[Federal Register Volume 88, Number 154 (Friday, August 11, 2023)]
[Notices]
[Pages 54690-54699]
[FR Doc No: 2023-17210]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98071; File No. SR-ICEEU-2023-010]

Self-Regulatory Organizations; ICE Clear Europe Limited; Order
Granting Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 1 and Amendment No. 2, to the ICE Clear Europe Clearing
Rules Relating to Non-Default Losses

August 7, 2023.

I. Introduction

    On April 21, 2023, ICE Clear Europe Limited (``ICE Clear Europe'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4,\2\ a proposed rule change to amend
the ICE Clear Europe Clearing Rules (the ``Rules'') regarding the
treatment of non-default losses. On May 2, 2023, ICE Clear Europe filed
Amendment No. 1 to the proposed rule change.\3\ Notice of the proposed
rule change, as modified by Amendment No. 1, was published for comment
in the Federal Register on May 10, 2023.\4\ On June 21, 2023, the
Commission designated a longer period for Commission action on the
proposed rule change until August 8, 2023.\5\ On June 30, 2023, ICE
Clear Europe filed Amendment No. 2 to the proposed rule change.\6\
Notice of Amendment No. 2 to the proposed rule change was published for
comment in the Federal Register on July 12, 2023.\7\ The Commission did
not receive comments regarding the proposed rule change, as modified by
Amendment Nos. 1 and 2 (hereafter, the ``proposed rule change''). For
the reasons discussed below, the Commission is approving the proposed
rule change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 amended and restated in its entirety the
Form 19b-4 and Exhibit 1A in order to correct the narrative
description of the proposed rule change.
    \4\ Self-Regulatory Organizations; ICE Clear Europe Limited;
Notice of Filing of Proposed Rule Change, as Modified by Amendment
No. 1, Relating to Amendments to the Clearing Rules, Exchange Act
Release No. 97429 (May 4, 2023); 88 FR 30187 (May 10, 2023) (SR-
ICEEU-2023-010) (``Notice'').
    \5\ Self-Regulatory Organizations; ICE Clear Europe Limited;
Notice of Designation of Longer Period for Commission Action on
Proposed Rule Change, as Modified by Amendment No. 1, Relating to
Amendments to the Clearing Rules; Exchange Act Release No. 97780
(June 21, 2023), 88 FR 41711 (June 27, 2023) (File No. SR-ICEEU-
2023-010).
    \6\ Amendment No. 2 modified Exhibit 5 to clarify when certain
funds are considered available to ICE Clear Europe to be applied in
accordance with the Rules as proposed to be amended.
    \7\ Self-Regulatory Organizations; ICE Clear Europe Limited;
Notice of Amendment No. 2 to Proposed Rule Change, as Modified by
Amendment No. 1, Relating to Amendments to the Clearing Rules,
Exchange Act Release No. 97851 (July 7, 2023); 88 FR 44418 (July 12,
2023) (SR-ICEEU-2023-010).
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II. Description of the Proposed Rule Change

A. Background

    ICE Clear Europe is registered with the Commission as a clearing
agency for the purpose of clearing security-based swaps.\8\ In its role
as a clearing agency for clearing security-based swaps, ICE Clear
Europe provides services to its Clearing Members, and Clearing Members
in turn transfer assets to ICE Clear Europe. For example, ICE Clear
Europe's Clearing Members transfer to ICE Clear Europe cash and other
assets to satisfy their margin and Guaranty Fund requirements. ICE
Clear Europe maintains these assets at banks for settlement and
custodianship and also invests the assets on behalf of Clearing
Members.
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    \8\ Capitalized terms not otherwise defined herein have the
meanings assigned to them in ICE Clear Europe's Clearing Rules.
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    Maintaining and investing Clearing Members' assets exposes those
assets to risk. For example, if ICE Clear Europe's custodial bank were
to default, ICE Clear Europe could lose access to, or suffer a decline
in value of, assets that it maintains at the bank. Similarly, if an
investment counterparty were to default, ICE Clear Europe could lose
access to, or suffer a decline in value of, assets invested with that
counterparty. These potential losses can be described generally as non-
default losses because they do not arise from the default of a Clearing
Member, but rather from the default of another counterparty to which
ICE Clear Europe is exposed through its custody and investment of
assets.
    As explained in more detail below, ICE Clear Europe's Rules
currently define and categorize non-default losses. The Rules also
specify ICE Clear Europe's responsibility to pay for such losses, set
aside financial resources to cover such losses, and allocate non-
default losses among Clearing Members in certain situations.
    The proposed rule change would amend the Rules to revise this
overall framework for non-default losses. As described more fully
below, the proposed rule change would: (i) add new types of non-default
losses and amend the definitions of the existing types; (ii) define the
responsibilities of ICE Clear Europe and of Clearing Members with
respect to the different types of non-default losses, including the
amount of financial resources put

forth by ICE Clear Europe to cover non-default losses; and (iii) make
other clarifications related to the treatment of non-default losses.

B. Types of Non-Default Losses

    The Rules currently divide non-default losses into two categories.
First, there are Investment Losses. Investment Losses are losses that
ICE Clear Europe incurs in connection with the investment of a Clearing
Member's assets representing Original/Initial Margin,\9\ Guaranty Fund
Contributions,\10\ or Permitted Cover \11\ otherwise provided to cover
margin and Guaranty Fund requirements. Second, there are Non-Default
Losses. Non-Default Losses are all losses that (i) are not Investment
Losses, (ii) ICE Clear Europe incurs other than by an Event of
Default,\12\ and (iii) threaten ICE Clear Europe's solvency.
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    \9\ Original Margin means Permitted Cover provided to ICE Clear
Europe as collateral for the obligations of a Clearing Member in
respect of F&O Contracts. Initial Margin means Permitted Cover
provided to ICE Clear Europe as collateral for the obligations of a
Clearing Member in respect of CDS Contracts. See ICE Clear Europe
Rule 101.
    \10\ Guaranty Fund Contribution means Permitted Cover
transferred by a Clearing Member to the Clearing House as a
contribution to the Guaranty Fund. See ICE Clear Europe Rule 101.
    \11\ Permitted Cover means cash in Eligible Currencies and other
assets determined by ICE Clear Europe as permissible for Margin or
Guaranty Fund Contributions. See ICE Clear Europe Rule 101.
    \12\ Rule 901(a) lists certain events that constitute an Event
of Default with respect to a Clearing Member, such as a Clearing
Member being unable, or likely to be unable, to meet its obligations
under the Rules or in respect of any of its Contracts.
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    The proposed rule change would add three new types of losses:
Custodial Losses, Pledged Collateral Losses, and Title Transfer
Collateral Loss.
    A Custodial Loss would include a loss that ICE Clear Europe incurs
with respect to Custodial Assets in connection with two events: (i) the
default, Insolvency, failure, or similar event with respect to a
Custodian \13\ or Delivery Facility \14\ and (ii) the embezzlement,
theft, defalcation of, or similar event affecting, Custodial Assets.
The proposed rule change would define Custodial Assets as any cash,
deposit, holding, and similar property that is or represents a Clearing
Member's Original/Initial Margin, Variation Margin, Guaranty Fund
Contributions, Permitted Cover, proceeds thereof, Deliverables, or
settlement amounts. The definition of Custodial Losses would
specifically exclude any Pledged Collateral Losses or Title Transfer
Collateral Losses.
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    \13\ The term Custodian would mean, among other entities, any
bank, custodian, sub-custodian, registry, nominee, agent, depository
or settlement system. See ICE Clear Europe Rule 101.
    \14\ The term Delivery Facility means any Person or facility
used for the delivery of Deliverables, such as warehouses, balancing
systems, gas networks, central securities depositories, settlement
systems, designated systems, and vessels. See ICE Clear Europe Rule
101.
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    While a Custodial Loss would arise from the default of a Custodian
or theft of Custodial Assets, a Title Transfer Loss would arise from a
reduction in value of collateral held at a Custodian, due to, for
example, a change in market value or exchange rates. Specifically, the
proposed rule change would define a Title Transfer Collateral Loss as
losses, liabilities, and damages incurred in connection with a
reduction in value of a Clearing Member's Original/Initial Margin,
Guaranty Fund Contributions, or other Permitted Cover that: (i)
Clearing Members have transferred to ICE Clear Europe other than by way
of Pledged Collateral and (ii) ICE Clear Europe has not invested or
reinvested.
    This category would include, for example, losses related to
collateral held at a Custodian, rather than invested. This category
would be limited, however, to losses that arise from a reduction in
value, such as one resulting from a change in exchange rates. It does
not cover losses arising from the default of a Custodian. Those losses,
to the extent incurred by ICE Clear Europe, would be Custodial Losses.
    Unlike a Title Transfer Loss, a Pledged Collateral Loss would
include any losses related to Pledged Collateral, and not just those
incurred in connection with a reduction in value or change in exchange
rates. The proposed rule change would define a Pledged Collateral Loss
as any losses, liabilities, and damages arising out of or relating to
holding any Pledged Collateral or the assets in any Pledged Collateral
Account. Pledged Collateral is a Clearing Member's margin or Permitted
Cover that is provided in a Pledged Collateral Account. With a Pledged
Collateral Account, the Clearing Member provides ICE Clear Europe a
security interest in the margin rather than transferring title in the
margin to ICE Clear Europe outright. Because a Clearing Member never
actually transfers such collateral to ICE Clear Europe, the Clearing
Member remains responsible for any losses related to such collateral.
This is the case both under ICE Clear Europe's current Rule 502(j),\15\
and under the proposed rule change.
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    \15\ ICE Clear Europe Rule 502(j) currently provides that ICE
Clear Europe ``shall not be liable to any Clearing Member's Customer
or other Person for any losses, liabilities, damages, costs, claims,
shortfalls or expenses arising out of or relating to the holding of
any Pledged Collateral or the assets in any Pledged Collateral
Account . . . except to the extent such [losses] result from the
gross negligence or wilful misconduct of the Clearing House.'' As
discussed below, the proposed rule change would delete this
provision from Rule 502(j) and move it into new Rule 919(s).
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    In addition to establishing these new categories of losses, the
proposed rule change would amend the existing definitions of Investment
Losses and Non-Default Losses. With respect to the definition of
Investment Losses, the proposed rule change would exclude Custodial
Losses, Pledged Collateral Losses, and any Title Transfer Collateral
Loss. The proposed rule change also would delete language, currently in
the definition, that Investment Losses do not include losses incurred
as a result of a default of a Custodian. This language is no longer
needed because those losses would be Custodial Losses, as discussed
above.
    With respect to the definition of Non-Default Losses, the proposed
rule change similarly would exclude Custodial Losses, Pledged
Collateral Losses, and any Title Transfer Collateral Loss (the
definition already excludes Investment Losses). The proposed rule
change also would exclude any losses that are included in the
calculation of the ICE Deposit Rate.\16\ Finally, the proposed rule
change would delete the caveat that to be a Non-Default Loss, the loss
must threaten ICE Clear Europe's solvency.
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    \16\ ICE Clear Europe generally pays Clearing Members interest
on the cash balances from their margin deposits. It is possible,
however, the ICE Clear Europe may charge a negative interest rate in
certain circumstances.
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    Taken together, these changes would remove certain losses from the
definition of Non-Default Losses, thereby narrowing the definition. For
example, the current definition of Non-Default Loss could include the
sorts of losses that would be captured in the new term Custodial
Losses. This could occur, for example, if a Custodian of ICE Clear
Europe defaults, causing ICE Clear Europe to suffer a loss that
threatens ICE Clear Europe's solvency. Moving such losses out of the
definition of Non-Default Losses and into a new definition of Custodial
Losses means, as discussed below, ICE Clear Europe's financial
responsibility for such losses would be limited to certain
predetermined financial assets.
    At the same time, the proposed rule change would remove the
requirement that Non-Default Losses threaten ICE Clear Europe's
solvency. Under the proposed rule change, a Non-Default Loss would be
any loss not incurred as part of an Event of Default, other than an
Investment Loss, Custodial Loss, Pledged Collateral Loss, or Title

