Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments to the ICE Clear Europe Delivery Procedures

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December 28, 2021

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Securities and Exchange Commission

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<title>Federal Register, Volume 86 Issue 246 (Tuesday, December 28, 2021)</title>
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[Federal Register Volume 86, Number 246 (Tuesday, December 28, 2021)]
[Notices]
[Pages 73835-73838]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-28110]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93839; File No. SR-ICEEU-2021-024]

Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change Relating
to Amendments to the ICE Clear Europe Delivery Procedures

December 21, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 9, 2021, ICE Clear Europe Limited (``ICE Clear Europe'' or
the ``Clearing House'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule changes described in
Items I, II and III below, which Items have been prepared primarily by
ICE Clear Europe. ICE Clear Europe filed the proposed rule change
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(4)(ii)
thereunder,\4\ such that the proposed rule change was immediately
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(4)(ii).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change

The principal purpose of the proposed amendments is for ICE Clear
Europe to amend its Delivery Procedures (``Delivery Procedures'' or

[[Page 73836]]

``Procedures'') to amend Part CC thereof (``Part CC'') to revise the
delivery specifications applicable to Midland West Texas Intermediate
American Gulf Coast Crude Oil Futures (formerly Permian West Texas
Intermediate Crude Oil Futures), consistent with changes to the
contract terms being made by ICE Futures Europe, and to make certain
conforming changes elsewhere in the Delivery Procedures.\5\
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\5\ Capitalized terms used but not defined herein have the
meanings specified in the Delivery Procedures or, if not defined
therein, the ICE Clear Europe Clearing Rules.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

In its filing with the Commission, ICE Clear Europe included
statements concerning the purpose of and basis for the proposed rule
change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. ICE Clear Europe has prepared summaries,
set forth in sections (A), (B), and (C) below, of the most significant
aspects of such statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

