Notice2023-01407
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to ICC's Fee Schedules
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
January 25, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 16 (Wednesday, January 25, 2023)</title>
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[Federal Register Volume 88, Number 16 (Wednesday, January 25, 2023)]
[Notices]
[Pages 4868-4870]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-01407]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96707; File No. SR-ICC-2023-001]
Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
ICC's Fee Schedules
January 19, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
\1\ and Rule 19b-4,\2\ notice is hereby given that on January 5, 2023,
ICE Clear Credit LLC (``ICC'') filed with the Securities and Exchange
Commission the proposed rule change as described in Items I, II and III
below, which Items have been prepared primarily by ICC. ICC 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 rule change is to modify
ICC's fee schedules to implement reduced fees for credit default index
swaptions (``Index Options'') for the remainder of calendar year 2023.
These revisions do not require any changes to the ICC Clearing Rules.
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, ICC 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. ICC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
(a) Purpose
The proposed changes are intended to modify ICC's fee schedules to
implement reduced fees for Index Options for the remainder of calendar
year 2023.\5\ ICC maintains a Clearing Participant (``CP'') fee
schedule \6\ and client fee schedule \7\ (collectively, the ``fee
schedules'') that are publicly available on its website, which ICC
proposes to update. Clearing fees are due by CPs and clients in
accordance with the product, amount and currency set out in the fee
schedules and subject to any incentive program described in the fee
schedules. The proposed changes to the fee schedules are set forth in
Exhibit 5A and Exhibit 5B and described in detail as follows. ICC
proposes to make such changes effective January 5, 2023 (the
``Effective Date''), subject to the completion of any applicable
regulatory review process.
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\5\ Pursuant to an Index Option contract, one party (the
``Swaption Buyer'') has the right (but not the obligation) to cause
the other party (the ``Swaption Seller'') to enter into an index
credit default swap transaction at a pre-determined strike price on
a specified expiration date on specified terms. In the case of Index
Options that may be cleared by ICC, the underlying index credit
default swap is limited to certain CDX and iTraxx index credit
default swaps that are accepted for clearing by ICC, and which would
be automatically cleared by ICC upon exercise of the Index Option by
the Swaption Buyer in accordance with its terms.
\6\ CP fee details available at: <a href="https://www.theice.com/publicdocs/clear_credit/ICE_Clear_Credit_Fees_Clearing_Participant.pdf">https://www.theice.com/publicdocs/clear_credit/ICE_Clear_Credit_Fees_Clearing_Participant.pdf</a>.
\7\ Client fee details available at: <a href="https://www.theice.com/publicdocs/clear_credit/ICE_Clear_Credit_Fees.pdf">https://www.theice.com/publicdocs/clear_credit/ICE_Clear_Credit_Fees.pdf</a>. As specified, all
fees are charged directly to a client's CP.
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The amended CP fee schedule would reduce Index Option fees to $1.5/
million or [euro]1.5/million for the remainder of calendar year 2023.
Under the regular CP fee schedule, Index Option fees are $3/million or
[euro]3/million, subject to an incentive program that provides a tiered
discount schedule based on U.S. Dollar equivalent, non-discounted Index
Option fees billed since the start of the year.\8\ ICC also discounted
CP Index Option fees for a portion of 2022, which expired at the end of
calendar year 2022.\9\ Under the proposed changes, in addition to
updating the fee table, ICC would include a footnote to indicate that
the listed fees of $1.5/million or [euro]1.5/million are applicable
from the Effective Date through calendar year 2023 and reflect a
discount from ICC's regular Index Option fees of $3/million or [euro]3/
million. On the first business day of 2024, ICC would remove this
discount and the listed fees would revert to ICC's regular Index Option
fees on this schedule dated January 2024.
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\8\ A description of this incentive program is included in a
prior filing. SEC Release No. 34-90524 (November 27, 2020) (notice),
85 FR 78157 (December 3, 2020) (SR-ICC-2020-013).
\9\ A description of the 2022 CP Index Option fee discount is
included in prior SEC filing Release No. 34-94330 (February 28,
2022) (notice), 87 FR 12508 (March 4, 2022) (SR-ICC-2022-001).
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The amended client fee schedule would reduce Index Option fees to
$2/million or [euro]2/million for the remainder of calendar year 2023.
Under the regular client fee schedule, Index Option fees are $4/million
or [euro]4/million. ICC also discounted client Index Option fees for a
portion of 2022, which expired at the end of calendar year 2022.\10\
Under the proposed changes, in addition to updating the fee table, ICC
would
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indicate in a footnote that the listed fees of $2/million or [euro]2/
million are applicable from the Effective Date through calendar year
2023 and reflect a discount from ICC's regular Index Option fees of $4/
million or [euro]4/million. On the first business day of 2024, ICC
would remove this discount and the listed fees would revert to ICC's
regular Index Option fees on this schedule dated January 2024.
