[Federal Register: June 21, 2010 (Volume 75, Number 118)]
[Proposed Rules]
[Page 34966-34969]
[DOCID:fr21jn10-28]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 544

[Docket No. NHTSA-2010-0017]
RIN 2127-AK69

Insurer Reporting Requirements; List of Insurers Required To File
Reports

AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to amend appendices to NHTSA
regulations on Insurer Reporting Requirements. The appendices list
those passenger motor vehicle insurers that are required to file
reports on their motor vehicle theft loss experiences. An insurer
included in any of these appendices would be required to file three
copies of its report for the 2007 calendar year before October 25,
2010. If the passenger motor vehicle insurers remain listed, they must
submit reports by each subsequent October 25. We are proposing to add
and remove several insurers from relevant appendices.

DATES: Comments must be submitted not later than August 20, 2010.
Insurers listed in the appendices are required to submit reports on or
before October 25, 2010.

ADDRESSES: You may submit comments, identified by DOT Docket No. NHTSA-
2010-0017 by any of the following methods:
     Federal eRulemaking Portal: Go to http://
www.regulations.gov. Follow the online instructions for submitting
comments.
     Mail: Docket Management Facility: U.S. Department of
Transportation, 1200 New Jersey Avenue, SE., West Building, Ground
Floor, Room W12-140, Washington, DC 20590-0001.
     Hand Delivery or Courier: West Building Ground Floor, Room
W12-140, 1200 New Jersey Avenue, SE., Washington, DC, between 9 a.m.
and 5 p.m. ET, Monday through Friday, except Federal holidays.
     Fax: 1-202-493-2251.
    Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Public
Participation heading of the Supplementary Information section of this
document. Note that all comments received will be posted without change
to http://www.regulations.gov, including any personal information
provided. Please see the Privacy Act heading below.
    Privacy Act: Anyone is able to search the electronic form of all
comments received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (65 FR 19477-78) or you may visit http://
DocketInfo.dot.gov.
    Docket: For access to the docket to read background documents or
comments received, go to the street address listed above. The Internet
access to the docket will be at http://www.regulations.gov. Follow the
online instructions for accessing the dockets.

FOR FURTHER INFORMATION CONTACT: Carlita Ballard, Office of
International Policy, Fuel Economy and Consumer Programs, NHTSA, 1200
New Jersey Avenue, SE., Washington, DC 20590, by electronic mail to
<EMAIL_ADDRESS>Ms. Ballard's telephone number is (202) 366-
0846. Her fax number is<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

    Pursuant to 49 U.S.C. 33112, Insurer reports and information, NHTSA
requires certain passenger motor vehicle insurers to file an annual
report with the agency. Each insurer's report includes information
about thefts and recoveries of motor vehicles, the rating rules used by
the insurer to establish premiums for comprehensive coverage, the
actions taken by the insurer to reduce such premiums, and the actions
taken by the insurer to reduce or deter theft. Under the agency's
regulation, 49 CFR Part 544, the following insurers are subject to the
reporting requirements:
    (1) Issuers of motor vehicle insurance policies whose total
premiums account for 1 percent or more of the total premiums of motor
vehicle insurance issued within the United States;
    (2) Issuers of motor vehicle insurance policies whose premiums
account for 10 percent or more of total premiums written within any one
State; and
    (3) Rental and leasing companies with a fleet of 20 or more
vehicles not covered by theft insurance policies issued by insurers of
motor vehicles, other than any governmental entity.
    Pursuant to its statutory exemption authority, the agency exempted
certain passenger motor vehicle insurers from the reporting
requirements.