(a) Purpose
ICE Clear Europe is proposing to amend Part CC of the Delivery
Procedures to revise delivery specifications to reflect amendments
being made to the relevant futures contract by ICE Futures Europe, the
exchange on which it is traded. As ICE Futures Europe has announced, it
is changing the name of its existing ICE Futures Europe Permian West
Texas Intermediate Crude Oil Futures (``Permian WTI Contracts'') to ICE
Futures Europe Midland West Texas Intermediate American Gulf Coast
Crude Oil Futures (``Midland WTI Contracts''), adding the Enterprise
ECHO Terminal as a delivery point for the contract and changing the
crude oil quality specification to a Permian Basin originated WTI crude
oil that aligns with the current quality of light sweet crude oil
originating from the Permian Basin, among other changes. To maintain
consistency of the Delivery Procedures with the amended contract
specifications for the Midland WTI Contracts, ICE Clear Europe is
proposing to amend Part CC of the Delivery Procedures to references to
``ICE Futures Europe Permian West Texas Intermediate Crude Oil
Futures'' with ``ICE Futures Europe Midland West Texas Intermediate
American Gulf Coast Crude Oil Futures'', and make conforming changes in
Part CC and elsewhere in the Delivery Procedures. The amendments would
also provide that delivery of Midland WTI Contracts may be made out of
and into the Enterprise ECHO Terminal (a crude oil storage terminal
owned and operated by Enterprise) in addition to the Magellan MEH
Terminal (formerly defined as ``MEH''), and conforming changes would be
made throughout Part CC to refer to either or both terminals where
applicable, as well as to refer to Enterprise as well as Magellan where
applicable.
The amendments to Section 1 of Part CC would replace all references
to Permian WTI Contracts with Midland WTI Contracts. Conforming changes
would be made to all such references elsewhere in the Delivery
Procedures. Section 1 would also be updated to add new definitions used
in Part CC, including definitions for ``Enterprise'' and ``Enterprise
Echo Terminal'', a new definition of ``Specified Terminal'' (which is
used to reference the relevant delivery terminal under the Contract),
as well as an updated definition for the Magellan MEH Terminal. Certain
definitions such as ``CT'' and ``LPT'' would also be clarified.
The amendments to Section 2.1 of Part CC would remove as
inapplicable the reference to in-line transfer as a means for effecting
delivery under Midland WTI Contracts, consistent with the revised
contract specifications. The provision relating to tolerance of
delivery into and out of the terminal would be revised to reflect
relevant terminal operation by Enterprise as well as Magellan.
Amendments would further provide that delivery under Contracts would be
made at Enterprise ECHO Terminal and/or the Magellan MEH Terminal. Each
of the Enterprise ECHO Terminal and the Magellan MEH Terminal would be
a Delivery Facility for purposes of Midland WTI Contracts.
The updates to Section 2.1 would also make clear that in order to
make and take delivery, the Seller and Buyer must be approved customers
and have executed documentation governing such delivery process at the
applicable Specified Terminal (instead of referring to Magellan-
specific documentation). Conforming changes would be made throughout
Part CC. The amendments would further provide that in accordance with
the Contract Terms, the Seller would be obliged to have all the
required permits, licenses and authorizations to operate as a customer
at the applicable Specified Terminal, and that the Buyer would be
obliged to have all the required permits, licenses and authorizations
to operate as a customer at both Enterprise ECHO Terminal and Magellan
MEH Terminal.
Section 2.2 would be revised to describe the origin and quality of
Midland WTI as Permian Basin originated West Texas Intermediate crude
oil conforming to the Specifications, as described in the Contract
Terms and the ICE Futures Europe Rules.
An update would be made to Section 3.1 to correct a reference to
the ``Rules'' with ``ICE Futures Europe Rules''. Similar updates would
be made elsewhere in Part CC where ``Rules'' is used. Section 3.2 would
be amended to provide that neither the Clearing House nor ICE Futures
Europe would be responsible for performance of Enterprise or any person
who operates the Enterprise ECHO Terminal (in addition to the existing
provisions relating to Magellan or person who operates the Magellan MEH
Terminal).
An update would be made to Section 3.3 to replace a reference to
the ``Procedures'' with ``Delivery Procedures'', for clarity.
In Section 4.1 an errant reference to ``Buyer Contract Security''
would be removed.
In Section 5, the Delivery timetable would be updated to reflect
changes in the delivery process that relate to the option of delivery
through the Enterprise ECHO Terminal. No changes would be made to the
delivery timeline itself. The amendments would provide that on the
Notice Day, Buyers would be able to elect a preference for delivery at
a Specified Terminal (or split deliveries at both Specified Terminals),
however such preference would only become effective once confirmed by
the Clearing House, which confirmation would be final and binding on
the Buyer. The amendments would further clarify the formula for
undelivered volume which factors into the Clearing House's calculation
of Delivery Margin. The amendments also provide that Nominations to be
submitted on Nomination Day may be submitted to Enterprise via
Enterprise's ESTREAM System in addition to Magellan via Magellan's
COBALT system (as applicable).
(b) Statutory Basis
ICE Clear Europe believes that the proposed amendments to the
Delivery Procedures are consistent with the requirements of Section 17A
of the Act \6\ and the regulations thereunder applicable to it. In
particular, Section

[[Page 73837]]

