[Federal Register: April 29, 2010 (Volume 75, Number 82)]
[Notices]
[Page 22656-22663]
[DOCID:fr29ap10-129]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61973; File No. S7-16-09]

Order Extending Temporary Conditional Exemptions Under the
Securities Exchange Act of 1934 in Connection With Request on Behalf of
ICE Clear Europe, Limited Related to Central Clearing of Credit Default
Swaps, and Request for Comments

April 23, 2010.

I. Introduction

    The Securities and Exchange Commission (``Commission'') has taken
multiple actions \1\ designed to address concerns related to the market
in credit default swaps (``CDS'').\2\ The over-the-counter (``OTC'')
market for CDS has been a source of particular concern to us and other
financial regulators, and we have recognized that facilitating the
establishment of central counterparties (``CCPs'') for CDS can play an
important role in reducing the counterparty risks inherent in the CDS
market, and thus can help mitigate potential systemic impact. We have
therefore found that taking action to help foster the prompt
development of CCPs, including granting temporary conditional
exemptions from certain provisions of the Federal securities laws, is
in the public interest.\3\
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    \1\ See generally Securities Exchange Act Release No. 60372
(Jul. 23, 2009), 74 FR 37748 (Jul. 29, 2009) (temporary exemptions
in connection with CDS clearing by ICE Clear Europe Limited) (``2009
ICE Clear Europe order''); Securities Exchange Act Release No. 60373
(Jul. 23, 2009), 74 FR 37740 (Jul. 29, 2009) and Securities Exchange
Act Release No. 61975 (Apr. 23, 2010) (temporary exemptions in
connection with CDS clearing by Eurex Clearing AG); Securities
Exchange Act Release No. 59578 (Mar. 13, 2009), 74 FR 11781 (Mar.
19, 2009), Securities Exchange Act Release No. 61164 (Dec. 14,
2009), 74 FR 67258 (Dec. 18, 2009) and Securities Exchange Act
Release No. 61803 (Mar. 30, 2010), 75 FR 17181 (Apr. 5, 2010)
(temporary exemptions in connection with CDS clearing by Chicago
Mercantile Exchange Inc.); Securities Exchange Act Release No. 59527
(Mar. 6, 2009), 74 FR 10791 (Mar. 12, 2009), Securities Exchange Act
Release No. 61119 (Dec. 4, 2009), 74 FR 65554 (Dec. 10, 2009) and
Securities Exchange Act Release No. 61662 (Mar. 5, 2010), 75 FR
11589 (Mar. 11, 2010) (temporary exemptions in connection with CDS
clearing by ICE Trust US LLC); Securities Exchange Act Release No.
59164 (Dec. 24, 2008), 74 FR 139 (Jan. 2, 2009) (temporary
exemptions in connection with CDS clearing by LIFFE A&M and
LCH.Clearnet Ltd.) and other Commission actions discussed in several
of these orders.
    In addition, we have issued interim final temporary rules that
provide exemptions under the Securities Act of 1933 and the
Securities Exchange Act of 1934 for CDS to facilitate the operation
of one or more central counterparties for the CDS market. See
Securities Act Release No. 8999 (Jan. 14, 2009), 74 FR 3967 (Jan.
22, 2009) (initial approval); Securities Act Release No. 9063 (Sep.
14, 2009), 74 FR 47719 (Sep. 17, 2009) (extension until Nov. 30,
2010).
    Further, the Commission provided temporary exemptions in
connection with Sections 5 and 6 of the Securities Exchange Act of
1934 for transactions in CDS; these exemptions expired on March 24,
2010. See Securities Exchange Act Release No. 59165 (Dec. 24, 2008),
74 FR 133 (Jan. 2, 2009) (initial exemption); Securities Exchange
Act Release No. 60718 (Sep. 25, 2009), 74 FR 50862 (Oct. 1, 2009)
(extension until Mar. 24, 2010).
    \2\ A CDS is a bilateral contract between two parties, known as
counterparties. The value of this financial contract is based on
underlying obligations of a single entity (``reference entity'') or
on a particular security or other debt obligation, or an index of
several such entities, securities, or obligations. The obligation of
a seller to make payments under a CDS contract is triggered by a
default or other credit event as to such entity or entities or such
security or securities. Investors may use CDS for a variety of
reasons, including to offset or insure against risk in their fixed-
income portfolios, to take positions in bonds or in segments of the
debt market as represented by an index, or to take positions on the
volatility in credit spreads during times of economic uncertainty.
    Growth in the CDS market has coincided with a significant rise
in the types and number of entities participating in the CDS market.
CDS were initially created to meet the demand of banking
institutions looking to hedge and diversify the credit risk
attendant to their lending activities. However, financial
institutions such as insurance companies, pension funds, securities
firms, and hedge funds have entered the CDS market.
    \3\ See generally actions referenced in note 1, supra.
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    The Commission's authority over the OTC market for CDS is limited.
Specifically, section 3A of the Securities Exchange Act of 1934
(``Exchange Act'') limits the Commission's authority over swap
agreements, as defined in section 206A of the Gramm-Leach-Bliley
Act.\4\ For those CDS that are swap agreements, the exclusion from the
definition of security in section 3A of the Exchange Act, and related
provisions, will continue to apply. The Commission's action today does
not affect these CDS, and this Order does not apply to them. For those
CDS that are not swap agreements (``non-excluded CDS''), the
Commission's action today provides temporary conditional exemptions
from certain requirements of the Exchange Act.
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    \4\ 15 U.S.C. 78c-1. Section 3A excludes both a non-security-
based and a security-based swap agreement from the definition of
``security'' under Section 3(a)(10) of the Exchange Act, 15 U.S.C.
78c(a)(10). Section 206A of the Gramm-Leach-Bliley Act defines a
``swap agreement'' as ``any agreement, contract, or transaction
between eligible contract participants (as defined in section 1a(12)
of the Commodity Exchange Act * * *) * * * the material terms of
which (other than price and quantity) are subject to individual
negotiation.'' 15 U.S.C. 78c note.
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    The Commission believes that using well-regulated CCPs to clear
transactions in CDS provides a number of benefits by helping to promote
efficiency and reduce risk in the CDS market, by contributing to the
goal of market stability, and by requiring maintenance of records of
CDS transactions that would aid the Commission's efforts to prevent and
detect fraud and other abusive market practices.\5\
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    \5\ See generally actions referenced in note 1, supra.
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    In the 2009 ICE Clear Europe Order, the Commission provided
temporary conditional exemptions to ICE Clear Europe, Limited (``ICE
Clear Europe'') and certain other parties to permit ICE Clear Europe to
clear and settle CDS transactions.\6\ The current exemptions

