise to fulfill
their responsibilities in the management and governance of the SDR,
have a clear understanding of their responsibilities, and exercise
sound judgment about the SDR's affairs.\51\
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\50\ 15 U.S.C 78m(n)(7)(B); 17 CFR 240.13n-4(c)(2).
\51\ 17 CFR 240.13n-4(c)(2)(i)-(iv).
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Furthermore, Rule 13n-4(b)(11) requires an SDR to designate an
individual to serve as CCO, and Rule 13n-11(a) requires the SDR to
identify on Form SDR the person so designated.\52\ Rule 13n-11(a) also
requires that the compensation, appointment, and removal of the CCO
shall require approval of a majority of the SDR's board of
directors.\53\ Rule 13n-11(c) requires the CCO to: (i) Report directly
to the board of directors or to the senior officer; (ii) review
compliance with Section 13(n) of the Exchange Act and the rules
thereunder; (iii) in consultation with the board or the senior officer,
take reasonable steps to resolve any material conflicts of
[[Page 32706]]
interest; (iv) be responsible for administering the policies and
procedures required by Section 13(n) of the Exchange Act and the rules
thereunder; (v) take reasonable steps to ensure compliance with the
Exchange Act and the SDR Rules thereunder; (vi) establish procedures
for the remediation of noncompliance; and (vii) establish and follow
appropriate procedures for the handling, management response,
remediation, retesting, and closing of noncompliance issues.\54\
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\52\ 17 CFR 240.13n-4(b), 13n-11(a).
\53\ 17 CFR 240.13n-11(a).
\54\ 17 CFR 240.13n-11(c)(1)-(7).
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Additionally, Section 13(n)(7)(C) of the Exchange Act requires an
SDR to establish and enforce rules to minimize conflicts of interest in
the decision-making process of the SDR and establish a process for
resolving any such conflicts of interest.\55\ Rule 13n-4(c)(3) under
the Exchange Act provides that an SDR must: (i) Establish, maintain,
and enforce written policies and procedures reasonably designed to
identify and mitigate potential and existing conflicts of interest in
the SDR's decision-making process on an ongoing basis; (ii) with
respect to the decision-making process for resolving any conflicts of
interest, require the recusal of any person involved in such conflict
from such decision-making; and (iii) establish, maintain, and enforce
written policies and procedures regarding the SDR's non-commercial and/
or commercial use of the SBS transaction information that it
receives.\56\
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\55\ 15 U.S.C. 78m(n)(7)(C)(i), (ii).
\56\ 17 CFR 240.13n-4(c)(3)(i)-(iii).
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The Commission received no comments applicable to these
requirements. As described above, the ITV Application includes
provisions for the representation of market participants in the
governance arrangements, as well as procedures providing an opportunity
to participate in the process for nominating directors and the right to
petition for alternative candidates. In addition, the ITV Application
includes policies and procedures that set standards for the skills and
expertise possessed by the ITV Board.
More generally, the ITV Application sets forth an organizational
structure that is clear and includes provisions for internal controls.
The ITV Application includes provisions for a CCO that has been
designated by the ITV Board and whose compensation, appointment, and
removal is set by the majority of the ITV Board. In addition, the ITV
Application includes policies and procedures that require the CCO to
report to the ITV Board and be responsible for maintaining compliance
with applicable Commission rules, investigating any suspected
violations thereof, and overseeing any necessary remediation. The ITV
Application includes policies and procedures that identify and mitigate
conflicts of interest, require the recusal from decision-making of
members of the ITV Board when involved in a conflict, and delineate the
commercial and non-commercial use of SBS transaction information
received.
B. Access and Information Security
1. Summary of ICE Trade Vault's Application
ICE Trade Vault represents that it provides access to its SDR
service on a fair, open and not unreasonably discriminatory basis.\57\
According to ICE Trade Vault, access to and usage of its service is
available to all market participants that validly engage in SBS
transactions and to all market venues from which data can be submitted
to ICE Trade Vault, and do not require the use of any other ancillary
service offered by ICE Trade Vault.\58\ ICE Trade Vault represents that
for security reasons, access to the ICE Trade Vault system is strictly
limited to users (entities with valid permissions and security
access).\59\ Users will only have access to (i) data they reported,
(ii) data that pertains to a SBS to which they are a counterparty;
(iii) data that pertains to a SBS for which the user is an execution
agent, platform, registered broker-dealer or a third-party reporter;
and (iv) data that ICE Trade Vault is required to make publicly
available.\60\
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\57\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 1; see also Swap Data Repository Rulebook, Security-Based
Swap Data Reporting Annex, Ex. HH.2, sec. 3.1.
\58\ See id.; see also SDR Adopting Release, 80 FR at 14451-52
(Commission noting that confirmation and dispute resolution services
or functions ``are ancillary . . . . [and are] not `core' SDR
services, which would cause a person providing such core services to
meet the definition of an SDR, and thus, require the person to
register with the Commission as an SDR. However, SDRs are required
to perform these two services or functions, and thus, they are
required ancillary services[.] . . . An SDR may delegate some of
these required ancillary services to third party service providers,
who do not need to register as SDRs to provide such services. The
SDR will remain legally responsible for the third party service
providers' activities relating to the required ancillary services
and their compliance with applicable rules under the Exchange
Act.'').
\59\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 1; see also ICE Trade Vault User Agreement, Ex. U.2.
\60\ See id.; see also Security-Based Swap Data Repository User
Onboarding Process Guide, Ex. N.6.
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According to ICE Trade Vault, access to its system is provided to
parties that have a duly executed User Agreement in effect with ICE
Trade Vault.\61\ When enrolling with ICE Trade Vault, users must
designate an administrator with respect to the user's use of ICE Trade
Vault to ensure ICE Trade Vault access is granted by a trusted
individual at the user's firm who is closest to and has the most
knowledge of those in the firm who require access; the administrator
will create, permission and maintain all user names and passwords for
the user.\62\ According to ICE Trade Vault, passwords must meet
technical and procedural processes for information security and must
include at least three of the following elements: Uppercase letters,
lowercase letters, numbers, and special characters.\63\
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\61\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 1; Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.2, sec. 3.1.1; see also ICE Trade Vault User
Agreement, Ex. U.2.
\62\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 1; Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.2, sec. 3.1.1.
\63\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 1.
