Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing of Proposed Rule Change Relating to Amendments to the ICE Clear Europe Clearing Membership Procedures

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September 13, 2022

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Securities and Exchange Commission

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<title>Federal Register, Volume 87 Issue 176 (Tuesday, September 13, 2022)</title>
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[Federal Register Volume 87, Number 176 (Tuesday, September 13, 2022)]
[Notices]
[Pages 56110-56112]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-19676]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95683; File No. SR-ICEEU-2022-010]

Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
of Filing of Proposed Rule Change Relating to Amendments to the ICE
Clear Europe Clearing Membership Procedures

September 7, 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 August 30, 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. 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.
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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 modify its Clearing Membership Procedures (``Clearing
Membership Procedures'' or ``Procedures'') to make certain
clarifications and updates.

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 its Clearing Membership
Procedures to make certain clarifications and enhancements to remove
certain provisions that are duplicative of the Clearing House's
Counterparty Credit Risk Policy and Counterparty Credit Risk
Procedures,\3\ to more clearly document certain practices and to make
certain non-substantive changes to improve clarity and readability.
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\3\ The Counterparty Credit Risk Policy and Procedures are
described in Exchange Act Release No. 34-93880, SR ICEEU-2021-15
(Dec. 30, 2021) 87 FR 513 (Jan. 5, 2022).
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The section describing the purpose of the Procedures would add a
defined term referencing the Clearing House's Clearing Rules.
Conforming changes would be made to each reference to the ``Clearing
Rules'' appearing in the remainder of the Procedures.
The section describing the application process would update the
names of certain departments responsible for reviewing Clearing
Membership applications as follows: such applications (i) would be
reviewed by the Credit and Clearing Risk department (this change does
not represent a change in departments, rather, it is an inclusion of
the relevant department names rather than stating ``Risk'' generally)
and (ii) are subject to the approval of the Executive Risk Committee
(rather than simply the ``Committee''), which would also be known as
``the Committee or ``ERC'' in shorthand in the Procedures. Conforming
changes would be made in the remainder of the Procedures.
A paragraph which provided that the Clearing Risk Department would
conduct a credit review which may include a credit check and
assessments based on the Clearing House's Counterparty Ratings System
would be removed as the credit review is covered by the Counterparty
Credit Risk Policy and Procedures.
The proposed amendments would provide that the list of Approved
Jurisdiction for applicants (those jurisdictions for which additional
legal and regulatory analysis is not required) would be maintained by
the legal department, rather than in the Clearing Membership
Parameters. This change reflects current practice as the list of
Approved Jurisdictions is currently maintained by the legal department.
Further, in order to consolidate information and because the legal
department is placed to provide guidance on Approved Jurisdictions, the
Clearing Membership Procedures would reflect that such list would be
maintained by the legal department only.
The subsection discussing termination of Clearing Membership by ICE
Clear Europe would be updated to remove a sentence which provided that
the Board is required to approve the issuance of a Termination Notice
against

[[Page 56111]]