are scheduled to expire on April 23, 2010, and ICE Clear Europe has
requested that the Commission extend those exemptions.\7\
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    \6\ For purposes of this Order, ``Cleared CDS'' means a credit
default swap that is submitted (or offered, purchased, or sold on
terms providing for submission) to ICE Clear Europe, that is offered
only to, purchased only by, and sold only to eligible contract
participants (as defined in Section 1a(12) of the Commodity Exchange
Act as in effect on the date of this Order (other than a person that
is an eligible contract participant under paragraph (C) of that
section)), and in which: (i) The reference entity, the issuer of the
reference security, or the reference security is one of the
following: (A) An entity reporting under the Exchange Act, providing
Securities Act Rule 144A(d)(4) information, or about which financial
information is otherwise publicly available; (B) a foreign private
issuer whose securities are listed outside the United States and
that has its principal trading market outside the United States; (C)
a foreign sovereign debt security; (D) an asset-backed security, as
defined in Regulation AB, issued in a registered transaction with
publicly available distribution reports; or (E) an asset-backed
security issued or guaranteed by the Federal National Mortgage
Association (``Fannie Mae''), the Federal Home Loan Mortgage
Corporation (``Freddie Mac'') or the Government National Mortgage
Association (``Ginnie Mae''); or (ii) the reference index is an
index in which 80 percent or more of the index's weighting is
comprised of the entities or securities described in subparagraph
(i). See definition in paragraph III.(e)(1) of this Order. As
discussed above, the Commission's action today does not affect CDS
that are swap agreements under Section 206A of the Gramm-Leach-
Bliley Act. See text at note 4, supra.
    \7\ See Letter from Russell Sacks, Shearman & Sterling LLP, to
Elizabeth M. Murphy, Secretary, Commission, April 23, 2010 (``April
2010 Request'').
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    Based on the facts presented and the representations made by ICE
Clear Europe,\8\ and for the reasons discussed in this Order and
subject to certain conditions, the Commission is extending each of the
existing exemptions connected with CDS clearing by ICE Clear Europe:
the temporary conditional exemption granted to ICE Clear Europe from
clearing agency registration under Section 17A of the Exchange Act
solely to perform the functions of a clearing agency for certain non-
excluded CDS transactions; the temporary conditional exemption of ICE
Clear Europe and certain of its clearing members from the registration
requirements of Sections 5 and 6 of the Exchange Act solely in
connection with the calculation of mark-to-market prices for non-
excluded CDS cleared by ICE Clear Europe; the temporary conditional
exemption of eligible contract participants and others from certain
Exchange Act requirements with respect to non-excluded CDS cleared by
ICE Clear Europe; and the temporary exemption from certain Exchange Act
requirements granted to registered broker-dealers. This extension is
temporary, and the exemptions will expire on November 30, 2010.
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    \8\ See id. The exemptions we are granting today are based on
all of the representations made on behalf of ICE Clear Europe, which
incorporate representations made on behalf of ICE Clear Europe as
part of the request that preceded our earlier exemptions addressing
CDS clearing by ICE Clear Europe. We recognize, however, that there
could be legal uncertainty in the event that one or more of the
underlying representations were to become inaccurate. Accordingly,
if any of these exemptions were to become unavailable by reason of
an underlying representation no longer being materially accurate,
the legal status of existing open positions in non-excluded CDS that
previously had been cleared pursuant to the exemptions would remain
unchanged, but no new positions could be established pursuant to the
exemptions until all of the underlying representations were again
accurate.
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II. Discussion

    In its request for an extension, ICE Clear Europe represents that
there have been no material changes to the operations of ICE Clear
Europe and the representations in the 2009 ICE Clear Europe Order
remain true in all material respects.\9\ These representations are
discussed in detail in the 2009 ICE Clear Europe Order.
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    \9\ See April 2010 Request, supra note 7.
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A. ICE Clear Europe's CDS Clearing Activities to Date

    ICE Clear Europe has cleared proprietary CDS transactions of its
clearing members since July 2009. As of March 16, 2010, ICE Clear
Europe had cleared approximately [euroi]1.4 trillion notional amount of
CDS contracts based on indices of securities.
    In December 2009, ICE Clear Europe commenced clearing CDS contracts
based on individual reference entities or securities. As of March 16,
ICE Clear Europe had cleared approximately [euroi]99 billion notional
amount of CDS contracts based on individual reference entities or
securities.