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ICE Trade Vault may decline the request of an applicant to become a
user of its system if such denial is required in order to comply with
applicable law (e.g., to comply with sanctions administered and
enforced by the Office of Foreign Assets Control of the U.S. Department
of the Treasury).\64\ If an applicant is denied by ICE Trade Vault for
any other reason, the applicant will be entitled to notice and an
opportunity to contest such determination in accordance with the
Rulebook.\65\ If the denial of an application is reversed, the
applicant will be granted access to ICE Trade Vault promptly following
completion of onboarding requirements.\66\ In addition, ICE Trade Vault
may revoke a user's access to ICE Trade Vault following a determination
that (i) the user has violated any provision of the User Agreement
(including by failing to pay any fees when due), the Rulebook,
applicable law or any ICE Trade Vault policies and procedures related
to its SDR service or (ii) such action is necessary or appropriate in
light of ICE Trade Vault's regulatory responsibilities or for the
protection of the integrity of its system (each, an ``Access
Determination'').\67\ Access Determinations shall be made by the CCO
based on the information gathered during the inquiry, if any, and
reviewed by the President and General Counsel of ICE Trade Vault within
5
[[Page 32707]]
business days of such determination prior to implementing any
revocation of access.\68\ Notwithstanding the foregoing, the CCO's
Access Determination may be implemented immediately without prior
review by the President or General Counsel (``Immediate Revocation'')
where the CCO determines such revocation is necessary for the
protection of the integrity of the ICE Trade Vault system or to fulfill
ICE Trade Vault's regulatory responsibilities.\69\ If (i) an Immediate
Revocation occurs or (ii) the President and General Counsel conclude
that an Access Determination is appropriate and in compliance with
applicable law, the CCO shall, within 1 business day, provide notice by
email to the user to which the Access Determination applies, including
in such notice the specific reasons for the determination.\70\ If the
President and General Counsel conclude that limitation or revocation of
access pursuant to an Access Determination made by the CCO would
constitute unreasonable discrimination, the President and General
Counsel shall take such actions as are necessary to maintain or restore
access to ICE Trade Vault, its services or SDR information, as
applicable.\71\
---------------------------------------------------------------------------
\64\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 1; Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.2, sec. 3.1.2.
\65\ See id.
\66\ See id.
\67\ See Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.2, sec. 3.3.
\68\ See id.
\69\ See id.
\70\ See id.
\71\ See id.; see also Swap Data Repository Rulebook, Security-
Based Swap Data Reporting Annex, Ex. HH.2, sec. 3.4 (review and
dispute of revocation of access), 3.5 (final access determinations),
3.6 (implementation of a revocation of access).
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ICE Trade Vault states that it recognizes its responsibility to
ensure data confidentiality and dedicates significant resources to
information security to prevent the misappropriation or misuse of
confidential information and any other SDR information not subject to
public dissemination (i.e., the information identified in Exchange Act
Rule 902(c)) and that it does not, as a condition of accepting SBS data
from users, require the waiver of any privacy rights by such users.\72\
ICE Trade Vault states that it maintains a security policy that sets
forth technical and procedural processes for information security and
contains an extensive list of policies and means of implementation and
that it uses a multi-tiered firewall deployment to provide network
segmentation and access control to its services.\73\ ICE Trade Vault
states that its application servers are housed in a demilitarized
network zone behind external firewalls and that a second set of
internal firewalls further isolate ICE Trade Vault database systems,
while an intrusion system provides added security to detect any threats
and network sensors analyze all internet and private line traffic for
malicious patterns.\74\
---------------------------------------------------------------------------
\72\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 4.
\73\ See id.
\74\ See id.
---------------------------------------------------------------------------
ICE Trade Vault states that tactical controls are regularly
examined and tested by multiple tiers of internal and external test
groups, auditors and independently contracted third-party security
testing firms.\75\ According to ICE Trade Vault, in addition, the
security policy imposes an accountable and standard set of best
practices to protect the confidentiality of users' SDR information,
including confidential information and other SDR information not
subject to public dissemination.\76\ ICE Trade Vault states that it
completes an audit for adherence to the data security policies on at
least an annual basis; the audit tests the following applicable
controls, among others, to ICE Trade Vault systems: (i) Logical access
controls; (ii) logical access to databases; (iii) physical and
environmental controls; (iv) backup procedures; and (v) change
management.\77\ ICE Trade Vault states that it has a robust information
security program and maintains effective and current policies and
procedures to ensure employee compliance; ICE Trade Vault's information
security program includes: Asset management; physical and environmental
security; authorization, authentication and access control management;
internet, email and data policy management, record retention
management; and accountability, compliance and auditability.\78\ ICE
Trade Vault states that it performs network scans and penetration tests
regularly to ensure the information security systems are performing as
designed.\79\
---------------------------------------------------------------------------
\75\ See id.
\76\ See id.
\77\ See id.
\78\ See id.
\79\ See id.
---------------------------------------------------------------------------
ICE Trade Vault maintains and will continue to maintain a robust
emergency and business-continuity and disaster recovery plan
(``Business Continuity Plan'') that allows for timely resumption of key
business processes and operations following unplanned interruptions,
unavailability of staff, inaccessibility of facilities, and disruption
or disastrous loss to one or more of ICE Trade Vault's facilities or
services.\80\ In accordance with the Business Continuity Plan, all
production system hardware and software is replicated in near real-time
at a geographical- and vendor-diverse disaster recovery site to avoid
any loss of data.\81\ ICE Trade Vault shall notify the SEC as soon as
it is reasonably practicable of ICE Trade Vault's invocation of its
emergency authority, any material business disruption, or any threat
that actually or potentially jeopardizes automated system capacity,
integrity, resiliency, availability or security.\82\
---------------------------------------------------------------------------
\80\ See id.
\81\ See id.
\82\ See id.; see also Swap Data Repository Rulebook, Security-
Based Swap Data Reporting Annex, Ex. HH.2, sec. 2.8.3 (``ICE Trade
Vault will notify the SEC as soon as practicable of any action
taken, or proposed to be taken (time permitting), pursuant to this
Rule 2.8.3. The decision-making process with respect to, and the
reasons for, any such action will be recorded in writing. ICE Trade
Vault will also notify Users via email as soon as practicable of any
action taken (time permitting), or proposed to be taken, pursuant to
this Rule 2.8.3.'').
---------------------------------------------------------------------------
2. Discussion
Rule 13n-4(c)(1)(ii) under the Exchange Act requires an SDR to
permit market participants to access specific services offered by the
SDR separately.\83\ Rule 13n-4(c)(1)(iii) requires an SDR to establish,
monitor on an ongoing basis, and enforce clearly stated objective
criteria that would permit fair, open, and not unreasonably
discriminatory access to services offered and data maintained by the
SDR.\84\ Rule 13n-4(c)(1)(iv) requires an SDR to establish, maintain,
and enforce written policies and procedures reasonably designed to
review any prohibition or limitation of any person with respect to
access to services offered, directly or indirectly, or data maintained
by the SDR and to grant such person access to such services or data if
such person has been discriminated against unfairly.\85\ In addition,
Rule 13n-6 requires an SDR, with respect to those systems that support
or are integrally related to the performance of its activities, to
establish, maintain, and enforce written policies and procedures
reasonably designed to ensure that its systems provide adequate levels
of capacity, integrity, resiliency, availability, and security.\86\
---------------------------------------------------------------------------
\83\ 17 CFR 240.13n-4(c)(1)(ii).
\84\ 17 CFR 240.13n-4(c)(1)(iii).
\85\ 17 CFR 240.13n-4(c)(1)(iv).
\86\ 17 CFR 240.13n-6.
---------------------------------------------------------------------------
The Commission received no comments applicable to these
requirements. As described above, the ITV Application includes
procedures for onboarding and maintaining ongoing access to users that
are fair, open, reasonable and not unreasonably discriminatory. These
procedures include user agreements that reflect
[[Page 32708]]
clear and specific minimum standards for users to follow in seeking to
access SBS data held at the SDR. The ITV Application also includes
reasonable provisions for limiting, denying, and revoking access to SDR
systems that include procedures for review and reconsideration of any
determination related to limiting, denying, or revoking a user's
access. The Commission believes that the procedures described above
further help ensure that the access requirements are fair, open, and
not unreasonably discriminatory. In addition, the ITV Application
includes policies and procedures designed to ensure that the SDR's
automated systems maintain adequate levels of capacity, integrity,
resiliency, availability, and security that protect against loss of
data, employ geographic diversity in their site selection, and account
for service disruptions.
