defaultwww.147.qqq.com

www.
theice.
comIntercontinentalExchange353NorthClark,Suite3100Chicago,IL60654SarahWilliamsStaffAttorneyMarch26,2014AlbertaSecuritiesCommissionAutoritédesmarchésfinanciersBritishColumbiaSecuritiesCommissionManitobaSecuritiesCommissionFinancialandConsumerServicesCommission(NewBrunswick)NovaScotiaSecuritiesCommissionOntarioSecuritiesCommissionc/oJohnStevenson,SecretaryOntarioSecuritiesCommission20QueenStreetWestSuite1900,Box55Toronto,OntarioM5H3S8c/oAnne-MarieBeaudoin,CorporateSecretaryAutoritédesmarchésfinanciers800,squareVictoria,22eétageC.
P.
246,TourdelaBourseMontréal,QuébecH4Z1G3Attn:CanadianSecuritiesAdministratorsOTCDerivativesCommitteeRe:CSAStaffNotice91-304ProposedModelProvincialRuleonDerivatives:CustomerClearingandProtectionofCustomerCollateralandPositionsToAllInterestedParties:ICEClearCreditLLC("ICC")welcomestheopportunitytosubmitcommentstotheCanadianSecuritiesAdministratorsOTCDerivativesCommittee(the"Committee")regardingtheproposedModelProvincialRuleonDerivatives:CustomerClearingandProtectionofCustomerCollateralandPositions("ModelRule").
ICCrespectfullyaskstheCommitteetoamendtheproposedreportinganddisclosurerequirementsunderPart4,Section28(3)andrecordkeepingrequirementsunderPart3,Section16oftheModelRulethatwouldbeimposedonclearingagenciesthatareexemptfromrecognitionunderSection147oftheOntarioSecuritiesAct(the"Act").
AboutICCICCistheworld'slargestclearinghouseforcreditdefaultswaps("CDS").
InMarch2009,ICCbecametheworld'sfirstcentralcounterpartytoclearCDS,inresponsetocallsforgreaterriskmanagementinthecreditderivativesmarkets.
ICCisregisteredwiththeU.
S.
CommodityFuturesTradingCommissionasaDerivativesClearingOrganizationandwiththeU.
S.
SecuritiesExchangeCommissionasaSecuritiesClearingAgency.
Sinceitslaunch,ICChasclearedover$31trillioningrossnotionalamount.
ProposedModelRuleCommentsTheModelRuledefinesa"derivativesclearingagency"asbothaclearingagencyexemptunderSection147oftheActandaclearingagencyrecognizedunderSection21.
2oftheAct.
ThroughouttheModelRule,theterm"derivativesclearingagency"isutilized,therebyprovidingforthesamerequirementsforbothexemptandrecognizedclearingagencies.
UnderModelRulePart4(ReportingandDisclosure),Section28(3),"aderivativesclearingagencythatreceivescustomercollateralmustelectronicallysubmittothe[applicablelocalsecuritiesregulator],withintwobusinessdaysoftheendofeachcalendarmonth,www.
theice.
com2acompletedFormF1(C)CustomerCollateralReport:DerivativesClearingAgency.
"ICCsoughtclarificationfromOntarioSecuritiesCommission("OSC")staffregardingtheinformationrequiredtobereportedinFormF1(C)CustomerCollateralReport:DerivativesClearingAgency.
OSCstaffconfirmedthatICCwouldberequiredtoreportinformationforallclearingparticipants("CPs")with"localcounterparty"customers.
Specifically,fornon-CanadianCPs,reportingofdataforlocalcounterpartycustomercollateralwouldberequired.
Additionally,forOntariobasedCPs,reportingofdataforallcustomerswouldberequired.
PursuanttoU.
S.
regulations,customersclearingatICCmustsubmittradesthroughU.
S.
-domiciledFutureCommissionMerchant("FCM")andBrokerDealer("BD")CPs.
Thus,sincecustomerscanonlyclearthroughU.
S.
-domiciledFCM/BDCPs,ICCwouldhavenocustomerdatatoreportfromanOntario-domiciledCP.
ICC'sconcernlieswithreportinglocalcounterpartycollateraldataforcustomersofnon-CanadianCPs.
ICChascontractualrelationshipswithitsCPs,butnotthecustomersofitsCPs.
Assuch,ICChasnodirectrelationshipwiththecustomersofitsCPs.
Therefore,ICChasnorecordsobtainedfromthecustomersofitsCPsidentifyingthespecificdomicileoridentityofitsCPs'customers.