A. Small Insurers of Passenger Motor Vehicles

    Section 33112(f)(2) provides that the agency shall exempt small
insurers of

passenger motor vehicles if NHTSA finds that such exemptions will not
significantly affect the validity or usefulness of the information in
the reports, either nationally or on a State-by-State basis. The term
``small insurer'' is defined, in Section 33112(f)(1)(A) and (B), as an
insurer whose premiums for motor vehicle insurance issued directly or
through an affiliate, including pooling arrangements established under
State law or regulation for the issuance of motor vehicle insurance,
account for less than 1 percent of the total premiums for all forms of
motor vehicle insurance issued by insurers within the United States.
However, that section also stipulates that if an insurance company
satisfies this definition of a ``small insurer,'' but accounts for 10
percent or more of the total premiums for all motor vehicle insurance
issued in a particular State, the insurer must report about its
operations in that State.
    In the final rule establishing the insurer reports requirement (52
FR 59; January 2, 1987), 49 CFR Part 544, NHTSA exercised its exemption
authority by listing in Appendix A each insurer that must report
because it had at least 1 percent of the motor vehicle insurance
premiums nationally. Listing the insurers subject to reporting, instead
of each insurer exempted from reporting because it had less than 1
percent of the premiums nationally, is administratively simpler since
the former group is much smaller than the latter. In Appendix B, NHTSA
lists those insurers required to report for particular States because
each insurer had a 10 percent or greater market share of motor vehicle
premiums in those States. In the January 1987 final rule, the agency
stated that it would update Appendices A and B annually. NHTSA updates
the appendices based on data voluntarily provided by insurance
companies to A.M. Best.\1\ A.M. Best publishes in its State/Line Report
each spring. The agency uses the data to determine the insurers' market
shares nationally and in each State.
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    \1\ A.M. Best Company is a well-recognized source of insurance
company ratings and information. 49 U.S.C. 33112(i) authorizes NHTSA
to consult with public and private organizations as necessary.
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B. Self-Insured Rental and Leasing Companies

    In addition, upon making certain determinations, NHTSA grants
exemptions to self-insurers, i.e., any person who has a fleet of 20 or
more motor vehicles (other than any governmental entity) used for
rental or lease whose vehicles are not covered by theft insurance
policies issued by insurers of passenger motor vehicles, 49 U.S.C.
33112(b)(1) and (f). Under 49 U.S.C. 33112(e)(1) and (2), NHTSA may
exempt a self-insurer from reporting, if the agency determines:
    (1) the cost of preparing and furnishing such reports is excessive
in relation to the size of the business of the insurer; and 33112(e)(1)
and (2),
    (2) the insurer's report will not significantly contribute to
carrying out the purposes of Chapter 331.
    In a final rule published June 22, 1990 (55 FR 25606), the agency
granted a class exemption to all companies that rent or lease fewer
than 50,000 vehicles, because it believed that the largest companies'
reports sufficiently represent the theft experience of rental and
leasing companies. NHTSA concluded that smaller rental and leasing
companies' reports do not significantly contribute to carrying out
NHTSA's statutory obligations and that exempting such companies will
relieve an unnecessary burden on them. As a result of the June 1990
final rule, the agency added Appendix C, consisting of an annually
updated list of the self-insurers subject to Part 544. Following the
same approach as in Appendix A, NHTSA included, in Appendix C, each of
the self-insurers subject to reporting instead of the self-insurers
which are exempted.
    NHTSA updates Appendix C based primarily on information from
Automotive Fleet Magazine and Auto Rental News.\2\
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    \2\ Automotive Fleet Magazine and Auto Rental News are
publications that provide information on the size of fleets and
market share of rental and leasing companies.
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C. When a Listed Insurer Must File a Report

    Under Part 544, as long as an insurer is listed, it must file
reports on or before October 25 of each year. Thus, any insurer listed
in the appendices must file a report before October 25, and by each
succeeding October 25, absent an amendment removing the insurer's name
from the appendices.