B. Extended Temporary Conditional Exemption From Clearing Agency
Registration Requirement

    On July 23, 2009, in connection with its efforts to facilitate the
establishment of one or more central counterparties (``CCP'') for
Cleared CDS, the Commission issued the 2009 ICE Clear Europe Order,
which conditionally exempted ICE Clear Europe from clearing agency
registration under Section 17A of the Exchange Act on a temporary
basis. Subject to the conditions in the 2009 ICE Clear Europe Order,
ICE Clear Europe is permitted to act as a CCP for Cleared CDS by
novating trades of non-excluded CDS that are securities and generating
money and settlement obligations for participants without having to
register with the Commission as a clearing agency. The 2009 ICE Clear
Europe Order is effective until April 23, 2010.
    In the 2009 ICE Clear Europe Order, the Commission recognized the
need to facilitate the prompt establishment of ICE Clear Europe as a
CCP for CDS transactions. The Commission also recognized the need to
ensure that important elements of Section 17A of the Exchange Act,\10\
which sets forth the framework for the regulation and operation of the
U.S. clearance and settlement system for securities, apply to the non-
excluded CDS market. Accordingly, the temporary exemption in the 2009
ICE Clear Europe Order were subject to a number of conditions designed
to enable Commission staff to monitor ICE Clear Europe's clearance and
settlement of CDS transactions.\11\ Moreover, the temporary exemption
in the 2009 ICE Clear Europe Order in part was based on ICE Clear
Europe's representation that it met the standards set forth in the
Committee on Payment and Settlement Systems (``CPSS'') and
International Organization of Securities Commissions (``IOSCO'') report
entitled: Recommendations for Central Counterparties (``RCCP'').\12\
The RCCP establishes a framework that requires a CCP to have: (i) The
ability to facilitate the prompt and accurate clearance and settlement
of CDS transactions and to safeguard its users' assets; and (ii) sound
risk management, including the ability to appropriately determine and
collect clearing fund and monitor its users' trading. This framework is
generally consistent with the requirements of Section 17A of the
Exchange Act.
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    \10\ 15 U.S.C. 78q-1.
    \11\ See Securities Exchange Act Release No. 60372 (Jul. 23,
2009), 74 FR 37748 (Jul. 29, 2009).
    \12\ The RCCP was drafted by a joint task force (``Task Force'')
composed of representative members of IOSCO and CPSS and published
in November 2004. The Task Force consisted of securities regulators
and central bankers from 19 countries and the European Union. The
U.S. representatives on the Task Force included staff from the
Commission, the Federal Reserve Board, and the Commodity Futures
Trading Commission.
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    The Commission believes that continuing to facilitate the central
clearing of CDS transactions through a temporary conditional exemption
from Section 17A will continue to provide important risk management and
systemic benefits by avoiding an interruption in those CCP clearance
and settlement services. Any interruption in CCP clearance and
settlement services for CDS transactions would eliminate in the future
the benefits ICE Clear Europe provides to the non-excluded CDS market.
Accordingly, and consistent with our findings in the 2009 ICE Clear
Europe Order and for the reasons described herein, we find pursuant to
Section 36 of the Exchange Act \13\ that it is necessary and
appropriate in the public interest and is consistent with the
protection of investors for the Commission to extend, through November
30, 2010, the relief provided from the clearing agency registration
requirements of Section 17A by the 2009 ICE Clear Europe Order.
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    \13\ 15 U.S.C. 78mm. Section 36 of the Exchange Act authorizes
the Commission to conditionally or unconditionally exempt any
person, security, or transaction, or any class or classes of
persons, securities, or transactions, from any provision or
provisions of the Exchange Act or any rule or regulation thereunder,
by rule, regulation, or order, to the extent that such exemption is
necessary or appropriate in the public interest, and is consistent
with the protection of investors.
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    Our action today balances the aim of facilitating ICE Clear
Europe's continued service as a CCP for non-excluded CDS transactions
with ensuring that important elements of

Commission oversight are applied to the non-excluded CDS market. The
temporary conditional exemptions will permit the Commission to continue
to develop direct experience with the non-excluded CDS market. During
the extended exemptive period, the Commission will continue to monitor
closely the impact of the CCPs on the CDS market. In particular, the
Commission will seek to assure itself that ICE Clear Europe does not
act in an anticompetitive manner or indirectly facilitate
anticompetitive behavior with respect to fees charged to members, and
the dissemination of market data.
    This temporary conditional extension of the 2009 ICE Clear Europe
Order also is designed to assure that--as ICE Clear Europe has
represented--information will continue to be available to market
participants about the terms of the CDS cleared by ICE Clear Europe,
the creditworthiness of ICE Clear Europe or any guarantor, and the
clearance and settlement process for CDS.\14\ The Commission believes
continued operation of ICE Clear Europe consistent with the conditions
of this Order will facilitate the availability to market participants
of information that should enable them to make better informed
investment decisions and better value and evaluate their Cleared CDS
and counterparty exposures relative to a market for CDS that is not
centrally cleared.
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    \14\ The Commission believes that it is important in the CDS
market, as in the market for securities generally, that parties to
transactions should have access to financial information that would
allow them to evaluate appropriately the risks relating to a
particular investment and make more informed investment decisions.
See generally Policy Statement on Financial Market Developments, The
President's Working Group on Financial Markets, March 13, 2008,
available at: http://www.treas.gov/press/releases/reports/
pwgpolicystatemktturmoil_03122008.pdf.
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    This temporary extension of the 2009 ICE Clear Europe Order is
subject to a number of conditions that are designed to enable
Commission staff to continue to monitor ICE Clear Europe's clearance
and settlement of CDS transactions and help reduce risk in the CDS
market. These conditions require that ICE Clear Europe: (i) Make
available on its Web site its annual audited financial statements; (ii)
preserve records related to the conduct of its Cleared CDS clearance
and settlement services for at least five years (in an easily
accessible place for the first two years); (iii) supply information
relating to its Cleared CDS clearance and settlement services to the
Commission and provide access to the Commission to conduct on-site
inspections of facilities, records and personnel related to its Cleared
CDS clearance and settlement services as may be reasonably requested by
the Commission and provide access to the Commission to conduct on-site
inspections of facilities, records, and personnel related to its
Cleared CDS clearance and settlement services, subject to cooperation
with the FSA and upon terms and conditions agreed between the FSA and
the Commission; (iv) notify the Commission about material disciplinary
actions taken against any of its members utilizing its Cleared CDS
clearance and settlement services, and about the involuntary
termination of the membership of an entity that is utilizing ICE Clear
Europe's Cleared CDS clearance and settlement services; (v) notify the
Commission not less than one day prior to effectiveness or
implementation of changes to rules, procedures, and any other material
events affecting its Cleared CDS clearance and settlement services, or,
in exigent circumstances, as promptly as reasonably practicable under
the circumstances; (vi) provide the Commission with reports prepared by
independent audit personnel that are generated in accordance with risk
assessment of the areas set forth in the Commission's Automation Review
Policy Statements \15\ and its annual audited financial statements
prepared by independent audit personnel; and (vii) provide notice to
the Commission regarding the suspension of services or inability to
operate facilities in connection with Cleared CDS clearance and
settlement services at the same time it provides notice to the FSA.
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    \15\ See Automated Systems of Self-Regulatory Organizations,
Exchange Act Release No. 27445 (November 16, 1989), File No. S7-29-
89, and Automated Systems of Self-Regulatory Organizations (II),
Exchange Act Release No. 29185 (May 9, 1991), File No. S7-12-91.
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    In addition, this temporary extension of the 2009 ICE Clear Europe
Order is conditioned on ICE Clear Europe, directly or indirectly,
making available to the public on terms that are fair and reasonable
and not unreasonably discriminatory: (i) All end-of-day settlement
prices and any other prices with respect to Cleared CDS that ICE Clear
Europe may establish to calculate mark-to-market margin requirements
for ICE Clear Europe Clearing Members; and (ii) any other pricing or
valuation information with respect to Cleared CDS as is published or
distributed by ICE Clear Europe.\16\
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    \16\ As a CCP, ICE Clear Europe collects and processes
information about CDS transactions, prices, and positions. Public
availability of such information can improve fairness, efficiency,
and competitiveness in the market. Moreover, with pricing and
valuation information relating to Cleared CDS, market participants
would be able to derive information about underlying securities and
indices, potentially improving the efficiency and effectiveness of
the securities markets.
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C. Extended Temporary Conditional Exemption From Exchange Registration
Requirements