C. Acceptance and Use of SBS Data
1. Summary of ICE Trade Vault's Application
ICE Trade Vault states that it will accept data in respect of all
SBS trades in the credit derivatives asset class and promptly records
such data upon receipt.\87\ ICE Trade Vault requires all users to
report complete and accurate trade information and to review and
resolve all error messages generated by the ICE Trade Vault system with
respect to the data they have submitted.\88\ According to ICE Trade
Vault, access to SDR information by ICE Trade Vault employees and
others performing functions on behalf of ICE Trade Vault is strictly
limited to those with the direct responsibility for supporting the ICE
Trade Vault system, users and regulators.\89\ ICE Trade Vault employees
and others performing functions on behalf of ICE Trade Vault are
prohibited from using SDR information other than in the performance of
their job responsibilities.\90\ In accordance with applicable SEC
regulations, ICE Trade Vault may disclose, for commercial purposes,
certain SDR information; any such disclosures shall be made solely on
an aggregated basis in a manner that ensures that the disclosed SDR
information cannot reasonably be attributed to individual transactions
or users.\91\
---------------------------------------------------------------------------
\87\ See Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.2, sec. 4.1.
\88\ See Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.2, sec. 4.2.1.
\89\ See Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.2, sec. 3.8; Security-Based SDR Service
Disclosure Document, Ex. V.2, sec. 5.
\90\ See id.
\91\ See id.
---------------------------------------------------------------------------
ICE Trade Vault states that, in accordance with Exchange Act Rule
13n-5(b)(5), it maintains internal policies and procedures in place to
ensure its recording process and operation does not invalidate or
modify the terms of trade information, and that it regularly audits
these controls to ensure the prevention of unauthorized and unsolicited
changes to SDR information maintained in the ICE Trade Vault system
through protections related to the processing of SBS.\92\
---------------------------------------------------------------------------
\92\ See Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.2, sec. 4.5.
---------------------------------------------------------------------------
Additionally, ICE Trade Vault states that it reasonably relies on
the accuracy of trade data submitted by users and that all users must
complete a conformance test to validate data submission integrity prior
to ICE Trade Vault's acceptance of actual SBS data and must immediately
inform ICE Trade Vault of any system or technical issues that may
affect the accuracy of SBS data transmissions.\93\ ICE Trade Vault
states that users are responsible for the timely resolution of trade
record errors and disputes.\94\ ICE Trade Vault provides users
electronic methods to extract SDR information for trade data
reconciliation.\95\ Disputes involving clearing transactions shall be
resolved in accordance with the clearing agency's rules and applicable
law.\96\ For an alpha SBS executed on a platform and reported by a
platform user, disputes must be resolved in accordance with the
platform's rules and applicable law.\97\ For SBS that are reported by a
user that is neither a platform nor a clearing agency, counterparties
shall resolve disputes with respect to SDR information in accordance
with the counterparties' master trading agreement and applicable
law.\98\ Users that are non-reporting sides may verify or dispute the
accuracy of trade information that has been submitted by a reporting
side to ICE Trade Vault, where the non-reporting side is identified as
the counterparty, by sending a verification message indicating that it
verifies or disputes such trade information.\99\ If the reporting side
for a SBS transaction discovers an error in the information reported
with respect to a SBS, or receives notification from a counterparty of
an error, the reporting side shall promptly submit to ICE Trade Vault
an amended report that corrects such error.\100\ ICE Trade Vault will
disseminate a corrected transaction report in instances where the
initial report included erroneous primary trade information.\101\ Users
are required to notify ICE Trade Vault promptly of disputed trade data
by utilizing the ``Dispute'' functionality; when a User ``disputes'' a
trade, the status of the trade will be recorded as ``Disputed,'' and
notice of the dispute will be sent promptly to the other party to the
trade; the trade record may then be amended or canceled upon mutual
agreement of the parties; the status of the trade will remain
``Disputed'' until either party to the trade provides evidence
satisfactory to ICE Trade Vault that the dispute has been
resolved.\102\ ICE Trade Vault will provide regulators with reports
identifying the SDR information that is deemed disputed.\103\
---------------------------------------------------------------------------
\93\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 6.
\94\ See id.; see also Swap Data Repository Rulebook, Security-
Based Swap Data Reporting Annex, Ex. HH.2, sec. 4.6 and 4.7.
\95\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 6; Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.2, sec. 4.6.
\96\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 6; Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.2, sec. 4.2.4 and 4.7.
\97\ See id.
\98\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 6; Swap Data Repository Rulebook, Security-Based Swap Data
Reporting Annex, Ex. HH.2, sec. 4.7.
\99\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 6; see also Swap Data Repository Rulebook, Security-Based
Swap Data Reporting Annex, Ex. HH.2, sec. 4.2.3.
\100\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 6; see also Swap Data Repository Rulebook, Security-Based
Swap Data Reporting Annex, Ex. HH.2, sec. 4.2.2.
\101\ See id.
\102\ See id.; see also Swap Data Repository Rulebook, Security-
Based Swap Data Reporting Annex, Ex. HH.2, sec. 4.7.
\103\ See Swap Data Repository Rulebook, Security-Based Swap
Data Reporting Annex, Ex. HH.2, sec. 4.7; see also Security-Based
SDR Service Disclosure Document, Ex. V.2, sec. 6.
---------------------------------------------------------------------------
2. Discussion
Rule 13n-5(b)(1)(i) under the Exchange Act requires an SDR to
establish, maintain, and enforce written policies and procedures
reasonably designed for the reporting of complete and accurate
transaction data to the SDR and to accept all transaction data that is
reported in accordance with such policies and procedures.\104\
Additionally, Rule 13n-5(b)(1)(ii) requires that if an SDR accepts any
SBS transaction in a particular asset class, the SDR must accept all
SBS transactions in that asset class that are reported to it in
accordance with its policies and procedures.\105\ In addition,
[[Page 32709]]
Rule 13n-5(b)(3) requires an SDR to establish, maintain, and enforce
written policies and procedures reasonably designed to ensure that the
transaction data and positions that it maintains are complete and
accurate.\106\ Rule 13n-5(b)(5) requires an SDR to establish, maintain,
and enforce written policies and procedures reasonably designed to
prevent any provision in a valid SBS transaction from being invalidated
or modified through the procedures or operations of the SDR.\107\ Rule
13n-5(b)(6) requires an SDR to establish procedures and provide
facilities reasonably designed to effectively resolve disputes over the
accuracy of the transaction data and positions that are recorded in the
SDR.\108\
---------------------------------------------------------------------------
\104\ 17 CFR 240.13n-5(b)(1)(i).
\105\ 17 CFR 240.13n-5(b)(1)(ii).
\106\ 17 CFR 240.13n-5(b)(3).
\107\ 17 CFR 240.13n-5(b)(5).
\108\ 17 CFR 240.13n-5(b)(6).
