[Federal Register Volume 79, Number 133 (Friday, July 11, 2014)]
[Notices]
[Pages 40177-40182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16193]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72550; File No. SR-OCC-2014-802]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of No Objection to Advance Notice Filing Concerning the
Consolidation of the Governance Committee and Nominating Committee Into
a Single Committee, Changes to the Nominating Process for Directors,
and Increasing the Number of Public Directors on The Options Clearing
Corporation's Board of Directors
July 7, 2014.
On May 8, 2014, The Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') advance
notice SR-OCC-2014-802 (``Advance Notice'') pursuant to Section
806(e)(1) of the Payment, Clearing, and Settlement Supervision Act of
2010 (``Clearing Supervision Act'' or ``Title VIII'') \1\ and Rule 19b-
4(n)(1)(i) under the Securities Exchange Act of 1934 (``Exchange
Act'').\2\ The Advance Notice was published for comment in the Federal
Register on June 3, 2014.\3\ The Commission did not receive any
comments on the Advance Notice publication. This publication serves as
a notice of no objection to the Advance Notice.
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\1\ 12 U.S.C. 5465(e)(1).
\2\ 17 CFR 240.19b-4(n)(1)(i). OCC is a designated financial
market utility and is required to file advance notices with the
Commission. See 12 U.S.C. 5465(e). OCC also filed the proposal
contained in the Advance Notice as a proposed rule change under
Section 19(b)(1) of the Exchange Act and Rule 19b-4 thereunder. See
SR-OCC-2014-09. The Commission published notice of the proposed rule
change in the Federal Register on May 30, 2014 and did not receive
any comments on the proposal. See Exchange Act Release No. 34-72242
(May 23, 2014), 79 FR 31166 (May 30, 2014) (SR-OCC-2014-09).
\3\ Release No. 34-72268 (May 28, 2014), 79 FR 31998 (June 3,
2014) (SR-OCC-2014-802) (``Notice'').
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I. Description of the Advance Notice
OCC is proposing to: (i) amend its By-Laws and Governance Committee
Charter to combine the current Nominating Committee (``NC'') and
Governance Committee (``GC'') to establish a single Governance and
Nominating Committee (``GNC''), (ii) make changes concerning OCC's
nomination process for Directors, and (iii) increase the number of
Public Directors on OCC's Board of Directors (``Board'') from three to
five. The proposed modifications are based on recommendations from the
GC in the course of carrying out its mandate of
[[Page 40178]]
reviewing the overall corporate governance of OCC and recommending
improvements to the structure of OCC's Board. In part, the GC's
recommendations stem from suggestions of an outside consultant that was
retained to review and report on OCC's governance structure in
relationship to industry governance practices. To conform to these
proposed changes, OCC is also proposing to make certain edits to its
Stockholders Agreement, Board of Directors Charter, and Fitness
Standards for Directors.
Currently, the GC operates pursuant to its own Charter.\4\ The NC
is not a Board level Committee and does not operate pursuant to a
charter; however, provisions in Article III of OCC's By-Laws prescribe
certain aspects of the NC's structure and operation. OCC is proposing
to apply to the GNC many of the existing provisions of the relevant By-
Laws and GC Charter that apply to the NC and GC. Where OCC is proposing
amendments to the existing By-Laws and GC Charter, they are discussed
below.
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\4\ Securities Exchange Act Release Nos. 71030 (Dec. 11, 2013),
78 FR 7612 (Dec. 16, 2013) (SR-OCC-2013-18); 71083 (Dec. 16, 2013),
78 FR 77182 (Dec. 20, 2013) (SR-OCC-2013-807).
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Certain provisions of Article III of OCC's By-Laws govern the role
the NC plays in nominating persons as Member Directors \5\ on OCC's
Board as well as the composition and structure of the NC itself. The NC
is required to endeavor to achieve balanced representation in its
Member Director and Non-Director Member nominees, giving due
consideration to business activities and geographic distribution.
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\5\ Under Article III, Section 2 every Member Director must be
either a Clearing Member or a representative of a Clearing Member
Organization.
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Presently, the NC is composed of seven total members: one Public
Director and six Non-Director Members.\6\ The Public Director member,
who is nominated by the Executive Chairman with the approval of a
majority of the Board, generally serves a three year term, unless she
ceases to be a Public Director. The six Non-Director Members nominated
by the NC and selected by OCC's stockholders are divided into two equal
classes of three members, and the classes serve staggered two year
terms.\7\ By comparison, the GC Charter requires the current GC to have
no fewer than five directors and to include at least one Public
Director, at least one Exchange Director, and at least one Member
Director. It also provides that no Management Directors may serve on
the Committee.
