[Federal Register Volume 77, Number 182 (Wednesday, September 19, 2012)]
[Notices]
[Pages 58194-58195]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-23039]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67851; File No. SR-OCC-2012-15]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of Proposed Rule Change Relating to Financial
Reporting by Canadian Clearing Members
September 13, 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 September 5, 2012, The Options Clearing Corporation (``OCC'') 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 would make technical ``housekeeping'' changes to
OCC's By-Laws and Rules relating to financial reporting by Canadian
clearing members to reflect the Investment Industry Regulatory
Organization of Canada's (``IIROC'') adoption of the International
Financial Reporting Standards.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
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. The self-regulatory organization
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 make technical
``housekeeping'' changes to OCC's By-Laws and Rules relating to
financial reporting by Canadian clearing members to reflect the
Investment Industry Regulatory Organization of Canada's (``IIROC'')
adoption of the International Financial Reporting Standards.
OCC Rule 310, through cross-references to interpretive provisions
of OCC Rule 306--Financial Reports and OCC Rule 308-Audits, allows
Canadian clearing members to elect to file their Joint Regulatory
Financial Questionnaire and Reports (``JRFQR'') with OCC, instead of
filing SEC Form X-17A-5, to discharge their financial reporting
requirements to OCC. In addition, other provisions of OCC's rules
(Rules 301, 302, 303, 304, 306 and 308) reference information Canadian
clearing members report on their JRFQR. IIROC, the primary regulator of
Canada's securities industry, replaced the JRFQR with ``Form 1'' of the
International Financial Reporting Standards. OCC proposes to replace
references to the JRFQR within its By-Laws and Rules with references to
``Form 1.'' \3\ OCC also proposes to add an Interpretation and Policy
to Rule 304 in response to a change in how IIROC requires regulated
entities to report capital withdrawals.
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\3\ OCC does not propose to amend Rule 310 since it does not
specifically use the term, ``Joint Regulatory Financial
Questionnaire and Reports.''
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OCC, as part of its financial surveillance program, requires
Canadian clearing members to submit their JRFQR, a financial report
similar to SEC Form X-17A-5, to OCC at the end of each month. OCC also
monitors the financial health of such clearing members using the
capital levels reported on their JRFQRs. In 2011, IIROC replaced the
JRFQR with Form 1. Among other things, Form 1 aligns the reporting of
certain financial liabilities to U.S. Generally Accepted Accounting
Principles. Canadian clearing members that use Form 1 report the same,
and in some cases more conservative, amounts of regulatory capital to
OCC as they had using the JRFQR. Moreover, OCC believes that the change
does not impair OCC's ability to conduct diligent financial
surveillance of Canadian clearing members. Accordingly, OCC proposes to
replace references to the ``JRFQR'' within its By-Laws and Rules with
references to ``Form 1.''
The IIROC also altered how its regulated entities report capital
withdrawals. IIROC previously required capital withdrawals to be
reported on monthly financial reports; however, IIROC amended its
standards and now requires firms to obtain approval for withdrawals of
capital following notice thereof. OCC had, when applicable, adjusted
Canadian clearing member's reported capital levels in light of
withdrawals reflected in financial reports in order to determine if the
firm's capital falls within OCC's standards. With the change
implemented by IIROC, that information is no longer available to OCC
via monthly financial reports submitted by Canadian clearing members.
To ensure it is aware of such capital withdrawals, OCC proposes to add
an Interpretation and Policy to Rule 304 which would require Canadian
clearing members to submit capital withdrawal notifications to OCC when
such requests are submitted to IIROC.
OCC believes that the proposed rule change is consistent with
Section 17A of the Securities Exchange Act of 1934, as amended (the
``Act''), because it promotes the prompt and accurate clearance and
settlement of securities transactions, and protects investors and the
public interest by allowing OCC to efficiently monitor the financial
health of its clearing members. The change is intended to facilitate
Canadian clearing members' compliance with OCC's By-Laws and Rules by
aligning OCC's financial reporting requirements, as they pertain to
Canadian clearing members, with those of the IIROC. It is also intended
to ensure OCC has appropriate information about Canadian clearing
members' capital withdrawals, which will no longer be reported to OCC
on a monthly basis. The proposed rule change is not inconsistent with
any rules of OCC, including any other rules proposed to be amended.
(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 not necessary or appropriate in furtherance of
the purposes of the Act.
(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
[[Page 58195]]
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 up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commissions Internet comment form (http://www.sec.gov/rules/sro.shtml) or Send an email to [email protected].
Please include File Number SR-OCC-2012-15 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-2012-15. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Section, 100 F Street
NE., Washington, DC 20549, on official business days between the hours
of 10:00 a.m. and 3:00 p.m. Copies of such filings will also be
available for inspection and copying at the principal office of OCC and
on OCC's Web site at http://www.optionsclearing.com/components/docs/legal/rules_and_bylaws/sr_occ_12_15.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-2012-15
and should be submitted on or before October 10, 2012.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\4\
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\4\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-23039 Filed 9-18-12; 8:45 am]
BILLING CODE 8011-01-P