Transfer Collateral Loss. ICE Clear Europe could seemingly categorize
less significant losses as Non-Default Losses because Non-Default
Losses would no longer need to threaten ICE Clear Europe's solvency. As
discussed below, this means ICE Clear Europe could cover losses using
certain predetermined financial assets.

C. Responsibilities of ICE Clear Europe and Clearing Members for Losses

1. Current Rule 919
    Rule 919 defines the responsibilities of ICE Clear Europe and
Clearing Members with respect to losses not related to a Clearing
Member's default. As discussed above, ICE Clear Europe currently
categorizes such losses as either Investment Losses or Non-Default
Losses. Accordingly, current Rule 919 applies to Investment Losses and
Non-Default Losses only.
    Rule 919 only applies where (i) there has been a Non-Default Loss
or Investment Loss and (ii) there has not been a Clearing House
Event.\17\ In that situation, Rule 919 makes ICE Clear Europe
responsible for a Non-Default Loss and the first portion of an
Investment Loss. With respect to a Non-Default Loss, ICE Clear Europe
meets that loss first with any available Loss Assets and satisfies any
remaining loss using its own capital or assets. With respect to an
Investment Loss, ICE Clear Europe meets that loss first with any
available Loss Assets and apportions any remaining loss among Clearing
Members. Loss Assets are assets of ICE Clear Europe that are set aside
to cover Non-Default Losses and Investment Losses.\18\
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    \17\ A Clearing House Event generally occurs if ICE Clear Europe
is insolvent or otherwise fails to make a payment when due. See ICE
Clear Europe Rule 913.
    \18\ As discussed in the next section, the proposed rule change
would eliminate the current set of Loss Assets and set aside two
separate amounts to cover losses, one for Investment Losses and one
for Custodial Losses.
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    The apportionment of the remaining Investment Loss works as
follows. First, ICE Clear Europe publishes a circular certifying that
the Investment Loss is greater than the Loss Assets. Then, ICE Clear
Europe determines the amount that each Clearing Member is required to
pay to satisfy that loss, which Rule 919 calls a Collateral Offset
Obligation. Each Clearing Member's Collateral Offset Obligation is
determined by multiplying the amount of the remaining Investment Loss
by a fraction, the numerator of which is the total of the Clearing
Member's Original/Initial Margin, Guaranty Fund Contributions, and
Permitted Cover, and the denominator of which is the total of such
amounts among all Clearing Members. Thus, each Clearing Member's
Collateral Offset Obligation would be derived from its proportionate
share of Original/Initial Margin, Guaranty Fund Contributions, and
Permitted Cover. Under current Rule 919(e), a Clearing Member's total
Collateral Offset Obligation could not exceed its total Original/
Initial Margin, Guaranty Fund Contributions, and Permitted Cover.
2. Amended Rule 919
    The proposed rule change would maintain this framework for
satisfying and apportioning losses but would add the additional
categories of losses discussed above. Like the current rule, Rule 919
as amended would only apply where (i) there has been a Non-Default
Loss, Investment Loss, Custodial Loss, Pledged Collateral Loss, or
Title Transfer Collateral Loss and (ii) there has not been a Clearing
House Event. How amended Rule 919 would treat each of these categories
of losses is discussed below.
    With respect to a Non-Default Loss, ICE Clear Europe would meet
that loss first with any available Investment Loss Assets \19\ and
Custodial Loss Assets.\20\ After those sources are exhausted, ICE Clear
Europe would satisfy any remaining Non-Default Loss using its own
capital or assets. Rule 919 as amended therefore would treat Non-
Default Losses the same as it does now, except that ICE Clear Europe
could meet the loss first with any Investment Loss Assets and Custodial
Loss Assets, instead of just Loss Assets.
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    \19\ As discussed in the next section, Investment Loss Assets
would be assets of ICE Clear Europe set aside to cover Investment
Losses.
    \20\ As discussed in the next section, Custodial Loss Assets
would be assets of ICE Clear Europe set aside to cover Custodial
Losses.
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    With respect to an Investment Loss, ICE Clear Europe would meet
that loss first with any available Investment Loss Assets. With respect
to a Custodial Loss, ICE Clear Europe would meet that loss first with
any available Custodial Loss Assets. After using the Investment Loss
Assets or Custodial Loss Assets, ICE Clear Europe would apportion any
remaining Investment Loss or Custodial Loss among Clearing Members. ICE
Clear Europe would use the same method and formula to apportion this
loss among Clearing Members discussed above, with a few additions.
Under the proposed rule change, each Clearing Member's share would
still be based on its portion of total Original/Initial Margin,
Guaranty Fund Contributions, and Permitted Cover, but the proposed rule
change would add Variation Margin, Deliverables, and settlement amounts
to this formula.\21\ A Clearing Member's total Collateral Offset
Obligation could not exceed its total Original/Initial Margin, Guaranty
Fund Contributions, Permitted Cover, Variation Margin, Deliverables,
and settlement amounts, which is essentially the same as the current
rule.
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    \21\ For the explanation of this particular change, see infra
Section II.D.2 below.
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    With respect to a Pledged Collateral Loss, a Clearing Member would
be responsible for that loss except in certain circumstances. New Rule
919(s) would specify that ICE Clear Europe would not be liable to any
Clearing Member, Customer or other Person for any Pledged Collateral
Losses and the Clearing Member or Customer would bear the risk of loss.
ICE Clear Europe could be liable for a Pledge Collateral Loss, however,
if the loss resulted directly from its fraud, bad faith, gross
negligence or wilful misconduct. New Rule 919(s) would mirror a
provision found in current Rule 502(j).\22\ As such, the proposed rule
change would delete this provision from Rule 502(j).
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    \22\ Under current Rule 502(j), ICE Clear Europe is not liable
to any Clearing Member's Customer or other Person for any losses,
liabilities, damages, costs, claims, shortfalls, or expenses arising
out of or relating to the holding of any Pledged Collateral or the
assets in any Pledged Collateral Account, except to the extent such
Custodial Losses result from the gross negligence or wilful
misconduct of ICE Clear Europe.
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    With respect to a Title Transfer Collateral Loss, a Clearing Member
would be solely responsible for that loss but would be entitled to get
back assets equivalent to those it transferred to ICE Clear Europe. New
Rule 919(u) would specify that ICE Clear Europe would not be liable to
any Clearing Member, Customer or other Person for any Title Transfer
Collateral Loss and the Clearing Member or Customer would bear the risk
of loss. Where a Clearing Member has delivered collateral via title
transfer, the Clearing Member would be entitled to get back an
equivalent asset but would not be entitled to any compensation in
respect of any losses. As discussed above, a Title Transfer Collateral
Loss covers losses resulting from a decline in value of collateral that
a Clearing Member has transferred to ICE Clear Europe, but which ICE
Clear Europe has not invested, instead keeping that collateral at a
Custodian. Thus, it follows that a Clearing Member would bear the risk
of a Title Transfer Collateral Loss but would be entitled to the return
of its collateral or an equivalent asset.