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\6\ Under Sections 4 and 5 of Article III, a Non-Director Member
of the NC must be a representative of a Clearing Member and no
person associated with the same Clearing Member Organization as a
member of the NC may be nominated by the NC for a position as a
Member Director on the Board of Directors or a Non-Director Member
of the NC for the ensuing year.
\7\ This tiered structure eliminated the complete turnover of
the members of the NC each year and fostered greater continuity
among its elected members. Securities Exchange Act Release No. 29437
(July 12, 1991), 56 FR 33319 (July 19, 1991) (SR-OCC-91-11).
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OCC's Board currently has 19 members consisting of nine Member
Directors, five Exchange Directors, three Public Directors, and two
Management Directors.\8\ Based on recommendations from the GC in the
course of review of OCC's overall corporate governance, OCC is
proposing certain amendments detailed below to merge OCC's NC and GC
into a single GNC and increase the number of Public Directors from
three to five.
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\8\ Public Directors may not be affiliated with any national
securities exchange or national securities association or any broker
or dealer in securities, and OCC's Executive Chairman and President,
who are Management Directors. See OCC By-Laws Article III, Section
6A.
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A. Proposed Amendments Common to the By-Laws and Other OCC Governance
Documents
Certain of the proposed changes would amend the existing By-Laws as
well as other governance documents of OCC. For example, conforming
edits would be made throughout the By-Laws and GC Charter to delete NC
and GC references and in many cases those references would be replaced
with references to the GNC.
1. GNC Composition
The new GNC would be composed of a minimum of three total members:
at least one Public Director, at least one Exchange Director and at
least one Member Director. To reflect this change, OCC would eliminate
in Section 4 of Article III of the By-Laws the requirement for six Non-
Director Members, add requirements for at least one Member Director and
one Exchange Director, and modify the current requirement for one
Public Director to instead require that there must be at least one
Public Director. The proposed composition for the GNC already mirrors
the existing composition specified in the GC Charter. Therefore, no
changes are proposed to the current GC Charter in that respect, other
than the elimination of the requirements that the GNC have no fewer
than five directors. In its filing with the Commission, OCC stated that
limitation would be eliminated with the goal of providing the Board
with greater flexibility to determine the optimal size and composition
of the GNC, so long as the composition also facilitates diverse
representation by satisfying the proposed requirement for at least one
GNC representative from each of the Member Director, Exchange Director,
and Public Director categories. The prohibition on Management Directors
serving on the GC would continue to apply to the GNC.
2. GNC Member Appointment Process and Term Limits
The members of the GNC would be appointed annually by the Board
from among certain Board members recommended by the GNC after
consultation with OCC's Executive Chairman. GNC Members would serve at
the pleasure of the Board. The GNC's Chairman (``GNC Chair'') would be
designated from among the GNC's Public Directors. Provisions
implementing these changes would be added to Section 4 of Article III
of the By-Laws to entirely supplant the class and term limit structure
and nominations process that currently applies to the NC and its Non-
Director Members and Public Director, and references to Non-Director
Members would be removed from the By-Laws. Section II.A. The GC Charter
would also be amended to reflect this structure for GNC nominations and
appointments.
3. Number of Public Directors and Member Directors
OCC is proposing to amend its By-Laws to increase the number of
Public Directors on its Board from three to five. It is also making
certain other changes related to the overall composition of the Board
and the classification and term of office of Public Directors. The
proposed change in the number of Public Directors from three to five
would reconstitute OCC's Board with a total of 21 directors. OCC
believes that, as indicated in its initial proposal to add Public
Directors to its Board,\9\ Public Directors broaden the mix of
viewpoints and business expertise that is represented on the Board.
Accordingly, OCC believes that the input and expertise of two more
Public Directors will further benefit OCC in the administration of its
affairs in respect of the markets that it serves, and in the discharge
of its obligations as a systemically important financial market
utility.
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\9\ Securities Exchange Act Release No. 30328 (January 31,
1992), 57 FR 4784 (February 7, 1992) (SR-OCC-1992-02).
