Notice2022-08799
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
Primary source
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Published
April 26, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 80 (Tuesday, April 26, 2022)</title>
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[Federal Register Volume 87, Number 80 (Tuesday, April 26, 2022)]
[Notices]
[Pages 24599-24601]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-08799]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94762; File No. SR-ICEEU-2022-009]
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
April 20, 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 April 12, 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)(4)(ii)
thereunder,\4\ such that the proposed rule change was immediately
effective upon filing with the
[[Page 24600]]
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 Part N of its Delivery Procedures (``Delivery
Procedures'' or ``Procedures'') to include delivery specifications
applicable to a new ICE Futures Europe futures contract, the ICE
Deliverable Carbon Credit Contract, and to make certain conforming
changes elsewhere in the Delivery Procedures. Such contracts would be
settled by delivery of qualifying carbon credits through a Registry
approved by the Clearing House and in the same manner as delivery under
ICE Deliverable US Emissions Contracts.
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 N of its Delivery
Procedures to include delivery procedures applicable to settlement of a
new ICE Futures Europe futures contract, the ICE Futures Europe Carbon
Credit Contract, which will be cleared by ICE Clear Europe. The
amendments to Part N would detail settlement procedures applicable to
ICE Futures Europe Carbon Credit Contracts (i) for which physical
delivery is specified as being ``Applicable'' in the relevant Contract
Terms, and (ii) which go to physical delivery on the expiry date (such
contracts ``ICE Deliverable Carbon Credit Contracts''). The amendments
would make certain other clarifications to Part N, which also addresses
ICE Deliverable US Emissions Contracts, as well as conforming changes
elsewhere in the Delivery Procedures. As a result of the amendments,
settlement under ICE Deliverable Carbon Credit Contracts would
generally be made under the same delivery procedures as settlement
under ICE Deliverable US Emissions Contracts, except as noted in the
amended procedures.
The amendments to Part N would clarify that the definition of
``Allowance'' means any and all transferrable or assignable interests
(in property, equity, contract or otherwise) in an instrument,
certificate, permit, asset, security, right, contract or allowance that
is designed as a deliverable instrument for an ICE Deliverable US
Emissions Contract in the relevant Contract Terms.
A parallel definition of ``Carbon Credit'' would be added for the
ICE Deliverable Carbon Credit Contract, which would provide that such
any and all transferrable or assignable interests (in property, equity,
contract or otherwise) in an instrument, certificate, permit, asset,
security, right, contract or allowance that is designed as a
deliverable instrument for an ICE Deliverable Carbon Contract in the
relevant Contract Terms.
The definition of ``Registry'' and the details about the procedures
relating to bilateral delivery (i.e., delivery directly between a
seller and buyer, rather than through a Clearing House account) through
a Registry approved by the Clearing House would be updated to apply to
the physical delivery of Carbon Credits under ICE Deliverable Carbon
Credit Contracts (as applicable) in addition to the physical delivery
of Allowances under US Emissions Contracts (as applicable).
The discussion about the Clearing House's processes with respect to
Exchange for Physicals (EFPs) and Exchange for Swaps (EFSs) would be
updated to apply to EFPs and EFSs made in accordance with ICE Futures
Europe Rules and Procedures (to address the ICE Deliverable Carbon
Credit Contracts) in addition to ICE Futures US Rules and procedures
(as applicable).
The amendments would add a new paragraph 2.6 to the Delivery
Specifications section which specifies that, for the avoidance of
doubt, (i) the Registry would be a Delivery Facility; and (ii)
Allowances and Carbon Credits shall be Deliverables (both changes tie
the delivery specifications to relevant defined terms used in the
Rules).
The amendments would update the discussion of limitations of
liability for the Clearing House and ICE Futures US to also apply to
ICE Futures Europe (as the exchange for the ICE Deliverable Carbon
Credit Contracts).
Finally, the section describing and providing a Delivery Timetable
detailing processes and timing related to the delivery of Allowances
under ICE Deliverable US Emissions Contracts would be updated to apply
to delivery of Carbon Credits under the ICE Deliverable Carbon Credit
Contracts as well (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 \5\ and the regulations thereunder applicable to it. In
particular, Section 17A(b)(3)(F) of the Act \6\ 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 establish delivery
procedures relating to new ICE Delivery Carbon Credit Contracts to be
traded on ICE Futures Europe and cleared at ICE Clear Europe, under
which physical delivery will be made through the Registry approved by
the Clearing House. The amendments would also set out the role,
responsibilities and liabilities of the Clearing House, Clearing
Members and designated transferors and transferees in the physical
delivery process, in line with Delivery Procedures for other types of
ICE Futures US Emissions Contracts, particularly the ICE Deliverable US
Emissions Contracts. ICE Deliverable Carbon Credit Contracts 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 are sufficient to support clearing
of such contracts 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.\7\ (In ICE Clear Europe's view,
[[Page 24601]]
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).\8\)
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\5\ 15 U.S.C. 78q-1.
\6\ 15 U.S.C. 78q-1(b)(3)(F).
\7\ 15 U.S.C. 78q-1(b)(3)(F).
\8\ 15 U.S.C. 78q-1(b)(3)(F).
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In addition, Rule 17Ad-22(e)(10) \9\ 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 include in Part N procedures
applicable to the settlement of ICE Deliverable Carbon Credit Contracts
that are to be settled by delivery through a Registry approved by the
Clearing House. The procedures would address, among other matters and
in line with the procedures applicable to ICE Deliverable US Emissions
Contracts, bilateral delivery specifications for ICE Deliverable Carbon
Credit Contracts, limitation of liability for the Clearing House and
ICE Futures Europe in respect of the delivery of such contracts, and
certain other documentation and timing matters, consistent with the
requirements of the Clearing House. Clearance of the ICE Deliverable
Carbon Credit Contracts would 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).\10\
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\9\ 17 CFR 240.17Ad-22(e)(10).
\10\ 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 establish
delivery procedures for a new contract to be traded on ICE Futures
Europe and cleared at ICE Clear Europe, the ICE Deliverable Carbon
Credit Contracts. Delivery of ICE Deliverable Carbon Credit Contracts
will be made through a Registry approved by the Clearing House. 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.
(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) 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).
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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#5220273e377f313d3f3f373c2621122137317c353d24"><span class="__cf_email__" data-cfemail="1062657c753d737f7d7d757e6463506375733e777f66">[email protected]</span></a>. Please include
File Number SR-ICEEU-2022-009 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-2022-009. 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 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-2022-009 and should be
submitted on or before May 17, 2022.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-08799 Filed 4-25-22; 8:45 am]
BILLING CODE 8011-01-P
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