Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments of the ICE Clear Europe Delivery Procedures

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Published

February 22, 2023

Issuing agencies

Securities and Exchange Commission

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<title>Federal Register, Volume 88 Issue 35 (Wednesday, February 22, 2023)</title>
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[Federal Register Volume 88, Number 35 (Wednesday, February 22, 2023)]
[Notices]
[Pages 10950-10952]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-03581]

[[Page 10950]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96934; File No. SR-ICEEU-2023-005]

Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change Relating
to Amendments of the ICE Clear Europe Delivery Procedures

February 15, 2023.
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 February 2, 2023, 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 by 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 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

ICE Clear Europe Limited (``ICE Clear Europe'' or the ``Clearing
House'') proposes to amend its Delivery Procedures (``Delivery
Procedures'' or ``Procedures'') to add a new Part II thereto (``Part
II'') to address new ICE Futures Europe Dutch TTF Natural Gas Futures
(each a ``Contracts'' and together the ``Contracts''), natural gas
futures contracts that will be traded at ICE Futures Europe and cleared
by ICE Clear Europe. The proposed updates would also make a conforming
change elsewhere in the Delivery Procedures.\5\
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\5\ Capitalized terms used but not defined herein have the
meanings specified in the Delivery Procedures or, if not defined
therein, the ICE Clear Europe Clearing Rules.
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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
Background
ICE Clear Europe is proposing to add a new Part II to the Delivery
Procedures as well as a conforming change elsewhere in the Delivery
Procedures. Part II would apply to the Contracts, which are to be
traded on ICE Futures Europe and cleared at ICE Clear Europe.\6\ The
amended Delivery Procedures would provide the delivery specifications
and processes related to delivery under the Contracts. The proposed
Delivery Procedures are intended to become operative on February 20,
2023, subject to regulatory approval.
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\6\ ICE Clear Europe also currently clears a similar TTF natural
gas futures contract traded on the ICE Endex market. That ICE Endex
contract will continue to be cleared separately from, and will not
be fungible with, the Contracts and is addressed by a separate
existing part of the Delivery Procedures (although the Delivery
Procedures for the two contracts are substantially similar).
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Delivery under the Contracts would be settled by the transfer of
rights to natural gas at the TTF (a notional point within the Dutch
natural gas Transmission System at which the balancing of the amounts
of natural gas takes place) from a Transferor nominated by the Seller
to the Clearing House and from the Clearing House to a Transferee
nominated by the Buyer. The amendments would provide that the Clearing
Members grant authority to ICE Clear Europe to make Trade Nominations
on their behalf in connection with deliveries under Contracts. Clearing
Members would not be required, and would not be able, to send Trade
Nominations themselves.
The amendments would set out relevant definitions related to
delivery under the contract, including those relating to TTF and the
Transmission System. The amendments would further specify certain
details of the delivery process for the Contracts including
denominations of relevant quantity, settlement price, relevant time
zones, timing of cessation of trading and certain requirements for
exchange of futures for physical and swap transactions under exchange
rules.
The amendments would also address the responsibilities of the
Clearing House and relevant parties for delivery under Contracts, as
well as certain limitations of liability for the Clearing House.
Specifically, the Clearing House would not be responsible for the
performance or non-performance of GTS (the transmission system
operator), including of its obligations under the GTS Rules.
Additionally, neither the Buyer, Seller nor their Transferees or
Transferors would have any claim against the Clearing House for any
loss, cost, damage or expense incurred or suffered as a result of the
condition or operation of the Transmission System or any part thereof
or the performance or non-performance of GTS except as otherwise
expressly provided in the ICE Futures Europe Rules.
The amendments would provide details related to delivery contract
security, which is the delivery margin to be provided by Buyer and
Seller, and which would take into account the possibility of costs or
charges arising from the balancing regime under the TSC. The Clearing
House would be permitted to alter the calculation of each of the
Buyer's Security and the Seller's Security at any time or make
adjustments in respect of a specific Seller or Buyer.
The amendments would include delivery timetables with detailed
timeframes and descriptions of the processes for delivery under
Contracts, and such timetables would set out, among other processes,
the time for cessation of trading, provision of Buyer's and Seller's
Security, submission of delivery intentions, confirmation reports,
notifications to the nomination agent, payment, top-up of security,
invoicing, and other matters. The amendments would also include
delivery tables with detailed times and processes relating to failed
delivery under Contracts. In respect of invoicing, the amendments would
detail how amounts included in invoices prepared by the Clearing House
would be calculated for confirmed deliveries and failed deliveries of
each Contract, and address the credit notes issued to Buyer's in
respect of failed deliveries.
In addition, the amendments would provide a summary of the reports
produced by the Clearing House in respect of each Contract and made
available to Buyers and Sellers electronically.
The amendments would also update Section 5.1 of the Delivery
Procedures to include ICE Futures Europe Dutch TTF Natural Gas Futures
Contract in the list of contracts under which, subject to delivery
obligations, sellers and buyers

[[Page 10951]]

can nominate transferors and transferees.
(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 \7\ and the regulations thereunder applicable to it. In
particular, Section 17A(b)(3)(F) of the Act \8\ 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 ICE Futures Europe Dutch TTF Natural Gas Futures
Contracts, which will be traded on ICE Futures Europe and cleared at
ICE Clear Europe. The amendments would 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
deliverable energy futures contracts. Contracts providing for delivery
under Part II will be cleared by the Clearing House in the
substantially same manner as other types of deliverable energy futures
contracts, and 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.\9\ (In ICE Clear Europe's view, 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).\10\)
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\7\ 15 U.S.C. 78q-1.
\8\ 15 U.S.C. 78q-1(b)(3)(F).
\9\ 15 U.S.C. 78q-1(b)(3)(F).
\10\ 15 U.S.C. 78q-1(b)(3)(F).
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In addition, Rule 17Ad-22(e)(10) \11\ provides that ``[e]ach
covered clearing agency shall establish, implement, maintain and
enforce written policies and procedures reasonably 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 establish a new
set of procedures applicable to the delivery and settlement of ICE
Futures Europe Dutch TTF Natural Gas Futures Contracts. The procedures
would address, among other matters, delivery specifications for such
contracts, the obligations and roles of Clearing Members and the
Clearing House, certain limitations of liability for the Clearing
House, and certain other documentation and timing matters. Clearance of
the Contracts would otherwise 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).\12\
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\11\ 17 CFR. 240.17Ad-22(e)(10).
\12\ 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 a new
set of procedures applicable to the delivery and settlement of ICE
Futures Europe Dutch TTF Natural Gas Futures Contracts in connection
with the listing of such contracts for trading on the ICE Futures
Europe market. ICE Clear Europe believes that such contracts would
provide additional opportunities for interested market participants to
engage in trading activity in the relevant Dutch natural gas market.
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 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.

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 \13\ and paragraph (f) of Rule 19b-4 \14\
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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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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, security-based swap submission or advance notice 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#5022253c357d333f3d3d353e2423102335337e373f26"><span class="__cf_email__" data-cfemail="bdcfc8d1d890ded2d0d0d8d3c9cefdced8de93dad2cb">[email&#160;protected]</span></a>. Please include
File Number SR-ICEEU-2023-005 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-2023-005. 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

[[Page 10952]]

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-2023-005 and should be
submitted on or before March 15, 2023.

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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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-03581 Filed 2-21-23; 8:45 am]
BILLING CODE 8011-01-P

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