II. Proposal

1. Insurers of Passenger Motor Vehicles

    Appendix A lists insurers that must report because each had 1
percent of the motor vehicle insurance premiums on a national basis.
The list was last amended in a final rule published on January 12, 2010
(75 FR 1548). Based on the 2007 calendar year data market shares from
A. M. Best, NHTSA proposes to make no change to Appendix A.
    Each of the 19 insurers listed in Appendix A are required to file a
report before October 25, 2010, setting forth the information required
by Part 544 for each State in which it did business in the 2007
calendar year. As long as these 19 insurers remain listed, they will be
required to submit reports by each subsequent October 25 for the
calendar year ending slightly less than 3 years before.
    Appendix B lists insurers required to report for particular States
for calendar year 2007, because each insurer had a 10 percent or
greater market share of motor vehicle premiums in those States. Based
on the 2007 calendar year data for market shares from A.M. Best, we
propose to add Balboa Insurance Group of South Dakota to Appendix B.
    The nine remaining insurers listed in Appendix B are required to
report on their calendar year 2007 activities in every State where they
had a 10 percent or greater market share. These reports must be filed
by October 25, 2010, and set forth the information required by Part
544. As long as these nine insurers remain listed, they would be
required to submit reports on or before each subsequent October 25 for
the calendar year ending slightly less than 3 years before.

2. Rental and Leasing Companies

    Appendix C lists rental and leasing companies required to file
reports. Subsequent to publishing the January 12, 2010 final rule (see
75 FR 1548), the agency was informed by Enterprise Rent-A-Car company
(Enterprise), that it purchased Vanguard Car Rental, USA (Vanguard) in
August of 2007, and that Vanguard will no longer be reporting as a
separate entity because it merged with Enterprise in August of 2009.
Specifically, Enterprise stated that all reporting will be performed by
its parent company, Enterprise Holdings, Inc. for all three brands,
National, Alamo and Enterprise. Therefore, NHTSA proposes to remove
Vanguard Car Rental USA from the list of insurers required to meet the
reporting requirements.
    Each of the remaining five companies (including franchisees and
licensees) listed in Appendix C are required to file reports for
calendar year 2007 no later than October 25, 2010, and set forth the
information required by Part 544. As long as those five companies
remain listed, they would be required to submit reports before each
subsequent October 25 for the calendar year ending slightly less than 3
years before.

III. Regulatory Impacts

1. Costs and Other Impacts

    This notice has not been reviewed under Executive Order 12866.
NHTSA has considered the impact of this proposed rule and determined
that the action is not ``significant'' within the meaning of the
Department of Transportation's regulatory policies and procedures. This
proposed rule implements the agency's policy of ensuring that all
insurance companies that are statutorily eligible for exemption from
the insurer reporting requirements are in fact exempted from those
requirements. Only those companies that are not statutorily eligible
for an exemption are required to file reports.
    NHTSA does not believe that this proposed rule, reflecting current
data, affects the impacts described in the final regulatory evaluation
prepared for the final rule establishing Part 544 (52 FR 59; January 2,
1987). Accordingly, a separate regulatory evaluation has not been
prepared for this rulemaking action. The cost estimates in the 1987
final regulatory evaluation should be adjusted for inflation, using the
Bureau of Labor Statistics Consumer Price Index for 2009 (see http://
www.bls.gov/cpi). The agency estimates that the cost of compliance is
$50,000 (1987 dollars) for any insurer added to Appendix A, $20,000
(1987 dollars) for any insurer added to Appendix B, and $5,770 (1987
dollars) for any insurer added to Appendix C. If this proposed rule is
made final, for Appendix A, the agency would propose to make no change;
for Appendix B, the agency would propose to add one company; and for
Appendix C, the agency would propose to remove one company. The agency
estimates that the net effect of this proposal, if made final, would be
a cost increase of approximately $14,220 (1987 dollars) to insurers as
a group.
    Interested persons may wish to examine the 1987 final regulatory
evaluation. Copies of that evaluation were placed in Docket No. T86-01;
Notice 2. Any interested person may obtain a copy of this evaluation by
writing to NHTSA, Technical Reference Division, 1201 New Jersey Avenue,
SE., East Building, Ground Floor, Room E12-100, Washington, DC 20590,
or by calling<PHONE_NUMBER>.