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The proposed changes would remove a provision that, under certain
[[Page 40179]]
conditions, automatically adjusts the number of Member Directors
serving on the Board. OCC's By-Laws currently require that if the
aggregate number of Exchange Directors and Public Directors equals at
least nine, the total number of Member Directors must be automatically
adjusted to exceed that number by one.\10\ This provision would be
removed.\11\ OCC believes that its removal will provide the Board with
greater flexibility to determine its optimal composition. The proposed
changes also remove a provision that reduces the number of Member
Directors if the number is above nine and exceeds the sum of the number
of Exchange Directors and the number of Public Directors by more than
one, because the number of Member Directors would be fixed at nine.
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\10\ OCC By-Laws Article III, Section 1.
\11\ OCC also proposes to make corresponding changes to Article
III, Section 3 of its By-Laws under which it would remove provisions
that provide for the classification and term of office of Member
Directors where the number of Member Directors increases based on
the provision in Article III, Section 1 that OCC proposes to delete.
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OCC is also proposing certain amendments to its Stockholders
Agreement, Board of Directors Charter and Fitness Standards for
Directors, Clearing Members and Others. In each case, conforming
changes would be made to recognize the merger of the NC and GC into the
GNC as a standing Committee of the Board and reflect the role it would
play in OCC's director nomination process. The proposed modifications
to the Board Charter and Fitness Standards would reflect the increase
in the number of Public Directors serving on the Board from three to
five and the removal of the provision that currently is designed under
certain conditions to automatically adjust the number of Member
Directors serving on the Board. The criteria specified in the Fitness
Standards for Directors, Clearing Members and Others for use in
considering individuals nominated to be Member Director would also be
revised for consistency with the criteria proposed to be added to
Article III, Section 5 of the By-Laws, discussed below, designed to
achieve balanced Board representation.
The Stockholders Agreement also contains proposed amendments to
replace the term Chairman with Executive Chairman. This parallels a
separate proposed amendment by OCC to implement this change in its By-
Laws and Rules, but a consolidated amendment to the Stockholders
Agreement is proposed for ease of administration.
B. Proposed Amendments to By-Laws Only
As explained in more detail below, certain of the proposed changes
would require amendments only to OCC's existing By-Laws. One such
example is that Sections 2 and 5 of Article III of the By-Laws would be
amended to remove prohibitions against representation of the same
Clearing Member Organization on the Board and the NC.\12\ This barrier
would be eliminated since GNC members will be selected from among the
members of the Board under the new approach.
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\12\ A Clearing Member Organization is a Clearing Member that is
a legal entity rather than a natural person.
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1. Balanced Representation
The NC's responsibility to endeavor to achieve balanced
representation among Clearing Members on the Board would be carried
over to the GNC. Specifically, the GNC would be required to ensure that
(1) not all of the Member Directors are from members having the largest
volume of business with OCC during the prior year and (2) the mix of
Member Directors includes members primarily engaged in agency trading
on behalf of retail investors.
2. Nomination and Election Process
The Board would appoint members to the GNC from among the Board's
members who are recommended by the GNC. This change requires certain
proposed modifications to the nomination and election process currently
reflected in Article III, Section 5 of the By-Laws. Changes are also
proposed that would change the deadlines for nominations of Member
Directors by both the GNC and Clearing Members, and OCC would preserve
the petition process by which Clearing Members may nominate additional
candidates to be Member Directors on the Board. In recognition of the
elimination of the concept of Non-Director Members, several provisions
in Section 5 of Article III of the By-Laws addressing the ability of
stockholders to elect or nominate Non-Director Members of the NC would
be deleted. In relevant part, however, these provisions would be
retained to the extent they apply to the ability of stockholders under
certain conditions to nominate and elect Member Directors of the Board.
3. Public Directors
Proposed changes to Section 6A of Article III of the By-Laws would
require the GNC to nominate Public Directors for election by OCC's
stockholders and to use OCC's fitness standards in making such
nominations. Presently, OCC's Executive Chairman nominates Public
Directors with Board approval. Changes are also proposed to help
clarify the class structure and term limits of Public Directors that
are independent of changes proposed to facilitate the formation of the
GNC.\13\
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\13\ These changes would specify that, aside from the Class II
Public Director who was elected to the Board at the 2011 annual
meeting, two other Public Directors were appointed to the Board
prior to its 2013 annual meeting, one designated as a Class I Public
Director and the other designated as a Class III Public Director.
Generally, the three year terms for Public Directors with staggered
expiration for each class would be preserved; however, an exception
would be added for the initial Class I and III Public Directors.