    When we initially provided exemptions in connection with CDS
clearing by ICE Clear Europe, we granted a temporary conditional
exemption to ICE Clear Europe from the requirements of sections 5 and 6
of the Exchange Act, and the rules and regulations thereunder, in
connection with ICE Clear Europe's calculation of mark-to-market prices
for open positions in Cleared CDS. We also temporarily exempted ICE
Clear Europe participants from the prohibitions of section 5 to the
extent that they use ICE Clear Europe to effect or report any
transaction in Cleared CDS in connection with ICE Clear Europe's
calculation of mark-to-market prices for open positions in Cleared CDS.
Section 5 of the Exchange Act contains certain restrictions relating to
the registration of national securities exchanges,\17\ while section 6
provides the procedures for registering as a national securities
exchange.\18\
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    \17\ In particular, section 5 states:
    It shall be unlawful for any broker, dealer, or exchange,
directly or indirectly, to make use of the mails or any means or
instrumentality of interstate commerce for the purpose of using any
facility of an exchange * * * to effect any transaction in a
security, or to report any such transactions, unless such exchange
(1) is registered as a national securities exchange under section 6
of [the Exchange Act], or (2) is exempted from such registration * *
* by reason of the limited volume of transactions effected on such
exchange * * * .
    15 U.S.C. 78e.
    \18\ 15 U.S.C. 78f. Section 6 of the Exchange Act also sets
forth various requirements to which a national securities exchange
is subject.
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    We granted these temporary exemptions to facilitate the
establishment of ICE Clear Europe's end-of-day settlement price
process. ICE Clear Europe had represented that in connection with its
clearing and risk management process it would calculate an end-of-day
settlement price for each Cleared CDS in which an ICE Clear Europe
participant has a cleared position, based on prices submitted by the
participants. As part of this mark-to-market process, ICE Clear Europe
has periodically required its clearing members to execute certain CDS
trades at the price at which certain quotations of the clearing members
lock or cross. ICE Clear Europe represents that it continues to
periodically require clearing members to execute certain CDS trades in
this manner.
    As discussed above, we have found in general that it is necessary
or appropriate in the public interest, and is

consistent with the protection of investors, to facilitate continued
CDS clearing by ICE Clear Europe. Consistent with that finding--and in
reliance on ICE Europe's representation that the end-of-day settlement
pricing process, including the periodically required trading, is
integral to its risk management--we further find that it is necessary
or appropriate in the public interest, and is consistent with the
protection of investors that we exercise our authority under section 36
of the Exchange Act to extend, through November 30, 2010, ICE Clear
Europe's temporary exemption from sections 5 and 6 of the Exchange Act
in connection with its calculation of mark-to-market prices for open
positions in Cleared CDS, and ICE Clear Europe's clearing members'
temporary exemption from section 5 with respect to such trading
activity.
    The temporary exemption for ICE Clear Europe will continue to be
subject to three conditions. First, ICE Clear Europe must report the
following information with respect to its calculation of mark-to-market
prices for Cleared CDS to the Commission within 30 days of the end of
each quarter, and preserve such reports during the life of the
enterprise and of any successor enterprise:
     The total dollar volume of transactions executed during
the quarter, broken down by reference entity, security, or index; and
     The total unit volume and/or notional amount executed
during the quarter, broken down by reference entity, security, or
index.
    Second, ICE Clear Europe must establish and maintain adequate
safeguards and procedures to protect participants' confidential trading
information. Such safeguards and procedures shall include: (a) Limiting
access to the confidential trading information of participants to those
employees of ICE Clear Europe who are operating the system or
responsible for its compliance with this exemption or any other
applicable rules; and (b) establishing and maintaining standards
controlling employees of ICE Clear Europe trading for their own
accounts. ICE Clear Europe must establish and maintain adequate
oversight procedures to ensure that the safeguards and procedures
established pursuant to this condition are followed.\19\
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    \19\ We are making a technical modification to this condition to
provide that ICE Clear Europe must ``establish and maintain'' the
applicable safeguards and procedures (in lieu of the current
exemption's use of terminology such as ``adopt and implement'') to
reflect the fact that ICE Clear Europe already is relying on this
settlement pricing process.
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    Third, ICE Clear Europe must comply with the conditions to the
temporary exemption from Section 17A of the Exchange Act in this Order,
given that this exemption is granted in the context of our goal of
continuing to facilitate ICE Clear Europe's ability to act as a CCP for
non-excluded CDS, and given ICE Clear Europe's representation that the
end-of-day settlement pricing process, including the periodically
required trading, will enhance the reliability of the submitted end-of-
day prices.
    The Commission also is continuing to temporarily exempt each ICE
Clear Europe clearing member, through November 30, 2010, from the
prohibition in Section 5 of the Exchange Act to the extent that such
ICE Clear Europe clearing member uses any facility of ICE Clear Europe
to effect any transaction in Cleared CDS, or to report any such
transaction, in connection with ICE Clear Europe calculation of mark-
to-market prices for open positions in Cleared CDS. Absent an
exemption, section 5 would prohibit any ICE Clear Europe clearing
member that is a broker or dealer from effecting transactions in
Cleared CDS on ICE Clear Europe, which will rely on this Order for an
exemption from exchange registration. The Commission believes that
temporarily exempting ICE Clear Europe clearing members from the
restriction in section 5 is necessary and appropriate in the public
interest and is consistent with the protection of investors because it
will facilitate their use of ICE Clear Europe's CCP for Cleared CDS,
which for the reasons set forth in this Order the Commission believes
to be beneficial. Without also temporarily exempting ICE Clear Europe
clearing members from this section 5 requirement, the Commission's
temporary exemption of ICE Clear Europe from sections 5 and 6 of the
Exchange Act would be ineffective, because ICE Clear Europe clearing
members that are brokers or dealers would not be permitted to effect
transactions on ICE Clear Europe in connection with the end-of-day
settlement price process.