3. Amount of ICE Clear Europe Resources To Cover Losses
    Rule 919(p) currently provides that ICE Clear Europe will notify
Clearing Members of the amount of Loss Assets by circular from time to
time. Loss Assets are assets of ICE Clear Europe that it would use to
first satisfy a Non-Default Loss or Investment Loss. Current Rule
919(p) further provides that the amount of Loss Assets is $90 million.
    The proposed rule change would delete the term Loss Assets and
replace it with two separate terms: Investment Loss Assets and
Custodial Loss Assets. Investment Loss Assets would be assets of ICE
Clear Europe set aside to cover Investment Losses, while Custodial Loss
Assets would be assets of ICE Clear Europe set aside to cover Custodial
Losses.
    The proposed rule change also would delete the set amount of such
assets from Rule 919(p). Amended Rule 919(p) would no longer specify
that Loss Assets are set at a level of $90 million and amended Rule
919(p) would not specify any particular amount for Investment Loss
Assets or Custodial Loss Assets. As under the current rule though, ICE
Clear Europe would be required to notify Clearing Members from time to
time, by circular, of the total amount of such assets. After issuing
such a circular, ICE Clear Europe's liability for any subsequent
Investment Loss or Custodial Loss would be limited to the amount of
Investment Loss Assets and Custodial Loss Assets, as applicable, set
out in the circular.
    Despite deleting the set amount from Rule 919(p), ICE Clear Europe
announced in the Notice that it is setting the current amount of
Investment Loss Assets at $195 million and Custodial Loss Assets at $80
million.\23\ Thus, the proposed rule change would increase the amount
of Investment Loss Assets and Custodial Loss Assets from the current
$90 million, while maintaining ICE Clear Europe's ability to change
this amount by circular notification.
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    \23\ Notice, 88 FR at 30190.
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    Rule 919(q) sets out further details regarding the assets set aside
to cover non-default losses. Currently Rule 919(q) requires that ICE
Clear Europe notify Clearing Members of the total amount of Loss Assets
applied in connection with any Investment Loss prior to using such
assets. Rule 919(q), as amended, would similarly require that ICE Clear
Europe notify Clearing Members of the total amount of Investment Loss
Assets applied in connection with any Investment Loss or Non-Default
Loss prior to using such assets. Likewise, amended Rule 919(q) would
require that ICE Clear Europe notify Clearing Members of the total
amount of Custodial Loss Assets applied in connection with any
Custodial Loss or Non-Default Loss prior to using such assets.
    Rule 919(q) also allows ICE Clear Europe to replenish its capital
and resources following an Investment Loss or Non-Default Loss. Such
recapitalization does not reduce any Clearing Member's Collateral
Offset Obligation or the amount of an Investment Loss. Similarly, ICE
Clear Europe may replenish its Loss Assets by applying retained
earnings, but doing so does not increase its liability beyond the
amounts already set aside for Loss Assets (i.e., $90 million under the
current rule). The proposed rule change would generally maintain these
provisions, with amendments to incorporate the new defined terms, such
as Custodial Losses and Custodial Loss Assets. Moreover, the proposed
rule change would require that ICE Clear Europe, after replenishing its
resources, issue a new circular pursuant to Rule 919(p) to notify
Clearing Members of the amount of Investment Loss Assets and Custodial
Loss Assets going forward. In such a situation though, ICE Clear Europe
would not be obligated to apply the new amounts to any prior Non-
Default Loss, Custodial Loss, or Investment Loss.
4. Other Sections of Rule 919
    In addition to the provisions discussed above, other sections of
Rule 919 affect the responsibilities of ICE Clear Europe and Clearing
Members for non-default losses, the apportionment of such losses, and
the financial resources to cover such losses. The proposed rule change
would amend some of these other sections to be consistent with the
overall changes discussed above. This section discusses these
amendments in the order in which they appear in Rule 919.
    Current Rule 919(f) provides details related to Collateral Offset
Obligations. All Collateral Offset Obligations arise on the date
specified in the circular published by ICE Clear Europe announcing the
obligations. ICE Clear Europe collects the Collateral Offset
Obligations using the same process for collecting additional cash
Margin or Guaranty Fund Contributions. Moreover, ICE Clear Europe may
offset any Collateral Offset Obligation against an obligation of ICE
Clear Europe to return or pay any Original/Initial Margin, Guaranty
Fund Contributions, or other Permitted Cover to a Clearing Member. The
proposed rule change would maintain these provisions largely as they
are currently written, but would add Variation Margin, Deliverables, or
settlement amounts to Rule 919(f).\24\
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    \24\ For the explanation of this particular change, see infra
Section II.D.2 below.
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    Current Rule 919(g) requires that ICE Clear Europe apply Collateral
Offset Obligations solely to meet Investment Losses. This provision is
based on the current allocation framework explained above, where losses
are either Non-Default Losses or Investment Losses, and Clearing
Members are only liable for Investment Losses. Given that the proposed
rule change would expand the categories of non-default losses, the
proposed rule change also would amend this provision. As amended, Rule
919(g) would require that ICE Clear Europe apply Collateral Offset
Obligations resulting from Investment Losses solely to meet those
Investment Losses and Collateral Offset Obligations resulting from
Custodial Losses solely to those Custodial Losses.
    Current Rule 919(h) requires that ICE Clear Europe, if it recovers
any money or assets that reduce an Investment Loss, pay the same amount
to the Clearing Members that met their Collateral Offset Obligations,
pro rata. In paying such recovered amounts to Clearing Members, ICE
Clear Europe is allowed to pay itself back for any expenses it incurred
and for any assets, other than Loss Assets, that it applied to meet the
Investment Loss. The proposed rule change would largely retain this
provision as written, with some edits. First, it would amend Rule
919(h) to apply to Custodial Losses, in addition to Investment Losses.
Second, it would limit ICE Clear Europe's obligation to pay any money
or assets to those assets that it recovers and that are received by and
remain available to ICE Clear Europe. The proposed rule change also
would add a more general caveat that the obligation to return amounts
to Clearing Members only applies to the extent that such amounts or
assets remain available to ICE Clear Europe in cleared funds and have
not been subject to an event similar to a Custodial Loss, Investment
Loss, Pledged Collateral Loss or Title Transfer Collateral Loss. This
particular change would help to recognize the possibility that such
amounts could be subject to a loss before ICE Clear Europe is able to
distribute them to Clearing Members. Finally, the proposed rule change
would add, in new Rule 919(t), an identical provision to Rule 919(h),
as amended,

except that Rule 919(t) would apply to a Pledged Collateral Loss.
    Current Rule 919(i) generally prohibits a Clearing Member from
offsetting its Collateral Offset Obligation against other obligations
that it owes to ICE Clear Europe. For example, Rule 919(i) provides
that a Collateral Offset Obligation does not reduce or otherwise affect
the liability of a Clearing Member to make Guaranty Fund Contributions,
to replenish any of its Guaranty Fund Contributions, or to pay
Assessment Contributions. Clearing Members remain liable for margin,
Guaranty Fund Contributions, Assessment Contributions, and amounts they
may owe to ICE Clear Europe. On the other hand, ICE Clear Europe must
pay or release Margin and Permitted Cover in the usual way, subject to
netting to take into account any Collateral Offset Obligation. The
proposed rule change would retain Rule 901(i) largely as written, but
would add references to Variation Margin, Deliverables, and settlement
amounts.\25\ For example, the proposed rule change would require that a
Clearing Member, despite a Collateral Offset Obligation, continue to
pay Variation Margin and make and receive timely delivery of all
Deliverables.
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    \25\ For the explanation of this particular change, see infra
Section II.D.2 below.
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    Current Rule 919(j) requires that ICE Clear Europe, if it
determines that it has provided for Collateral Offset Obligations in
excess of that required or actually applied against an Investment Loss,
or makes a recovery under Rule 919(h), credit the excess or recovered
amount to the Clearing Member's Proprietary Account. The proposed rule
change would largely retain this provision as written, with two
amendments. First, it would amend Rule 919(j) to apply to Custodial
Losses, in addition to Investment Losses. Second, it would add a
general caveat that the obligation only applies to the extent that such
amounts or assets remain available to ICE Clear Europe in cleared funds
and have not been subject to an event similar to a Custodial Loss,
Investment Loss, Pledged Collateral Loss, or Title Transfer Collateral
Loss. Similar, to amended Rule 919(h) described above, this particular
change would help to recognize the possibility that such amounts could
be subject to a loss before ICE Clear Europe is able to distribute them
to Clearing Members.
    Current Rule 919(k) clarifies that a Clearing Member's liability
for a Collateral Offset Obligation is independent from ICE Clear
Europe's power of assessment under Rule 909.\26\ None of the caps on
assessment liabilities found in Rule 909 or elsewhere limit any
liability for a Collateral Offset Obligation. The proposed rule change
would amend this provision to also refer to Rule 914,\27\ Rule 915,\28\
and Rule 916,\29\ in addition to Assessment Contributions under Rule
909. Thus, a Clearing Member's liability for a Collateral Offset
Obligation would be independent of any of its obligations under Rule
909, Rule 914, Rule 915, and Rule 916.
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    \26\ Following the default of a Clearing Member, and if certain
other conditions are satisfied, Rule 909 allows ICE Clear Europe to
assess Clearing Members for additional amounts as needed to resolve
any shortfall resulting from the default.
    \27\ Following the default of a Clearing Member, and if certain
other conditions are satisfied, Rule 914 allows ICE Clear Europe to
reduce variation margin payments, as needed to retain cash and
resolve any shortfall resulting from the default.
    \28\ Following the default of a Clearing Member, and if certain
other conditions are satisfied, Rule 915 allows ICE Clear Europe to
terminate open contracts that offset the defaulting Clearing
Member's open contracts.
    \29\ Following the default of a Clearing Member, and if certain
other conditions are satisfied, Rule 916 allows ICE Clear Europe to
cease clearing specific categories of contracts.
---------------------------------------------------------------------------

