[Federal Register Volume 78, Number 221 (Friday, November 15, 2013)]
[Notices]
[Pages 68888-68889]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-27289]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70838; File No. SR-OCC-2013-19]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Concerning an Amendment to the Amended and Restated Clearing and
Services Agreement Between The Options Clearing Corporation and NYSE
Liffe US LLC in Connection With NYSE Liffe US LLC's Transition to
Electronic Vault Receipts
November 8, 2013.
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 October 29, 2013, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change described in Items I, II and III below, which
Items have been prepared primarily by OCC. OCC filed the proposed rule
change pursuant to Section 19(b)(3)(A)(iii) \3\ of the Act and Rule
19b-4(f)(4)(ii) \4\ thereunder, so that the proposal was effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the rule change from interested parties.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b 4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b 4(f)(4)(ii).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
OCC is proposing to execute an amendment (``Amendment'') to the
Amended and Restated Clearing and Services Agreement (``Clearing
Agreement'') between OCC and NYSE Liffe US LLC (``NYSE Liffe US'') to
make changes to the Clearing Agreement in connection with NYSE Liffe
US' transition to electronic vault receipts, from physical vault
receipts, to represent metals underlying physically-settled precious
metal futures contracts (``Precious Metals Futures''). The Amendment
makes certain clarifying and non-material technical changes to the
Clearing Agreement.
II. Clearing Agency'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 these
statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose of the Proposed Rule Change
OCC provides clearance and settlement services to NYSE Liffe US
pursuant to the Clearing Agreement. OCC and NYSE Liffe US have been
working together on an initiative that will transition the vault
receipts that represent metals underlying Precious Metals Futures to
electronic vault receipts, instead of physical vault receipts
(``Initiative'').\5\ The purpose of this rule filing is to amend the
Clearing Agreement so that OCC and NYSE Liffe US may complete the
Initiative and begin using electronic vault receipts.
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\5\ See Securities Exchange Act Release No. 34-69595 (May 16,
2013), 78 FR 30364 (May 22, 2013) (SR-OCC-2013-06).
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In connection with the Initiative, NYSE Liffe US has entered into
bailment agreements with five vaults that will provide depository and
transfer services (each such agreement is hereinafter referred to as a
``Bailment Agreement'') for the electronic vault receipts of NYSE Liffe
US members that trade Precious Metals Futures (who are also OCC
clearing members). Each Bailment Agreement began as a ``form''
agreement, which was drafted collectively by NYSE Liffe US and OCC.
NYSE Liffe US subsequently negotiated various terms of the form
agreement with the five vaults and entered into executed Bailment
Agreements with each vault. OCC has reviewed each Bailment Agreement
and has determined that certain terms of the Bailment Agreement between
NYSE Liffe US and Brink's, Incorporated and Brink's Global Services
U.S.A., Inc. (collectively, ``Brinks'') differ from the form agreement
(i.e., Default Cures, Transfer of Metals and Audits) more than the
other Bailment Agreements and, therefore, the parties have agreed to
limit the amount of electronic vault receipts held at Brinks to no more
than $5 million at this time. Accordingly, OCC proposes to amend
Section 6(c)(iv)(F) of the Clearing Agreement to reflect such
limitation.
The Amendment will also make several other non-material technical
changes to the Clearing Agreement, which include:
An amendment to Section 6(c)(ii) of the Clearing Agreement
that will clarify NYSE Liffe US' right to pursue disciplinary action
against sellers of Precious Metals Futures that do not adhere to time
frames set forth by NYSE Liffe US regarding the issuance of vault
receipts;
An amendment to Section 6(c)(v) of the Clearing Agreement
to clarify that vault receipts with a registration date of the first
day of the Transition period or later must be in electronic form, and
vault receipts with a registration date before the first day of the
Transaction Period must be in paper form;
A technical amendment to replace the reference to
``Bailment Arrangement'' in Section 26(a)(ii) of the Clearing Agreement
with ``Bailment Agreement;''
Technical amendments to Schedules D and F of the Clearing
Agreement to reflect an updated and current checklist and list of
executed bailment arrangements; and
A technical amendment to add a Schedule G to the Clearing
Agreement, titled ``Form of Declaration of Regularity (referred to as
``Bailment Agreements'' in the Clearing Agreement).''
2. Statutory Basis for the Proposed Rule Change
OCC believes the proposed rule change is consistent with Section
17A(b)(3)(F) of the Act \6\ and the rules and regulations thereunder,
including Rule 17Ad-22,\7\ because it is designed to permit OCC to
perform clearance and settlement services for derivative products that
are subject to the jurisdiction of the Commodity Futures Trading
Commission (the ``CFTC'') without adversely affecting OCC's obligations
with respect to the prompt and accurate clearance and settlement of
securities transactions or the protection of securities investors and
the public interest. The proposed rule change will permit OCC to make
certain clarifying and technical amendments to its Clearing Agreement
with NYSE Liffe US, a futures market. The proposed rule change is not
inconsistent with any rules of OCC, including any rules proposed to be
amended.
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\6\ 15 U.S.C. 78q-1(b)(3)(F).
\7\ 17 CFR 240.17Ad-22.
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[[Page 68889]]
(B) Clearing Agency's Statement on Burden on Competition
OCC does not believe that the proposed rule change would impose any
burden on competition that is not necessary or appropriate in
furtherance of the Act because it relates solely to a commodity futures
product subject to the exclusive jurisdiction of the CFTC and therefore
will not have any impact, or impose any burden, on competition in
securities markets or any other market governed by the Act.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants or Others
Written comments on the proposed rule change 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
This proposed rule change is filed for immediate effectiveness
pursuant to Section 19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-
4(f)(4)(ii) \9\ thereunder. Pursuant to Rule 19b-4(f)(4)(ii),\10\ a
rule change may take effect upon filing if it primarily affects the
clearing operations of the clearing agency with respect to products
that are not securities and does not significantly affect any
securities clearing operations of the clearing agency or any rights or
obligations of the clearing agency with respect to securities clearing
or persons using such securities-clearing service. As described above,
this rule proposed rule change concerns futures products that are
subject to the exclusive jurisdiction of the CFTC and does not
adversely affecting OCC's obligations with respect to the prompt and
accurate clearance and settlement of securities transactions or the
protection of securities investors and the public interest.
Notwithstanding the foregoing, OCC will delay its implementation of
this rule change until it is deemed certified under Regulation Sec.
40.6 of the CFTC.\11\
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\8\ 15 U.S.C. 78s(b)(3)(A)(iii).
\9\ 17 CFR 240.19b-4(f)(4)(ii).
\10\ Id.
\11\ 17 CFR Part 40.6.
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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-2013-19 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-2013-19. 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 of submission. 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 filing also will
be available for inspection and copying at the principal office of OCC
and on OCC's Web site at http://www.theocc.com/components/docs/legal/rules_and_bylaws/sr_occ_13_19.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-2013-19 and
should be submitted on or before December 6, 2013.
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. 2013-27289 Filed 11-14-13; 8:45 am]
BILLING CODE 8011-01-P