D. Extended and Revised Temporary Conditional General Exemption for ICE
Clear Europe and Certain Eligible Contract Participants

    As we recognized when we initially provided temporary exemptions in
connection with CDS clearing by ICE Clear Europe, applying the full
panoply of Exchange Act requirements to participants in transactions in
non-excluded CDS likely would deter some participants from using CCPs
to clear CDS transactions. We also recognized that it is important that
the antifraud provisions of the Exchange Act apply to transactions in
non-excluded CDS, particularly given that OTC transactions subject to
individual negotiation that qualify as security-based swap agreements
already are subject to those provisions.\20\
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    \20\ While Section 3A of the Exchange Act excludes ``swap
agreements'' from the definition of ``security,'' certain antifraud
and insider trading provisions under the Exchange Act explicitly
apply to security-based swap agreements. See (a) paragraphs (2)
through (5) of section 9(a), 15 U.S.C. 78i(a), prohibiting the
manipulation of security prices; (b) section 10(b), 15 U.S.C.
78j(b), and underlying rules prohibiting fraud, manipulation or
insider trading (but not prophylactic reporting or recordkeeping
requirements); (c) section 15(c)(1), 15 U.S.C. 78o(c)(1), which
prohibits brokers and dealers from using manipulative or deceptive
devices; (d) sections 16(a) and (b), 15 U.S.C. 78p(a) and (b), which
address disclosure by directors, officers and principal
stockholders, and short-swing trading by those persons, and rules
with respect to reporting requirements under Section 16(a); (e)
section 20(d), 15 U.S.C. 78t(d), providing for antifraud liability
in connection with certain derivative transactions; and (f) section
21A(a)(1), 15 U.S.C. 78u-1(a)(1), related to the Commission's
authority to impose civil penalties for insider trading violations.
    ``Security-based swap agreement'' is defined in Section 206B of
the Gramm-Leach-Bliley Act as a swap agreement in which a material
term is based on the price, yield, value, or volatility of any
security or any group or index of securities, or any interest
therein.
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    As a result, we concluded that it is appropriate in the public
interest and consistent with the protection of investors to apply
temporarily substantially the same framework to transactions by market
participants in non-excluded CDS that applies to transactions in
security-based swap agreements. Consistent with that conclusion, we
temporarily exempted ICE Clear Europe, and certain members and eligible
contract participants, from a number of Exchange Act requirements,
subject to certain conditions, while excluding certain enforcement-
related and other provisions from the scope of the exemption.
    We believe that continuing to facilitate the central clearing of
CDS transactions by ICE Clear Europe through this type of temporary
exemption will provide important risk management benefits and systemic
benefits. Accordingly, pursuant to Section 36 of the Exchange Act, the
Commission finds that it is necessary or appropriate in the public
interest and is consistent with the protection of investors to exercise
its authority to grant an exemption through November 30, 2010 from
certain requirements under the Exchange Act.
    As before, this temporary conditional exemption applies to ICE
Clear Europe, any ICE Clear Europe Clearing

Member \21\ which is not a broker or dealer registered under section
15(b) of the Exchange Act (other than paragraph (11) thereof), and any
eligible contract participants \22\ other than: Eligible contract
participants that receive or hold funds or securities for the purpose
of purchasing, selling, clearing, settling or holding Cleared CDS
positions for other persons; \23\ eligible contract participants that
are self-regulatory organizations or eligible contract participants
that are registered brokers or dealers.\24\
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    \21\ For purposes of this Order, an ``ICE Clear Europe Clearing
Member'' means any clearing member of ICE Clear Europe that submits
Cleared CDS to ICE Clear Europe for clearance and settlement
exclusively (i) for its own account or (ii) for the account of an
affiliate that controls, is controlled by, or is under common
control with the clearing member of ICE Clear Europe. See definition
in paragraph III.(e)(1) of this Order.
    \22\ This exemption in general applies to eligible contract
participants, as defined in section 1a(12) of the Commodity Exchange
Act as in effect on the date of this Order, other than persons that
are eligible contract participants under paragraph (C) of that
section.
    \23\ Solely for purposes of this requirement, an eligible
contract participant would not be viewed as receiving or holding
funds or securities for the purpose of purchasing, selling,
clearing, settling, or holding Cleared CDS positions for other
persons, if the other persons involved in the transaction would not
be considered ``customers'' of the eligible contract participant
under the analysis used for determining whether certain persons
would be considered ``customers'' of a broker-dealer under Exchange
Act Rule 15c3-3(a)(1). For these purposes, and for the purpose of
the definition of ``Cleared CDS,'' the terms ``purchasing'' and
``selling'' mean the execution, termination (prior to its scheduled
maturity date), assignment, exchange, or similar transfer or
conveyance of, or extinguishing the rights or obligations under, a
Cleared CDS, as the context may require. This is consistent with the
meaning of the terms ``purchase'' or ``sale'' under the Exchange Act
in the context of security-based swap agreements. See Exchange Act
Section 3A(b)(4).
    \24\ A separate temporary exemption addresses the Cleared CDS
activities of registered broker-dealers. See Part II.E, infra.
Solely for purposes of this Order, a registered broker-dealer, or a
broker or dealer registered under Section 15(b) of the Exchange Act,
does not refer to someone that would otherwise be required to
register as a broker or dealer solely as a result of activities in
Cleared CDS in compliance with this Order.
---------------------------------------------------------------------------

    As before, under this temporary conditional exemption, and solely
with respect to Cleared CDS, those persons generally are exempt from
the provisions of the Exchange Act and the rules and regulations
thereunder that do not apply to security-based swap agreements. Thus,
those persons would still be subject to those Exchange Act requirements
that explicitly are applicable in connection with security-based swap
agreements.\25\ In addition, all provisions of the Exchange Act related
to the Commission's enforcement authority in connection with violations
or potential violations of such provisions would remain applicable.\26\
In this way, the temporary conditional exemption would apply the same
Exchange Act requirements in connection with non-excluded CDS as apply
in connection with OTC credit default swaps.
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    \25\ See note 20, infra.
    \26\ Thus, for example, the Commission retains the ability to
investigate potential violations and bring enforcement actions in
the Federal courts as well as in administrative proceedings, and to
seek the full panoply of remedies available in such cases.
---------------------------------------------------------------------------