ICCpreviouslyexplaineditsmodeltotheOSC,firstintheprocessofapplyingtobecomeexemptfromrecognitionandagainwhentheOSCwasdraftingtherequirementsofitsorderexemptingICCfromtherequirementtoberecognizedasaclearingagencyunderSection147oftheAct(the"ExemptionOrder").
AsICCexplainedatthattime,ICCutilizesacustomerDeskIDinthecourseofclearing,butnolegalnameordomicileisidentified.
TheDeskIDsconsistentlyidentifytheaccountthatownsthetradingfundsandICCappropriatelysegregatescustomerfundsbasedonDeskIDs.
ICCdoesnotmaintainfurthercustomerentityordomicileinformation.
Similarly,regulatoryreportingsubmissionsaremadetoU.
S.
regulatorsusingLegalEntityIdentifiers("LEIs").
DataisidentifiedusingLEIsandnotthelegalentity'snameordomicile.
Currently,ICC'sU.
S.
regulatoryreportingrequirementsdonotrequireidentificationofthedomicileofanunderlyingcustomer.
ICCdoesnotmaintainthecustomerdatanecessarytomeetthereportingrequirementsundertheModelRule.
ICC'sExemptionOrderprovidesforthereportingofcertaininformationregardingCanadianCPsofICC.
Asexplainedabove,customeridentificationdataisnotpartofICC'srecords.
Furthermore,ICCisnotcurrentlyrequiredtomaintaincustomeridentificationdataundertheExemptionOrderorU.
S.
regulations.
ThecustomeridentificationdatareportingrequirementsintheModelRulewouldbeasignificantbreakinprecedentfromthedatareportingrequirementscurrentlycontainedinICC'sOSCExemptionOrderandtheU.
S.
regulations.
ThereportingrequirementsincludedintheModelRulewouldcreateasubstantialburdenforICC.
ICCwouldberequiredtomateriallyoverhaulitsbusinessoperationsinordertocomplywiththerequirements.
ICChasconsistentlyprovidedallinformationrequiredincompliancewiththeExemptionOrder.
Aspreviouslystated,theModelRuledefinesbothaclearingagencyexemptunderSection147oftheActandaclearingagencyrecognizedunderSection21.
2oftheActas"derivativesclearingagencies"andimposestherequirementsoftheModelRuleconsistently.
CurrentlyundertheAct,exemptandrecognizedclearingagenciesaresubjecttomateriallydifferentlegalrequirements.
Thisdistinctionshould,ataminimum,berepresentedintheModelRuletotheextentICCwouldberequiredtomateriallychangeitsoperationsinordertocomplywiththeModelRule.
ICCbelievesthereportingrequirementsthatwouldbeimposedbytheModelRuleareasignificantdeparturefromtherequirementsICCcurrentlycomplieswithundertheExemptionOrder.
Furthermore,theModelRulewouldimposeamorestringentburdenthanICC'sU.
S.
regulatoryrequirementsinoneadditionalarea.
UnderModelRulePart3(Record-Keeping),Section16,ICCwouldberequiredtomaintaincertaindocumentation"inareadilyaccessiblelocation,forthelifeoftheclearedderivativeandforafurther7yearsafterthedateonwhichtheclearedderivativeexpiresorterminates.
"U.
S.
regulationsrequireICCtomaintainsuchdocumentationforthelifeoftheclearedswapandfor5additionalyearsfollowingthefinalterminationoftheswap.
ICCbelievestheModelRuleshouldremainconsistentwiththeActanddifferentiatebetweenrequirementsforexemptandrecognizedclearingagencies.
ICCdoesnotbelievethatthisprovisionoftheModelRuleshouldapplytoICCorotherexemptclearingagencies.
www.
theice.
com3Forthereasonsstatedabove,ICCrequeststhatthereportinganddisclosurerequirementsunderPart4,Section28(3)andrecordkeepingrequirementsunderPart3,Section16oftheModelRulebeamendedtorevisecustomercollateraldatareportingandrecordkeepingrequirementsforclearingagenciesthatareexemptfromrecognitionunderSection147oftheAct.
ICCalsorequeststhattheModelExplanatoryGuidancetoproposedModelProvincialRuleonDerivatives:CustomerClearingandProtectionofCustomerCollateralandPositionsbeupdatedtoconsistentlyreflectthischange.
ICCwouldbepleasedtorespondtoanyquestionstheCommitteemayhaveregardingthisletter.
PleasedirectanyquestionsorrequestsforinformationtotheattentionoftheundersignedatSarah.
Williams@theice.
comor(312)836-6883.
Sincerely,SarahWilliamsStaffAttorneycc:CosminCazan,OSC(byemail)EmilySutlic,OSC(byemail)AaronUnterman,OSC(byemail)EricNield,ICC(byemail)MichelleWeiler,ICC(byemail)