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Federal Register / Vol. 86, No. 104 / Wednesday, June 2, 2021 / Notices
jbell on DSKJLSW7X2PROD with NOTICES

with the drafting used in the other Standard Terms.
Proposed clarifications would be made to Rule 1607diii, CDS Standard Terms 7iii, F&O Standard Terms 7iii and FX Standard Terms 7iii to refer to Personal Data rather than Personal Data of its Data Subjects. This change eliminates unnecessary language.
A minor change is proposed to paragraph 15.4b of the Finance Procedures to delete an outdated reference to the Continuing CDS Rule Provisions, which are no longer in effect.
b Statutory Basis ICE Clear Europe believes that the proposed rule changes are consistent with the requirements of Section 17A of the Act 9 and the regulations thereunder applicable to it, including the standards under Rule 17Ad22.10 In particular, Section 17Ab3F of the Act requires that that rule changes be consistent with the prompt and accurate clearance and settlement of securities transactions and derivative agreements, contracts and transactions cleared by ICE Clear Europe, the safeguarding of securities and funds in the custody or control of ICE Clear Europe or for which it is responsible, and the protection of investors and the public interest.11 As discussed herein, the proposed rule changes are principally designed to clarify various aspects of the Rules and Procedures to improve drafting and to update the Rules and Procedures to ensure consistency with current operational practices and processes as well as current applicable laws and regulations. In ICE Clear Europes view, these changes would therefore facilitate the prompt and accurate clearance and settlement of transactions through the Clearing House and would generally be consistent with the protection of investors and the public interest.
Furthermore, ensuring that the Rules and Procedures are clear, including with respect to matters such as portability, will enhance the safeguarding of securities and funds in the custody or control of the Clearing House or for which it is responsible. As such, ICE
Clear Europe believes the amendments are consistent with the requirements of Section 17Ab3F of the Act.12
Further, Section 17Ab3G of the Act 13 requires that clearing agency rules provide that its participants shall be appropriately disciplined for violations 9 15

U.S.C. 78q1.
CFR 240.17Ad22.
11 15 U.S.C. 78q1b3F.
12 15 U.S.C. 78q1b3F.
13 15 U.S.C. 78q1b3G.
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of the rules including by fine, censure or any other fitting sanction. Section 17Ab3H of the Act 14 requires that a clearing agency provide a fair procedure with respect to the disciplining of participants. The addition of the new Summary Disciplinary Process would enable the Clearing House to impose appropriate fines or to censure appropriate parties in the event of a rule violation. It would also specify the process of imposing any sanction, including the notice process by the Clearing House, the opportunity for a Clearing Member to appeal, the grounds for appeal and the actions the appeal panel may take i.e., to affirm, vary or revoke a sanction. As such, by enabling appropriate disciplining of participants and providing a fair procedure relating to this process, ICE
Clear Europe believes the amendments are consistent with the requirements of Section 17Ab3G and H of the Act.15
The amendments are also consistent with the relevant specific requirements of Rule 17Ad22,16 as set forth in the following discussion:
i Portability Rule 17Ad22e14 17 requires that clearing agencies maintain policies and procedures which enable the segregation and portability of customers positions and collateral. The amendments provide greater clarity with respect to providing porting instructions. The amendments would remove the existing process whereby Non-FCM/BD Clearing Members may deliver a Default Portability Preference, with advance porting information, to the Clearing House, an option that was rarely used and that has proven to be impractical and has been superseded by requirements under EMIR that post-default porting notices be served prior to porting, which limited the value of instructions provided prior to default. The amendments will also clarify the process for providing post-default porting notices. The amendments will 14 15

U.S.C. 78q1b3H.
U.S.C. 78q1b3G and H.
16 17 CFR 240.17Ad22.
17 17 CFR 240.17Ad22e14 which states that each covered clearing agency shall establish, implement, maintain and enforce written policies and procedures reasonably designed to, as applicable: 14 Enable, when the covered clearing agency provides central counterparty services for security-based swaps or engages in activities that the Commission has determined to have a more complex risk profile, the segregation and portability of positions of a participants customers and the collateral provided to the covered clearing agency with respect to those positions and effectively protect such positions and related collateral from the default or insolvency of that participant.
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thus facilitate the process of post-default porting in a manner consistent with applicable regulations, including the requirements of Rule 17Ad22e14,18
while avoiding the concerns created by the existing process.
Further, proposed amendments to Rule 209d would facilitate the process of porting positions, pre-default, in the context of a corporate group reorganization where a new Clearing Member that is an Affiliate will be receiving the terminating Clearing Members Open Contract Positions, and thereby facilitate the Clearing Houses compliance with requirements of Rule 17Ad22e14 19 to enable portability of customer positions and collateral.
ii Operational Risk Rule 17Ad22e17i 20 requires that a clearing agency manage its operational risks through appropriate policies and procedures. The amendments to the notices provisions would facilitate electronic notice, including for default notices under Rule 901 and other notices more generally under Rule 113.
These clarifications better ensure appropriate and timely notices will be provided, reducing operational risks relating to timely receipt of notices.
Further, proposed amendments to Rule 202axxii would extend the requirement for Clearing Members to have competent persons accessible to the Clearing House to also include the two hours prior to the start of the business day, to ensure that operational policies are consistent with consistent with operational practices and ensures that staff are available to process and deal with questions in relation to morning margin calls. The amendment would thus reduce the operational risks of not being able to address such calls in a timely manner.
The proposed changes at Rule 301o enhance the Clearing Houses ability to request information when needed on account balances, including for the purpose of calling on available cash where the Clearing Member has failed to meet a payment obligation, and are expected to reduce operational risks that may arise where the Clearing House may not otherwise have access to such information.
18 17

CFR 240.17Ad22e14.
CFR 240.17Ad22e14.
20 17 CFR 240.17Ad22e17i which states that each covered clearing agency shall establish, implement, maintain and enforce written policies and procedures reasonably designed to, as applicable: 17 Manage the covered clearing agencys operational risks by: i Identifying the plausible sources of operational risk, both internal and external, and mitigating their impact through the use of appropriate systems, policies, procedures, and controls.
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