    Consistent with the 2009 ICE Clear Europe Order, this temporary
conditional exemption does not extend to: The exchange registration
requirements of Exchange Act sections 5 and 6; \27\ the clearing agency
registration requirements of Exchange Act section 17A; the requirements
of Exchange Act sections 12, 13, 14, 15(d), and 16; \28\ the
Commission's administrative proceeding authority under paragraphs (4)
and (6) of Exchange Act section 15(b),\29\ and the rules and
regulations thereunder that apply to a broker or dealer that is not
registered with the Commission; or certain provisions related to
government securities.\30\
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    \27\ These are subject to a separate temporary class exemption.
See note 1, supra. A national securities exchange that effects
transactions in Cleared CDS would continue to be required to comply
with all requirements under the Exchange Act applicable to such
transactions. A national securities exchange could form subsidiaries
or affiliates that operate exchanges exempt under that order. Any
subsidiary or affiliate of a registered exchange could not
integrate, or otherwise link, the exempt CDS exchange with the
registered exchange including the premises or property of such
exchange for effecting or reporting a transaction without being
considered a ``facility of the exchange.'' See Section 3(a)(2), 15
U.S.C. 78c(a)(2).
    This Order also includes a separate temporary exemption from
Sections 5 and 6 in connection with the mark-to-market process of
ICE Clear Europe, discussed above, at note 17 and accompanying text.
    \28\ 15 U.S.C. 78l, 78m, 78n, 78o(d), 78p. Eligible contract
participants and other persons instead should refer to the interim
final temporary rules issued by the Commission. See note 1, supra.
    \29\ Exchange Act Sections 15(b)(4) and 15(b)(6), 15 U.S.C.
78o(b)(4) and (b)(6), grant the Commission authority to take action
against broker-dealers and associated persons in certain situations.
    \30\ This exemption specifically does not extend to the Exchange
Act provisions applicable to government securities, as set forth in
Section 15C, 15 U.S.C. 78o-5, and its underlying rules and
regulations. The exemption also does not extend to related
definitions found at paragraphs (42) through (45) of Section 3(a),
15 U.S.C. 78c(a). The Commission does not have authority under
Section 36 to issue exemptions in connection with those provisions.
See Exchange Act Section 36(b), 15 U.S.C. 78mm(b).
---------------------------------------------------------------------------

    We are modifying this temporary conditional exemption by providing
that ICE Clear Europe clearing members must be in material compliance
with ICE Clear Europe rules to be eligible to take advantage of this
exemption from Exchange Act requirements. This should promote
compliance with the applicable CCP rules.

E. Extended Temporary General Exemption for Certain Registered Broker-
Dealers

    The 2009 ICE Clear Europe Order included a limited conditional
exemption from Exchange Act requirements to registered broker-dealers
in connection with their activities involving Cleared CDS. In crafting
this temporary conditional exemption, we balanced the need to avoid
creating disincentives to the prompt use of CCPs against the critical
role that certain broker-dealers play in promoting market integrity and
protecting customers (including broker-dealer customers that are not
involved with CDS transactions).
    In light of the risk management and systemic benefits in continuing
to facilitate CDS clearing by ICE Clear Europe through targeted
exemptions to registered broker-dealers, the Commission finds pursuant
to Section 36 of the Exchange Act that it is necessary or appropriate
in the public interest and is consistent with the protection of
investors to exercise its authority to extend this temporary registered
broker-dealer exemption from certain Exchange Act requirements through
November 30, 2010.\31\
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    \31\ The temporary exemption addressed above with regard to ICE
Clear Europe, certain clearing members and certain eligible contract
participants are not available to persons that are registered as
broker-dealers with the Commission (other than those that are notice
registered pursuant to Exchange Act Section 15(b)(11)). Exchange Act
Section 15(b)(11) provides for notice registration of certain
persons that effect transactions in security futures products. 15
U.S.C. 78o(b)(11).
---------------------------------------------------------------------------

    Consistent with the temporary exemptions discussed above, and
solely with respect to Cleared CDS, we are temporarily exempting
registered broker-dealers from provisions of the Exchange Act and the
rules and regulations thereunder that do not apply to security-based
swap agreements. As discussed above, we are not excluding registered
broker-dealers from Exchange Act provisions that explicitly apply in
connection with security-based swap agreements or from related
enforcement authority provisions.\32\ As above, and

for similar reasons, we are not exempting registered broker-dealers
from: sections 5, 6, 12, 13, 14, 15(b)(4), 15(b)(6), 15(d), 16 and 17A
of the Exchange Act.\33\
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    \32\ See notes 20 and 26, supra. As noted above, broker-dealers
also would be subject to Section 15(c)(1) of the Exchange Act, which
prohibits brokers and dealers from using manipulative or deceptive
devices, because that provision explicitly applies in connection
with security-based swap agreements. In addition, to the extent the
Exchange Act and any rule or regulation thereunder imposes any other
requirement on a broker-dealer with respect to security-based swap
agreements (e.g., requirements under Rule 17h-1T to maintain and
preserve written policies, procedures, or systems concerning the
broker or dealer's trading positions and risks, such as policies
relating to restrictions or limitations on trading financial
instruments or products), these requirements would continue to apply
to broker-dealers' activities with respect to Cleared CDS.
    \33\ We also are not exempting those members from provisions
related to government securities, as discussed above.
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    Further we are not exempting registered broker-dealers from the
following additional provisions under the Exchange Act: (1) Section
7(c),\34\ regarding the unlawful extension of credit by broker-dealers;
(2) Section 15(c)(3),\35\ regarding the use of unlawful or manipulative
devices by broker-dealers; (3) Section 17(a),\36\ regarding broker-
dealer obligations to make, keep and furnish information; (4) Section
17(b),\37\ regarding broker-dealer records subject to examination; (5)
Regulation T,\38\ a Federal Reserve Board regulation regarding
extension of credit by broker-dealers; (6) Exchange Act Rule 15c3-1,
regarding broker-dealer net capital; (7) Exchange Act Rule 15c3-3,
regarding broker-dealer reserves and custody of securities; (8)
Exchange Act Rules 17a-3 through 17a-5, regarding records to be made
and preserved by broker-dealers and reports to be made by broker-
dealers; and (9) Exchange Act Rule 17a-13, regarding quarterly security
counts to be made by certain exchange members and broker-dealers.\39\
Registered broker-dealers must comply with these provisions in
connection with their activities involving non-excluded CDS because
these provisions protect investors, provide safeguards with respect to
the financial responsibility and related practices of broker-dealers,
and safeguard against fraud and abuse.\40\
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    \34\ 15 U.S.C. 78g(c).
    \35\ 15 U.S.C. 78o(c)(3).
    \36\ 15 U.S.C. 78q(a).
    \37\ 15 U.S.C. 78q(b).
    \38\ 12 CFR 220.1 et seq.
    \39\ Solely for purposes of this temporary exemption, in
addition to the general requirements under the referenced Exchange
Act sections, registered broker-dealers shall only be subject to the
enumerated rules under the referenced Exchange Act sections.
    \40\ See 15 U.S.C. 78o(c)(3) (directing the Commission to
establish minimum financial responsibility requirements for broker-
dealers, including rules relating to the acceptance of custody, the
use of customers' securities and the carrying and use of customers'
deposits or credit balances).
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G. Solicitation of Comments

