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Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Notices A Clearing Agencys Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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a Purpose ICE Clear Europe is proposing to amend Part 12 of the Rules to implement certain account and settlement finality arrangements applicable to the settlement of Eurodenominated payments by the Clearing House through the European Union EU TARGET2 payment system.6
Effective as of January 1, 2021, upon the exit of the United Kingdom from the EU, ICE Clear Europe has been recognized as a tier 2 third-country central counterparty TCCCP 7 for purposes of the European Market Infrastructure Regulation EMIR.8 Pursuant to Article 252b of EMIR, a tier 2 TCCCP
is required, as a condition to such recognition, to open an overnight deposit account with the central bank of issue of the relevant currency. ICE Clear Europe currently has accounts with the Dutch component of TARGET2
TARGET2NL operated by De Nederlandsche Bank DNB, but will not be eligible to maintain such accounts after March 31, 2021. ICE Clear Europe therefore plans to establish an account with the European Central Bank ECB component of the TARGET2
system TARGET2ECB, which both ICE Clear Europe and the ECB wish to do in compliance with, and furtherance of, EMIR. The proposed changes to Part 12 of the Rules would facilitate the establishment and use of accounts with TARGET2 including TARGET2ECB 9
and address settlement finality with respect to payments made through such accounts in accordance with TARGET2
terms and conditions of operation.
Specifically, in Rule 1201, several new definitions would be added. In 6 TARGET2 is the real-time gross settlement system for Euro payments owned and operated by the Eurosystem which consists of the European Central Bank and the national central banks of those countries that have adopted the Euro.
7 See European Securities and Markets Authority ESMA Public Statement of 28 September 2020, available at https www.esma.europa.eu/pressnews/esma-news/esma-recognise-three-uk-ccps-1january-2021.
8 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; Commission Delegated Regulation EU
2020/1301 of 14 July 2020 Supplementing Regulation EU No 648/2012 of the European Parliament and of the council with respect to the criteria that ESMA should take into account to determine whether a central counterparty established in a third country is systemically important or likely to become systemically important for the financial stability of the Union or of one or more of its Member States.
9 For such time as the TARGET2NL accounts remain in operation, the proposed changes to Part 12 would apply to such accounts as well.

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addition to a definition for TARGET2
referencing the real-time gross settlement system owned and operated by the Eurosystem, new definitions would be added for TARGET2
Component System referencing the real-time gross settlement system of any central bank that is part of the TARGET2 system where the operator of such system is a Concentration Bank under the Rules, TARGET2
Concentration Bank referencing a Concentration Bank under the Rules that is the operator of a TARGET2
Component System, TARGET2 PM
Account referencing a cash account of the Clearing House in TARGET2, and TARGET2 Terms and Conditions referencing the terms and conditions that apply to participation in the relevant TARGET2 Component System.
The definition of Payment Transfer Order would be amended to add TARGET2 Payment Transfer Orders, as discussed below. Subsequent provisions of Rule 1201 would be renumbered accordingly. It is contemplated that ICE
Clear Europes account with TARGET2
ECB would constitute a TARGET2 PM
Account and that the ECB would constitute a TARGET2 Concentration Bank for purposes of these Rules as proposed to be amended.10 ICE Clear Europe intends to designate the ECB as a Concentration Bank under the Rules for these purposes.
In Rule 1202a, a new clause v would be added to provide that a Payment Transfer Order will arise and enter ICE Clear Europes designated system at the moment ICE Clear Europes TARGET2 PM Account is debited or credited with funds, pursuant to the Clearing House sending a SWIFT
instruction to the TARGET2
Concentration Bank. Such a Payment Transfer Order would be defined as a TARGET2 Payment Transfer Order.
Rule 1202aiv, which addresses Payment Transfer Orders involving Clearing House bank accounts, would be amended to exclude TARGET2
Concentration Banks which would be covered instead by the new clause v.
Rule 1202eii, which addresses the amounts subject to a Payment Transfer Order, would be amended to cover TARGET2 Payment Transfer Orders.
Rule 1202m, which specifies the parties subject to a Payment Transfer Order, would be amended to add a new 10 Similarly, while they remain operational, ICE
Clear Europes existing accounts with TARGET2
NL will constitute a TARGET2 PM Accounts and DNB will constitute a TARGET2 Concentration Bank. It is expected that after the TARGET2ECB
account has been opened, the TARGET2NL
account of ICE Clear Europe would be closed and DNB would cease to be a Concentration Bank.

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clause iv specifying that a TARGET2
Payment Transfer Order would have effect between the relevant TARGET2
Concentration Bank and the Clearing House. Subsequent provisions of Rule 1202m would be renumbered accordingly.
In Rule 1203, a new paragraph c would be added to provide that a TARGET2 Payment Transfer Order will become irrevocable at the earlier of i the moment the TARGET2 Payment Account is credited or debited or ii when or during the period in which any relevant payment settlement algorithm used in TARGET2 commences or is running. The approach is intended to be consistent with the point at which payment order becomes irrevocable under the TARGET2 Terms and Conditions. Subsequent provisions of Rule 1203 would be renumbered accordingly.
b Statutory Basis ICE Clear Europe believes that the proposed amendments to the Clearing Rules are consistent with the requirements of Section 17A of the Act 11 and the regulations thereunder applicable to it including the standards under Rule 17Ad22.12 In particular, Section 17Ab3F of the Act 13
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 amendments are intended to accommodate the Clearing Houses use of TARGET2ECB accounts and would also apply to the Clearing Houses use of TARGET2NL accounts whilst they remain operational for purposes of settling Euro payments through the TARGET2 system in central bank funds, consistent with the conditions of recognition for a tier 2
TCCCP under EMIR. As such, the amendments will facilitate settlement by the Clearing House of Euro payments and provide for settlement finality of such payments in accordance with the TARGET2 Terms and Conditions. In ICE
Clear Europes view, the amendments will thus promote the prompt and accurate clearance and settlement of transactions and the protections of investors and the public interest, within 11 15

U.S.C. 78q1.
CFR 240.17Ad22.
13 15 U.S.C. 78q1b3F.
12 17

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