2. Paperwork Reduction Act

    The information collection requirements in this proposed rule were
submitted to the Office of Management and Budget (OMB) pursuant to the
requirements of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
This collection of information is assigned OMB Control Number 2127-0547
(``Insurer Reporting Requirements''). This collection of information is
approved for use through April 30, 2012 and the agency will seek to
extend the approval afterwards. The existing information collection
indicates that the number of respondents for this collection is thirty-
three, however, the actual number of respondents fluctuate from year to
year. Therefore, because the number of respondents required to report
for this final rule does not exceed the number of respondents indicated
in the existing information collection, the agency does not believe
that an amendment to the existing information collection is necessary.

3. Regulatory Flexibility Act

    The agency also considered the effects of this rulemaking under the
Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.). I certify that
this proposed rule will not have a significant economic impact on a
substantial number of small entities. The rationale for the
certification is that none of the companies proposed for Appendices A,
B, or C are construed to be a small entity within the definition of the
RFA. ``Small insurer'' is defined, in part under 49 U.S.C. 33112, as
any insurer whose premiums for all forms of motor vehicle insurance
account for less than 1 percent of the total premiums for all forms of
motor vehicle insurance issued by insurers within the United States, or
any insurer whose premiums within any State account for less than 10
percent of the total premiums for all forms of motor vehicle insurance
issued by insurers within the State. This notice would exempt all
insurers meeting those criteria. Any insurer too large to meet those
criteria is not a small entity. In addition, in this rulemaking, the
agency proposes to exempt all ``self insured rental and leasing
companies'' that have fleets of fewer than 50,000 vehicles. Any self-
insured rental and leasing company too large to meet that criterion is
not a small entity.

4. Federalism

    This action has been analyzed according to the principles and
criteria contained in Executive Order 12612, and it has been determined
that the proposed rule does not have sufficient federalism implications
to warrant the preparation of a Federalism Assessment.

5. Environmental Impacts

    In accordance with the National Environmental Policy Act, NHTSA has
considered the environmental impacts of this proposed rule and
determined that it would not have a significant impact on the quality
of the human environment.

6. Regulation Identifier Number (RIN)

    The Department of Transportation assigns a regulation identifier
number (RIN) to each regulatory action listed in the Unified Agenda of
Federal Regulations. The Regulatory Information Service Center
publishes the Unified Agenda in April and October of each year. You may
use the RIN contained in the heading, at the beginning, of this
document to find this action in the Unified Agenda.

7. Plain Language

    Executive Order 12866 and the President's memorandum of June 1,
1998, require each agency to write all rules in plain language.
Application of the principles of plain language includes consideration
of the following questions:
     Have we organized the material to suit the public's needs?
     Are the requirements in the proposal clearly stated?
     Does the proposal contain technical language or jargon
that is not clear?
     Would a different format (grouping and order of sections,
use of headings, paragraphing) make the rule easier to understand?
     Would more (but shorter) sections be better?
     Could we improve clarity by adding tables, lists, or
diagrams?
     What else could we do to make the proposal easier to
understand?
    If you have any responses to these questions, you can forward them
to me several ways:
    a. Mail: Carlita Ballard, Office of International Policy, Fuel
Economy and Consumer Programs, NHTSA, 1200 New Jersey Avenue, SE.,
(West Building) Washington, DC 20590;
    b. E-mail<EMAIL_ADDRESS>or
    c. Fax:<PHONE_NUMBER>.

IV. Comments

Submission of Comments

1. How can I influence NHTSA's thinking on this proposed rule?
    In developing our rules, NHTSA tries to address the concerns of all
our stakeholders. Your comments will help us improve this rule. We
invite you to provide views on our proposal, new data, a discussion of
the effects of this proposal on you, or other relevant information. We
welcome your views on all aspects of this proposed rule. Your comments
will be most effective if you follow the suggestions below:
     Explain your views and reasoning clearly.