    When we granted the 2009 ICE Clear Europe Order, we requested
comment on all aspects of the exemptions. We received no comments in
response. In connection with this Order extending the exemptions
granted in connection with CDS clearing by ICE Clear Europe, we
reiterate our request for comments on all aspects of the exemptions.
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/other.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number S7-16-09 on the subject line; or
     Use the Federal eRulemaking Portal (http://
www.regulations.gov/). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number S7-16-09. This file number
should be included on the subject line if e-mail is used. To help us
process and review your comments more efficiently, please use only one
method. We will post all comments on the Commission's Internet Web site
(http://www.sec.gov/rules/other.shtml). Comments are also available for
Web site viewing and printing in the Commission's Public Reference
Room, 100 F Street, NE., Washington, DC 20549, on official business
days between the hours of 10 a.m. and 3 p.m. All comments received will
be posted without change; we do not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly.

III. Conclusion

    It is hereby ordered, pursuant to section 36(a) of the Exchange
Act, that, through November 30, 2010:
    (a) Exemption from section 17A of the Exchange Act.
    ICE Clear Europe Limited (``ICE Clear Europe'') shall be exempt
from section 17A of the Exchange Act solely to perform the functions of
a clearing agency for Cleared CDS (as defined in paragraph (e)(1) of
this Order), subject to the following conditions:
    (1) ICE Clear Europe shall make available on its Web site its
annual audited financial statements.
    (2) ICE Clear Europe shall keep and preserve at least one copy of
all documents, including all correspondence, memoranda, papers, books,
notices, accounts, and other such records as shall be made or received
by it relating to its Cleared CDS clearance and settlement services.
These records shall be kept for at least five years and for the first
two years shall be held in an easily accessible place.
    (3) ICE Clear Europe shall supply information and periodic reports
relating to its Cleared CDS clearance and settlement services as may be
reasonably requested by the Commission and, subject to cooperation with
the FSA and upon such terms and conditions as may be agreed between the
FSA and the Commission, shall provide access to the Commission to
conduct on-site inspections of all facilities (including automated
systems and systems environment), records, and personnel related to ICE
Clear Europe's Cleared CDS clearance and settlement services.
    (4) ICE Clear Europe shall notify the Commission, on a monthly
basis, of any material disciplinary actions taken against any of its
members using its Cleared CDS clearance and settlement services,
including the denial of services, fines, or penalties. ICE Clear Europe
shall notify the Commission promptly when ICE Clear Europe terminates
on an involuntary basis the membership of an entity that is using ICE
Clear Europe's Cleared CDS clearance and settlement services. Both
notifications shall describe the facts and circumstances that led to
the ICE Clear Europe's disciplinary action.
    (5) ICE Clear Europe shall notify the Commission of all changes to
its rules, procedures, and any other material events affecting its
Cleared CDS clearance and settlement services, including its fee
schedule and changes to risk management practices, not less than one
day prior to effectiveness or implementation of such changes or, in
exigent circumstances, as promptly as reasonably practicable under the
circumstances. If ICE Clear Europe gives notice to, or seeks approval
from, the FSA regarding any other changes to its rules regarding its
Cleared CDS clearance and settlement services, ICE Clear Europe will
also provide notice to the Commission. All such rule changes will be
posted on ICE Clear Europe's Web site. Such notifications will not be
deemed rule filings that require Commission approval.
    (6) ICE Clear Europe shall provide the Commission with reports
prepared by independent audit personnel concerning its Cleared CDS
clearance and settlement services that are generated in accordance with
risk assessment of the areas set forth in the Commission's Automation
Review Policy Statements. ICE Clear Europe

