Notice2022-23234
Self-Regulatory Organizations; ICE Clear Europe Limited; Notice and Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments to the Investment Management Procedures
Primary source
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Published
October 26, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 206 (Wednesday, October 26, 2022)</title>
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[Federal Register Volume 87, Number 206 (Wednesday, October 26, 2022)]
[Notices]
[Pages 64828-64830]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-23234]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96118; File No. SR-ICEEU-2022-019]
Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
and Filing and Immediate Effectiveness of Proposed Rule Change Relating
to Amendments to the Investment Management Procedures
October 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 October 11, 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)(1)
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)(1).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
ICE Clear Europe Limited (``ICE Clear Europe'' or the ``Clearing
House'') proposes to modify its Investment Management Procedures (the
``Investment Management Procedures'' or the ``Procedures'') to clarify
certain permitted investments and related limits for the Clearing House
when managing cash received from Clearing Members as margin or from the
Clearing House's contribution to the guaranty fund.
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 update the Table of Authorised
Investments and Concentration Limits for Cash from CMs and from Skin In
The Game (the ``Table'') in the Procedures to make certain
clarifications that reflect limitations on investments that can be made
with customer funds provided by FCM Clearing Members under applicable
law. The amendments reflect restrictions that ICE Clear Europe
currently observes (and are described elsewhere in the existing
Procedures), and accordingly will not constitute a change in practice.
Specifically, the amendment would provide that the reference in the
Table to there being ``no limit'' for counterparty concentration in
respect to investments in (i) US government agency bonds and (ii) UK
government agency bonds, as well as the 15% concentration limit
specified for the purchase of EU government agency bonds each applies
to cash provided by non-FCM Clearing Members. The amendments would also
state explicitly in the Table that FCM customer funds may not be
invested in such assets. The proposed changes reflect limitations under
CFTC regulations.\5\ Such updates
[[Page 64829]]
are intended to provide greater clarity in the Table as to the
permissible investment of customer cash provided by Clearing Members
and accurately document existing practices, consistent with legal
requirements.
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\5\ Consistent with ICE Clear Europe's current practice, certain
limitations in the amendments are more restrictive than required
under CFTC regulations. For example, investment of FCM customer
funds in U.S. agency securities is not permitted, as described in
the amendments, although CFTC Rule 1.25(b)(3)(i)(B) would permit
investment in U.S. agency obligations up to a maximum of 50 percent
of the total assets held in segregation by the futures commission
merchant or derivatives clearing organization. 17 CFR
1.25(b)(3)(i)(B). A footnote referencing this rule would be included
in the Table.
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(b) Statutory Basis
ICE Clear Europe believes that the proposed amendments to the
Investment Management Procedures are consistent with the requirements
of Section 17A of the Act \6\ and the regulations thereunder applicable
to it. In particular, Section 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.
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\6\ 15 U.S.C. 78q-1.
\7\ 15 U.S.C. 78q-1(b)(3)(F).
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The proposed changes to the Investment Management Procedures are
designed to reflect the Clearing House's practices with respect to the
management of investments, in light of existing CFTC regulations
relating to the investment of customer funds provided by FCM Clearing
Members. The amendments would reflect certain limitations under CFTC
Rule 1.25, as discussed above, on investments of FCM customer cash in
agency securities, consistent with the Clearing House's current
practice. The proposed amendments thus promote the accuracy and clarity
of the Clearing House's policies and procedures and are consistent with
the prompt and accurate clearing and settlement of cleared contracts.
The amendments are thus also generally consistent with the protection
of investors and the public interest in the safe operation of the
Clearing House. The updates will also facilitate management of the cash
held by the Clearing House from Clearing Members and their customers in
accordance with applicable law, and thus enhance the safeguarding of
securities and funds in ICE Clear Europe's custody or control or for
which it is responsible. Accordingly, the amendments are consistent
with the requirements of Section 17A(b)(3)(F).\8\
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\8\ 15 U.S.C. 78q-1(b)(3)(F).
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Rule 17A-22(e)(16) requires clearing agencies to safeguard their
own and their ``participants' assets, minimize the risk of loss and
delay in access to these assets, and invest such assets in instruments
with minimal credit, market and liquidity risks.'' \9\ As discussed
above, the amendments to the Investment Management Procedures are
intended to more clearly document investment limitations in connection
with the investment of cash assets provided by Clearing Members to
reflect current practice and applicable law, including the requirements
of CFTC regulations. As such, the revised Investment Management
Procedures will help enable the Clearing House to safeguard such assets
and minimize the risk of loss from liquidity and investment risks,
consistent with the requirements of Rule 17Ad-22(e)(16).\10\
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\9\ 17 CFR 240.17Ad-22(e)(16).
\10\ 17 CFR 240.17Ad-22(e)(16).
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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 changes are
being proposed in order to update the Investment Management Procedures
to provide clarifications and additional details where necessary in
order to reflect existing practices and are not intended to impose new
requirements on Clearing Members. The terms of clearing are not
otherwise changing. ICE Clear Europe does not believe that proposed
amendments would adversely affect competition among Clearing Members or
other market participants or affect the ability of market participants
to access clearing 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.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants or Others
Written comments relating to the proposed amendment has 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#4634332a236b25292b2b232832350635232568212930"><span class="__cf_email__" data-cfemail="1664637a733b75797b7b737862655665737538717960">[email protected]</span></a>. Please include
File Number SR-ICEEU-2022-019 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-2022-019. 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
[[Page 64830]]
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-2022-019 and should be
submitted on or before November 16, 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. 2022-23234 Filed 10-25-22; 8:45 am]
BILLING CODE 8011-01-P
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