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The proposed changes to Article III, Section 6A of the By-Laws
would also provide for the classification of the two new Public
Directors. One of the new Public Directors will be designated as a
Class I Public Director, and the other will be designated as a Class
III Public Director. The proposed changes also establish the times at
which the successors of the two new Public Directors will be elected.
The successor of the new Public Director that is a Class III Public
Director will be elected at the 2015 annual meeting of stockholders,
and the successor of the new Public Director that is a Class I Public
Director will be elected at the 2016 annual meeting.
4. Disqualifications and Filling Vacancies and Newly Created
Directorships
The disqualification provisions in Article III, Section 11 of the
By-Laws would be revised to reflect that any determination to
disqualify a director would be effective and result in a vacancy only
if the GNC makes a recommendation for disqualification in addition to
an affirmative vote for disqualification by a majority of the whole
Board. The By-Laws currently provide that if a Member Director vacancy
is filled by the Board, the person filling the vacancy will serve until
the next scheduled election for the relevant class of Member Director
and a successor is elected. However, if the term for that class of
Member Director extends beyond the Board's next annual meeting the
vacancy must be filled by a person who is recommended by the Nominating
Committee. Proposed changes to these terms in respect of the GNC would
require the Board in all cases to appoint a person who is recommended
by the GNC. Similarly, Public Director vacancies would be required to
be filled by the Board as generally provided for in Section 6A of
[[Page 40180]]
Article III of the By-Laws, including with regard to candidates being
nominated by the GNC using OCC's fitness standards for directors.
Provisions concerning filling vacancies with respect to the NC would be
deleted, consistent with its elimination in favor of the GNC.
5. Ministerial Changes
The proposed changes to Article III of the By-Laws also include
certain ministerial changes. A reference to stockholder exchanges in
the interpretation and policy to Section 6 would be replaced by the
defined term Equity Exchanges, and a reference in Section 14 to notice
by telegram would be changed to facsimile to reflect current means of
communication.
C. Proposed Amendments to the GC Charter Only
Certain of the proposed amendments relating to the creation of the
GNC would apply only to OCC's existing GC Charter. These amendments are
discussed below.
1. GNC Purpose
The statement of purpose in the GC Charter would be revised to
reflect the GNC's larger scope of responsibilities. The existing GC
purpose of reviewing the overall corporate governance of OCC would be
maintained, along with language clarifying that this review would be
performed on a regular basis and that recommendations concerning Board
improvements should be made when necessary. The GNC Charter would also
provide that the GNC assists the Board in identifying, screening and
reviewing individuals qualified to serve as directors and by
recommending candidates to the Board for nomination for election at the
annual meeting of stockholders or to fill vacancies. The GNC Charter
would also specify that the GNC would develop and recommend to the
Board, and oversee the implementation of, a Board Code of Conduct.
2. GNC Membership and Organization
The requirement in the GC Charter that the GC hold four meetings
annually would be modified to also permit the GNC to call additional
meetings as it deems appropriate.\14\ The GC Charter requirement for
regular reporting to the Board on Committee activities by the GC chair
or a designee would be revised in favor of placing the reporting
responsibility solely on the GNC Chair and requiring the GNC Chair to
make timely reports to the Board on important issues discussed at GNC
meetings. Taking into consideration certain pre-established guidelines
in the GNC Charter, the GNC Chair would also be given responsibility
for determining whether minutes should be recorded at any executive
session. Aside from this exception for executive sessions, GNC meeting
minutes would be required to be recorded. The GNC Charter would also
create a position to be filled by an OCC officer who would assist the
GNC and liaise between it and OCC's staff.
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\14\ This would bring the Governance and Nominating Committee
Charter in line with the Charters of OCC's other Board Committees.
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3. GNC Authority
As in the case of the existing GC, the GNC would have authority to
inquire into any matter relevant to its purpose and responsibilities in
the course of carrying out its duties. The GNC Charter would further
specify that in connection with any such inquiry the GNC would have
access to all books, records, facilities and personnel of OCC. Unlike
the existing GC Charter, the GNC Charter would not provide express
authority for the GNC to rely on members of OCC's management for
assistance. Instead, this relationship between the GNC and OCC's
management would be more specifically addressed through the role of the
newly created staff liaison position. Additional revisions to the GC
Charter would also establish that the GNC Chair would not have
discretion to take unilateral action on behalf of the Committee, even
in special circumstances.
