[Federal Register Volume 78, Number 232 (Tuesday, December 3, 2013)]
[Notices]
[Pages 72729-72731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-28847]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70947; File No. SR-OCC-2013-21]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Make Technical Changes to OCC's By-Laws and Rules in Connection with
the Modification of the Individual Registration Categories of the
Investment Industry Regulatory Organization of Canada
November 26, 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 November 20, 2013, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change described in Items I and II below, which Items
have been prepared primarily by OCC. OCC has designated the proposed
rule change as constituting a ``non-controversial'' rule change under
paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which renders 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\ 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
This proposed rule change by The Options Clearing Corporation
(``OCC'') would make technical changes to OCC's By-Laws and Rules in
connection with the modification of the individual registration
categories of the Investment Industry Regulatory Organization of Canada
(``IIROC'') under which every Canadian clearing member or applicant
seeking to become a Canadian clearing member would be required to
employ at least one associated person registered as a Chief Financial
Officer (``CFO'') with IIROC.
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
[[Page 72730]]
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
In connection with a change made by IIROC to its individual
registration categories, OCC is proposing to make technical changes to
its By-Laws and Rules under which every Canadian clearing member or
applicant seeking to become a Canadian clearing member would be
required to employ at least one associated person registered as the
Clearing Member's CFO. OCC's membership standards include conditions
designed to assess the overall quality and character of the personnel
of an applicant. These conditions include a requirement that at least
one associated person of the applicant be registered as a Financial and
Operations Principal (``FINOP'') with FINRA and at least two key
operations staff be full-time employees of the applicant. For Canadian
members, OCC has permitted this requirement to be satisfied where any
principal, director or officer of the firm is also registered as a
Designated Registered Options Principal (``DROP'') with the IIROC.
However, as a result of IIROC's modification of its registration
categories the DROP has supervisory authority with respect to options
transactions but no responsibilities over the books and records of the
IIROC member.
Under IIROC's rules, the registered CFO is responsible for
monitoring the investment dealer's adherence with the financial rules
of IIROC as well as establishing and maintaining policies and
procedures related to financial requirements, which in OCC's view
equates to that of the function of FINOP under the rules for membership
standards. Accordingly, the proposed changes to Article V and Section
(a) of Rule 214 takes into account the regulatory changes made by IIROC
with respect to the DROP by requiring every Canadian clearing member or
applicant seeking to become a Canadian clearing member to employ at
least one associated person registered as the Canadian clearing
member's CFO, in place of the current requirement that at least one
employee be a Principal/Director/Officer and a DROP. OCC is also
proposing to replace outdated references in the By-Laws and Rules to
the Investment Dealers Association of Canada to IIROC, which is its
successor.\4\
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\4\ IIROC was established on June 1, 2008 through the
consolidation of the Investment Dealers Association of Canada and
Market Regulation Services Inc.
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2. Statutory Basis
OCC believes the proposed rule change is consistent with Section
17A(b)(3)(F) of the Act \5\ and the rules and regulations thereunder,
including Rules 17Ad-22(d)(1) and 17Ad-22(d)(2), because the proposed
modifications would help ensure that the By-Laws and Rules of OCC
provide for a well-founded, transparent, and enforceable legal
framework for each aspect of its activities in all relevant
jurisdictions \6\ and require participants to have robust operational
capacity to meet obligations arising from participation in the clearing
agency and to have procedures in place to monitor that participation
requirements are met on an ongoing basis.\7\ The proposed rule change
is not inconsistent with the existing rules of OCC, including any other
rules proposed to be amended.
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\5\ 15 U.S.C. 78q-1.
\6\ 17 CFR 240.17Ad-22(d)(1).
\7\ 17 CFR 240.17Ad-22(d)(2).
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(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 purposes of the Act.\8\ Changes to the rules of a
clearing agency may have an impact on the participants in a clearing
agency and the markets that the clearing agency serves. This proposed
rule change affects only Canadian clearing members or applicants
seeking to become a Canadian clearing member and OCC believes that the
proposed modifications would not unfairly inhibit access to OCC's
services or disadvantage or favor any particular user in relationship
to another user because the proposed modifications are technical in
nature and designed to take into account changes in regulations
applicable to Canadian broker-dealers and would apply equally to all
Canadian clearing members.
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\8\ 15 U.S.C. 78q-1(b)(3)(I).
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(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
Because the proposed change does not (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest, the proposed change has become effective
pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6)(iii) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(6)(iii), OCC provided the Commission with written notice of its
intent to file the proposed rule change, along with a brief
description and the text of the proposed rule change, at least five
business days prior to the date of filing of the proposed change, or
such shorter time as designated by the Commission.
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OCC has requested that the Commission waive the 30 day operative
delay contained in Rule 19b-4(f)(6)(iii) under the Act so that the
proposal may become operative immediately upon filing.\11\ The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest, as
the proposed rule change is technical in nature and waiver of the
operative delay will help ensure that OCC's By-Laws and Rules provide
for a well-founded, transparent, and enforceable legal framework for
each aspect of its activities in all relevant jurisdictions.\12\ For
this reason, the Commission designates the proposed rule change to be
operative upon filing.\13\
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\11\ Id.
\12\ Notwithstanding the foregoing, OCC has noted that
implementation of this rule change will be delayed until this rule
change is deemed certified under CFTC Regulation Sec. 40.6.
\13\ For purposes of waiving the 30-day operative delay, the
Commission has also considered the proposed rule's impact on
efficiency competition, and capital formation. See 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of such rule change, the
Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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:
[[Page 72731]]
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-2013-21 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-2013-21. 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_21.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-2013-21 and
should be submitted on or before December 24, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated Authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-28847 Filed 12-2-13; 8:45 am]
BILLING CODE 8011-01-P