[Federal Register Volume 78, Number 190 (Tuesday, October 1, 2013)]
[Notices]
[Pages 60356-60357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-23830]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70502; File No. SR-OCC-2013-13]
Self-Regulatory Organizations; The Options Clearing Corporation;
Order Approving Proposed Rule Change Relating to the Use of Manual
Signatures, Reduction of Segregated Long Positions in Accounts With
Aggregated Long Positions, Requirements To Be Physically Present, and
Other Technical Changes to OCC's By-Laws and Rules To Better Reflect
Current Operational Practices
September 25, 2013.
I. Introduction
On August 5, 2013, The Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change SR-OCC-2013-13 pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder.\2\ The proposed rule change was published for comment in
the Federal Register on August 22, 2013.\3\ The Commission received no
comment letters. For the reasons discussed below, the Commission is
granting approval of the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Exchange Act Release No. 34-70225 (August 16, 2013), 78 FR
52227 (August 22, 2013).
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II. Description
OCC is amending a number of provisions in its By-Laws and Rules to
update and better reflect OCC's current operational practices.
First, OCC is amending certain rules to remove references to manual
signatures. OCC is removing references to manual signatures within Rule
201 because OCC has adopted and implemented electronic processes and
controls within its clearance and settlement systems to allow
authorized individuals to electronically verify and validate
information such as trade data and banking instructions.\4\ Similarly,
OCC is amending Rule 202 to remove certain references to manual
signatures on certain documents (e.g. certificates, checks, receipts,
and orders) but will continue to require clearing members to provide
OCC with a list of individuals authorized to act on behalf of a
clearing member, who will in turn be provided with appropriate
electronic access to its clearance and settlement systems.\5\
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\4\ See OCC Rule 205, which requires clearing members to
electronically submit items to OCC, and Rule 212, which allows OCC
to assign clearing members access codes for electronic data entry.
\5\ OCC will also make conforming changes to the forms required
by OCC to list the individuals authorized to act on behalf of a
clearing member.
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Second, OCC is amending Rule 611(c) to better reflect the current
practice that, in the event of a closing transaction or exercise in an
account with aggregate long positions, segregated long positions are
reduced before unsegregated long positions, and that clearing members
may not choose an alternative reduction method.
Third, in order to better reflect technological advancements as
well as the decentralized operational structures and remote access
adopted to address business continuity and disaster recovery, OCC is
amending Rule 201 which currently requires that an authorized
representative of a clearing member be present in such clearing
member's office during specific hours each day. Instead, OCC will
require an authorized representative of a clearing member to be
available during such times as OCC may specify from time to
[[Page 60357]]
time. OCC is also amending Rule 204 to add Rule 204.01 in order to
clarify that, each clearing member shall be deemed to have designated
OCC's primary processing facility (or, if in operation, OCC's back-up
processing) as the office through which it shall clear confirmed trades
and otherwise conduct all of its business with OCC on any given day.
Fourth, OCC is amending Rules 207, 208, and 611(b) to reflect
changes to the names of, information contained within, and manner in
which clearing members may amend various reports. Additional amendments
are being made to Rule 611(b) to clarify that clearing members may
electronically submit instructions to OCC regarding their segregated
long positions.
Fifth, OCC is amending Articles I and VI of the By-Laws as well as
Rule 801 in order to remove references to the clearing international
transactions and the International Clearing System, a system which is
now dormant. OCC is further amending Article VI of the By-Laws and Rule
801 to remove reference to XMI index options, which are no longer
traded. An additional amendment is being made to Rule 801 so that OCC,
not OCC's Board of Directors, may choose exercise notices that are not
eligible for late processing.
Finally, OCC will add language to Rule 211.01 to reflect that OCC
satisfies the notification requirements of Rule 211 to provide notice
of rule changes to clearing members and other registered clearing
agencies by posting proposed rule change filings on OCC's Web site.
III. Discussion
Section 19(b)(2)(C) of the Act \6\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that the proposed rule change is consistent with the requirements
of the Act and the rules and regulations thereunder applicable to such
organization. Section 17A(b)(3)(F) of the Act \7\ requires that the
rules of a clearing agency that is registered with the Commission be
designed to, among other things, promote the prompt and accurate
clearance and settlement of securities transactions, to remove
impediments to and perfect the mechanism of a national system for the
prompt and accurate clearance and settlement of securities
transactions, and in general, to protect investors and the public
interest.
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\6\ 15 U.S.C. 78s(b)(2)(C).
\7\ 15 U.S.C. 78q-1(b)(3)(F).
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The Commission finds that the rule change is consistent with
Section 17A(b)(3)(F) of the Act.\8\ Advances in technology and certain
regulatory changes have made certain requirements within OCC's Rules
and By-Laws unnecessary. Therefore, by updating OCC Rules and By-Laws
so that they are better tailored to the current operational and
technological environment in which OCC and its clearing members operate
and by eliminating those provisions that may impose unnecessary costs
and inefficiencies related to outdated processing and staffing, the
rule change should help promote the prompt and accurate clearance and
settlement of securities transactions and remove impediments to the
national system.
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\8\ Id.
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IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act and in
particular with the requirements of Section 17A of the Act \9\ and the
rules and regulations thereunder.
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\9\ 15 U.S.C. 78q-1.
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (File No. SR-OCC-2013-13) be and
hereby is approved.\11\
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\10\ 15 U.S.C. 78s(b)(2).
\11\ 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.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-23830 Filed 9-30-13; 8:45 am]
BILLING CODE 8011-01-P