---------------------------------------------------------------------------
Furthermore, Section 13(n)(5)(F) of the Exchange Act and Rule 13n-
4(b)(8) thereunder each require an SDR to maintain the privacy of any
and all SBS transaction information that the SDR receives.\109\ In
addition, Rule 13n-9(b)(1) requires an SDR to establish, maintain, and
enforce written policies and procedures reasonably designed to protect
the privacy of any and all SBS transaction information that the SDR
receives and that include policies and procedures to protect the
privacy of any and all SBS transaction information that the SDR shares
with affiliates and non-affiliated third parties.\110\ Rule 13n-9(b)(2)
also requires an SDR to establish, and maintain safeguards, policies,
and procedures reasonably designed to prevent the misappropriation or
misuse, directly or indirectly, of any confidential information
received by the SDR, material non-public information, or intellectual
property, such as trading strategies or portfolio positions, by: (i)
Limiting access to such information and intellectual property; (ii)
having standards for trading by persons associated with the SDR for
their personal benefit or the benefit of others; and (iii) having
adequate oversight to ensure compliance with these safeguards,
policies, and procedures.\111\
---------------------------------------------------------------------------
\109\ See 15 U.S.C. 78m(n)(5)(F); 17 CFR 240.13n-4(b)(8),
240.13n-9.
\110\ 17 CFR 240.13n-9.
\111\ See 17 CFR 240.13n-9(b)(2).
---------------------------------------------------------------------------
The Commission received no comments applicable to these
requirements. As described above, the ITV Application includes policies
and procedures designed to protect transaction data and its systems by
restricting access to users, who are obligated to comport with ICE
Trade Vault's rules in a manner that facilitates ICE Trade Vault's
compliance with its obligations under Commission rules. The Commission
views this approach as reasonable. Access to ICE Trade Vault's systems
to view trade data or verify information should be conditioned such
that ICE Trade Vault retains the ability to protect the data, its
systems, and its users. The Commission notes that ICE Trade Vault
retains the responsibility, among other things, to ensure that its
policies and procedures are reasonably designed to: (i) Ensure trade
data reported to it is complete and accurate, as required under Rule
13n-5(b)(1); (ii) ensure that its systems provide adequate levels of
capacity, integrity, resiliency, availability and security, as required
under Rule 13n-6; and (iii) ensure that it protects the privacy and
confidentiality of transaction information, as required under Rule 13n-
9(b). Additionally, the ITV Application includes procedures designed to
ensure that any valid provisions of trade information are not modified
or invalidated, and these procedures include controls that are
regularly audited and processing systems designed to prevent
unauthorized changes to SBS information. The Commission also believes
that ICE Trade Vault provides procedures and facilities reasonably
designed to effectively resolve disputes over the accuracy of the
transaction data and positions that are recorded in the SDR.
Furthermore, the ITV Application contains policies and procedures
regarding both data security and the privacy of SBS data, the latter of
which includes in each case procedures limiting access to SBS data to
employees with either direct or support responsibilities related to
systems that maintain the data, and that limit the use of such data in
all cases to the performance of job responsibilities. The Commission
believes that such policies and procedures also establish a standard
for the trading practices of personnel that prevents the use of the
data for personal benefit or the benefit of others. In addition, ICE
Trade Vault has policies and procedures that, when taken together with
policies and procedures regarding the duties of the CCO,\112\ are
reasonably designed to protect the privacy of SBS transaction
information, including information shared with affiliates and third
parties, through adequate oversight to ensure compliance with the
policies and procedures described above.
---------------------------------------------------------------------------
\112\ See supra Part III.A (describing policies and procedures
regarding the CCO and conflicts of interest).
---------------------------------------------------------------------------
D. Fees
1. Summary of ICE Trade Vault's Application
According to ICE Trade Vault, all fees imposed by ICE Trade Vault
in connection with the reporting of swap data shall be equitable and
established in a uniform and non-discriminatory manner as determined
from time-to-time by ICE Trade Vault.\113\ In addition, ICE Trade Vault
represents that all fees will be commensurate to ICE Trade Vault's
costs for providing its SDR service. ICE Trade Vault states it will
only assess fees as noted in its fee schedule, and there will be no
``hidden fees'' associated with ICE Trade Vault Service.\114\
---------------------------------------------------------------------------
\113\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 8; see also Swap Data Repository Rulebook, Security-Based
Swap Data Reporting Annex, Ex. HH.2, sec. 2.7 (``In accordance with
Exchange Act Rule 13n-4(c), any dues, fees or other charges imposed
by, and any discounts or rebates offered by, ICE Trade Vault in
connection with the ICE SBSDR Service shall be fair and reasonable
and not unreasonably discriminatory. ICE Trade Vault dues, fees,
other charges, discounts, or rebates shall be applied consistently
across all similarly situated Users.'')
\114\ See ICE Trade Vault Security-Based Swap Data Repository
Service and Pricing Schedule, Ex. M.2.
---------------------------------------------------------------------------
The most current pricing schedule is made available via the ICE
Trade Vault website. ICE Trade Vault applies fees according to the type
of SDR user accessing ICE Trade Vault: Counterparty, clearing agency,
execution agent and third party reporter.\115\ According to ICE Trade
Vault, in the case of the execution agent versus the third party
reporter, the application of fees is differentiated based upon the type
of service provided in each case.\116\ According to ICE Trade Vault, an
execution agent is directly involved with trade execution; as such, it
is charged directly for the fees associated with the SDR just as a
counterparty, whereas the underlying funds are not charged a fee.\117\
However, the third party reporter is not involved with the trade
execution and simply provides a service to counterparties who have an
obligation to report; therefore, according to ICE Trade Vault, they are
assessed a fee for each of those reporting parties on behalf of whom
they are reporting the trades.\118\ According to ICE Trade Vault, as a
result, the third party reporter is able to pass the cost of its
service to each of its counterparties utilizing third party reporting;
this
[[Page 32710]]
allows for the cost of ICE Trade Vault to be fair and equal for
reporting parties whether they choose to report directly to ICE Trade
Vault or via a third party reporter.\119\ Additionally, according to
ICE Trade Vault, clearing agency fees vary from other users due to the
unique requirements necessary to support this type of customer; ICE
Trade Vault must build out a separate custom interface(s) and purchase
and maintain additional hardware necessary to support the high volume
of trades submitted to the SDR by the clearing agency; as a result, the
minimum fee outlined in the ICE Trade Vault pricing schedule reflects
the costs incurred by ICE Trade Vault to purchase the necessary
hardware and software and the cost to build out the SDR system; in
addition, the clearing agency fees also reflect the additional ongoing
support and maintenance costs for this type of high volume user.\120\
According to ICE Trade Vault, all fees within the schedule, including
the monthly per $1MM notional, are cost based to ensure ICE Trade Vault
may operate with a minimum margin while allowing for a reasonable cost
to its customers, given the expected volume of trades it expects to
receive as an SDR.\121\
---------------------------------------------------------------------------
\115\ See Dues, Fees and Charges, Ex. M.1.
\116\ See id.
\117\ See id.
\118\ See id.
\119\ See id.
\120\ See id.
\121\ See id.