a Clearing Member. There is no such requirement under the Rules, and
accordingly the amendments would bring the Procedures into line with
the Rules and the scope of authority currently delegated by the Board
and does not represent a change in existing practice or procedures as
they relate to Termination Notices. Action by the Clearing House to
terminate a member under Rule 209 would be subject to the existing
general governance provisions of the Rules, including Rule 114. Rule
114(a) allows the Clearing House to delegate authority to its Board,
Chairman, President or any other Director or employee. Although ICE
Clear Europe would expect that a decision to issue a Termination Notice
against a Clearing Member would likely be made by the Board, the
Clearing House's existing Delegation of Authority to its President
implemented pursuant to Rule 114(a) could potentially apply to issuance
of a Termination Notice in certain emergency scenarios including
situations where time is of the essence for the interests of the
Clearing House and its Clearing Members. In such cases and pursuant to
the specifications included in the Delegation of Authority, the
President may be authorized to issue a Termination Notice. Accordingly,
the proposed update will conform the Clearing Membership Procedures to
reflect the Clearing House's existing authority under the Rules and
Delegation of Authority to issue Termination Notice in respect of
Clearing Members.
The subsection discussing the minimum capital requirements that the
Clearing House requires of Clearing Members would be updated to remove
a reference to data sources used to determine a Clearing Member's
Capital. Such matters are addressed in the Counterparty Credit Risk
Policy and Procedures and do not need to be addressed in the Clearing
Membership Procedures. Additionally, the amendments clarify that
certain additional risk-based requirements that may be imposed under
the CDS Procedures would apply only to CDS Clearing Members in
accordance with the terms of the CDS Procedures. This update does not
represent a change to the Clearing Membership Procedures and is
intended to reflect that the Clearing Membership Procedures align with
the CDS Procedures.
The subsection discussing contributions to the Guaranty Fund for
CDS and F&O would be updated to clarify that the Clearing Membership
applications would be required to make Guaranty Fund contributions as
specified by the F&O Guaranty Fund Policy and Section 5 of the CDS Risk
Policy. The change is intended to update references to the correct F&O
and CDS policies and does not represent a change in substantive
requirements.
A subsection discussing the Clearing House's margin-to-capital
ratio requirement would be removed as unnecessary because such
requirement is addressed in greater detail in the Clearing House's
Counterparty Credit Risk Policy and Procedures.
In the section discussing on-going monitoring of the Clearing
Members by the Clearing House, a sentence which cross-referenced the
Counterparty Credit Risk Policy would be removed as unnecessary.
The proposed amendments would provide that the Clearing House's
periodic counterparty review includes know-your-customer and anti-money
laundering assessments. This amendment is intended to reflect current
practice.
A subsection referencing the Clearing House's Quarterly
Counterparty Rating System Report would be removed as the topic is
discussed in greater detail in the Counterparty Credit Risk Policy and
Procedures.
A subsection discussing the information the Clearing House requires
that Clearing Members provide through the Annual Member Return (AMR)
would be updated to expressly include updated Clearing Member
information. AMR is an annual process by which ICE Clear Europe
requests Clearing Members to provide and confirm certain information
related to their clearing membership; AMR is a means for the Clearing
House to ensure that it has up-to-date information about Clearing
Members. The proposed change is intended to inform Clearing Members
that information requested as part of AMR will include updated Clearing
Member information, which may include, for example, a change of a
Clearing Member's registered or operational address, its legal entity
name, etc.
Other non-substantive typographical and similar drafting
clarifications and updates would be made throughout the Procedures to
improve readability and correct grammatical errors.
(b) Statutory Basis
ICE Clear Europe believes that the proposed amendments to the
Clearing Membership Procedures are consistent with the requirements of
Section 17A of the Act \4\ and the regulations thereunder applicable to
it. In particular, Section 17A(b)(3)(F) of the Act \5\ 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.
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\4\ 15 U.S.C. 78q-1.
\5\ 15 U.S.C. 78q-1(b)(3)(F).
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The proposed changes to the Clearing Membership Procedures are
intended to update and more clearly document the Clearing House's
procedures for reviewing applications for clearing membership,
variations of membership permissions and on-going monitoring and
termination of membership of ICEU. The amendments remove certain
overlapping or duplicative information that is addressed in more detail
in the Clearing House's Counterparty Credit Risk Policy and Procedures.
In ICE Clear Europe's view the amendments would thus facilitate the
clearing membership process, and related risk management by the
Clearing House. The amendments would therefore facilitate the prompt
and accurate clearing of cleared contracts and protect investors and
the public interest in the sound operations of the Clearing House,
consistent with the requirement s of Section 17A(b)(3)(F).\6\ Further,
the amendments will not affect the safeguarding of securities and funds
in the custody or control of the Clearing House or for which it is
responsible, within the meaning Section 17A(b)(3)(F).\7\
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\6\ 15 U.S.C. 78q-1(b)(3)(F).
\7\ 15 U.S.C. 78q-1(b)(3)(F).
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The amendments to the Procedures are also consistent with relevant
provisions of Rule 17Ad-22.\8\ Rule 17Ad-22(e)(18) provides that
``[e]ach covered clearing agency shall establish, implement, maintain
and enforce written policies and procedures reasonable designed to, as
applicable [. . .] establish objective, risk-based and publicly
disclosed criteria for participation, which permit fair and open access
by direct . . . participants . . . require participants to have
sufficient financial resources and robust operational capacity to meet
obligations arising from participation in the clearing agency, and
monitor compliance with such participation requirements on an ongoing
basis''.\9\ As set forth above, the amendments to the Clearing
Membership Procedures are intended to clarify and enhance the Clearing

[[Page 56112]]

House's procedures as they relate to Clearing Membership application
and monitoring processes. The amendments do not substantively change
the requirements for membership or the related Rules, but rather update
the Procedures to reflect the Clearing House's current practices, avoid
duplication of other Clearing House policies (specifically the
Counterparty Credit Risk Policy and Procedures) and make other updates
to improve clarity and readability. The amendments will facilitate the
Clearing House's ability to implement and monitor its participation
requirements. In ICE Clear Europe's view, the amendments are therefore
consistent with the requirements of Rule 17Ad-22(e)(18).\10\
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\8\ 17 CFR 240.17 Ad-22.
\9\ 17 CFR 240.17 Ad-22(e)(18).
\10\ 17 CFR 240.17Ad-22(e)(18).
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Rule 17Ad-22(e)(2) further provides that ``[e]ach covered clearing
agency shall establish, implement, maintain and enforce written
policies and procedures reasonable designed to, as applicable [. . .]
provide for governance arrangements that are (i) clear and transparent,
(ii) clearly prioritize the safety and efficiency of the covered
clearing agency; and (iii) support the public interest requirement in
Section 17A of the Act'' \11\ among other requirements. As set forth
above, the amendments clarify the governance arrangements around the
termination of clearing membership status under Rule 209, to remove a
requirement that terminations be approved by the Board. Such a
requirement is not provided in the Rules, and accordingly the
amendments would make the Procedures consistent with the governance
procedures of the Rules, including Rule 114. As such, in ICE Clear
Europe's view, the amendments are consistent with the requirements of
Rule 17Ad-22(e)(2).\12\
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\11\ 17 CFR 240.17Ad-22(e)(2).
\12\ 17 CFR 240.17Ad-22(e)(2).
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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 amendments
are being adopted to update and clarify the Clearing Membership
Procedures, which relates to the Clearing House's internal processes
for implementation and ongoing monitoring of its membership
requirements. No substantive changes are being made to the membership
requirements themselves or the Rules. Accordingly, ICE Clear Europe
does not believe the amendments would affect the costs of clearing, the
ability of market participants to access clearing, or the market for
clearing services generally. Therefore, ICE Clear Europe does not
believe the proposed rule change imposes any burden on competition that
is inappropriate in furtherance of the purposes 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 written comments received with respect to the
proposed rule change and adoption.

III. Date of Effectiveness of the Proposed Rule Change

Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.

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#3644435a531b55595b5b535842457645535518515940"><span class="__cf_email__" data-cfemail="ef9d9a838ac28c8082828a819b9caf9c8a8cc1888099">[email&#160;protected]</span></a>. Please include
File Number SR-ICEEU-2022-010 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-2022-010. 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-2022-010 and should be
submitted on or before October 4, 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,
Deputy Secretary.
[FR Doc. 2022-19676 Filed 9-12-22; 8:45 am]
BILLING CODE 8011-01-P

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