    Current Rule 919(l) provides a general exception to the definition
of Clearing House Event.\30\ Specifically, if ICE Clear Europe
exercises any of its authority or rights under Rule 919, then such
exercise shall not be deemed to be any kind of Clearing House Event.
The proposed rule change would retain this provision as written.
---------------------------------------------------------------------------

    \30\ As discussed above, a Clearing House Event generally occurs
if ICE Clear Europe is insolvent or otherwise fails to make a
payment when due. See ICE Clear Europe Rule 913.
---------------------------------------------------------------------------

    Current Rule 919(m) allows Clearing Members to make payments of
Collateral Offset Obligations pursuant to Part 3 of the Rules and the
Finance Procedures. Rule 919(m) further provides that Rule 919 does not
prejudice ICE Clear Europe's right to set off any sum owed by a
Clearing Member to ICE Clear Europe against sum payable by ICE Clear
Europe to the Clearing Member. The proposed rule change would retain
this provision as written.
    Current Rule 919(n) provides that nothing in Rule 919 obligates ICE
Clear Europe to pursue any litigation, claim, or other action against a
Clearing Member, Defaulter, Custodian, or any other Person. The
proposed rule change would retain this provision as written, with one
amendment. It would further specify that ICE Clear Europe is not
required to pursue any claim against a Delivery Facility, in addition
to a Clearing Member, Defaulter, Custodian, or any other Person. This
particular change would account for the new definition of Custodial
Losses, which includes losses in connection with the default of a
Delivery Facility, as discussed above.
    Current Rule 919(o) allows ICE Clear Europe to convert any amounts
denominated in one currency to another currency, when making any
calculations or determinations under Rule 919. The proposed rule change
would retain this provision as written.
    Current Rule 919(r) limits ICE Clear Europe's liability for the
failure of any payment or securities services provider, including any
Custodian or central securities depository. ICE Clear Europe is not
liable to any Clearing Member, Customer or other Person for any losses,
liabilities, damages, costs, claims, shortfalls or expenses arising out
of or relating to any failure, in whole or in part, of any payment or
securities services provider, including without limitation any
Custodian, central securities depository, or central bank. This
disclaimer of liability is subject to Rule 111, which generally limits
ICE Clear Europe's liability to Clearing Members, except in certain
circumstances. The proposed rule change would make a few edits to this
provision. First, it would specify that the limitation applies to such
losses that are incurred by a Clearing Member, Customer, or Person. It
also would add a Delivery Facility to the list of entities. Thus, under
Rule 919(r), as amended, ICE Clear Europe would not be liable to any
Clearing Member, Customer or other Person for any losses, liabilities,
damages, costs, claims, shortfalls or expenses incurred by such
Clearing Member, Customer, or other Person arising out of or relating
to any failure, in whole or in part, of any payment or securities
services provider, including without limitation any Custodian, Delivery
Facility, central securities depository or central bank.
    Finally, Rule 919(w) generally would limit ICE Clear Europe's
liability for investments made by Clearing Members and their clients.
ICE Clear Europe would have no liability for any loss, liability, cost,
claim, shortfall, or expense relating to any investment decision by any
Clearing Member, Customer, or any other Person, such as choosing cash
in a particular currency to satisfy a margin requirement, or for the
results of any such choices or investments. New Rule 919(w) would
mirror a provision currently found in Rule 502(j). As such, the
proposed rule change would delete this provision from Rule 502(j).

D. Other Clarifications Related to Non-Default Losses

    In addition to making amendments to the types of non-default losses
and the framework for covering and apportioning such losses, the
proposed rule change would make other related amendments, as discussed
in this section. These amendments would (i) confirm ICE Clear Europe's
ability to charge a negative interest rate; (ii) add references to the
terms Variation Margin, Deliverables, and settlement amounts; and (iii)
clarify that ICE Clear Europe's responsibility to repay certain assets
is limited to the extent those assets remain available to ICE Clear
Europe.
1. Negative Interest Rate
    The proposed rule change would clarify that certain provisions of
Rule 919 would not limit ICE Clear Europe's ability to charge a
negative interest rate. ICE Clear Europe generally pays Clearing
Members interest on the cash balances from their margin deposits. It is
possible, however, that ICE Clear Europe may charge a negative interest
rate in certain circumstances. New Rules 919(s) and 919(u) each would
specify that nothing there would limit ICE Clear Europe's ability to
charge a negative or reduced ICE Deposit Rate pursuant to the Finance
Procedures. Similarly, as discussed above, the revised definition of
Non-Default Losses would exclude any losses that are included in the
calculation of the ICE Deposit Rate. Finally, new Rule 919(v) would
provide that a negative yield, negative interest rate, negative coupon
or pre-agreed reduced principal repayment on a non-cash asset being or
representing Original/Initial Margin, Guaranty Fund Contributions,
Permitted Cover or any Deliverable would not be an Investment Loss or
Non-Default Loss and would only be for the account of the relevant
Clearing Member and/or its customer.
2. Variation Margin, Deliverables, and Settlement Amounts
    The proposed rule change would add the terms Variation Margin,\31\
Deliverables,\32\ and settlement amounts to various definitions and
provisions of the Rules. For example, the proposed rule change would
include these terms in the new definition of Custodial Assets and add
the terms Variation Margin and settlement amounts to the definition of
Investment Losses. These amendments would have the effect of treating
any losses of Variation Margin, Deliverables, and settlement amounts as
Custodial Losses or Investment Losses (assuming the losses otherwise
meet the definitions of those terms). Thus, losses of Variation Margin,
Deliverables, and settlement amounts that meet the definition of
Custodial Losses or Investment Losses could be satisfied using
Investment Loss Assets and Custodial Loss Assets and, if necessary,
apportioned among Clearing Members using the framework discussed above.
---------------------------------------------------------------------------

    \31\ Variation Margin is the cash transferred by Clearing
Members to ICE Clear Europe, and vice versa, to reflect the change
in the market value of a CDS contract. See ICE Clear Europe Rule
101.
    \32\ Deliverables include any property, right, interest,
register or book entry, commodity, certificate, property entitlement
or Investment, which is capable of being delivered pursuant to an
F&O Contract or with respect to which settlement amounts are
calculated. See ICE Clear Europe Rule 101.
---------------------------------------------------------------------------

