[Federal Register Volume 77, Number 148 (Wednesday, August 1, 2012)]
[Notices]
[Pages 45702-45703]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-18703]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67506; File No. SR-OCC-2012-12]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of Proposed Rule Change To Amend OCC's By-Laws To
Allow the Corporation To Approve OCC's Form of Clearing Member
Application and Form of Clearing Agreement
July 26, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 16, 2012, The Options Clearing Corporation (``OCC'' or the
``Corporation'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared primarily by OCC. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change would amend OCC's By-Laws to allow the
Corporation to approve OCC's form of clearing member application and
form of clearing agreement. The proposed rule change also amends the
Agreement for OCC Services to reflect operational changes OCC made
since OCC first created the agreement.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for the Proposed Rule Change
In its filing with the Commission, OCC included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. OCC has prepared summaries, set forth in sections A, B,
and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The purpose of this proposed rule change is to amend OCC's By-Laws
to allow the Corporation to approve OCC's form of clearing member
application and form of clearing agreement. Currently, OCC's Board of
Directors must approve the form of these documents. OCC is also
proposing general updates to its Agreement for OCC Services which has
not been updated for several years.
OCC requires applicants for clearing membership at OCC to complete
an application and, once an applicant becomes a clearing member,
requires clearing members to enter into a clearing member agreement.
Currently, OCC's By-Laws and Rules set forth the qualifications and
requirements for clearing membership at OCC. The clearing member
application is designed to elicit relevant information from an
applicant for clearing membership in order for OCC to determine if the
applicant meets OCC's qualifications for clearing membership. The
clearing member agreement is a contract between OCC and a clearing
member whereby the clearing member agrees to meet all of the
requirements of clearing membership at OCC. The By-Laws require OCC's
Board of Directors to
[[Page 45703]]
approve both the form of clearing member application and the form of
clearing member agreement.
In addition to the clearing member agreement, clearing members may
also enter into an Agreement for OCC Services. The Agreement for OCC
Services sets forth certain ancillary services OCC provides to its
clearing members that are in addition to those services set forth in
the By-Laws and Rules. The Agreement for OCC Services is set up as a
master agreement. Clearing members may then choose the specific
ancillary services they desire and then execute the appropriate
ancillary services supplement. Such ancillary services may include, for
example, access to OCC's Data Distribution Services, internet access to
OCC information and data systems, and OCC's theoretical profit and loss
values service.
Proposed By-Law and Rule Changes
OCC proposes to amend the applicable provisions of its By-Laws to
state that both the form of clearing member application and the form of
clearing member agreement be specified by OCC generally, rather than
its Board of Directors. The requirement that the Board of Directors
approve the form of such documents is overly ministerial given that
OCC's By-Laws specify the substantive requirements of both the clearing
member application and the clearing member agreement.
OCC also proposes to amend its Agreement for OCC Services (see
Exhibit 5 to OCC's proposed rule filing) to reflect operational changes
OCC made since OCC first created the agreement. These changes include
broader references to ``clearing services'' provided by OCC and not
only to ``options'' clearing services. Advanced notice of 90 days of
fee changes would be eliminated because fee changes to the ancillary
services program are filed as rule changes and are infrequent in
nature. Language would be added to the Agreement for OCC Services such
that the clearing member authorizes OCC to withdraw funds from the
clearing member's firm account, on or after the fifth business day
following the end of the calendar month. This language conforms to OCC
Rules. In addition, a provision referring to the exclusivity of the
warranties set forth in the Agreement for OCC Services would be
eliminated because the agreement contains no warranty provisions. Any
applicable warranty provisions would be contained within the ancillary
supplements to the Agreement for OCC Services.
OCC believes that the proposed changes to its By-Laws and Agreement
for OCC Services are consistent with the purposes and requirements of
Section 17A of the Act because they are designed to remove impediments
to, and perfect the mechanism of, a national system for the prompt and
accurate clearance and settlement of securities transactions.\3\ The
proposed changes eliminate inefficient and burdensome administrative
procedures which unnecessarily require OCC's Board approval for the
form of clearing member application and agreement. The proposed rule
change is not inconsistent with any rules of OCC, including those
proposed to be amended.
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\3\ 15 U.S.C. 78q-1.
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B. Self-Regulatory Organization's Statement on Burden on Competition
OCC does not believe that the proposed rule change would impose any
burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Written comments were not and are not intended to be solicited with
respect to the proposed rule change and none have been received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-OCC-2012-12 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-OCC-2012-12. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549-1090. Copies of such filing will also be available
for inspection and copying at the principal office of OCC and on OCC's
Web site at http://www.optionsclearing.com/components/docs/legal/rules_and_bylaws/sr_occ_12_12.pdf. All comments received will be
posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-OCC-2012-12 and should be submitted on
or before August 22, 2012.
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\4\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\4\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-18703 Filed 7-31-12; 8:45 am]
BILLING CODE 8011-01-P