[Federal Register Volume 79, Number 37 (Tuesday, February 25, 2014)]
[Notices]
[Pages 10581-10582]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-03971]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71571; File No. SR-OCC-2013-23]
Self-Regulatory Organizations; The Options Clearing Corporation;
Order Approving Proposed Rule Change, As Modified by Amendment No. 1,
To Provide OCC With Authority in Emergency Circumstances To Waive,
Suspend, or Extend the Time for Compliance With Its By-Laws, Rules,
Policies and Procedures, or any Other Rules Issued by OCC
February 19, 2014.
I. Introduction
On December 27, 2013, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'')
proposed rule change SR-OCC-2013-23 pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder.\2\ On January 8, 2014, OCC filed Amendment No. 1 to the
proposed rule change.\3\ The proposed rule change was published for
comment in the Federal Register on January 15, 2014.\4\ The Commission
received no comments concerning the proposed rule change. For the
reasons set forth below, the Commission is approving the proposed rule
change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, OCC clarified its ability to extend the
time fixed in certain Rules for the doing of any act or acts in
emergency situations, and made other technical changes.
\4\ Securities Exchange Act Release No. 71268 (January 9, 2014),
79 FR 2739 (January 15, 2014) (SR-OCC-2013-23).
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II. Description
The rule change, as approved, amends OCC's by-laws to provide OCC
with authority in emergency circumstances, subject to certain
conditions, to waive or suspend the operation of its by-laws, rules,
policies and procedures, or any other rules issued by OCC
(collectively, ``Rules'') or to extend any time fixed thereby for the
doing of any act or acts. OCC previously sought action by the Division
of Trading and Markets on an ad hoc basis whenever OCC needed to
temporarily waive or suspend certain of its Rules, or extend the time
for doing any act or acts specified by its Rules, in order to help
facilitate the national system for the prompt and accurate clearance
and settlement of securities transactions.\5\ The rule change generally
aligns OCC's Rules with those of other registered clearing agencies,
which allow those clearing agencies to waive or suspend their rules, or
extend the time fixed thereby for performing any act or acts, in
similar circumstances.
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\5\ For instance, in one case, OCC needed to waive certain of
its rules temporarily to facilitate the transfer and assignment of
the correspondent securities-clearing business of one of its
clearing members to another. The Division of Trading and Markets
issued a No-Action Letter advising OCC that the Division would not
recommend an enforcement action if OCC waived its rules under those
circumstances. The Options Clearing Corporation, SEC No-Action
Letter, (June 4, 2012), available at http://www.sec.gov/divisions/marketreg/mr-noaction/2012/occ060412.pdf.
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Under the rule change, as approved, OCC's Board of Directors,
Chairman,\6\ Management Vice Chairman, or President is authorized
either to waive or suspend the Rules or extend any time fixed by the
Rules for the doing of any act or acts if it is believed that an
emergency exists and such extension, waiver, or suspension is necessary
or advisable to protect OCC or allow it to continue to facilitate the
prompt and accurate clearance and settlement of confirmed transactions
and to provide its services in a safe and sound manner. If a
determination to invoke these emergency powers is made by anyone other
than by the Board of Directors, the Board of Directors must be notified
as soon as practicable.
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\6\ Pursuant to Article IV, Section 6 of OCC's By-Laws, the
Chairman of the Board is also the Executive Chairman.
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The rule change, as approved, requires OCC to notify the Commission
and the CFTC within two hours after exercising its emergency powers.\7\
OCC is further required to provide the Commission and the CFTC as soon
as practicable, but not later than three calendar days after exercising
its emergency powers, with a report setting out the nature of the
emergency, the identity of the person or persons who invoked OCC's
emergency powers, and the rationale for doing so.
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\7\ The Commission's approval of this rule change does not
relieve OCC of its obligation to submit a filing to the Commission
pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall
Street Reform and Consumer Protection Act when appropriate. See 12
U.S.C. 5465(e)(1).
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OCC is permitted to continue the emergency action for up to thirty
calendar days unless the Commission or the CFTC, as applicable, objects
in writing. If OCC wishes to continue the emergency action beyond the
thirty-day period, then OCC is required to file a
[[Page 10582]]
corresponding proposed rule change with the Commission, the CFTC, or
both during this thirty-day period. In that case, the emergency action
would remain in effect while the agency or agencies review the
corresponding proposed rule change. If either the Commission or the
CFTC objects to the proposed rule change in writing, OCC is required to
discontinue the emergency extension, waiver, or suspension of its
rules.
III. Discussion
Section 19(b)(2)(C) of the Act \8\ 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 \9\ requires that the
rules of a registered clearing agency be designed to, among other
things, promote the prompt and accurate clearance and settlement of
securities transactions, as well as foster cooperation and coordination
amongst other persons engaged in the clearance and settlement of
securities transactions.
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\8\ 15 U.S.C. 78s(b)(2)(C).
\9\ 15 U.S.C. 78q-1(b)(3)(F).
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The Commission believes that the proposed rule change is consistent
with the requirements of Section 17A of the Act and the rules and
regulations thereunder applicable to OCC. By giving OCC the ability to
respond promptly in the event of an emergency, the proposed rule change
will help to minimize the risk of a disruption to OCC's clearance and
settlement services. This will help facilitate the prompt clearance and
settlement of securities transactions, and will also enable OCC to
coordinate its actions with those of other clearing agencies that
already possess emergency powers similar to those at issue here.
Further, the proposed rule change circumscribes OCC's emergency powers
by requiring it to notify the Commission and the CFTC whenever OCC
invokes those powers, and by further requiring OCC to discontinue any
changes made under those powers if the Commission or the CFTC, as
applicable, objects. These procedural safeguards will help to ensure
that OCC exercises its emergency powers only in a manner that is
consistent with the requirements of the Act and the rules and
regulations thereunder.
IV. Conclusion
On the basis of the foregoing, the Commission concludes that the
proposal is consistent with the requirements of the Act, particularly
the requirements of Section 17A of the Act \10\ and the rules and
regulations thereunder.
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\10\ 15 U.S.C. 78q-1.
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\11\ that proposed rule change SR-OCC-2013-23, as amended, be and
hereby is approved.\12\
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\11\ 15 U.S.C. 78s(b)(2).
\12\ 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).
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission by the Division of Trading and Markets, pursuant
to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-03971 Filed 2-24-14; 8:45 am]
BILLING CODE 8011-01-P