17A(b)(3)(F) of the Act \7\ requires, among other things, that the
rules of a clearing agency be designed to promote the prompt and
accurate clearance and settlement of securities transactions and, to
the extent applicable, derivative agreements, contracts, and
transactions, the safeguarding of securities and funds in the custody
or control of the clearing agency or for which it is responsible, and
the protection of investors and the public interest. The proposed
changes to the Delivery Procedures are designed to clarify the delivery
procedures to conform to changes made to the renamed Midland WTI
Contracts under ICE Futures Europe rules, principally to allow delivery
to be made through the Enterprise ECHO Terminal as well as the Magellan
MEH Terminal. Changes also clarify the quality specifications for the
product, consistent with the exchange rules. In all other respects, the
Midland WTI Contracts will be cleared by the Clearing House in the same
manner as the prior Permian WTI Contracts, and will be supported by ICE
Clear Europe's existing F&O financial resources, risk management,
systems and operational arrangements. Accordingly, ICE Clear Europe
believes that its financial resources, risk management, systems and
operational arrangements continue to be sufficient to support clearing
of such contracts as amended and to manage the risks associated with
such contracts. As a result, in ICE Clear Europe's view, the amendments
would be consistent with the prompt and accurate clearance and
settlement of the contracts, and the protection of investors and the
public interest consistent with the requirements of Section
17A(b)(3)(F) of the Act.\8\ (In ICE Clear Europe's view, the amendments
would not affect the safeguarding of funds or securities in the custody
or control of the clearing agency or for which it is responsible,
within the meaning of Section 17A(b)(3)(F).\9\)
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\6\ 15 U.S.C. 78q-1.
\7\ 15 U.S.C. 78q-1(b)(3)(F).
\8\ 15 U.S.C. 78q-1(b)(3)(F).
\9\ 15 U.S.C. 78q-1(b)(3)(F).
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In addition, Rule 17Ad-22(e)(10) \10\ provides that ``[e]ach
covered clearing agency shall establish, implement, maintain and
enforce written policies and procedures reasonable designed to, as
applicable [. . .] establish and maintain transparent written standards
that state its obligations with respect to the delivery of physical
instruments, and establish and maintain operational practices that
identify, monitor and manage the risks associated with such physical
deliveries.'' As discussed above, the amendments would amend the
Delivery Procedures applicable to the settlement of Midland WTI
Contracts in light of the addition of the Enterprise ECHO Terminal as a
Delivery Facility. The procedures would revise, among other matters,
quality specifications, limitation of liability for the Clearing House
and ICE Futures Europe in respect of the delivery under such contracts
at the relevant terminals, and documentation requirements regarding the
election of the relevant terminal, consistent with the requirements of
the Clearing House. Clearance of the Midland WTI Contracts would
continue to be supported by ICE Clear Europe's existing financial
resources, risk management, systems and operational arrangements. The
amendments thus appropriately clarify the role and responsibilities of
the Clearing House and Clearing Members with respect to physical
delivery. As a result, ICE Clear Europe believes the amendments are
consistent with the requirements of Rule 17Ad-22(e)(10).\11\
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\10\ 17 CFR 240.17Ad-22(e)(10).
\11\ 17 CFR 240.17Ad-22(e)(10).
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(B) Clearing Agency's Statement on Burden on Competition

ICE Clear Europe does not believe the proposed amendments would
have any impact, or impose any burden, on competition not necessary or
appropriate in furtherance of the purposes of the Act. The proposed
amendments to the Delivery Procedures are intended to update the
existing procedures applicable to the delivery of Midland WTI Contracts
to be consistent with changes in exchange rules, principally to add an
additional delivery terminal option. ICE Clear Europe does not believe
the amendments would adversely affect competition among Clearing
Members, materially affect the cost of clearing, adversely affect
access to clearing in the new contracts for Clearing Members or their
customers, or otherwise adversely affect competition in clearing
services. Accordingly, ICE Clear Europe does not believe that the
amendments would impose any impact or burden on competition that is not
appropriate in furtherance of the purpose of the Act.

Written comments relating to the proposed amendments have not been
solicited or received by ICE Clear Europe. ICE Clear Europe will notify
the Commission of any comments received with respect to the proposed
rule change.

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

The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \12\ and paragraph (f) of Rule 19b-4 \13\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>) or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#146661787139777b7979717a6067546771773a737b62"><span class="__cf_email__" data-cfemail="f587809990d8969a9898909b8186b5869096db929a83">[email&#160;protected]</span></a>. Please include
File Number SR-ICEEU-2021-024 on the subject line.

Paper Comments

<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-ICEEU-2021-024. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official

[[Page 73838]]

business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
such filings will also be available for inspection and copying at the
principal office of ICE Clear Europe and on ICE Clear Europe's website
at <a href="https://www.theice.com/clear-europe/regulation">https://www.theice.com/clear-europe/regulation</a>.
All comments received will be posted without change. Persons
submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-ICEEU-2021-024 and should be
submitted on or before January 18, 2022.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-28110 Filed 12-27-21; 8:45 am]
BILLING CODE 8011-01-P

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