---------------------------------------------------------------------------
ICE Trade Vault will assess a Repository Fee upon its acceptance of
any trade message for an SBS transaction.\122\ For both cleared and
uncleared/bilateral transactions, the Repository Fee rates will be
$1.35 per $1/MM Notional. For cleared SBS, the Repository Fee will be
charged to the clearing agency that cleared the SBS and, for uncleared
or bilateral SBS transactions, the fee will be charged to the user
which submitted the record as a counterparty or execution agent.
---------------------------------------------------------------------------
\122\ See ICE Trade Vault Security-Based Swap Data Repository
Service and Pricing Schedule, Ex. M.2.
---------------------------------------------------------------------------
For transactions submitted directly by a clearing agency user,
clearing agency users will have a minimum monthly invoice per user of
$10,000, and the invoice will be the greater of (i) the total of all
Repository Fees incurred by user or (ii) $10,000.\123\ If a clearing
agency user does not have any submittals in a given month but does have
open positions, the $10,000 will be charged as a minimum maintenance
fee in the place of any Repository Fees. If a clearing agency user does
not have any submittals in a given month and does not have any open
positions then no fees will be charged.
---------------------------------------------------------------------------
\123\ See id.
---------------------------------------------------------------------------
For transactions submitted directly by a counterparty user, the
minimum monthly invoice per user will be $375.\124\ In a given month,
each user represented as a counterparty shall be invoiced the greater
of (i) the total of all Repository Fees incurred by user or (ii) $375.
If the user does not have any submittals in a given month but does have
open positions on SBS in the ICE Trade Vault Service, the $375 will be
charged as a minimum maintenance fee in the place of any Repository
Fees. If the user does not have any submittals in a given month and
does not have any open positions then no fees will be charged.
---------------------------------------------------------------------------
\124\ See id.
---------------------------------------------------------------------------
When an execution agent submits an SBS transaction on behalf of the
counterparty and is listed as the execution agent, the execution agent
will be charged the Repository Fee (not the underlying funds, accounts
or other principals).\125\ When an execution agent submits an SBS
transaction where the execution agent is acting as the counterparty, it
will be charged the Repository Fee. The minimum monthly invoice for an
execution agent will be a total of $375, including all transactions in
which the executing agent is acting on behalf of a counterparty or
acting as its own counterparty.
---------------------------------------------------------------------------
\125\ See id.
---------------------------------------------------------------------------
For transactions submitted by third party reporters, third party
reporters will only be charged a Repository Fee for those transactions
they report on behalf of non-users of ICE Trade Vault.\126\ Each non-
user on whose behalf the third party reporter submits the transaction
will have an invoice created as if it were a user, and will be invoiced
the greater of (i) the total of all Repository Fees incurred by non-
user or (ii) $200. If the non-user does not have any submittals by the
third party reporter in a given month but does have open positions,
$200 will be charged as a minimum maintenance fee in the place of any
Repository Fees. If the non-user does not have any submittals by the
third party reporter in a given month and does not have any open
positions then no fees will be charged. The details regarding the
Repository Fees incurred or the minimum monthly amount for each non-
user will be detailed on the third-party reporter's invoice and summed
across all non-users to determine the total amount charged to any one
third party reporter. ICE Trade Vault will solely provide invoices to
the third party reporter for trades reported on behalf of the non-user
and will not issue an invoice directly to any non-users.
---------------------------------------------------------------------------
\126\ See id.
---------------------------------------------------------------------------
2. Discussion
Section 13(n)(7)(A) of the Exchange Act prohibits an SDR (unless
necessary or appropriate to achieve the purposes of the Exchange Act)
from: (i) Adopting any rule or taking any action that results in any
unreasonable restraint of trade; or (ii) imposing any material anti-
competitive burden on the trading, clearing, or reporting of
transactions.\127\ Rule 13n-4(c)(1)(i) under the Exchange Act also
requires an SDR to ensure that any dues, fees, or other charges that it
imposes, and any discounts or rebates that it offers, are fair and
reasonable and not unreasonably discriminatory.\128\ It also requires
that such dues, fees, other charges, discounts, or rebates be applied
consistently across all similarly situated users of the SDR's
services.\129\ In discussing the fee provisions of the SDR Rules, the
Commission stated that it would take a flexible approach in evaluating
the fairness and reasonableness of an SDR's fees and charges on a case-
by-case basis, recognizing that there may be instances in which an SDR
could charge different users different prices for the same or similar
services.\130\
---------------------------------------------------------------------------
\127\ 15 U.S.C. 78m(n)(7)(A).
\128\ 17 CFR 240.13n-3(c)(1)(i).
\129\ Id.
\130\ See SDR Adopting Release, supra note 7, at 14479. In
making this statement, however, the Commission also noted that
charging different users different prices for the same or similar
services cannot be unreasonably discriminatory.
---------------------------------------------------------------------------
The Commission received no comments applicable to these
requirements. ICE Trade Vault states that all of the fees it charges,
including the Repository Fee, are cost based to ensure ICE Trade Vault
may operate with a minimum margin while allowing for a reasonable cost
to its customers, given the expected volume of trades ICE Trade Vault
expects to receive as an SDR. The fees include a fixed component and a
variable component that increases with the usage of SDR services. Such
a fee structure is generally in line with the economics of
recordkeeping services for security-based swaps, which involve a fixed
cost investment and marginal costs of operation.\131\ In addition, ICE
Trade Vault's approach to fees would be consistent across CFTC and
Commission reporting requirements, and, as a general matter, the
Commission believes it is reasonable for ICE Trade Vault to establish
similar fees where its
[[Page 32711]]
obligations require similar levels of services and infrastructure.
---------------------------------------------------------------------------
\131\ See generally Regulation SBSR Adopting Release, 81 FR at
53551 (stating that the provision of recordkeeping services for
security-based swaps involves a predominantly fixed cost investment
with low marginal costs of operation).
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With respect to the specific elements of ICE Trade Vault's fee
structure, the Commission notes the following. First, the fixed
component of ICE Trade Vault's fees would be consistent with the
applicant recovering the fixed costs investment associated with setting
up and maintaining a user account, while the variable component would
be consistent with the applicant recovering marginal costs of
operation, i.e., costs that increase with the provision of SDR services
to the user. Second, the Commission believes that the lower minimum
maintenance fee that ICE Trade Vault imposes on third party reporters
is consistent with third party reporters and their non-user clients
placing a lower burden on ICE Trade Vault's staff, resources, and
systems. Non-users would not require ICE Trade Vault to incur
onboarding costs and costs associated with the maintenance of user
accounts. To the extent that third party reporters are more efficient
users of ICE Trade Vault's reporting infrastructure than other
categories of users, ICE Trade Vault could anticipate lower costs
associated with trade messages reported by third party reporters on
behalf of their non-User clients.