     Provide solid technical and cost data to support your
views.
     If you estimate potential costs, explain how you derived
the estimate.
     Provide specific examples to illustrate your concerns.
     Offer specific alternatives.
     Include the name, date, and docket number with your
comments.
2. How do I prepare and submit comments?
    Your comments must be written in English. To ensure that your
comments are correctly filed in the Docket, please include the docket
number of this document in your comments.
    Your comments must not exceed 15 pages long (49 CFR 553.21). We
established this limit to encourage you to write your primary comments
concisely. You may attach necessary documents to your comments. We have
no limit on the attachments' length.
    Please submit two copies of your comments, including the
attachments, to Docket Management at the address given above under
ADDRESSES.
    Comments may also be submitted to the docket electronically by
logging onto the Federal eRulemaking Portal Web site at http://
www.regulation.gov. Follow the online instructions for submitting
comments.
3. How can I be sure that my comments were received?
    If you wish Docket Management to notify you, upon its receipt of
your comments, enclose a self-addressed, stamped postcard in the
envelope containing your comments. Upon receiving your comments, Docket
Management will mail the postcard.
4. How do I submit confidential business information?
    If you wish to submit any information under a confidentiality
claim, you should submit three copies of your complete submission,
including the information you claim as confidential business
information, to the Chief Counsel, Office of Chief Counsel, NHTSA, 1200
New Jersey Avenue, SE., West Building, Washington, DC 20590. In
addition, you should submit two copies, from which you have deleted the
claimed confidential business information, to Docket Management at the
address given above under ADDRESSES. When you send a comment containing
information claimed to be confidential business information, you should
include a cover letter addressing the information specified in our
confidential business information regulation (49 CFR Part 512).
5. Will the agency consider late comments?
    NHTSA will consider all comments that Docket Management receives
before the close of business on the comment closing date indicated
above under DATES. To the extent possible, we will also consider
comments that Docket Management receives after that date. If Docket
Management receives a comment too late for us to consider, in
developing a final rule (assuming that one is issued), we will consider
that comment as an informal suggestion for future rulemaking action.
6. How can I read the comments submitted by other people?
    You may read the comments received by Docket Management at the
address given above under ADDRESSES. The hours of the Docket are
indicated above, in the same location. You may also see the comments on
the Internet. To read the comments on the Internet, log onto the
Federal eRulemaking Portal at http://www.regulation.gov.

V. Conclusion

    Based on the foregoing, we are proposing to amend Appendices B and
C of 49 CFR 544, Insurer Reporting Requirements. We are also amending
Sec.  544.5 to revise the example given the recent update to the
reporting requirements.

List of Subjects in 49 CFR Part 544

    Crime insurance, Insurance, Insurance companies, Motor vehicles,
Reporting and recordkeeping requirements.

    In consideration of the foregoing, 49 CFR Part 544 is proposed to
be amended as follows:

PART 544--[AMENDED]

    1. The authority citation for part 544 continues to read as
follows:

    Authority: 49 U.S.C. 33112; delegation of authority at 49 CFR
1.50.

    2. Paragraph (a) of Sec.  544.5 is revised to read as follows:

Sec.  544.5  General requirements for reports.

    (a) Each insurer to which this part applies shall submit a report
annually before October 25, beginning on October 25, 1986. This report
shall contain the information required by Sec.  544.6 of this part for
the calendar year 3 years previous to the year in which the report is
filed (e.g., the report due by October 25, 2010, will contain the
required information for the 2007 calendar year).
* * * * *
    3. Appendix A to Part 544 is revised to read as follows:

Appendix A--Insurers of Motor Vehicle Insurance Policies Subject to the
Reporting Requirements in Each State in Which They Do Business

Allstate Insurance Group
American Family Insurance Group
American International Group
Auto Club Enterprise Insurance Group
Auto-Owners Insurance Group
Erie Insurance Group
Berkshire Hathaway/GEICO Corporation Group
California State Auto Group
Hartford Insurance Group
Liberty Mutual Insurance Companies
Metropolitan Life Auto & Home Group
Mercury General Group
Nationwide Group
Progressive Group
Safeco Insurance Companies
State Farm Group
Travelers Companies
USAA Group
Farmers Insurance Group

