Notice2023-25218
Order Granting ICE Clear Europe Limited's Request To Withdraw From Registration as a Clearing Agency
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
November 15, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 219 (Wednesday, November 15, 2023)</title>
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[Federal Register Volume 88, Number 219 (Wednesday, November 15, 2023)]
[Notices]
[Pages 78428-78430]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-25218]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98902; File No. 4-809]
Order Granting ICE Clear Europe Limited's Request To Withdraw
From Registration as a Clearing Agency
November 9, 2023.
I. Introduction
On August 10, 2023, ICE Clear Europe Limited (``ICE Clear Europe'')
filed with the Securities and Exchange Commission (``Commission'') a
written request (the ``Written Request'') \1\ to withdraw from
registration as a clearing agency under section 17A of the Securities
Exchange Act of 1934 (the ``Exchange Act'').\2\ ICE Clear Europe also
requested the withdrawal of an exemption related to the clearance and
settlement of certain futures and options contracts.\3\ The Commission
published notice of ICE Clear Europe's request in the Federal Register
on September 14, 2023, to solicit comments from interested persons.\4\
The Commission received no comments regarding the request. For the
reasons discussed below, the Commission is granting ICE Clear Europe's
requests and requiring ICE Clear Europe to retain and produce upon
request certain records.
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\1\ See Letter from Hester Serafini, President, ICE Clear
Europe, to Vanessa Countryman, Secretary, Commission, dated Aug. 10,
2023.
\2\ 15 U.S.C. 78q-1.
\3\ See Notice of Withdrawal Request, infra at note 4, 88 FR at
63176.
\4\ Securities Exchange Act Release No. 98339 (Sept. 8, 2023),
88 FR 63173 (Sept. 14, 2023) (File No. 4-809) (``Notice of
Withdrawal Request'').
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II. Discussion and Commission Findings
ICE Clear Europe is registered with the Commission as a clearing
agency under section 17A of the Exchange Act solely for the purpose of
clearing
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security-based swaps (``SBS'').\5\ ICE Clear Europe also is authorized
as a recognized clearing house under United Kingdom (``UK'') law; \6\
recognized as a third-country central counterparty under the European
Market Infrastructure Regulation; \7\ registered as a derivatives
clearing organization under the Commodity Exchange Act; \8\ recognized
as a foreign central counterparty under the Swiss Financial Market
Infrastructure Act; \9\ and recognized as a remote clearing house in
the Abu Dhabi Global Market.\10\ ICE Clear Europe provides clearing and
settlement services for two primary categories of derivative contracts:
(1) exchange-traded futures and options contracts traded on the ICE
Futures Europe, ICE Futures U.S., ICE Endex and ICE Futures Abu Dhabi
markets (the ``F&O Business''); and (2) over-the-counter index and
single-name credit default swap (``CDS'') contracts (the ``CDS
Business'').
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\5\ See 15 U.S.C. 78q-1. Pursuant to section 17A(l) of the
Exchange Act, ICE Clear Europe became ``deemed registered'' as a
clearing agency as part of its CDS Business. See Amendment to Rule
Filing Requirements for Dually-Registered Clearing Agencies,
Securities Exchange Act Release No. 69284 (Apr. 3, 2013), 78 FR
21046, 21047 & n.20 (Apr. 9, 2013) (File No. S7-29-11). ``Clearing
agency'' is defined in section 3(a)(23)(A) of the Exchange Act as,
in relevant part, ``any person who acts as an intermediary in making
payments or deliveries or both in connection with transactions in
securities or who provides facilities for comparison of data
respecting the terms of settlement of securities transactions, to
reduce the number of settlements of securities transactions, or for
the allocation of securities settlement responsibilities.'' 15
U.S.C. 78c(a)(23)(A).
\6\ See UK Financial Services and Markets Act of 2000 c. 8,
available at <a href="https://www.legislation.gov.uk/ukpga/2000/8/contents">https://www.legislation.gov.uk/ukpga/2000/8/contents</a>.
\7\ See Regulation (EU) No 648/2012 of the European Parliament
and of the Council of 4 July 2012 on OTC derivatives, central
counterparties and trade repositories.
\8\ See 7 U.S.C. 7a-1.