shall provide the Commission with annual audited financial statements
for ICE Clear Europe prepared by independent audit personnel.
    (7) ICE Clear Europe shall notify the Commission at the same time
it notifies the FSA in accordance with FSA REC 3.15 and FSA REC 3.16
regarding the suspension of services or inability to operate its
facilities in connection with its Cleared CDS clearance and settlement
services.
    (8) ICE Clear Europe, directly or indirectly, shall make available
to the public on terms that are fair and reasonable and not
unreasonably discriminatory: (i) All end-of-day settlement prices and
any other prices with respect to Cleared CDS that ICE Clear Europe may
establish to calculate mark-to-market margin requirements for ICE Clear
Europe Clearing Members; and (ii) any other pricing or valuation
information with respect to Cleared CDS as is published or distributed
by ICE Clear Europe.
    (b) Exemption from Sections 5 and 6 of the Exchange Act
    (1) ICE Clear Europe shall be exempt from the requirements of
Sections 5 and 6 of the Exchange Act and the rules and regulations
thereunder in connection with its calculation of mark-to-market prices
for open positions in Cleared CDS, subject to the following conditions:
    (i) ICE Clear Europe shall report the following information with
respect to the calculation of mark-to-market prices for Cleared CDS to
the Commission within 30 days of the end of each quarter, and preserve
such reports during the life of the enterprise and of any successor
enterprise:
    (A) The total dollar volume of transactions executed during the
quarter, broken down by reference entity, security, or index; and
    (B) The total unit volume and/or notional amount executed during
the quarter, broken down by reference entity, security, or index;
    (ii) ICE Clear Europe shall establish and maintain adequate
safeguards and procedures to protect members' confidential trading
information. Such safeguards and procedures shall include: (A) limiting
access to the confidential trading information of members to those
employees of ICE Clear Europe who are operating the system or
responsible for its compliance with this exemption or any other
applicable rules; and (B) establishing and maintaining standards
controlling employees of ICE Clear Europe trading for their own
accounts. ICE Clear Europe must establish and maintain adequate
oversight procedures to ensure that the safeguards and procedures
established pursuant to this condition are followed; and
    (iii) ICE Clear Europe shall satisfy the conditions of the
temporary exemption from Section 17A of the Exchange Act set forth in
paragraphs (a)(1)-(8) of this Order.
    (2) Any ICE Clear Europe Clearing Member shall be exempt from the
requirements of Section 5 of the Exchange Act to the extent such ICE
Clear Europe Clearing Member uses any facility of ICE Clear Europe to
effect any transaction in Cleared CDS, or to report any such
transaction, in connection with ICE Clear Europe's clearance and risk
management process for Cleared CDS.
    (c) Exemption for ICE Clear Europe, ICE Clear Europe Clearing
Members, and certain eligible contract participants.
    (1) Persons eligible. The exemption in paragraph (c)(2) is
available to:
    (i) ICE Clear Europe;
    (ii) Any ICE Clear Europe Clearing Member (as defined in paragraph
(e)(2) of this Order), which is not a broker or dealer registered under
Section 15(b) of the Exchange Act (other than paragraph (11) thereof);
and
    (iii) Any eligible contract participant (as defined in Section
1a(12) of the Commodity Exchange Act as in effect on the date of this
Order (other than a person that is an eligible contract participant
under paragraph (C) of that section)), other than: (A) An eligible
contract participant that receives or holds funds or securities for the
purpose of purchasing, selling, clearing, settling, or holding Cleared
CDS positions for other persons; (B) an eligible contract participant
that is a self-regulatory organization, as that term is defined in
Section 3(a)(26) of the Exchange Act; or (C) a broker or dealer
registered under Section 15(b) of the Exchange Act (other than
paragraph (11) thereof).
    (2) Scope of exemption.
    (i) In general. Subject to the conditions specified in paragraph
(c)(3) of this subsection, such persons generally shall, solely with
respect to Cleared CDS, be exempt from the provisions of the Exchange
Act and the rules and regulations thereunder that do not apply in
connection with security-based swap agreements. Accordingly, under this
exemption, those persons would remain subject to those Exchange Act
requirements that explicitly are applicable in connection with
security-based swap agreements (i.e., paragraphs (2) through (5) of
Section 9(a), Section 10(b), Section 15(c)(1), paragraphs (a) and (b)
of Section 16, Section 20(d) and Section 21A(a)(1) and the rules
thereunder that explicitly are applicable to security-based swap
agreements). All provisions of the Exchange Act related to the
Commission's enforcement authority in connection with violations or
potential violations of such provisions also remain applicable.
    (ii) Exclusions from exemption. The exemption in paragraph
(c)(2)(i), however, does not extend to the following provisions under
the Exchange Act:
    (A) Paragraphs (42), (43), (44), and (45) of Section 3(a);
    (B) Section 5;
    (C) Section 6;
    (D) Section 12 and the rules and regulations thereunder;
    (E) Section 13 and the rules and regulations thereunder;
    (F) Section 14 and the rules and regulations thereunder;
    (G) Paragraphs (4) and (6) of Section 15(b);
    (H) Section 15(d) and the rules and regulations thereunder;
    (I) Section 15C and the rules and regulations thereunder;
    (J) Section 16 and the rules and regulations thereunder; and
    (K) Section 17A (other than as provided in paragraph (a)).
    (3) Conditions for ICE Clear Europe Clearing Members. Any ICE Clear
Europe Clearing Members relying on this exemption must be in material
compliance with the rules of ICE Clear Europe.
    (d) Exemption for certain registered broker-dealers.
    A broker or dealer registered under Section 15(b) of the Exchange
Act (other than paragraph (11) thereof) shall be exempt from the
provisions of the Exchange Act and the rules and regulations thereunder
specified in paragraph (c)(2), solely with respect to Cleared CDS,
except:
    (1) Section 7(c);
    (2) Section 15(c)(3);
    (3) Section 17(a);
    (4) Section 17(b);
    (5) Regulation T, 12 CFR 200.1 et seq.;
    (6) Rule 15c3-1;
    (7) Rule 15c3-3;
    (8) Rule 17a-3;
    (9) Rule 17a-4;
    (10) Rule 17a-5; and
    (11) Rule 17a-13.
    (e) Definitions.
    For purposes of this Order:
    (1) ``Cleared CDS'' shall mean a credit default swap that is
submitted (or offered, purchased, or sold on terms providing for
submission) to ICE Clear Europe, that is offered only to, purchased
only by, and sold only to eligible contract participants (as defined in
Section 1a(12) of the Commodity

Exchange Act as in effect on the date of this Order (other than a
person that is an eligible contract participant under paragraph (C) of
that section)), and in which:
    (i) The reference entity, the issuer of the reference security, or
the reference security is one of the following:
    (A) An entity reporting under the Exchange Act, providing
Securities Act Rule 144A(d)(4) information, or about which financial
information is otherwise publicly available;
    (B) A foreign private issuer whose securities are listed outside
the United States and that has its principal trading market outside the
United States;
    (C) A foreign sovereign debt security;
    (D) An asset-backed security, as defined in Regulation AB, issued
in a registered transaction with publicly available distribution
reports; or
    (E) An asset-backed security issued or guaranteed by Fannie Mae,
Freddie Mac or Ginnie Mae; or
    (ii) The reference index is an index in which 80 percent or more of
the index's weighting is comprised of the entities or securities
described in subparagraph (i).
    (2) ``ICE Clear Europe Clearing Member'' shall mean any clearing
member of ICE Clear Europe that submits Cleared CDS to ICE Clear Europe
for clearance and settlement exclusively (i) for its own account or
(ii) for the account of an affiliate that controls, is controlled by,
or is under common control with the clearing member of ICE Clear
Europe.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-9932 Filed 4-28-10; 8:45 am]
BILLING CODE 8011-01-P