    4. Appendix B to Part 544 is revised to read as follows:

Appendix B--Issuers of Motor Vehicle Insurance Policies Subject to the
Reporting Requirements Only in Designated States

Alfa Insurance Group (Alabama)
Auto Club (Michigan)
Balboa Insurance Group (South Dakota) \1\
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    \1\ Indicates a newly listed company which must file a report
beginning with the report due October 25, 2010.
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Commerce Group, Inc. (Massachusetts)
Kentucky Farm Bureau Group (Kentucky)
New Jersey Manufacturers Group (New Jersey)
Safety Group (Massachusetts)
Southern Farm Bureau Group (Arkansas, Mississippi)
Tennessee Farmers Companies (Tennessee)

    5. Appendix C to Part 544 is revised to read as follows:

Appendix C--Motor Vehicle Rental and Leasing Companies (Including
Licensees and Franchisees) Subject to the Reporting Requirements of
Part 544

Cendant Car Rental
Dollar Thrifty Automotive Group
Enterprise Holding Inc./Enterprise Rent-A-Car Company \2\
Hertz Rent-A-Car Division (subsidiary of The Hertz Corporation)
U-Haul International, Inc. (subsidiary of AMERCO)
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    \2\ Enterprise Rent-A-Car Company acquired ownership of Vanguard
Car Rental USA in August 2007.

    Issued on: June 14, 2010.
Stephen R. Kratzke,
Associate Administrator for Rulemaking.
[FR Doc. 2010-14841 Filed 6-18-10; 8:45 am]
BILLING CODE 4910-59-P


[Federal Register Volume 79, Number 213 (Tuesday, November 4, 2014)]
[Notices]
[Pages 65443-65445]
[FR Doc No: 2014-26120]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73459; File No. SR-ICEEU-2014-18]

Self-Regulatory Organizations; ICE Clear Europe Limited; Notice
of Filling of Proposed Rule Change To Provide for the Clearance of
Additional Sovereign Contracts

October 29, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder \2\ notice is hereby given that
on October 20, 2014, ICE Clear Europe Limited (``ICE Clear Europe'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed changes to the rules as described in Items I, II, and III
below, which Items have been primarily prepared by ICE Clear Europe.
The Commission is publishing this notice to solicit comments on the
proposed changes to the rules from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The principal purpose of the change is to provide for the clearance
of additional CDS contracts that are Western European sovereign CDS
contracts referencing the Kingdom of Belgium and the Republic of
Austria (the ``Additional WE Sovereign Contracts'').

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, ICE Clear Europe included
statements concerning the purpose of and basis for proposing the
Additional WE Sovereign Contracts. The text of these statements may be
examined at the places specified in Item IV below. ICE Clear Europe has
prepared summaries, set forth in sections A, B, and C below, of the
most significant aspects of these statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    The purpose of the proposed rule change is for ICE Clear Europe to
offer clearing of Western European sovereign CDS contracts referencing
two additional reference entities, the Kingdom of Belgium and the
Republic of Austria. ICE Clear Europe currently clears CDS contracts
referencing four other Western European sovereigns: Ireland, the
Republic of Italy, the Portuguese Republic and the Kingdom of Spain.\3\
ICE Clear Europe believes clearance of the Additional WE Sovereign
Contracts will benefit the markets for credit default swaps on Western
European sovereigns by offering to market participants the benefits of
clearing, including reduction in counterparty risk and safeguarding of
margin assets pursuant to Clearing House rules.
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    \3\ See Exchange Act Release No. 34-71920 (Apr. 9, 2014) (File
No. SR-ICEEU-2014-04); 79 FR 21331 (Apr. 15, 2015) (order approving
rule changes to clear other Western European sovereign CDS
contracts) (the ``Prior WE Sovereigns Order'').
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    The Additional WE Sovereign Contracts will constitute ``Non-STEC
Single Name Contracts'' for purposes of the CDS Procedures and
accordingly will be governed by Paragraph 10 of the CDS Procedures,
consistent with treatment of the Western European sovereign CDS
contracts currently cleared by ICE Clear Europe. Clearing of the
Additional WE Sovereign Contracts will not require any changes to ICE