Third, the Commission believes the differentiation in fees between
third party reporters and execution agents is consistent with ICE Trade
Vault's approach of attributing fees to entities that are directly
involved in trade execution and is fair, reasonable, and not
unreasonably discriminatory.\132\ In the case of an execution agent,
ICE Trade Vault states that such an entity is directly involved in the
execution of the transaction reported to ICE Trade Vault. As such, the
execution agent is directly assessed fees as any other entity that is
directly involved in the execution of a transaction, whereas the
underlying funds are not charged a fee. In contrast, a third party
reporter is not directly involved with the execution of the reported
transaction and simply provides a service to counterparties that are
directly involved with execution of the reported transaction and also
have an obligation to report. Therefore, ICE Trade Vault assesses a fee
to a third party reporter for each of the underlying reporting parties
on whose behalf the third party reporter reports the trades to ICE
Trade Vault. ICE Trade Vault further states that it will create an
invoice for each of underlying reporting party as if the underlying
reporting party were a user. The Commission understands that such an
arrangement allows ICE Trade Vault to collect fees from the underlying
reporting parties.\133\
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\132\ For example, the minimum monthly fee due from a third
party reporter submitting data for two accounts would be $400, while
the minimum due from an execution agent submitting data for two
accounts would be $375.
\133\ See ITV Pricing Schedule, Ex. M.1.
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Fourth, the Commission believes that the fees that ICE Trade Vault
charges a clearing agency, while different than those imposed on other
types of users, are fair, reasonable, and not unreasonably
discriminatory. Because of their central role in many security-based
swap transactions and their provision of netting and compression
services to members clearing agency users are directly involved in, and
report a significant number of security-based swaps.\134\ To support
this category of users, ICE Trade Vault has to incur additional costs
to handle large volumes of transactions generated over a short period
of time.
---------------------------------------------------------------------------
\134\ See Regulation SBSR Adopting Release, 81 FR at 53630 (the
Commission estimating that there will be approximately 760,000
reportable events per year that are clearing transactions or life
cycle events associated with clearing transactions).
---------------------------------------------------------------------------
Taking into account the above, the Commission believes that the ITV
Application sets fees at levels that are fair and reasonable and not
unreasonably discriminatory.
E. Recordkeeping
1. Summary of ICE Trade Vault's Application
According to ICE Trade Vault, users access ICE Trade Vault through
a web-based front-end that requires user systems to (a) satisfy the
minimum computing system and web browser requirements specified in the
ICE Trade Vault Technical Guides; (b) support HTTP 1.1 and 128-bit or
stronger SSL data encryption; and (c) the most recent version of
Chrome.\135\ Trade information submitted to ICE Trade Vault is saved in
a non-rewriteable, non-erasable format, to a redundant, local database
and a remote disaster recovery database in near real-time; the database
of trade information submitted to ICE Trade Vault is backed-up to tape
daily with tapes moved offsite weekly.\136\ Counterparties' individual
trade data records remain available to users at no charge for online
access through ICE Trade Vault from the date of submission until five
years after expiration of the trade (last day of delivery or settlement
as defined for each product).\137\ After the initial five-year period,
counterparties' trade data will be stored off-line and remain available
upon a three-day advance request to ICE Trade Vault, until ten years
from the termination date.\138\ According to ICE Trade Vault, users
will retain unimpaired access to their online and archived trade
data.\139\ However, if a user or its regulator requests or requires
archived trade information from ICE Trade Vault to be delivered other
than via the web-based front-end or the application programming
interface (``API'') or in a non-standard format, such user may be
required, in accordance with the ICE Trade Vault schedule of fees and
charges, to reimburse ICE Trade Vault for its reasonable expenses in
producing data in response to such request or requirement as such
expenses are incurred.\140\ Similarly, ICE Trade Vault may require a
user to pay all reasonable expenses associated with producing records
relating to its transactions pursuant to a court order or other legal
process, as those expenses are incurred by ICE Trade Vault, whether
such production is required at the instance of such user or at the
instance of another party with authority to compel ICE Trade Vault to
produce such records.\141\
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\135\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 2; see also Swap Data Repository Rulebook, Security-Based
Swap Data Reporting Annex, Ex. HH.2, sec. 3.7.
\136\ See Swap Data Repository Rulebook, Security-Based Swap
Data Reporting Annex, Ex. HH.2, sec. 7.1; see also Security-Based
SDR Service Disclosure Document, Ex. V.2, sec. 3.
\137\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 3.
\138\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 3.
\139\ See id.
\140\ See id.; see also Swap Data Repository Rulebook, Security-
Based Swap Data Reporting Annex, Ex. HH.2, sec. 7.1.
\141\ See id.
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2. Discussion
Rule 13n-5(b)(4) of the Exchange Act requires an SDR to maintain
transaction data and related identifying information for not less than
five years after the SBS expires and historical positions for not less
than five years in a place and format that is readily accessible and
usable to the Commission and other persons with authority to access or
view such information and in an electronic format that is non-
rewriteable and non-erasable.\142\ Rule 13n-7 requires an SDR to make
and keep current books and records relating to its business for at
least five years, and for the first two years, keep such records in a
place that is immediately available to representatives of the
Commission for inspection and examination.\143\ In addition, Rule 13n-
5(b)(8) requires an SDR to make and keep current a plan to ensure that
the transaction data and
[[Page 32712]]
positions that are recorded in the SDR continue to be maintained in
accordance with Rule 13n-5(b)(7),\144\ including procedures for
transferring the transaction data and positions to the Commission or
its designee.\145\
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\142\ 17 CFR 240.13n-5(b)(4).
\143\ 17 CFR 240.13n-7.
\144\ Rule 13n-5(b)(7) states that, if an SDR ceases doing
business or ceases to be registered pursuant to Section 13(n) of the
Exchange Act, the SDR must continue to preserve, maintain, and make
accessible the transaction data and historical positions required to
be collected, maintained, and preserved by this section in the
manner required by the Exchange Act and the rules and regulations
thereunder and for the remainder of the period required by this
section. 17 CFR 240.13n-5(b)(7).
\145\ 17 CFR 240.13n-8.
---------------------------------------------------------------------------
The Commission received no comments applicable to these
requirements. As described above, the ITV Application provides for the
recordkeeping of SBS transaction data for at least five years following
the termination of the transaction,\146\ and will be readily accessible
throughout the life of a security-based swap in an electronic format
that is non-rewriteable and non-erasable.\147\ In addition, ICE Trade
Vault provides for the transferring of transaction data and positions
to the Commission via reports designed to provide visibility into
positions and the status of submitted trades and also provides for
direct electronic access to data reported to ICE Trade Vault in
satisfaction of the Commission's regulatory requirements both for the
Commission and, where such access is permitted by applicable law and
any relevant Memorandum of Understanding or other arrangement, the
Commission's designee.
---------------------------------------------------------------------------
\146\ See Security-Based SDR Service Disclosure Document, Ex.
V.2, sec. 3.
\147\ See id.
---------------------------------------------------------------------------
F. Disclosure
1. Summary of ICE Trade Vault's Application
ICE Trade Vault publishes a disclosure document to provide a
summary of information regarding its service offerings and the SBS data
it maintains.\148\ Specifically, the disclosure document sets forth a
description of the following: (i) Criteria for access to the ICE Trade
Vault service and SBS data; (ii) criteria for connection and linking to
ICE Trade Vault; (iii) policies and procedures to safeguard SBS data
and operational reliability; (iv) policies and procedures to protect
the privacy of SBS data; (v) policies and procedures on ICE Trade Vault
commercial and non-commercial use of SBS data; (vi) ICE Trade Vault
data accuracy and dispute resolution procedures; (vii) ICE Trade Vault
services; (viii) ICE Trade Vault pricing; and (ix) ICE Trade Vault
governance arrangements.\149\
---------------------------------------------------------------------------
\148\ See Security-Based SDR Service Disclosure Document, Ex.