    The proposed rule change also would add Variation Margin,
Deliverables, and settlement amounts to the formula in Rule 919(d). As
discussed above, ICE Clear Europe would use this formula to determine
each Clearing Member's Collateral Offset Obligation. The Collateral
Offset Obligation is effectively each Clearing Member's share of any
remaining Investment Loss or Custodial Loss. Adding Variation Margin,
Deliverables, and settlement amounts to this formula would therefore
take into account the value of these holdings in determining each
Clearing Member's share of an Investment Loss or Custodial Loss.
    Relatedly, the proposed rule change would add Variation Margin,
Deliverables, and settlement amounts to 919(e). As discussed above,
Rule 919(e) limits the amount of a Clearing Member's Collateral Offset
Obligation. Specifically, the Clearing Member would not be obligated to
pay any amount greater than the total of its Original/Initial Margin,
Variation Margin, Guaranty Fund Contributions, Permitted Cover,
Deliverables and settlement amounts. Thus, this change would include
the value of a Clearing Member's Variation Margin, Deliverables, and
settlement amounts in capping its overall liability for any Investment
Loss or Custodial Loss.
    For the sake of consistency with these amendments, the proposed
rule change also would add Variation Margin, Deliverables, and
settlement amounts to Rules 919(f) and (i). Rule 919(f) generally
permits ICE Clear Europe to offset Collateral Offset Obligations owed
to it by Clearing Members against amounts that ICE Clear Europe owes to
Clearing Members. Currently, this offset applies to any obligation that
ICE Clear Europe may have to return Original/Initial Margin, Guaranty
Fund Contributions, or other Permitted Cover. The proposed rule change
would add Variation Margin, Deliverables, and settlement amounts.
    Relatedly, Rule 919(i) generally prohibits a Clearing Member from
offsetting its Collateral Offset Obligation against other obligations
that it owes to ICE Clear Europe, as discussed above. The proposed rule
change would add references to Variation Margin, Deliverables, and
settlement amounts to Rule 919(i). This change would mean Clearing
Members would remain liable to pay or transfer Variation Margin and
Deliverables to ICE Clear Europe, despite a Collateral Offset
Obligation.
3. Amendments to Rules Regarding Assets That Remain Available to ICE
Clear Europe
    In certain situations, ICE Clear Europe may recover funds on behalf
of its Clearing Members. In those circumstances, ICE Clear Europe is
generally required to return those funds to its Clearing Members. For
example, Rule 301(f) describes how Clearing Members should make
payments to ICE Clear Europe. Among other things, Rule 301(f) requires
that all Clearing Members make payments by electronic transfer through
an Approved Financial Institution.\33\ Rule 301(f) further describes
what happens when an Approved Financial Institution fails to make a
payment to ICE Clear Europe. In that situation, the Clearing Member
generally remains liable to ICE Clear Europe, while the Approved
Financial Institution remains liable to ICE Clear Europe and the
Clearing Member that submitted the payment. If ICE Clear Europe
eventually receives money to make up the failed payment and certain
other conditions are met, then Rule 301 requires ICE Clear Europe to
pay back affected Clearing Members the money, net of costs and
expenses, pro rata.
---------------------------------------------------------------------------

    \33\ ICE Clear Europe Rule 101 defines ``Approved Financial
Institution'' as ``a credit institution, bank, trust company or
other institution . . . which has been designated as an approved
financial institution by the Clearing House for purposes of making
and receiving cash transfers to and from the Clearing House. . . .''
---------------------------------------------------------------------------

    The proposed rule change would revise Rule 301(f) with respect to
this last part, ICE Clear Europe's obligation to pay back to the
Clearing Member the amount of money it recovered. Specifically, the
proposed rule change would add a caveat that limits the obligation to
return the funds to the Clearing Member. Under the proposed rule
change, ICE Clear Europe would only be obligated to return the money to
the extent such assets are received by and remain available to ICE
Clear Europe in cleared funds, not having

been subject to an event similar to a Custodial Loss, Investment Loss,
Pledged Collateral Loss or Title Transfer Collateral Loss.
    The proposed rule change would add this same or a similar caveat to
Rules 908, 913, 914, 916, 919, 1102, and 1103, each as described
further below.
    Rule 908(b) explains the order in which ICE Clear Europe may apply
assets to meet the obligations, liabilities, and any shortfall of a
defaulting Clearing Member that was an F&O Clearing Member or a
Sponsored Principal that was authorised to clear F&O (but was not a CDS
Clearing Member, an FX Clearing Member, nor authorised to clear CDS or
FX). In such a circumstance, Rule 908(b)(iii) provides that any claims
under any default insurance come third in the order of priority, after
the defaulting Clearing Member's resources and ICE Clear Europe's own
contribution. Currently, Rule 908(b)(iii) makes available any claims
under any default insurance policies (including the proceeds of any
claim) of which ICE Clear Europe is the beneficiary that have been
received by ICE Clear Europe as a result of the Event of Default. Under
the proposed rule change, Rule 908(b)(iii) would make available any
claims under any default insurance policies (including the proceeds of
any claim) of which ICE Clear Europe is the beneficiary that have been
received by and remain available to ICE Clear Europe in Cleared Funds,
not having been subject to an event similar to a Custodial Loss,
Investment Loss, Pledged Collateral Loss, or Title Transfer Collateral
Loss. The proposed rule change would make an identical amendment to
Rules 908(c),\34\ 908(d),\35\ and 908(g).\36\
---------------------------------------------------------------------------

    \34\ Like Rule 908(b), Rule 908(c) explains the order in which
ICE Clear Europe may apply assets to meet a defaulting Clearing
Member's obligations, liabilities, and shortfall. Rule 908(c)
specifically applies to a defaulting Clearing Member that is a CDS
Clearing Member or a Sponsored Principal authorized to clear CDS
(but not an F&O Clearing Member, FX Clearing Member, nor authorized
to clear F&O or FX).
    \35\ Like Rule 908(b), Rule 908(d) explains the order in which
ICE Clear Europe may apply assets to meet a defaulting Clearing
Member's obligations, liabilities, and shortfall. Rule 908(d)
specifically applies to a defaulting Clearing Member that is a FX
Clearing Member or a Sponsored Principal authorized to clear FX (but
not an F&O Clearing Member, CDS Clearing Member, nor authorized to
clear F&O or CDS).
    \36\ Like Rule 908(b), Rule 908(g) explains the order in which
ICE Clear Europe may apply assets to meet a defaulting Clearing
Member's obligations, liabilities, and shortfall. Rule 908(g)
specifically applies to a defaulting Clearing Member that falls in
multiple membership categories at ICE Clear Europe, such a CDS
Clearing Member that is also an F&O Clearing Member.
---------------------------------------------------------------------------

    Rule 913 sets out the definitions that are used in Rules 914
through 919. These rules generally describe steps ICE Clear Europe
could take to offset losses it may incur as a result of a Clearing
Member's default or otherwise not as a result of a default (in the case
of Rule 919, as discussed above). For example, as discussed above, Rule
914 authorizes ICE Clear Europe, in certain circumstances, to
distribute losses to Clearing Members by implementing a haircut to
variation margin payments. Rule 913 includes a formula for determining
the losses incurred by ICE Clear Europe. This formula takes into
account, among other things, ICE Clear Europe's Available Non-Defaulter
Resources. Currently, that term as defined means the cash proceeds or
equivalent cash value (as calculated by ICE Clear Europe) of the
Guaranty Fund Contributions, Clearing House Contributions, Assessment
Contributions, and any claims under any default insurance policies
which are available to be applied pursuant to Rule 908, following a
particular Event of Default. The definition also stipulates that
Assessment Contributions and any claims under any default insurance
policies only count as Available Non-Defaulter Resources if they have
been received by the ICE Clear Europe in cleared funds at the time it
calculates its resources. The proposed rule change would modify this
stipulation, such that Assessment Contributions and any claims under
any default insurance policies would only count if they have been
received by and remain available to ICE Clear Europe, not having been
subject to an event similar to a Custodial Loss, Investment Loss,
Pledged Collateral Loss, or Title Transfer Collateral Loss.
    Following the default of a Clearing Member, and if certain other
conditions are satisfied, Rule 914 allows ICE Clear Europe to reduce
variation margin payments as needed to retain cash and resolve any
shortfall resulting from the default. This process of reducing
variation margin payments is also known as haircutting. If the
requirements of Rule 914 are met, ICE Clear Europe can use such
haircuts to distribute losses resulting from a Clearing Member's
default to non-defaulting Clearing Members. Rule 914(j) generally
requires that ICE Clear Europe distribute to Clearing Members certain
funds that would increase ICE Clear Europe's resources and therefore
reduce the amount of loss that it is sharing via the haircuts. These
funds could include, for example, payments made to ICE Clear Europe by
the defaulting Clearing Member, by a non-defaulting Clearing Member, or
an insurer. Under the proposed rule change, ICE Clear Europe would be
obligated to distribute these funds only to the extent they remain
available to ICE Clear Europe in cleared funds, not having been subject
to an event similar to a Custodial Loss, Investment Loss, Pledged
Collateral Loss, or Title Transfer Collateral Loss.
    Following the default of a Clearing Member, and if certain other
conditions are satisfied, Rule 916 allows ICE Clear Europe to cease
clearing specific categories of contracts. If the requirements of Rule
916 are met, ICE Clear Europe can terminate the contracts. ICE Clear
Europe then calculates an amount owed to each Clearing Member with
respect to the terminated contracts (or which each Clearing Member owes
to ICE Clear Europe, in the case of a negative amount). Rule 916(n)
generally requires that ICE Clear Europe distribute to Clearing Members
certain funds that would increase this amount paid in respect of a
contract termination (or decrease the amount owed by a Clearing
Member). These funds could include, for example, payments made to ICE
Clear Europe by the defaulting Clearing Member, by a non-defaulting
Clearing Member, or an insurer. Under the proposed rule change, ICE
Clear Europe would be obligated to distribute these funds only to the
extent they remain available to ICE Clear Europe in cleared funds, not
having been subject to an event similar to a Custodial Loss, Investment
Loss, Pledged Collateral Loss, or Title Transfer Collateral Loss.
    The proposed rule change would add the same caveat to rules 919(b),
919(h), 919(j), and 919(t), as discussed above.\37\
---------------------------------------------------------------------------

    \37\ For a discussion of Rule 919, see supra Section II.C above.
---------------------------------------------------------------------------