Clear Europe's existing Clearing Rules and Procedures. In addition,
clearing of the Additional WE Sovereign Contracts will not require any
changes in ICE Clear Europe's risk management framework (including
relevant policies) or margin model.\4\ ICE Clear Europe believes that
clearing of the proposed Additional WE Sovereign Contracts is
consistent with the requirements of Section 17A of the Act \5\ and
regulations thereunder applicable to it, including the standards under
Rule 17Ad-22.\6\ The Additional WE Sovereign Contracts are
substantially similar to the other Western European sovereign CDS
contracts currently cleared by ICE Clear Europe. The additional
contracts will be cleared in the same manner as such other Western
European sovereign CDS contracts, consistent with ICE Clear Europe's
existing clearing arrangements and related financial safeguards,
protections, risk management policies and procedures and margin
methodology (including those enhancements for Western European
sovereign contracts previously adopted and approved in the Prior WE
Sovereigns Order). In ICE Clear Europe's view, clearing of the
Additional WE Sovereign CDS contracts, under such terms and
arrangements, is consistent with the prompt and accurate clearance of
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 and the protection of investors and the public interest,
within the meaning of Section 17A(b)(3)(F) of the Act.\7\ Clearing of
the Additional WE Sovereign Contracts will also satisfy the relevant
requirements of Rule 17Ad-22,\8\ as discussed below.
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    \4\ For a description of previously approved changes to ICE
Clear Europe's risk management framework to accommodate clearing of
Western European sovereign CDS contracts, see the Prior WE
Sovereigns Order. ICE Clear Europe has performed a variety of
empirical analyses related to clearing of the Additional WE
Sovereign Contracts under its margin methodology, including back
tests and stress tests.
    \5\ 15 U.S.C. 78q-1.
    \6\ 17 CFR 240.17Ad-22.
    \7\ 15 U.S.C. 78q-1(b)(3)(F).
    \8\ 17 CFR 240.17Ad-22.
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    Financial Resources. ICE Clear Europe will apply its existing
margin methodology for Western European sovereign CDS contracts to the
Additional WE Sovereign Contracts. ICE Clear Europe believes that this
model will provide sufficient margin to cover its credit exposure to
its clearing members from clearing such contracts, consistent with the
requirements of Rule 17Ad-22(b)(2) and Rule 17Ad-22(d)(14).\9\ In
addition, ICE Clear Europe believes the CDS Guaranty Fund, under its
existing methodology, will, together with the required margin, provide
sufficient financial resources to support the clearing of Additional WE
Sovereign Contracts consistent with the requirements of Rule 17Ad-
22(b)(3).\10\
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    \9\ 17 CFR 240.17Ad-22(b)(2), (d)(14).
    \10\ 17 CFR 240.17Ad-22(b)(3).
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    Operational Resources. ICE Clear Europe will have the operational
and managerial capacity to clear the Additional WE Sovereign Contracts
as of the commencement of clearing, consistent with the requirements of
Rule 17Ad-22(d)(4).\11\ ICE Clear Europe believes that its existing
systems used for sovereign CDS contracts are appropriately scalable to
handle the clearing of the Additional WE Sovereign Contracts.
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    \11\ 17 CFR 240.17Ad-22(d)(4).
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    Settlement. ICE Clear Europe will use its existing settlement
procedures (including for physical settlements), account structures and
approved financial institutions as used in other sovereign CDS clearing
for the Additional WE Sovereign Contracts. ICE Clear Europe believes
that clearing of the Additional WE Sovereign Contracts will therefore
be consistent with the requirements of Rule 17Ad-22(d)(5), (12) and
(15).\12\
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    \12\ 17 CFR 240.17Ad-22(d)(5), (12) and (15).
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    Default Procedures. ICE Clear Europe's existing Rules and default
management policies and procedures for CDS will apply to the Additional
WE Sovereign Contracts. ICE Clear Europe believes that the Rules and
procedures allow for it to take timely action to contain losses and
liquidity pressures and to continue meeting its obligations in the
event of clearing member insolvencies or defaults, including in respect