V.2.
\149\ See id.
---------------------------------------------------------------------------
2. Discussion
Rule 13n-10 under the Exchange Act requires that, before accepting
any SBS data from a market participant or upon a market participant's
request, an SDR shall furnish to the market participant a disclosure
document that contains certain written information, which must
reasonably enable the market participant to identify and evaluate
accurately the risks and costs associated with using the SDR's
services.\150\ This written information must contain the following: (i)
The SDR's criteria for providing others with access to the services
offered and data it maintains; (ii) its criteria for those seeking to
connect to or link with the SDR; (iii) a description of its policies
and procedures regarding its safeguarding of data and operational
reliability, as described in Rule 13n-6; (iv) a description of its
policies and procedures reasonably designed to protect the privacy of
SBS transaction information that it receives, as described in Rule 13n-
9(b)(1); (v) a description of its policies and procedures regarding its
noncommercial and commercial use of SBS transaction information that it
receives, as described in Rule 13n-5(b)(6); (vi) a description of its
dispute resolution procedures, as described in Rule 13n-5(b)(6); (vii)
a description of all the SDR's services, including any ancillary
services; and (viii) the SDR's updated schedule of any dues; unbundled
prices, rates or other fees for all of its services, including
ancillary services; any discounts or rebates offered; and the criteria
to benefit from such discounts or rebates; and (ix) a description of
its governance arrangements.\151\
---------------------------------------------------------------------------
\150\ 17 CFR 240.13n-10.
\151\ See id.
---------------------------------------------------------------------------
The Commission received no comments applicable to these
requirements. As described throughout this order, the ITV Application
includes extensive discussion of ICE Trade Vault's policies and
procedures with respect to access,\152\ the use of SBS transaction
information,\153\ service offerings, including ancillary services,\154\
and governance arrangements.\155\ The Commission believes that ICE
Trade Vault's Disclosure Document presents a reasonably comprehensive
view of the applicant's overall service offering, from which a
potential user could identify and evaluate accurately the risks and
costs associated with using the SDR's services.\156\ In addition,
regarding the requirement to furnish the document to market
participants, the Commission understands that ICE Trade Vault publishes
similar disclosure documents on its website,\157\ and anticipates the
same for ICE Trade Vault's Disclosure Document relevant to this
application.
---------------------------------------------------------------------------
\152\ See supra Part III.B (describing policies and procedures
with respect to access and information security).
\153\ See supra Part III.C (describing policies and procedures
with respect to acceptance and use of SBS data).
\154\ See supra Part III.D (describing policies and procedures
with respect to fees).
\155\ See supra Part III.A (describing policies and procedures
with respect to governance arrangements, the duties of the CCO, and
conflicts of interest).
\156\ See Security-Based SDR Service Disclosure Document, Ex.
V.2.
\157\ See, e.g., <a href="https://www.theice.com/publicdocs/ICE_Trade_Vault_Disclosure_Document.pdf">https://www.theice.com/publicdocs/ICE_Trade_Vault_Disclosure_Document.pdf</a> (publishing a disclosure
document pursuant to CFTC requirements).
---------------------------------------------------------------------------
G. Regulatory Reporting and Public Dissemination
As a registered SDR, ICE Trade Vault would carry out an important
role in the regulatory reporting and public dissemination of SBS
transactions. As noted above, ICE Trade Vault has stated that it
intends to rely on the no-action statement included in the ANE Adopting
Release for the period set forth in the ANE Adopting Release with
respect to the credit derivatives asset class.\158\ Therefore, ICE
Trade Vault does not need to include materials in its application
explaining how it would comply with the provisions of the SBS Reporting
Rules noted in the no-action statement.\159\ Instead, ICE Trade Vault
may rely on its discussion about how it complies with comparable CFTC
requirements pertaining to regulatory reporting and public
dissemination of swap transactions.
---------------------------------------------------------------------------
\158\ See supra note 30 and accompanying text.
\159\ However, the ITV Application includes provisions
explaining how it would require users to identify SBS, as required
by Rule 901(c)(1) of Regulation SBSR. See Security-Based SDR Service
Disclosure Document, Ex. N.5 (fields 146-148). The ITV Application
also includes a provision explaining how it would comply with a
condition to the no-action statement included in the ANE Adopting
Release. See Security-Based SDR Service Disclosure Document, Ex.
N.4, sec. 3.5 (providing, in the case of a credit security-based
swap, for dissemination of a capped notional size of $5 million if
the true notional size of the transaction is $5 million or greater).
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In the no-action statement, the Commission stated that an applicant
``will not need to include materials in its application explaining how
it would comply with the provisions [specifically noted as not
providing a basis for a Commission enforcement action during
[[Page 32713]]
the pendency of the statement].'' \160\ The applicant ``could instead
rely on its discussion about how it complies with comparable CFTC
requirements.'' \161\ In its application, ICE Trade Vault provided
exhibits that adapted its policies and procedures for regulatory
reporting and public dissemination of swaps for use in the SBS market.
The Commission believes that, with respect to its role in the
regulatory reporting and public dissemination of SBS transactions, ICE
Trade Vault has satisfied the approach described by the Commission in
the no-action statement regarding the information and representations
sufficient to support its approval for registration as an SDR and
SIP.\162\
---------------------------------------------------------------------------
\160\ ANE Adopting Release, supra note 12, at 6348.
\161\ Id.
\162\ Because ICE Trade Vault has elected to rely on the no-
action statement, see supra note 30, the Commission has not
evaluated the ITV Application against any provisions of Regulation
SBSR specifically noted as not providing a basis for a Commission
enforcement action during the pendency of the statement.
---------------------------------------------------------------------------
ISDA Letter II raised several issues with respect to the ITV
Application. First, ISDA stated that there are challenges associated
with ICE TV's requirements for reporting a counterparty identity when
the counterparty does not have a legal entity identifier (``LEI'') and
suggested that ICE Trade Vault instead follow the approach set out in
the DDR Rulebook.\163\ In addition, ISDA recommended that ICE Trade
Vault make a minor adjustment to the boolean indicator for the
``Package Trade Flag.'' \164\ These scenarios can arise in the
reporting of a swap transaction under the CFTC reporting rules
currently, and ICE Trade Vault has represented that it is in compliance
with applicable CFTC requirements and intends to rely on the
Commission's position outlined in the ANE Adopting Release for
applicable reporting rules and SBSDR duties for the period set forth
therein. Therefore, these comments do not preclude the Commission's
approval of ICE Trade Vault's application to register as an SDR and as
a SIP.
---------------------------------------------------------------------------
\163\ See ISDA Letter II at 2-3.
\164\ See id. at 4.
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In addition, ISDA stated that the ITV Rulebook should ``discuss
`Counterparty 2' identifiers that will be permitted under the new
[CFTC] swap data reporting rules.'' \165\ To the extent that this
suggestion involves changes to ICE Trade Vault's systems, policies, and
procedures for complying with future CFTC requirements, they are not
part of ICE Trade Vault's existing systems, policies, and procedures
and thus are not germane to the application being considered by the
Commission. However, the Commission expects that ICE Trade Vault will,
in the future, explain to its participants how changes made to the
systems, policies, and procedures for complying with CFTC swap data
reporting requirements will impact the reporting of security-based swap
transactions.