    Rule 1102 describes generally Clearing Members' obligations to
contribute to ICE Clear Europe's Guaranty Funds, and how ICE Clear
Europe will collect, use, and in some circumstances, return the
contributions. Rule 1102(k) explains that if (i) ICE Clear Europe has
used the non-defaulting Clearing Members' Guaranty Fund Contributions,
ICE Clear Europe's own contribution to the Guaranty Fund, or insurance
proceeds, and (ii) subsequently has received payments or other monetary
amounts from the defaulting Clearing Member, then (iii) ICE Clear
Europe must repay the non-defaulting Clearing Members, retain assets to
replenish its own contribution to the Guaranty Fund, or repay its
insurers, in the reverse order to that specified in Rule 908. Rule
1102(k) sets out a number of conditions on such

repayments. The proposed rule change would add a new condition that ICE
Clear Europe has not suffered any loss equivalent to an Investment
Loss, Custodial Loss, Pledged Collateral Loss, or Title Transfer
Collateral Loss with respect to the amounts received from the
defaulting Clearing Member.
    Rule 1103(e) applies to ICE Clear Europe's use of default insurance
policies. The rule explains how ICE Clear Europe will apply the
proceeds of any claim under a default insurance policy. The rule also
explains certain limitations and conditions to ICE Clear Europe's use
of default insurance, such as the policies being limited to a certain
set of contracts cleared by ICE Clear Europe. The proposed rule change
would add another condition, that any amounts that ICE Clear Europe
receives from an insurer may be subject to losses similar to an
Investment Loss, Custodial Loss, Pledged Collateral Loss, or Title
Transfer Collateral Loss prior to ICE Clear Europe being able to use
the proceeds to offset losses.
    Rule 1103(e) also explains how ICE Clear Europe would apply the
proceeds of a claim under default insurance among multiple defaulting
Clearing Members. The proposed rule change would not alter this
explanation, but it would add an additional caveat. ICE Clear Europe
would only apply the proceeds of a claim under default insurance among
multiple defaulting Clearing Members to the extent that the proceeds
remain available to ICE Clear Europe in cleared funds, not having been
subject to an event similar to a Custodial Loss, Investment Loss,
Pledged Collateral Loss, or Title Transfer Collateral Loss.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
such proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to such
organization.\38\ For the reasons discussed below, the Commission finds
that the proposed rule change is consistent with Section 17A(b)(3)(D)
of the Act,\39\ Section 17A(b)(3)(F) of the Act,\40\ and Rule 17Ad-
22(e)(17)(i) thereunder.\41\
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78s(b)(2)(C).
    \39\ 15 U.S.C. 78q-1(b)(3)(D).
    \40\ 15 U.S.C. 78q-1(b)(3)(F).
    \41\ 17 CFR 240.17Ad-22(e)(17)(i).
---------------------------------------------------------------------------

A. Consistency With Section 17A(b)(3)(D) of the Act

    Section 17A(b)(3)(D) of the Act requires that the rules of ICE
Clear Europe provide for the equitable allocation of reasonable dues,
fees, and other charges among its participants.\42\ Based on its review
of the record, and for the reasons discussed below, the Commission
believes the proposed rule change is consistent with the equitable
allocation of reasonable dues, fees, and other charges among ICE Clear
Europe's Clearing Members.
---------------------------------------------------------------------------

    \42\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

    As explained above, the proposed rule change would add three new
categories of non-default losses. ICE Clear Europe would continue to be
responsible for Non-Default Losses, and it first would pay for
Investment Losses and Custodial Losses out of the assets it has set
aside for that purpose. ICE Clear Europe would apportion any remaining
Investment Losses and Custodial Losses among Clearing Members using the
same method as it does now, with the additional consideration of
Variation Margin, Deliverables, and settlement amounts. ICE Clear
Europe would allocate losses based on each Clearing Member's share of
total Original/Initial Margin, Guaranty Fund Contributions, Permitted
Cover, Variation Margin, Deliverables, and settlement amounts.
Moreover, each Clearing Member's liability could not exceed the total
of its Original/Initial Margin, Guaranty Fund Contributions, Permitted
Cover, Variation Margin, Deliverables, and settlement amounts.
    The Commission believes this allocation of losses is equitable
because it would distribute Investment Losses and Custodial Losses
based on each Clearing Member's share of the assets that could
potentially be depleted by such losses. As discussed above, the
definition of Investment Losses would cover certain losses to Original/
Initial Margin, Guaranty Fund Contributions, Permitted Cover, Variation
Margin, and settlement amounts. The definition of Custodial Losses
would move over certain losses to Custodial Assets, which would be
defined to include assets being or representing Original/Initial
Margin, Variation Margin, Guaranty Fund Contributions or Permitted
Cover, or the proceeds of any of the foregoing, Deliverables or
settlement amounts. Finally, each Clearing Member's liability could not
exceed its total amount with respect to these assets. Thus, the
Commission believes this should help to ensure that Clearing Members
only contribute to the recovery from such losses in amounts
commensurate with their Original/Initial Margin, Guaranty Fund
Contributions, Permitted Cover, Variation Margin, Deliverables, and
settlement amounts in the first instance.
    The Commission also believes that it is consistent with
17A(b)(3)(D) of the Act \43\ to make Clearing Members responsible for
any Pledged Collateral Losses and a Title Transfer Collateral Loss as
discussed above. Specifically, because a Pledged Collateral Loss
relates to Pledged Collateral, the Commission believes it is consistent
with 17A(b)(3)(D) of the Act \44\ that a Clearing Member bear the risk
of such loss and that ICE Clear Europe be liable only because of its
fraud, bad faith, gross negligence, or other willful misconduct. The
Commission believes this because, as discussed above, ICE Clear Europe
only maintains a security interest in such collateral. Moreover, as
discussed above, the new provision in Rule 919 regarding Pledged
Collateral is essentially the same as an existing provision in Rule
502(j).
---------------------------------------------------------------------------

    \43\ 15 U.S.C. 78q-1(b)(3)(D).
    \44\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

    Because a Title Transfer Collateral Loss would result from a
reduction in value or change of exchange rate of Original/Initial
Margin, Guaranty Fund Contributions or Permitted Cover, the Commission
believes it is consistent with 17A(b)(3)(D) of the Act \45\ to allocate
these losses to Clearing Members. Clearing Members are responsible for
transferring assets to ICE Clear Europe to satisfy their margin and
Guaranty Fund obligations. Clearing Members incur these obligations
because of the transactions they submit for clearing at ICE Clear
Europe. A decline in value of collateral that a Clearing Member
transfers to ICE Clear Europe to satisfy its margin obligation would
necessarily require the Clearing Member to transfer additional
collateral to make up for that decline in value. Thus, allocating a
Title Transfer Collateral Loss to a Clearing Member follows from ICE
Clear Europe's overall risk management framework.
---------------------------------------------------------------------------

    \45\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

    The Commission further believes the proposed rule change would not
substantially alter ICE Clear Europe's responsibility for losses. ICE
Clear Europe would remain responsible for Non-Default Losses. The
proposed rule change would remove the caveat that a Non-Default Loss
must threaten ICE Clear Europe's insolvency. This change would expand
the losses for which ICE Clear Europe would be liable as Non-Default
Losses, while also giving ICE

Clear Europe access to financial resources to pay for those losses. As
discussed above, ICE Clear Europe could pay for a Non-Default Loss
first out of Investment Loss Assets and Custodial Loss Assets.
    While that would be the case, ICE Clear Europe also would set aside
more assets to cover these losses than it does currently. Currently,
ICE Clear Europe has set aside $90 million to cover a Non-Default Loss
and/or an Investment Loss. Under the proposed rule change, $195 million
would be available for an Investment Loss and $80 million would be
available for a Custodial Loss. As under the current rule, ICE Clear
Europe could use these amounts to cover a Non-Default Loss as well.
    Finally, as discussed above in Section II.D.3, the proposed rule
change would amend various ICE Clear Europe rules that require ICE
Clear Europe to return money to Clearing Members in certain
circumstances. As amended, these rules generally would require that ICE
Clear Europe only return money to the extent ICE Clear Europe has
received the assets and they remain available to ICE Clear Europe in
cleared funds, not having been subject to an event similar to a
Custodial Loss, Investment Loss, Pledged Collateral Loss or Title
Transfer Collateral Loss. The Commission believes adding these caveats
to the existing rule provisions would help to recognize the possibility
that such assets could be subject to a loss before ICE Clear Europe is
able to distribute them to Clearing Members. In that situation, the
Commission believes not requiring ICE Clear Europe to return the assets
to Clearing Members is consistent with 17A(b)(3)(D) of the Act \46\
given that ICE Clear Europe would no longer possess such assets.
---------------------------------------------------------------------------

    \46\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

    On balance then, the Commission believes the proposed rule change
would establish an equitable allocation of losses not relating to the
default of a Clearing Member as between ICE Clear Europe and its
Clearing Members and among ICE Clear Europe's Clearing Members.
    Therefore, the Commission finds that the proposed rule change is
consistent with Section 17A(b)(3)(D) of the Act.\47\
---------------------------------------------------------------------------

    \47\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

B. Consistency With Section 17A(b)(3)(F) of the Act

    Section 17A(b)(3)(F) of the Act requires, among other things, that
the rules of ICE Clear Europe be designed to promote the prompt and
accurate clearance and settlement of securities transactions and, to
the extent applicable, derivative agreements, contracts, and
transactions.\48\ Based on its review of the record, and for the
reasons discussed below, the Commission believes the proposed rule
change is consistent with the promotion of the prompt and accurate
clearance and settlement of securities transactions.
---------------------------------------------------------------------------