\9\ See Federal Act on Financial Market Infrastructures and
Market Conduct in Securities and Derivatives Trading of 19 June
2015.
\10\ See Abu Dhabi Global Market Financial Services and Markets
Regulations 2015, available at <a href="https://en.adgm.thomsonreuters.com/rulebook/financial-services-and-markets-regulations-2015-0">https://en.adgm.thomsonreuters.com/rulebook/financial-services-and-markets-regulations-2015-0</a>.
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In June 2022, by circular published on its website, ICE Clear
Europe publicly announced its intention to terminate its CDS Business
in 2023, including its clearing of SBS.\11\ In the Written Request
subsequently filed with the Commission, ICE Clear Europe represented
that it would no longer accept CDS contracts for clearing after close
of business on October 26, 2023, and would subsequently terminate and
settle any open CDS positions.\12\ ICE Clear Europe represented further
that it would settle all final amounts owed to or by each Clearing
Member by November 7, 2023, and that it will not seek to engage in
securities clearing activity relating to security-based swaps in
reliance on any deemed registered status pursuant to section 17A(l) of
the Exchange Act.\13\ ICE Clear Europe therefore submitted its request
for withdrawal of its clearing agency registration pursuant to section
19(a)(3) of the Exchange Act, which states that a self-regulatory
organization may ``withdraw from registration by filing a written
notice of withdrawal with the Commission,'' upon such terms and
conditions as the Commission, by rule, deems necessary or appropriate
in the public interest or for the protection of investors.\14\
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\11\ See Cessation of Clearing of CDS Contracts, Circular C22/
076 (June 30, 2022), available at <a href="https://www.theice.com/publicdocs/clear_europe/circulars/C22076.pdf">https://www.theice.com/publicdocs/clear_europe/circulars/C22076.pdf</a> (setting Mar. 31, 2023 as the
Withdrawal Date); Cessation of Clearing of CDS Contracts:
Postponement of Withdrawal Date, Circular C22/109 (Sept. 26, 2022),
available at <a href="https://www.theice.com/publicdocs/clear_europe/circulars/C22109.pdf">https://www.theice.com/publicdocs/clear_europe/circulars/C22109.pdf</a> (postponing Withdrawal Date to Oct. 27, 2023 in
light of suggestions from CDS market participants).
\12\ See Notice of Withdrawal Request, 88 FR at 63175.
\13\ See Notice of Withdrawal Request, 88 FR at 63175-76. See
also 15 U.S.C. 78q-1(l). ICE Clear Europe further represents that if
an affiliate of ICE Clear Europe seeks to clear SBS or another
securities product, such affiliate would do so after registering
with the Commission pursuant to the process set forth in Commission
Rule 17Ab2-1. See Notice of Withdrawal Request, 88 FR at 63176. See
also 17 CFR 240.17Ab2-1.
\14\ See Notice of Withdrawal Request, 88 FR at 63176; see also
15 U.S.C. 78s(a)(3).
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ICE Clear Europe also requested the withdrawal of an exemption it
was previously granted related to the clearance and settlement of
certain futures and options contracts.\15\ In 2013, the Commission
exempted ICE Clear Europe from clearing agency registration under
section 17A(b) of the Exchange Act and Rule 17Ab2-1 \16\ thereunder in
connection with ICE Clear Europe's clearing of certain futures and
options contracts on underlying U.S. equity securities (the
``Securities Product Exemption'').\17\ ICE Clear Europe represents that
it does not currently clear any equity options or single stock futures
on U.S. securities,\18\ and that its rules are designed to prohibit ICE
Clear Europe from clearing futures or options on underlying U.S.
securities for U.S. persons.\19\ ICE Clear Europe believes that the
Securities Product Exemption will not be necessary for ICE Clear
Europe's continued operation of the F&O Business, and therefore has
requested that the Commission terminate the exemption.\20\
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\15\ See Notice of Withdrawal Request, 88 FR at 63176.
\16\ 15 U.S.C. 78q-1(b) and 17 CFR 240.17Ab2-1.
\17\ See Order Pursuant to section 17A of the Securities
Exchange Act of 1934 Granting Exemption from the Clearing Agency
Registration Requirement Under section 17A(b) of the Exchange Act
for ICE Clear Europe Limited in Connection with its Proposal to
Clear Contracts Traded on the LIFFE Administration and Management
Market, Exchange Act Release No. 69872 (June 27, 2013), 78 FR 40220
(July 3, 2013).