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\10\ A description of the 2022 client Index Option fee discount
is included in prior SEC filing Release No. 34-94330 (February 28,
2022) (notice), 87 FR 12508 (March 4, 2022) (SR-ICC-2022-001).
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(b) Statutory Basis
ICC believes that the proposed rule change is consistent with the
requirements of the Act, including Section 17A of the Act \11\ and the
regulations thereunder applicable to it. More specifically, the
proposed rule change establishes or changes a member due, fee or other
charge imposed by ICC under Section 19(b)(3)(A)(ii) of the Act \12\ and
Rule 19b-4(f)(2) \13\ thereunder. ICC believes the proposed rule change
is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to ICC, in particular, to Section
17A(b)(3)(D),\14\ which requires that the rules of the clearing agency
provide for the equitable allocation of reasonable dues, fees, and
other charges among its participants.
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\11\ 15 U.S.C. 78q-1.
\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 17 CFR 240.19b-4(f)(2).
\14\ 15 U.S.C. 78q-1(b)(3)(D).
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ICC believes that the proposed discounts in the fee schedules have
been set at an appropriate level. In determining the appropriate
discount level, ICC considered factors such as volume, revenue, and
market participation in the clearing service, including based on
different fee levels. ICC also considered costs and expenses in
offering clearing of Index Options, taking into account the investments
that ICC has made in clearing such products and the level of investment
and development needed for this clearing service at this time. In ICC's
view, the fees are reasonable as the discounts correspond with
anticipated volumes, costs and expenses, and revenues, and they
consider current and past market activity as well as anticipated market
activity with respect to clearing Index Options at ICC.\15\
Furthermore, the proposed discounts are in line with past Index Option
incentive programs that ICC offered, which similarly temporarily
reduced Index Option fees without any further action required by CPs or
clients. Under the proposed changes, the same percentage discount
(i.e., 50%) from ICC's regular Index Option fees would apply to both
CPs and clients. These reduced fees are designed to incentivize the
clearing of Index Options by CPs and clients to grow this clearing
service.
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\15\ Supporting detail and additional data, including clearing
statistics for Index Options is included in confidential Exhibit 3.
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Moreover, the proposed fee changes will apply equally to all market
participants clearing Index Options. The reduced fees for Index Options
for calendar year 2023 apply to all CPs and clients. ICC's fee
schedules will continue to be transparent and to apply equally to
market participants clearing indexes, single names, and Index Options
at ICC. Therefore, the proposed rule change provides for the equitable
allocation of reasonable dues, fees and other charges among
participants, within the meaning of Section 17A(b)(3)(D) of the
Act.\16\ ICC therefore believes that the proposed rule change is
consistent with the requirements of Section 17A of the Act \17\ and the
regulations thereunder applicable to it and is appropriately filed
pursuant to Section 19(b)(3)(A) of the Act \18\ and paragraph (f)(2) of
Rule 19b-4 \19\ thereunder.
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\16\ 15 U.S.C. 78q-1(b)(3)(D).
\17\ 15 U.S.C. 78q-1.
\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(2).
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(B) Clearing Agency's Statement on Burden on Competition
ICC does not believe the proposed rule change would have any
impact, or impose any burden, on competition not necessary or
appropriate in furtherance of the purpose of the Act. As discussed
above, the proposed changes modify ICC's fee schedules to temporarily
reduce fees for Index Options and will apply uniformly across all
market participants. The implementation of such changes does not
preclude other market participants from offering such instruments for
clearing or offering incentive programs. Moreover, ICC does not believe
that the amendments would adversely affect the ability of market
participants to access clearing services. Accordingly, ICC does not
believe the amendments impose any burden on competition not necessary
or 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 rule change have not been
solicited or received. ICC will notify the Commission of any written
comments received by ICC.
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 \20\ and paragraph (f) of Rule 19b-4 \21\
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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\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 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#d9abacb5bcf4bab6b4b4bcb7adaa99aabcbaf7beb6af"><span class="__cf_email__" data-cfemail="3240475e571f515d5f5f575c4641724157511c555d44">[email protected]</span></a>. Please include
File Number SR-ICC-2023-001 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities and
Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-ICC-2023-001. 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
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inspection and copying at the principal office of ICE Clear Credit and
on ICE Clear Credit's website at <a href="https://www.theice.com/clear-credit/regulation">https://www.theice.com/clear-credit/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-ICC-2023-001 and should be
submitted on or before February 15, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-01407 Filed 1-24-23; 8:45 am]
BILLING CODE 8011-01-P
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