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Federal Register / Vol. 86, No. 104 / Wednesday, June 2, 2021 / Notices j. Clarifying How Open Contract Positions Are Aggregated and Netted
amendments come out of default event simulations and planning.

The proposed amendments at Rule 406b and c address contractual netting for F&O contracts. The proposed changes would align the provisions for F&O Contracts more closely with the corresponding rule on contractual netting for CDS contracts in Rule 406d et seq.
In particular, the changes would address aggregation of open contract positions of an F&O Clearing Member in addition to netting of such positions, and would clarify that the process for aggregation or netting takes place via contractual novation.

n. Affiliate Cross-Defaults It is proposed that Rule 901aiv be amended to clarify that the declaration of an Event of Default in respect of one Clearing Member is a circumstance in which the Clearing House can declare an Event of Default in respect of another Clearing Member that is a Group Company. In the Clearing Houses view, this is the effect of Rule 901a as it stands already, but the Clearing House has decided to clarify this expressly in light of questions raised in default planning exercises.

k. Clarifying How the Clearing House May Amend Contract Terms It is proposed that Rule 409a be amended so that the Clearing House can evidence its consent to amendments, waivers and variations of the Contract Terms by way of Circular. This has been the usual way of issuing such amendments, waivers and variations, and would conform the Rules with operational practice.
l. Pledged Collateral Not for Settlement Payments It is proposed that Rule 1603c be amended to clarify that only original or initial types of Margin payments be provided in the form of Pledged Collateral, and that such collateral excludes Variation Margin, Mark-toMarket Margin and FX Mark-to-Market Margin, which is provided to or by the Clearing House by outright transfer of cash as a settlement payment. The change is intended to be consistent with amendments previously made to the Rules to clarify that such variation and mark-to-market margin are settlement payments rather than collateral, and was inadvertently omitted from such prior amendments.5

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m. Hedging Following an Event of Default Rule 903c would be amended to clarify that the Clearing Houses right to authorize hedging transactions in a Default scenario would include transactions on a Market, any other Exchange or over the counter. The amendments would also provide that such transactions taking place on an exchange which is not a Market, or where requested or directed otherwise by the Clearing House, need not themselves be cleared. These 5 Exchange Act Release No. 3488665 File No.
SRICEEU2020003 Apr. 16, 2020, 85 FR 22892
Apr. 23, 2020.

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o. Eligible Contract Participant Status Rule 201axx would be amended to provide that the requirement that a Clearing Member be an eligible contract participant 6 only applies if it is to be a CDS Clearing member or an FX Clearing member. Such status would not be required under U.S. law for a Clearing Member that is only an F&O
Clearing Member. The amendment reflects that such status is required under applicable U.S. law for persons that trade swaps and security-based swaps such as CDS, but not for futures.7 Section 10 of the F&O
Standard Terms would for similar reasons be amended to remove a requirement that an F&O Clearing Member and Customer be an eligible contract participant. Rule 1901bxv would also be amended to provide that the requirement that a Sponsored Principal be an eligible contract participant only applies in relation to CDS Contracts and FX Contracts.
p. Corrected Names of Internal Risk Committees It is proposed that Rule 916d be amended to change the term Risk Committee to relevant product risk committee. This reflects that there are different product risk committees addressing topics specific to F&O and CDS which take on this role. The Risk Committee established under EMIR has different competencies. The changes clarify and align the Rules to current Clearing House governance processes.
In the Finance Procedures paragraph 142 and 143, reference to the CDS
Risk Committee and FX Risk Committee would be corrected to CDS Product Risk Committee and FX Product Risk Committee to reflect the correct committee names. The same change 6 Commodity Exchange Act Section 1a18, 7
U.S.C. 1a18.
7 See Section 6l of the Act, 15 U.S.C. 78fl;
Commodity Exchange Act Section 2e, 7 U.S.C.
2e.

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would be made throughout the CDS
Procedures where CDS Risk Committee is currently used.
q. Amendments to Complaint Resolution Procedures Various clarifications and amendments are proposed throughout the Complaint Resolution Procedures.
Paragraph 1.1 would be amended to reframe the Complaint Resolution Procedures based on ICE Clear Europes obligations as a CCP under EMIR.8
Throughout the procedures, the term Complaints Resolution Procedure would be replaced with Complaint Resolution Procedures to correct a typographical error and for consistency with the term used in Rule 101.
Paragraph 1.1 would be amended to use the defined term Person which is defined in Rule 101 rather than person. This would be reflected as a global change throughout the Complaint Resolution Procedures. Further amendments in paragraphs 1.1 and 1.2
would be made to provide for an independent Commissioner, who is responsible for the investigation of complaints generally, and for the appointment of an Investigator to investigate a particular complaint.
Minor drafting updates would be made in paragraph 1.3 to improve clarity.
Additional drafting changes throughout the procedures would be made to refer where appropriate to Eligible Complaint instead of complaint. This would clarify that only Eligible Complaints and not other complaints would be subject to this process. As a result, the defined term Complaint has been replaced globally by the undefined term complaint, to allow a distinction between complaints generally speaking and those that qualify as Eligible Complaints within the scope of the procedures.
The definition of Eligible Complaints in paragraph 2.1 would be broadened to include complaints against any Directors, officers, employees or committees or committee members of the Clearing House, which ICE Clear Europe believes is the proper scope for the Complaint Resolution Procedures.
The amendments would also clarify that Eligible Complaints may relate to the manner in which the Clearing House has failed to perform applicable regulatory functions.
8 As a result of ICE Clear Europe Circular C20/
163, this reference to EMIR is to be interpreted as including a reference to EMIR as applicable in the United Kingdom under the European Union Withdrawal Act 2018. See Exchange Act Release No. 3490746 File No. SRICEEU2020016 Dec.
21, 2020, 85 FR 85704 Dec. 29, 2020.

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