    \48\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change would help
enhance ICE Clear Europe's ability to manage non-default losses and
continue operating as a going concern if it incurs losses not relating
to a Clearing Member's default. Specifically, the proposed rule change
would maintain ICE Clear Europe's existing framework for covering and
sharing in such losses, while expanding the framework to cover new
types of losses. The proposed rule change would add new categories of
non-default losses, namely Custodial Losses, Pledged Collateral Losses,
and a Title Transfer Collateral Loss. At the same time, the proposed
rule change would cover losses to additional categories of assets,
specifically Variation Margin, Deliverables, and settlement amounts.
    The proposed rule change would also limit ICE Clear Europe's
liability for Custodial Losses, Investment Losses, Pledged Collateral
Losses, and a Title Transfer Collateral Loss. For Custodial Losses and
Investment Losses, the proposed rule change would limit ICE Clear
Europe's liability to the assets it has set aside, with any remaining
losses apportioned among Clearing Members. ICE Clear Europe generally
would have no liability for any Pledged Collateral Losses and a Title
Transfer Collateral Loss except in the limited circumstances discussed
above. Similarly, under new Rule 919(w), ICE Clear Europe generally
would have no liability for investment decisions made by Clearing
Members and their clients.
    Relatedly, the proposed rule change would increase the amount of
ICE Clear Europe's resources available to cover Non-Default Losses,
Custodial Losses, and Investment Losses, and enhance ICE Clear Europe's
ability to replenish those resources. Under the proposed rule change,
ICE Clear Europe would set aside $90 million to cover Custodial Losses
and $195 million to cover Investment Losses. This is an increase from
the $80 million set aside currently to cover Investment Losses. As
noted above, ICE Clear Europe could also use these amounts to cover
Non-Default Losses. Moreover, Rule 919(q) would allow ICE Clear Europe
to replenish its capital and resources following an Investment Loss,
Non-Default Loss, or Custodial Loss.
    Finally, the Commission believes that various aspects of the
proposed rule change would help to ensure that Non-Default Losses,
Investment Losses, and Custodial Losses would not affect ICE Clear
Europe's ability to collect other amounts owed by Clearing Members. For
example, under Rule 919(i), Clearing Members would continue to be
liable for Guaranty Fund Contributions, Assessment Contributions, and
margin, including Variation Margin. ICE Clear Europe also would
continue to be able to charge its Clearing Members a negative interest
rate, as needed. The Commission believes that these provisions would
help ensure that ICE Clear Europe's treatment and allocation of losses
not arising from the default of a Clearing Member do not hinder its
ability to enforce Clearing Members' other financial obligations,
including those related to the default of a Clearing Member.
    Taken together, the Commission believes that the various components
of the proposed rule change discussed above would enhance ICE Clear
Europe's ability to cover and allocate losses not related to a Clearing
Member's default. The Commission believes that doing so would help ICE
Clear Europe to avoid disruptions to its operations, which could occur
if non-default losses are not fully covered or allocated. The
Commission therefore believes the proposed rule change would be
consistent with the promotion of the prompt and accurate clearance and
settlement of securities transactions by helping ensure that ICE Clear
Europe can continue to clear and settle securities transactions even
when faced with non-default losses.
    Therefore, the Commission finds that the proposed rule change is
consistent with Section 17A(b)(3)(F) of the Act.\49\
---------------------------------------------------------------------------

    \49\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

C. Consistency With Rule 17Ad-22(e)(17)(i) Under the Act

    Rule 17Ad-22(e)(17)(i) requires that ICE Clear Europe establish,
implement, maintain, and enforce written policies and procedures
reasonably designed to manage its operational risks by identifying
plausible sources of operational risk, both internal and external, and
mitigating their impact through the use of appropriate systems,
policies, procedures, and controls.\50\
---------------------------------------------------------------------------

    \50\ 17 CFR 240.17Ad-22(e)(17)(i).
---------------------------------------------------------------------------

    The Commission believes that non-default losses, meaning losses
that do not arise from the default of a Clearing Member, are a
plausible source of

operational risk at ICE Clear Europe. For example, a theft of ICE Clear
Europe's assets could threaten its ability to operate. The Commission
therefore believes that by adding new categories of non-default losses
and covering losses to additional categories of assets, as discussed
above, the proposed rule change would identify plausible sources of
operational risk.
    The Commission further believes that the proposed rule change would
mitigate the impact of non-default losses by establishing appropriate
procedures for categorizing, covering, and allocating such losses. For
example, as discussed above, the proposed rule change would amend the
existing framework for allocating non-default losses to cover Custodial
Losses. The proposed rule change also would increase the amount of ICE
Clear Europe's resources available to cover Non-Default Losses,
Custodial Losses, and Investment Losses, and enhance ICE Clear Europe's
ability to replenish those resources. Finally, as discussed above, the
proposed rule change help ensure that ICE Clear Europe can enforce
Clearing Members' other financial obligations, including those related
to the default of a Clearing Member, despite any non-default losses.
    Taken together, the Commission believes the proposed rule change
would identify non-default losses as a plausible source of operational
risk and mitigate the impact of such losses through the use of
appropriate procedures.
    Therefore, the Commission finds that the proposed rule change is
consistent with Rule 17Ad-22(e)(17)(i).\51\
---------------------------------------------------------------------------

    \51\ 17 CFR 240.17Ad-22(e)(17)(i).
---------------------------------------------------------------------------

IV. Accelerated Approval of the Proposed Rule Change as Modified by
Amendment Nos. 1 and 2

    The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\52\ to approve the proposed rule change, as modified by
Amendment Nos. 1 and 2, prior to the 30th day after the date of
publication of Amendment No. 2 in the Federal Register. As discussed
above, Amendment No. 1 amended and restated in its entirety the Form
19b-4 and Exhibit 1A in order to correct the narrative description of
the proposed rule change. Amendment No. 2 modified the Exhibit 5 to
clarify when certain funds are considered available to ICE Clear Europe
to be applied in accordance with the Rules as proposed to be amended.
By so doing, Amendment Nos. 1 and 2 provide for a more clear and
comprehensive understanding of the proposed changes.
---------------------------------------------------------------------------

    \52\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    For the reasons discussed above, the Commission finds that the
proposed rule change, as modified by Amendment Nos. 1 and 2, is
consistent with the Act and the applicable rules thereunder.
Accordingly, the Commission finds good cause for approving the proposed
rule change, as modified by Amendment Nos. 1 and 2, on an accelerated
basis, pursuant to Section 19(b)(2) of the Act.\53\
---------------------------------------------------------------------------

    \53\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

V. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule change, as modified by Amendment No. 1 and Amendment No.
2, is consistent with the requirements of the Act, and in particular,
with the requirements of Section 17A(b)(3)(D) of the Act,\54\ Section
17A(b)(3)(F) of the Act,\55\ and Rule 17Ad-22(e)(17)(i) thereunder.\56\
---------------------------------------------------------------------------

    \54\ 15 U.S.C. 78q-1(b)(3)(D).
    \55\ 15 U.S.C. 78q-1(b)(3)(F).
    \56\ 17 CFR 240.17Ad-22(e)(17)(i).
---------------------------------------------------------------------------

    It is therefore ordered pursuant to Section 19(b)(2) of the Act
\57\ that the proposed rule change, as modified by Amendment Nos. 1 and
2 (SR-ICEEU-2023-010), be, and hereby is, approved on an accelerated
basis.\58\
---------------------------------------------------------------------------

    \57\ 15 U.S.C. 78s(b)(2).
    \58\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\59\
---------------------------------------------------------------------------

    \59\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-17210 Filed 8-10-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: April 11, 2007 (Volume 72, Number 69)]
[Notices]
[Page 18243-18245]
[DOCID:fr11ap07-83]

-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OPP-2007-0037; FRL-8121-4]

Pesticide Registration Review; New Dockets Opened for Review and
Comment

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY:  EPA has established registration review dockets for the
pesticides listed in the table in Unit III.A. With this document, EPA
is opening the public comment period for these registration reviews.
Registration review is EPA's periodic review of pesticide registrations
to ensure that each pesticide continues to satisfy the statutory
standard for registration, that is, the pesticide can perform its
intended function without unreasonable adverse effects on human health
or the environment. Registration review dockets contain information
that will assist the public in understanding the types of information
and issues that the Agency may consider during the course of
registration reviews. Through this program, EPA is ensuring that each
pesticide's registration is based on current scientific and other
knowledge, including its effects on human health and the environment.

DATES: Comments must be received on or before June 11, 2007.

ADDRESSES: Submit your comments identified by the docket identification
(ID) number for the specific pesticide of interest provided in the
table in Unit III.A., by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.