of Additional WE Sovereign Contracts, in accordance with Rule 17Ad-
22(d)(11).\13\
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    \13\ 17 CFR 240.17Ad-22(d)(11).
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    Governance. As discussed in further detail in the Prior WE
Sovereigns Order, although the margin model applicable to Western
European sovereign CDS contracts, including the Additional WE Sovereign
Contracts, may result in clearing members being subject to different
margin charges based on their domicile and correlation with the
underlying sovereign, ICE Clear Europe believes that the margin model
properly aligns the margin requirements to the risks presented by
particular clearing members. Moreover, the model operates without the
need for ICE Clear Europe (or its management, Board or CDS Risk
Committee) to exercise discretion concerning particular clearing
members or the margin levels applicable to them. As a result, in ICE
Clear Europe's view, the clearing of such contracts does not result in
unfair discrimination among clearing members within the meaning of
Section 17A(b)(3)(F) of the Act and Rule 17Ad-22(d)(8).\14\
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    \14\ 15 U.S.C. 78q-1(b)(3)(F); 17 CFR 240.17Ad-22(d)(8).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    ICE Clear Europe does not believe the proposed Additional WE
Sovereign Contracts would have any impact, or impose any burden, on
competition not necessary or appropriate in furtherance of the purpose
of the Act. ICE Clear Europe does not anticipate that its commencement
of clearing for the Additional WE Sovereign Contracts will adversely
affect the trading market for those contracts or for CDS more
generally. Specifically, allowing clearing of the Additional WE
Sovereign Contracts will provide market participants with the
additional choice to have their transactions in these types of
contracts cleared, and should generally promote the further development
of the market for these contracts. Moreover, ICE Clear Europe has
established fair and objective criteria for eligibility to clear the
Additional WE Sovereign Contracts, consistent with its criteria for
other cleared CDS.
    Although clearance of Additional WE Sovereign Contracts may result
in higher margin requirements for some clearing members as a result of
the general wrong way risk component of the margin model, ICE Clear
Europe believes that the model properly aligns margin requirements to
the risks presented by such clearing members with respect to the
Additional WE Sovereign Contracts. As a result, ICE Clear Europe is of
the view that these changes are necessary and appropriate in
furtherance of the purpose of the Act and the Commission's regulations
thereunder, including the financial resources and risk management
requirements of Rule 17Ad-22.\15\ Furthermore, ICE Clear Europe does
not believe that any such increase in margin requirements would
significantly affect the ability of clearing members or other market
participants to continue to clear CDS, consistent with the risk
management requirements of the Clearing House, or otherwise limit
market participants' choices for selecting clearing services.
Accordingly ICE Clear Europe does not believe that

clearance of the Additional WE Sovereign Contracts will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.
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    \15\ 17 CFR 240.17Ad-22.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others

    Written comments relating to the acceptance of the Additional WE
Sovereign Contracts for clearing have not been solicited or received.
ICE Clear Europe will notify the Commission of any written comments
received by ICE Clear Europe.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml) or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-ICEEU-2014-18 on the subject line.

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 SR-ICEEU-2014-18. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be 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
10:00 a.m. and 3:00 p.m. Copies of such filings will also be available
for inspection and copying at the principal office of ICE Clear Europe
and on ICE Clear Europe's Web site at https://www.theice.com/notices/Notices.shtml?regulatoryFilings.
    All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-ICEEU-2014-18
and should be submitted on or before November 25, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26120 Filed 11-3-14; 8:45 am]
BILLING CODE 8011-01-P