Notice2022-03961
Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments to the Rate of Return on Euro and Pound Sterling Cash Margin and Guaranty Fund Deposits
Primary source
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Published
February 25, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 38 (Friday, February 25, 2022)</title>
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[Federal Register Volume 87, Number 38 (Friday, February 25, 2022)]
[Notices]
[Pages 10835-10837]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-03961]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94281; File No. SR-ICEEU-2022-005]
Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change Relating
to Amendments to the Rate of Return on Euro and Pound Sterling Cash
Margin and Guaranty Fund Deposits
February 18, 2022.
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 February 15, 2022, 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)(2)
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)(2).
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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 the rate of return paid by the Clearing House on Euro
(``EUR'') and Pound Sterling (``GBP'') cash margin and Guaranty Fund
deposits. The proposed amendments do not involve any changes to the ICE
Clear Europe Clearing Rules or Procedures.\5\
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\5\ Capitalized terms used but not defined herein have the
meanings specified in 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
(a) The purpose of the proposed rule changes is for ICE Clear
Europe to [sic] its rate of return paid on EUR and GBP cash margin and
Guaranty Fund deposits applicable to all Clearing Members for house and
customer accounts. ICE Clear Europe pays a rate of return on cash
deposited by Clearing
[[Page 10836]]
Members in respect of margin and Guaranty Fund requirements referred to
as the ICE Deposit Rate (the ``IDR''). The IDR is calculated daily and
applied to cash balances held at the close of business on the previous
business day in respect of US Dollar (``USD''), EUR and GBP deposits.
The IDR is calculated as the net income earned on cash deposits in the
relevant currency (positive or negative) less a charge or spread.
Currently, the spread for all currencies is 15 bps.
(b) ICE Clear Europe is proposing to increase the spread for EUR
balances from 15 bps to 25 bps and reduce the spread for GBP balances
from 15 bps to 12 bps. The spread for USD balances would remain
unchanged at 15 bps. ICE Clear Europe has determined that in light of
financial market conditions, including repo rates available in the
market, the current spread levels have provided an incentive for
Clearing Members to provide EUR balances as compared to GBP balances,
including by using EUR balances to cover margin obligations denominated
in GBP. Such a practice by Clearing Members could result in reduced
available liquidity for the Clearing House in GBP. To avoid such
potential concerns, ICE Clear Europe believes it is appropriate to
reduce the IDR on EUR balances (through a higher spread) while
comparatively increasing the IDR on GBP balances (through a lower
spread). ICE Clear Europe believes the change would better align the
relative costs and benefits of using EUR and GBP to cover margin and
Guaranty Fund obligations and thereby improve Clearing House liquidity
management.
(b) Statutory Basis
ICE Clear Europe believes that the proposed rule changes are
consistent with the requirements of the Act, including Section 17A of
the Act \6\ and regulations thereunder applicable to it. In particular,
Section 17A(b)(3)(D) of the Act \7\ requires that ``[t]he rules of the
clearing agency provide for the equitable allocation of reasonable
dues, fees and other charges among its participants''. ICE Clear Europe
believes that the IDR, as proposed to be amended, would be reasonable
and appropriate in light of market conditions, including available repo
rates, for the relevant currencies. The proposed modifications would
apply to all Clearing Members and other market participants who hold
cash balances in EUR and GBP. Further, ICE Clear Europe has determined
that the revised spreads would enhance GBP liquidity by providing a
greater incentive for Clearing Members to provide GBP balance to
satisfy GBP margin and Guaranty Fund obligations as compared to EUR
balances. As such, in ICE Clear Europe's view, the amendments are
consistent with the equitable allocation of reasonable dues, fees and
other charges among its Clearing Members and other market participants,
within the meaning of Section 17A(b)(3)(D) of the Act.\8\
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\6\ 15 U.S.C. 78q-1.
\7\ 15 U.S.C. 78q-1(b)(3)(D).
\8\ 15 U.S.C. 78q-1(b)(3)(D).
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The proposed amendments are also consistent with the requirements
of Section 17A(b)(3)(F) of the Act \9\ which requires, among other
things, that ``[t]he rules of a clearing agency [. . .] are not
designed to permit unfair discrimination in the admission of
participants or among participants in the use of the clearing agency''.
As noted above, the GBP and EUR spreads, as proposed to be amended,
would apply on a currency level and would apply to all Clearing
Members. The amendments would not otherwise change the ability of
Clearing Members to post GBP and EUR in satisfaction of their
obligations. As a result, the amendments would not result in any unfair
discrimination among Clearing Members in their use of the Clearing
House, within the meaning of Section 17A(b)(3)(F) of the Act.\10\
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\9\ 15 U.S.C. 78q-1(b)(3)(F).
\10\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Clearing Agency's Statement on Burden on Competition
ICE Clear Europe does not believe the proposed rule changes would
have any impact, or impose any burden, on competition not necessary or
appropriate in furtherance of the purpose of the Act. Although ICE
Clear Europe is revising certain spreads applied to the IDR, as set
forth herein, it believes such changes are appropriate to align
incentives for providing EUR and GBP deposits with general market
conditions and to avoid potential reductions in GBP liquidity. Further,
as discussed above, the changes to the spreads would be applied equally
to all Clearing Members who deposit cash balances in EUR and GBP. ICE
Clear Europe does not believe that the amendments would adversely
affect the ability of such Clearing Members or other market
participants generally to access clearing services. Further, ICE Clear
Europe believes that the amendments would not otherwise affect
competition among Clearing Members, adversely affect the market for
clearing services or limit market participants' choices for obtaining
clearing services. As a result, ICE Clear Europe does not believe the
amendments would have any impact or impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants or Others
Written comments relating to the proposed amendments have not been
solicited or received by ICE Clear Europe. ICE Clear Europe will notify
the Commission of any 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 \11\ and paragraph (f)(2) of Rule 19b-4 \12\
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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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(2).
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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#f082859c95dd939f9d9d959e8483b0839593de979f86"><span class="__cf_email__" data-cfemail="4230372e276f212d2f2f272c3631023127216c252d34">[email protected]</span></a>. Please include
File Number SR-ICEEU-2022-005 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-2022-005. 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
[[Page 10837]]
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 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-2022-005 and should be
submitted on or before March 18, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-03961 Filed 2-24-22; 8:45 am]
BILLING CODE 8011-01-P
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