4. Board Composition
Without limiting the GNC to particular activities, the GNC Charter
would specify certain responsibilities meant to guide the GNC in
achieving its purposes, including with respect to its role in the
development of the Board's composition. The GNC's Charter would require
it to pursue development of a Board comprised of individuals who have a
reputation for integrity and represent diverse professional backgrounds
as well as a broad spectrum of experience and expertise. The GNC
Charter would also prescribe more detailed responsibilities designed to
further this goal. For example, the GNC would be required to conduct
periodic reviews of the composition of the Board against the goal,
including whether the Board reflects the appropriate balance of types
of directors, business specialization, technical skills, diversity and
other qualities.\15\
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\15\ The GNC would also review director conflicts of interest
and the manner in which any such conflicts are to be monitored and
resolved.
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The GNC would be required to recommend policies and procedures to
the Board for identifying and reviewing Board nominee candidates, and
it would implement and oversee the effectiveness of those policies,
including with regard to criteria for Board nominees. Using criteria
approved by the Board, the GNC would identify, screen and review
persons who it determines are qualified to serve as directors. This
process would also extend to incumbent directors concerning any
potential re-nomination. In all cases, the GNC would only recommend
candidates to the Board for nomination for election after consulting
with OCC's Executive Chairman.
In the event that a sitting director offers to resign because of a
change in occupation or business association, the GNC would be
responsible for reviewing whether continued service is appropriate and
making a recommendation of any action, consistent with OCC's By-Laws
and Rules, that should be taken by the Board. The GNC would also
undertake periodic reviews of term limits for certain directors and
recommend changes to these limits where appropriate.
5. Governance Practices
The GNC would have responsibility for reviewing the Board's Charter
for consistency with regulatory requirements, transparency of the
governance process and other sound governance practices. Currently,
this is a GC function, and certain GC Charter amendments are proposed
to help further detail the GNC's review responsibilities. These include
a general responsibility to recommend changes, as the GNC deems
appropriate, to the Board concerning Committee Charters. This would
include the GNC Charter, which the GNC would be required to review
annually.\16\ In connection with a periodic review of Board Committee
structure, the GNC would advise the Board regarding related matters of
structure, operations and charters. Furthermore, and in each case after
consultation with OCC's Executive Chairman, the GNC would recommend to
the Board for its approval certain directors for Committee service as
well as for assignment as Committee chair persons.
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\16\ As part of the annual review, the GNC would also submit the
GNC Charter to the Board for re-approval, including any changes the
GNC deems advisable.
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The GNC would develop and recommend to the Board the annual process
used by the Board and Board Committees for self-evaluation of their
[[Page 40181]]
role and performance in the governance of OCC. The GNC would also be
responsible for coordinating and providing oversight of that process.
Corporate governance principles applicable to OCC would be developed by
the GNC for recommendation to the Board, and the GNC would review them
at least once a year.
6. Other Proposed GC Charter Amendments
The GNC Charter would require the GNC to regularly evaluate its
performance and the performance of its individual members and provide
results of such assessments to the Board. It would also require an
annual report to be prepared by the GNC and delivered to the Board
regarding the GNC's activities for the preceding year, and the GNC
would be required to include a statement that it carried out all of its
GNC Charter responsibilities. In addition to such responsibilities, the
GNC would generally be empowered to perform any other duties that it
deems necessary or appropriate and consistent with the GNC Charter or
as may otherwise be further delegated to it by the Board.
II. Discussion and Commission Findings
Although Title VIII does not specify a standard of review for an
advance notice, the Commission believes that the stated purpose of
Title VIII is instructive.\17\ The stated purpose of Title VIII is to
mitigate systemic risk in the financial system and promote financial
stability by, among other things, promoting uniform risk management
standards for systemically-important financial market utilities
(``FMUs'') and strengthening the liquidity of systemically important
FMUs.\18\
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\17\ See 12 U.S.C. 5461(b).
\18\ Id.
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Section 805(a)(2) of the Clearing Supervision Act \19\ authorizes
the Commission to prescribe risk management standards for the payment,
clearing, and settlement activities of designated clearing entities and
financial institutions engaged in designated activities for which it is
the supervisory agency or the appropriate financial regulator. Section
805(b) of the Clearing Supervision Act \20\ states that the objectives
and principles for the risk management standards prescribed under
Section 805(a) shall be to:
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\19\ 12 U.S.C. 5464(a)(2).
\20\ 12 U.S.C. 5464(b).
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Promote robust risk management;
promote safety and soundness;
reduce systemic risks; and
support the stability of the broader financial system.
