Notice2022-17662
Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change Relating to the Clearance of Additional Credit Default Swap Contracts
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
August 17, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 158 (Wednesday, August 17, 2022)</title>
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[Federal Register Volume 87, Number 158 (Wednesday, August 17, 2022)]
[Notices]
[Pages 50672-50673]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-17662]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95472; File No. SR-ICC-2022-007]
Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change Relating to the Clearance of Additional
Credit Default Swap Contracts
August 11, 2022.
I. Introduction
On June 16, 2022, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (the
``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
revise the ICC Rulebook (the ``Rules'') \3\ to provide for the
clearance of additional Standard Emerging Market Sovereign \4\ CDS
contracts (collectively, the ``EM Contracts''). The proposed rule
change was published for comment in the Federal Register on June 22,
2022.\5\ The Commission did not receive comments regarding the proposed
rule change. For the reasons discussed below, the Commission is
approving the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Capitalized terms used but not defined herein have the
meanings specified in the Rules.
\4\ The term ``Standard Emerging Market Sovereign'' is
abbreviated in the Rules as ``SES,'' as used below.
\5\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice
of Filing of Proposed Rule Change Relating to the Clearance of
Additional Credit Default Swap Contracts; Exchange Act Release No.
95139 (June 22, 2022); 87 FR 38435 (June 28, 2022) (File No. SR-ICC-
2022-007) (``Notice'').
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II. Description of the Proposed Rule Change
The proposed rule change would amend Subchapter 26D of the Rules to
provide for the clearance of the following EM Contracts: the Arab
Republic of Egypt, Kingdom of Bahrain, and Sultanate of Oman.\6\ The
proposed rule change would do so by amending the term ``Eligible SES
Reference Entities'' in Rule 26D-102 (Definitions) to include the Arab
Republic of Egypt, Kingdom of Bahrain, and Sultanate of Oman in the
list of specific Eligible SES Reference Entities to be cleared by ICC.
ICC represents that these additional EM Contracts have terms consistent
with the other EM Contracts approved for clearing at ICC and governed
by Subchapter 26D of the Rules, and that clearance of these additional
EM contracts would not require any changes to ICC's Risk Management
Framework.\7\
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\6\ The description that follows is excerpted from the Notice,
87 FR at 38435.
\7\ See Notice, 87 FR at 38435.
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III. Discussion and Commission Findings
Section 19(b)(2)(C) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
such proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to such
organization.\8\ Section 17A(b)(3)(F) of the Act requires, among other
things, that the rules of ICC be designed to promote the prompt and
accurate clearance and settlement of securities transactions and, to
the extent applicable, derivative agreements, contracts, and
transactions, as well as to assure the safeguarding of securities and
funds which are in the custody or control of ICC or for which it is
responsible.\9\
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\8\ 15 U.S.C. 78s(b)(2)(C).
\9\ 15 U.S.C. 78q-1(b)(3)(F).
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The Commission finds that the proposed rule change is consistent
with Section 17A(b)(3)(F) of the Act.\10\ The Commission has reviewed
the terms and conditions of the additional EM Contracts proposed for
clearing and has determined that those terms and conditions are
substantially similar to the terms and conditions of the other
contracts listed in Subchapter 26D of the ICC Rules, all of which ICC
currently clears, with the key difference being that the underlying
reference obligations will be issuances by the Arab Republic of Egypt,
Kingdom of Bahrain, and Sultanate of Oman. Moreover, after reviewing
the Notice and ICC's Rules, policies and procedures, the Commission
finds that ICC would clear the additional EM Contracts pursuant to its
existing clearing arrangements and related financial safeguards,
protections and risk management procedures.
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\10\ 15 U.S.C. 78q-1(b)(3)(F).
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In addition, based on its own experience and expertise, including a
review of data on volume, open interest, and the number of ICC Clearing
Participants (``CPs'') that currently trade in the additional EM
Contracts as well as certain model parameters for the additional EM
Contracts, the Commission finds that ICC's rules, policies, and
procedures are reasonably designed to price and measure the potential
risk presented by the additional EM Contracts, collect financial
resources in proportion to such risk, and liquidate this product in the
event of a CP default. This should
[[Page 50673]]
help ensure ICC's ability to maintain the financial resources it needs
to provide its critical services and function as a central
counterparty, thereby promoting the prompt and accurate settlement of
the additional EM Contracts and other credit default swap transactions.
For the same reasons, the Commission believes that the proposed rule
change should help assure the safeguarding of securities or funds in
the custody or control of ICC.
Therefore, the Commission finds that clearance of the additional EM
Contracts would promote the prompt and accurate clearance and
settlement of securities transactions and would help assure
safeguarding of securities and funds in the custody or control of ICC,
consistent with Section 17A(b)(3)(F) of the Act.\11\
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\11\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act,
and in particular, with the requirements of Section 17A(b)(3)(F) of the
Act.\12\
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\12\ 15 U.S.C. 78q-1(b)(3)(F).
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It is therefore ordered pursuant to Section 19(b)(2) of the Act
\13\ that the proposed rule change (SR-ICC-2022-007), be, and hereby
is, approved.\14\
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\13\ 15 U.S.C. 78s(b)(2).
\14\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17662 Filed 8-16-22; 8:45 am]
BILLING CODE 8011-01-P
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