[Federal Register Volume 79, Number 212 (Monday, November 3, 2014)]
[Notices]
[Pages 65277-65279]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26009]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73449; File No. SR-OCC-2014-19 ]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of Proposed Rule Change To Permit the Executive
Chairman, the President or a Delegate of Such Officer To Approve
Requests by a Hedge Clearing Member To Become a Market Loan Clearing
Member
October 28, 2014.
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 24, 2014, The Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II and III below, which
Items have been prepared by OCC. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
This proposed rule change by OCC would amend OCC's By-Laws to
permit the Executive Chairman, the President or a delegate of such
officer to approve requests by a Hedge Clearing Member to become a
Market Loan Clearing Member, provided that such delegate is an officer
of the rank of Senior Vice President or higher.
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
The purpose of this proposed rule change is permit the Executive
Chairman, the President or their delegate to approve business expansion
requests of Hedge Clearing Members \3\ to become Market Loan Clearing
Members.\4\ Delegates of the Executive Chairman and/or the President
must be an officer of the rank of Senior Vice President or higher.
Currently, OCC's By-Laws require that requests of a Hedge Clearing
Member to become a Market Loan Clearing Member be processed through
OCC's business expansion process, which involves review and approval by
OCC's Risk Committee (``Committee''). As described below, this type of
business expansion request is operational and administrative in nature
and OCC does not believe review and approval of this type of business
expansion request requires the Committee to assess the risk of such
designation. Accordingly, OCC proposes to amend its rules to permit the
Executive Chairman, the President, or their delegate to approve
business expansion requests of Hedge Clearing Members to become Market
Loan Clearing Members without further review by the Committee, provided
that any delegate be an officer of the rank of Senior Vice President or
higher.
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\3\ See OCC By-Laws, Article 1.H(1). See also, OCC By-Laws,
Article V, Section 1, Interpretation and Policy .07.
\4\ See OCC By-Laws, Article 1.M(4). See also, OCC By-Laws,
Article V, Section 1, Interpretation and Policy .07A.
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By way of background, the Committee is responsible for reviewing
and approving clearing member requests to clear a type or a kind of
transaction for which it is not currently approved to clear through OCC
(i.e., a business expansion request).\5\ The Committee has delegated
the Executive Chairman, the Management Vice Chairman, the President, or
their delegate with authority to review and approve business expansion
requests in response to requests by clearing members for expedited
review. Such approval is then subject to the Committee's review and
ratification at its next regularly scheduled meeting. If a clearing
member does not request expedited review of a business expansion
request then such request will be reviewed by the Committee at a
regularly scheduled
[[Page 65278]]
meeting of the Committee, and not by the Executive Chairman, the
Management Vice Chairman, the President, or their delegate.
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\5\ See OCC By-Laws, Article V, Section 1, Interpretation and
Policy .03(e).
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In the case of a Hedge Clearing Member requesting a business
expansion in order to be approved as Market Loan Clearing Member, the
clearing member will have already been subject a robust risk review by
the Committee concerning such clearing member's ability to participate
in stock loan activity at OCC. Accordingly, the review of the Market
Loan business expansion request by either the Committee and/or the
Executive Chairman, the Management Vice Chairman, the President, or
their delegate would be primarily operational in nature and involve
ensuring that the clearing member: (1) Is a U.S. Clearing Member, (2)
is a member of a Loan Market,\6\ (3) is a participant of the Depository
Trust Company and has executed certain agreements with the Depository
Trust Company, and (4) executes applicable agreements with OCC.\7\ The
Committee and/or the Executive Chairman, the Management Vice Chairman,
the President, or their delegate would also review the current
financial risk profile of the clearing member in connection with the
business expansion request in order to verify that the clearing member
continues to meet OCC's financial requirements. OCC believes that a
second risk review by the Committee would be duplicative because the
Committee has already analyzed and approved the clearing member's
ability to participate in stock loan activity at OCC. In addition, OCC
does not believe that review and approval of this type of business
expansion request is an appropriate use of the Committee's time given
other, more substantive, issues the Committee must consider. Therefore,
OCC proposes to amend Article V, Section 1, Interpretation and Policy
.03 of its By-Laws to provide the Executive Chairman, the President, or
their delegate with the authority to approve the business expansion
requests of Hedge Clearing Members to become Market Loan Clearing
Members without further review by the Committee, provided that any
delegate be an officer of the rank of Senior Vice President or higher.
OCC will implement appropriate procedures to ensure that Hedge Clearing
Members meet the requirements to become Market Loan Clearing Members
and participate and the Market Loan Program.
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\6\ See OCC By-Laws, Article 1.L(5).
\7\ See, OCC By-Laws, Article V, Section 1, Interpretation and
Policy .07A.
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2. Statutory Basis
OCC believes that the proposed rule change is consistent with
Section 17A(b)(3)(F) of Act \8\ because it is designed to remove
impediments to a national system for the prompt and accurate clearance
and settlement of securities transactions through the removal of
administrative and ministerial obligations of the Committee. By
providing the Executive Chairman, the President or their delegate the
authority to review and approve the business expansion requests of
Hedge Clearing Members that would like to become Market Loan Clearing
Members without further review by the Committee, clearing members and
their customers will not be subject to an additional and time-consuming
review by the Committee. In addition, the proposed rule change will
allow the Committee to focus on substantive risk issues. The proposed
rule change is not inconsistent with any rules of OCC, including those
proposed to be amended.
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\8\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Clearing Agency's Statement on Burden on Competition
OCC does not believe that the proposed rule change would impose a
burden on competition.\9\ The proposed rule change will ensure that OCC
may provide timely and efficient services to its clearing members
because it will remove administrative and ministerial steps associated
with certain types of business expansion requests. The proposed rule
change will apply to all clearing members and will not substantively
change the requirements for Hedge Clearing Member to be approved as
Market Loan Clearing Members. The Committee's review and approval of a
Market Loan Clearing Member business expansion requests from a Hedge
Clearing Member would be duplicative of prior action by the Committee
since a Market Loan Clearing Member must first be approved as a Hedge
Clearing Member, and the Committee will have already considered
substantive issues concerning a clearing member's ability to
participate in stock loan activity cleared through OCC when the
clearing member was designated as a Hedge Clearing Member. Accordingly,
OCC does not believe that the proposed rule will impose any burden on
competition.
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\9\ 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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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-2014-19 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-OCC-2014-19. 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. 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
[[Page 65279]]
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 Room, 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 the 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_14_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-2014-19
and should be submitted on or before November 24, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26009 Filed 10-31-14; 8:45 am]
BILLING CODE 8011-01-P