Follow the on-line instructions for submitting comments.
     Mail: Office of Pesticide Programs (OPP) Regulatory Public
Docket (7502P), Environmental Protection Agency, 1200 Pennsylvania
Ave., NW., Washington, DC 20460-0001.
     Delivery: OPP Regulatory Public Docket (7502P),
Environmental Protection Agency, Rm. S-4400, One Potomac Yard (South
Bldg.), 2777 S. Crystal Dr., Arlington, VA. Deliveries are only
accepted during the Docket's normal hours of operation (8:30 a.m. to 4
p.m., Monday through Friday, excluding legal holidays). Special
arrangements should be made for deliveries of boxed information. The
Docket Facility telephone number is<PHONE_NUMBER>.
    Instructions: Direct your comments to the assigned docket ID number
listed in the table in Unit III.A. for the pesticides you are
commenting on. EPA's policy is that all comments received will be
included in the docket without change and may be made available on-line
at http://www.regulations.gov, including any personal information

provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through regulations.gov or e-
mail. The regulations.gov website is an ``anonymous access'' system,
which means EPA will not know your identity or contact information
unless you provide it in the body of your comment. If you send an e-
mail comment directly to EPA without going through regulations.gov,
your e-mail address will be automatically captured and included as part
of the comment that is placed in the docket and made available on the
Internet. If you submit an electronic comment, EPA recommends that you
include your name and other contact information in the body of your
comment and with any disk or CD-ROM you submit. If EPA cannot read your
comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment. Electronic
files should avoid the use of special characters, any form of
encryption, and be free of any defects or viruses.
    Docket: All documents in the docket are listed in the docket index
available in regulations.gov. To access the electronic docket, go to
http://www.regulations.gov, select ``Advanced Search,'' then ``Docket

Search.'' Insert the docket ID number where indicated and select the
``Submit'' button. Follow the instructions on the regulations.gov
website to view the docket index or access available documents.
Although listed in the index, some information is not publicly
available, e.g., CBI or other information whose disclosure is
restricted by statute. Certain other material, such as copyrighted
material, is not placed on the Internet and will be publicly available
only in hard copy form. Publicly available docket materials are
available electronically at http://www.regulations.gov, or, if only

available in hard copy, at the OPP Regulatory Public Docket in Rm. S-
4400, One Potomac Yard (South Bldg.), 2777 S. Crystal Dr., Arlington,
VA. The hours of operation of this Docket Facility are from 8:30 a.m.
to 4 p.m., Monday through Friday, excluding legal holidays. The Docket
Facility telephone number is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: For information about the pesticides
included in this notice, contact the specific Chemical Review Managers
for these pesticides as identified in the table in Unit III.A..
    For general questions on the registration review program, contact
Kennan Garvey, Special Review and Reregistration Division (7508P),
Office of Pesticide Programs, Environmental Protection Agency, 1200
Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone number:
(703) 305-7106; fax number:<PHONE_NUMBER>; e-mail address:
<EMAIL_ADDRESS>

SUPPLEMENTARY INFORMATION:

I. General Information

 A. Does this Action Apply to Me?

    This action is directed to the public in general, and may be of
interest to a wide range of stakeholders including environmental, human
health, farmworker, and agricultural advocates;

the chemical industry; pesticide users; and members of the public
interested in the sale, distribution, or use of pesticides. Since
others also may be interested, the Agency has not attempted to describe
all the specific entities that may be affected by this action. If you
have any questions regarding the applicability of this action to a
particular entity, consult the person listed under FOR FURTHER
INFORMATION CONTACT.

 B. What Should I Consider as I Prepare My Comments for EPA?

    1. Submitting CBI. Do not submit this information to EPA through
regulations.gov or e-mail. Clearly mark the part or all of the
information that you claim to be CBI. For CBI information in a disk or
CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as
CBI and then identify electronically within the disk or CD-ROM the
specific information that is claimed as CBI. In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2.
    2. Tips for preparing your comments. When submitting comments,
remember to:
    i. Identify the document by docket ID number and other identifying
information (subject heading, Federal Register date and page number).
    ii. Follow directions. The Agency may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal Regulations (CFR) part or section number.
    iii. Explain why you agree or disagree; suggest alternatives and
substitute language for your requested changes.
    iv. Describe any assumptions and provide any technical information
and/or data that you used.
    v. If you estimate potential costs or burdens, explain how you
arrived at your estimate in sufficient detail to allow for it to be
reproduced.
    vi. Provide specific examples to illustrate your concerns and
suggest alternatives.
    vii. Explain your views as clearly as possible, avoiding the use of
profanity or personal threats.
    viii. Make sure to submit your comments by the comment period
deadline identified.

II. Authority

    EPA is initiating its reviews of the pesticides identified in this
document pursuant to section 3(g) of the Federal Insecticide,
Fungicide, and Rodenticide Act (FIFRA) and the Procedural Regulations
for Registration Review published in the Federal Register issue of
August 9, 2006, and effective on October 10, 2006 (71 FR 45719) (FRL-
8080-4), you may also access this document on EPA's Internet at http://www.epa.gov/fedrgstr/EPA-PEST/2006/August/Day-09/p12904.htm.
 Section

3(g) of FIFRA provides, among other things, that the registrations of
pesticides are to be periodically reviewed. The goal is a review of a
pesticide's registration every 15 years. Under section 3(a) of FIFRA, a
pesticide product may be registered or remain registered only if it
meets the statutory standard for registration given in FIFRA section
3(c)(5). When used in accordance with widespread and commonly
recognized practice, the pesticide product must perform its intended
function without unreasonable adverse effects on the environment; that
is, without any unreasonable risk to man or the environment, or a human
dietary risk from residues that result from the use of a pesticide in
or on food.

III. Registration Reviews

 A. What Action is the Agency Taking?

    As directed by FIFRA section 3(g), EPA is periodically reviewing
pesticide registrations to assure that they continue to satisfy the
FIFRA standard for registration--that is, they can still be used
without unreasonable adverse effects on human health or the
environment. The implementing regulations establishing the procedures
for registration review appear at 40 CFR part 155. A pesticide's
registration review begins when the Agency establishes a docket for the
pesticide's registration review case and opens the docket for public
review and comment. At present, EPA is opening registration review
dockets for the cases identified in the following table.

                Table--Registration Review Dockets Opening
------------------------------------------------------------------------
                                                        Chemical Review
  Registration Review Case Name    Pesticide Docket     Managers Name,
           and Number                  ID Number       Phone Number, E-
                                                         mail Address
------------------------------------------------------------------------
Case 6050 Trichoderma species     EPA-HQ-OPP-2006-    Shanaz Bacchus,
                                   0245                Chemist/RAL;
<PHONE_NUMBER>;
                                                       bacchus.shanaz@ep
                                                       a.gov
------------------------------------------------------------------------
Case 6058 Linalool                EPA-HQ-OPP-2006-    Stephen Morrill,
                                   0356                Special
                                                       Assistant; (703)
                                                       308-8319;
                                                       morrill.stephen@e
                                                       pa.gov
------------------------------------------------------------------------

 B. Docket Content

    1. Review dockets. The registration review dockets contain
information that the Agency may consider in the course of the
registration review. The Agency may include information from its files
including, but not limited to, the following information:
     An overview of the registration review case status.
     A list of current product registrations and registrants.
     FR notices regarding any pending registration actions.
     FR notices regarding current or pending tolerances.
     Risk assessments.
     Bibliographies concerning current registrations.
     Summaries of incident data.
     Any other pertinent data or information.
     Each docket contains a document summarizing what the Agency
currently knows about the pesticide case and a preliminary work plan
for anticipated data and assessment needs. Additional documents provide
more detailed information. During this public comment period, the
Agency is asking that interested persons identify any additional
information they believe the Agency should consider during the
registration reviews of these pesticides. The Agency identifies in each
docket the areas where public comment is specifically requested, though
comment in any area is welcome.
    2. Other related information. More information on these cases,
including the active ingredients for each case, may be located in the
registration review schedule on the Agency's website at http://www.epa.gov/oppsrrd1/registration_review/schedule.htm
.

Information on the Agency's registration review program and its
implementing regulation may be seen at http://www.epa.gov/oppsrrd1/registration_review
.

     3. Information submission requirements. Anyone may submit data or
information in response to this document. To be considered during a
pesticide's registration review, the submitted data or information must
meet the following requirements:
      To ensure that EPA will consider data or information
submitted, interested persons must submit the data or information
during the comment period. The Agency may, at its discretion, consider
data or information submitted at a later date.
      The data or information submitted must be presented in
legible and useable form. For example, an English translation must
accompany any material that is not in English and a written transcript
must accompany any information submitted as an audiographic or
videographic record. Written material may be submitted in paper or
electronic form.
     Submitters must clearly identify the source of any
submitted data or information.
      Submitters may request the Agency to reconsider data or
information that the Agency rejected in a previous review. However,
submitters must explain why they believe the Agency should reconsider
the data or information in the pesticide's registration review.
     As provided in 40 CFR 155.58, the registration review
docket for each pesticide case will remain publicly accessible through
the duration of the registration review process; that is, until all
actions required in the final decision on the registration review case
have been completed.

List of Subjects

    Environmental protection, Pesticides and pests.

    Dated: March 30, 2007.
James Jones,
Acting Assistant Administrator, Office of Prevention, Pesticides and
Toxic Substances.
[FR Doc. E7-6626 Filed 4-10-07; 8:45 am]

BILLING CODE 6560-50-S