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Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Notices
CDS Default Committee for the next Relevant CDS Default Committee Period as one of the three CDS Default Committee Participants; and b one of the next three CDS Committee-Eligible Clearing Members on the CDS Default Committee Participant List would be selected by the Clearing House at its discretion to take part in the CDS
Default Committee during that Relevant CDS Default Committee Period. The CDS Default Committee Participant List would be amended accordingly. Certain other drafting clarifications are made to paragraph 5.3.
Paragraph 5.4 would be amended to add that if a CDS Clearing Member becomes a defaulter or is suspended or receives a termination notice with respect to its Clearing Membership, it would be removed from the CDS Default Committee Participant List. Paragraphs 5.4 and 5.5 would be amended to clarify that the CDS Default Committee Participant List would be amended to take into account any Clearing Member that becomes or resumes being a CDS
Committee-Eligible Clearing Member or is removed from being a CDS Default Committee Participant because the Clearing House determines that such Clearing Member has a conflict or lacks impartiality.
The amendments in paragraph 5.6
would also provide that the Clearing House would give notice that, since CDS
Default Committee Members and CDS
Default Committee Participants act as part of the governance of ICE Clear Europe, such CDS Default Committee Members and CDS Default Committee Participants would take the benefit of all exclusions and limitations of liability available to the Clearing House under the Rules or Applicable Laws. The change is intended to make the exclusions and limitations on liability for such persons consistent with those generally applicable to Clearing House governance process.
The amendments in paragraph 5.8
would provide that CDS Clearing Members agree and acknowledge that each CDS Default Committee Members and CDS Default Committee Participant each a Covered Party would be subject to the provisions of Rule 106
regarding confidentiality of information received and permitted disclosures as if it were the Clearing House.
Furthermore, each CDS Clearing Member would be required to ensure that each such Covered Party nominated by it would not use any Confidential Material for its own benefit or the benefit of any of its Affiliates and, if so requested by the Clearing House, would execute any documentation specified by the Clearing House acknowledging the
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same. The procedures that would apply in the event a Covered Party is served with or otherwise subject to legal process have been removed as unnecessary in light of the referenced provisions of Rule 106. Paragraph 5.9
would be amended to clarify that each CDS Clearing Member agrees that each Covered Party would be responsible for its own costs associated with its service in such position.
II. CDS Default Management Policy General Drafting Clarifications and Improvements By way of general drafting clarifications and improvements, the amendments to the Policy would remove Appendices A and B, which contain various forms of notice and examples, as well as references thereto.
In ICE Clear Europes view, these appendices do not need to be included in the Policy and, to the extent they remain relevant, forms of notice can be maintained by the Clearing House separately. Certain terminology would be updated throughout the Policy as follows: i The term, Employee, would be updated to Eligible Employee; and ii the terms, Defaulting Clearing Member or Defaulting Member, would be updated to defaulter in certain instances in order to avoid repetition and aid with readability. Certain provisions relating to the Clearing House ceasing to clear new trades for a Defaulting Clearing Member would be moved and reorganized.
CDS Default Committee Activation Consistent with the changes described above to the CDS Procedures, the Policy would be amended to provide that a Clearing Member would only be defined as Committee-Eligible, hereby permitting such Clearing Member to be a CDS Default Committee Participant, if such Clearing Member i is deemed appropriate by the Clearing House, ii is the primary clearing entity of an affiliate group, and iii has a London based trading desk. The Policy would also clarify that the Clearing House maintains a list of all CDS CommitteeEligible Clearing Members and that the relevant term for the committee Relevant CDS Default Committee Period is six calendar months or until the end of any active Default event.
In addition, the Policy would provide that in the event that a CDS Default Committee Participant is unable to fulfill its upcoming rotation obligation for any reason including serving in the CDS Default Committee of another clearing house, such CDS Default Committee Participant would have the
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option to request to postpone their Relevant CDS Default Committee for a Relevant CDS Default Committee Period. If the Clearing House finds the reason for postponement satisfactory, the CDS Default Committee Participant would be substituted for a CDS
Committee-Eligible Clearing Member from the next three members on the CDS
Default Committee Participant List.
Prior to commencement of a rotation, CDS Default Committee Members would be required to have signed all documentation required by the Clearing House including but not limited to a Seconded Trader Agreement, and the Clearing House would use reasonable efforts to ensure that such requirement is enforced.
The amendments would also clarify that CDS Default Committee Members would be responsible for assisting in executing any CDS transactions with respect to Rules 902 or 903 in CDS only on behalf of the Clearing House only if needed. Under the Committee Activation Procedures section, the procedure for use of an alternate CDS
Default Committee Member contact would be revised to refer generally to a situation where the designated primary representative cannot be reached in a reasonable amount of time, and remove specific examples of reasons a member could not be reached.
Secondment Facilities The amendments would clarify that upon arrival at the ICE Clear Europe offices, each CDS Default Committee Member would be assigned a PC with the ICE Clear Europe risk reports concerning the defaulters portfolio and a third-party data provider application.
References to how the CDS Default Committee Member would be able to login to the PC and view certain information sent to ICE Clear Europe by the non-defaulting Clearing Members would be removed as unnecessary. The amendments would also clarify that CDS Default Committee Members would only execute the hedging and liquidating transactions that the Head of Clearing Risk and the team deem necessary.
Confidentiality The amendments would remove the requirement that seconded traders sign an additional confidentiality agreement pertaining to their role within a given member default as ICE Clear Europe believes the existing single secondment agreement is sufficient. Instead, the Policy would provide that CDS Default Committee Members would be reminded of ongoing confidentiality
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