---------------------------------------------------------------------------
\165\ Id. at 3. The comment refers to revisions to Parts 43 and
45 adopted by the CFTC in September 2020, which include requirements
for reporting new data elements as well as changes to how existing
data elements should be reported. See Part 43 revisions, available
at: <a href="http://www.cftc.gov/sites/default/files/2020/11/2020-21568a.pdf">www.cftc.gov/sites/default/files/2020/11/2020-21568a.pdf</a>; Part
45 revisions, available at: <a href="http://www.cftc.gov/sites/default/files/2020/11/2020-21569a.pdf">www.cftc.gov/sites/default/files/2020/11/2020-21569a.pdf</a>.
---------------------------------------------------------------------------
ISDA also recommended that unique identification codes generated by
ICE Trade Vault be 52 rather than 54 characters in length, to align
with the global standard for unique transaction identifiers (``UTIs''),
which are 52 characters in length.\166\ Although the Commission
anticipates that ICE Trade Vault will utilize the global UTI system
when implemented, implementation has not yet occurred. Therefore, this
comment does not preclude the Commission's approval of ICE Trade
Vault's application to register as an SDR and as a SIP.
---------------------------------------------------------------------------
\166\ See ISDA Letter II at 3.
---------------------------------------------------------------------------
Furthermore, ISDA recommended that, until the global standard for
unique product identifiers (``UPIs'') comes into effect, ICE Trade
Vault utilize the ISDA Taxonomy for product identifiers rather than ICE
Trade Vault's own product taxonomy.\167\ The UPI system, like the UTI
system, is not yet in effect. In the absence of an internationally
recognized system, ICE Trade Vault may assign product identifiers using
its own policies and procedures. Therefore, this comment does not
preclude the Commission's approval of ICE Trade Vault's application to
register as an SDR and as a SIP.
---------------------------------------------------------------------------
\167\ See id. at 3-4.
---------------------------------------------------------------------------
ISDA also contested the requirement in ITV Rulebook to report ``Not
Applicable'' where a data field is not applicable for a historical
security-based swap transaction or ``an exotic SBS submission.'' \168\
Nothing in Regulation SBSR prohibits a registered SDR from requiring a
reporting person to submit an affirmative response of ``Not Available''
instead of leaving a data field blank. This approach allows the
registered SDR and the Commission to differentiate between a
circumstance where the data element is truly ``Not Available'' from a
circumstance where the reporting person has inappropriately failed to
report the data element.
---------------------------------------------------------------------------
\168\ See id. at 4.
---------------------------------------------------------------------------
Finally, ISDA noted that, although the specifications in the ITV
Rulebook ``technically align'' with the SEC requirement that an SDR
publicly disseminate immediately upon receipt, SDRs are also built to
delay public dissemination under CFTC requirements. ISDA suggested that
complying with the SEC requirement would require SDRs to incur the cost
of adding functionality to disseminate immediately under Regulation
SBSR, and ISDA therefore requests that the SEC align its requirement
with the CFTC requirement.\169\ To the extent that ISDA is requesting
that the Commission modify the no-action statement in response to
ISDA's comment, the Commission declines to do so. Furthermore, because
this comment pertains to a Commission position and not to the ICE Trade
Vault Application, it does not affect the Commission's review of the
ICE Trade Vault Application under the relevant statutory standards for
registration as an SDR and as a SIP.\170\
---------------------------------------------------------------------------
\169\ See id. at 5.
\170\ Under the CFTC's reporting rules, an SDR must publicly
disseminate swap transaction and pricing data as soon as
technologically practicable after such data is received, unless such
swap transaction and pricing data is subject to a time delay
described in Sec. 43.5, in which case the swap transaction and
pricing data shall be publicly disseminated in the manner described
in Sec. 43.5. See 17 CFR 43.3(b)(1). In addition, Appendix C to
Part 43 provides clarification of the time delays for public
dissemination set forth in Sec. 43.5. An SDR subject to the CFTC's
Part 43 rules must disseminate transaction and pricing data with a
time delay if the transaction falls within Sec. 43.5, and must
disseminate transaction and pricing data ``as soon as
technologically practicable'' if it does not. The Commission's no-
action statement recognized that security-based swap transactions do
not fall within Sec. 43.5 or Appendix C of Part 43. See ANE
Adopting Release, supra note 12, at 6347. Accordingly, an SDR, when
utilizing CFTC rather than SEC protocols for dissemination of a
security-based swap transaction, would not impose the time delay
required for a swap transaction that falls within Sec. 43.5.
Nevertheless, to offer some accommodation for certain large-sized
security-based swaps based on a single credit instrument or a
narrow-based index of credit instruments, the Commission established
a size cap of ``$5MM+'' for any transaction having a true notional
size of $5 million or greater. As explained in the Commission's no-
action statement, this cap is also applied by the Financial Industry
Regulatory Authority when disseminating transaction reports of
economically similar cash debt securities. See id. at 6347, n.768.
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IV. Evaluation of ICE Trade Vault's Application and Commission Findings
Consistent with the standard for registration previously described
in Part II.B,\171\ the Commission has considered whether ICE Trade
Vault is so organized, and has the capacity, to be
[[Page 32714]]
able to assure the prompt, accurate, and reliable performance of its
functions as an SDR, comply with any applicable provisions of the
securities laws and the rules and regulations thereunder, and carry out
its functions in a manner consistent with the purposes of Section 13(n)
of the Exchange Act and the rules and regulations thereunder. The
Commission finds that ICE Trade Vault meets these criteria for
registration as an SDR for the reasons described throughout this order.
---------------------------------------------------------------------------
\171\ See supra notes 15-17 and accompanying text.
---------------------------------------------------------------------------
To evaluate ICE Trade Vault's application to register as a SIP, and
consistent with the standard for registration previously described in
Part II.B,\172\ the Commission has considered whether ICE Trade Vault
is so organized, and has the capacity, to be able to assure the prompt,
accurate, and reliable performance of its functions as a SIP, comply
with the provisions of the Exchange Act and the rules and regulations
thereunder, carry out its functions in a manner consistent with the
purposes of the Exchange Act, and, insofar as it is acting as an
exclusive processor, operate fairly and efficiently. The Commission
finds that ICE Trade Vault meets these criteria for registration as a
SIP for the reasons described throughout this order.
---------------------------------------------------------------------------
\172\ See supra note 19 and accompanying text.
---------------------------------------------------------------------------
V. Conclusion
For the reasons discussed above, the Commission finds that ICE
Trade Vault meets the applicable requirements for registration as an
SDR, including those standards set forth in Section 13(n) of the
Exchange Act and Commission rules and regulations thereunder, and the
applicable requirements for registration as a SIP under Section 11A(b)
of the Exchange Act.
It is hereby ordered that the application for registration as a
security-based swap data repository and a securities information
processor filed by ICE Trade Vault, LLC (File No. SBSDR-2021-01)
pursuant to Sections 13(n) and 11A(b) of the Exchange Act be, and
hereby is, approved.
By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13140 Filed 6-21-21; 8:45 am]
BILLING CODE 8011-01-P
</pre></body>
</html>Indexed from Federal Register on June 22, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.