The Commission has adopted risk management standards under Section
805(a)(2) of the Clearing Supervision Act \21\ (``Clearing Agency
Standards'').\22\ The Clearing Agency Standards became effective on
January 2, 2013 and require registered clearing agencies that perform
central counterparty (``CCP'') services to establish, implement,
maintain, and enforce written policies and procedures that are
reasonably designed to meet certain minimum requirements for their
operations and risk management practices on an ongoing basis.\23\ As
such, it is appropriate for the Commission to review advance notices
against these Clearing Agency Standards and the objectives and
principles of these risk management standards as described in Section
805(b) of the Clearing Supervision Act.\24\
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\21\ 12 U.S.C. 5464(a)(2).
\22\ Rule 17Ad-22, 17 CFR 240.17Ad-22. Exchange Act Release No.
68080 (October 22, 2012), 77 FR 66220 (November 2, 2012) (S7-08-11).
\23\ The Clearing Agency Standards are substantially similar to
the risk management standards established by the Board of Governors
of the Federal Reserve System (``Federal Reserve'') governing the
operations of designated DFMUs that are not clearing entities and
financial institutions engaged in designated activities for which
the Commission or the Commodity Futures Trading Commission is the
Supervisory Agency. See Financial Market Utilities, 77 FR 45907
(August 2, 2012).
\24\ 12 U.S.C. 5464(b).
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The proposed changes in the Advance Notice may result in changes
that will improve OCC's overall risk management process, and therefore
may promote robust risk management. A Board-level committee likely will
be in a better position to make well-informed nomination decisions.
Members of the GNC will themselves be members of the Board, and, thus,
have personal insight and experience into the types of experience and
credentials that would be useful on the Board and be better able to
assess the current needs of the Board. A Board comprised of Directors
with more relevant skills and credentials that are better able to
evaluate OCC's risks may promote more robust risk management.
Adding two Public Directors to the Board and eliminating the
provision which ensured the number of Member Directors would outnumber
the combined number of Exchange and Public Directors by one may also
result in improved risk management processes and therefore may promote
robust risk management. Additional emphasis on Public Directors may
result in more independent views on the risks OCC presents being
brought to the Board's attention for discussion and management of those
risks. Moreover, the combined GNC and the additional emphasis on Public
Directors should also aid in identifying any risks and inefficiencies
in the current governance structure and making recommendations to the
full Board to help mitigate those risks and eliminate any such
inefficiencies.
The GNC's periodic reviews of the composition of the Board,
including whether the Board reflects the appropriate balance of types
of directors, business specialization, technical skills, diversity and
other qualities, may help the GNC achieve balanced representation and a
diversity among Member Directors. Maintaining balanced representation
and having diversity among Member Directors may help the Board better
evaluate and identify the risks OCC presents, and improve overall risk
management.
In addition, the changes proposed in the Advance Notice may reduce
OCC's contribution to systemic risk because they enhance the
transparency of OCC's governance arrangements. The Commission believes
that providing additional insight into OCC's governance arrangements
may have this effect by allowing Members and other market participants
to better assess risks at OCC, to comment on OCC's operations, and
otherwise to advocate for improved overall risk management.
Commission Rule 17Ad-22(d)(8), adopted as part of Clearing Agency
Standards, requires that a registered clearing agency establish,
implement, maintain, and enforce written policies and procedures
reasonably designed to ``have governance arrangements that are clear
and transparent to fulfill the public interest requirements in Section
17A of the Exchange Act applicable to clearing agencies, to support the
objectives of owners and participants, and to promote the effectiveness
of the clearing agency's risk management procedures.'' \25\ The
Commission believes that the changes proposed in this advance notice
should help OCC fulfill these transparency requirements.
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\25\ 17 CFR 240.17Ad-22(d)(8).
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III. Conclusion
It is therefore noticed, pursuant to Section 806(e)(1)(I) of the
Clearing Supervision Act,\26\ that the Commission does not object to
advance notice proposal (SR-OCC-2014-802) and that OCC is authorized to
implement the proposal as of the date of this notice or the date of an
order by the Commission
[[Page 40182]]
approving a proposed rule change that reflects rule changes that are
consistent with this advance notice proposal (SR-OCC-2014-09),
whichever is later.
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\26\ 12 U.S.C. 5465(e)(1)(I).
By the Commission.
Kevin O'Neill,
Deputy Secretary.
[FR Doc. 2014-16193 Filed 7-10-14; 8:45 am]
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