\18\ See Notice of Withdrawal Request, 88 FR at 63176 n.36.
\19\ See id.; ICE Clear Europe Rule 207(g).
\20\ See Notice of Withdrawal Request, 88 FR at 63176.
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On November 7, 2023, ICE Clear Europe confirmed to the Commission
that it stopped accepting CDS contracts as of close-of-business on
October 26, 2023, closed-out all CDS positions on October 27, 2023,
returned collateral related to CDS positions, and completed final
settlement of amounts owed to or from members related to ICE Clear
Europe's CDS Business on November 7, 2023.\21\ It also re-confirmed the
representations in the Written Request regarding record-keeping,
record-production, the settlement of existing claims, and the lack of
potential for future claims against it resulting from its CDS
Business.\22\
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\21\ See Letter from Hester Serafini, President, ICE Clear
Europe, to Vanessa Countryman, Secretary, Securities and Exchange
Commission, dated Nov. 7, 2023 (``Confirmation Letter'').
\22\ See Confirmation Letter at 2.
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Based upon the representations made by ICE Clear Europe to the
Commission, the Commission has determined that granting ICE Clear
Europe's requests to (i) withdraw its clearing agency registration and
(ii) terminate the Securities Product Exemption are appropriate. ICE
Clear Europe represents it is no longer performing actions that require
registration as a clearing agency under section 17A of the Exchange Act
and will not seek to engage in securities clearing activity in reliance
on any ``deemed registered'' status pursuant to section 17A(l) of the
Exchange Act.\23\ In addition, ICE Clear Europe has provided specific
assurances regarding record-keeping, record-production, and both the
settlement of existing, and lack of potential for future, claims
against it resulting from its CDS Business. Specifically, ICE Clear
Europe confirmed that all known claims against it in connection with
the CDS Business were settled by November 7, 2023, and that ICE Clear
Europe is not aware of any potential future claims against it in
connection with the CDS Business.\24\ ICE Clear Europe also confirmed
that, for a period of five years following its withdrawal from
registration as a clearing agency, it will retain and maintain all
documents, books, and
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records in accordance with Rules 17a-1(a) and (b) under the Exchange
Act and will furnish such information upon request in accordance Rule
17a-1(c) under the Exchange Act.\25\ As noted above, no comments were
received in response to the published notice of ICE Clear Europe's
Written Request to withdraw from registration as a clearing agency,
which included ICE Clear Europe's representations regarding maintenance
of records and record production, as well as ICE Clear Europe's
representations regarding any potential for claims associated with its
clearing agency registration. As further noted above, ICE Clear Europe
reconfirmed, in writing, the representations made in its Written
Request.
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\23\ See Confirmation Letter at 2; 15 U.S.C. 78q-1(l).
\24\ See Confirmation Letter at 2.
\25\ See Confirmation Letter at 2.
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III. Conclusion
It is therefore ordered, pursuant to section 19(a)(3) of the
Exchange Act,\26\ that:
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\26\ 15 U.S.C. 78s(a)(3).
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(1) Effective as of the date of this Order, ICE Clear Europe's
registration as a clearing agency under section 17A of the Exchange Act
is withdrawn;
(2) Effective as of the date of this Order, the exemption under
section 17A(b) of the Exchange Act in connection with ICE Clear
Europe's proposal to clear contracts traded on the LIFFE Administration
and Management Market is terminated; \27\ and
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\27\ 15 U.S.C. 78q-1(b)
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(3) For a period of five years from the effective date of
withdrawal of registration as a clearing agency, ICE Clear Europe will
maintain all the records required to be maintained pursuant to Rule
17A-1(a) and (b) which are in ICE Clear Europe's possession and will
produce such records upon the request of any representative of the
Commission, in accordance with Commission Rule 17a-1(c).\28\
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\28\ 17 CFR 240.17a-1(a), (b), and (c).
By the Commission.
Sherry Haywood,
Assistant Secretary.
[FR Doc. 2023-25218 Filed 11-14-23; 8:45 am]
BILLING CODE 8011-01-P
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