45706 Federal Register / Vol. 83, No. 175 / Monday, September 10, 2018 / Notices 

29 15 U.S.C. 78s(b)(3)(A). 

30 17 CFR 240.19b–4(f)(2). 

31 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 17 CFR 240.17Ad–22(e)(2) and (3). 

4OCC’s By-Laws and Rules can be found on 

OCC’s public website: http://optionsclearing.com/ 

about/publications/bylaws.jsp. 

examinations and the impact to 

individuals and the industry. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 29 and paragraph (f)(2) of Rule 

19b–4 thereunder.30 At any time within 

60 days of the filing of the proposed 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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or 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 rule-comments@

sec.gov. Please include File Number SR– 

FINRA–2018–033 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–FINRA–2018–033. 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 website (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 website 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 such 

filing also will be available for 

inspection and copying at the principal 

office of FINRA. All comments received 

will be posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–FINRA– 

2018–033 and should be submitted on 

or before October 1, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–19502 Filed 9–7–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84021; File No. SR–OCC– 

2018–012] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing of Proposed Rule Change 

Related to The Options Clearing 

Corporation’s Board of Directors and 

Board Committee Charters 

September 4, 2018. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934,1 and 

Rule 19b–4 thereunder,2 notice is 

hereby given that on August 24, 2018, 

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 primarily by OCC. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change by OCC 

concerns changes to its (1) Audit 

Committee Charter, (2) Compensation 

and Performance Committee Charter, (3) 

Governance and Nominating Committee 

Charter, (4) Risk Committee Charter, (5) 

Technology Committee Charter and (6) 

Board of Directors Charter in connection 

with requirements applicable to OCC 

under Rules 17Ad–22(e)(2) 

(Governance) and (3) (Framework for 

the Comprehensive Management of 

Risks).3

The charters are attached as Exhibits 

5A through F to the filing [sic]. Material 

proposed to be added to the charters as 

currently in effect is marked by double 

underlining and material proposed to be 

deleted is marked by strikethrough text. 

The proposed rule change, including 

Exhibits 5A through F, is available on 

OCC’s website at https://

www.theocc.com/about/publications/ 

bylaws.jsp. The proposed rule change 

does not require any changes to the text 

of OCC’s By-Laws or Rules. All terms 

with initial capitalization that are not 

otherwise defined herein have the same 

meaning as set forth in the OCC ByLaws and Rules.4

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 the proposed rule 

change is to make certain changes to 

OCC’s (1) Audit Committee (‘‘AC’’) 

Charter (‘‘AC Charter’’), (2) 

Compensation and Performance 

Committee (‘‘CPC’’) Charter (‘‘CPC 

Charter’’), (3) Governance and 

Nominating Committee (‘‘GNC’’) Charter 

(‘‘GNC Charter’’), (4) Risk Committee 

(‘‘RC’’) Charter (‘‘RC Charter’’), (5) 

Technology Committee (‘‘TC’’) Charter 


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5As discussed below, the changes to the Board 

Charter would involve incorporating provisions 

from OCC’s Corporate Governance Principles 

(‘‘CGP’’) and changing the title of the document to 

the Board Charter and Corporate Governance 

Principles. 

6 17 CFR 240.17Ad–22(e)(2) and (3). 

7Securities Exchange Act Release No. 78961 

(September 28, 2016), 81 FR 70786, 70812 (October 

13, 2016) (‘‘CCA Adopting Release’’); see also 17 

CFR 240.17Ad–22. 

8 17 CFR 240.17Ab2–2. 

9 15 U.S.C. 78q–1. 

10 12 U.S.C. 5461 et seq. 

11 17 CFR 240.17Ad–22(a)(5). 

12 Id. 

13 17 CFR 240.17Ad–22(e)(2). The public interest 

requirements in Section 17A of the Act include that 

the ‘‘prompt and accurate clearance and settlement 

of securities transactions, including the transfer of 

record ownership and the safeguarding of securities 

and funds related thereto, are necessary for the 

protection of investors and persons facilitating and 

acting on behalf of investors.’’ See 15 U.S.C. 78q– 

1(a)(1)(A). 

14See 17 CFR 240.17Ad–22(e)(2). 

15See 17 CFR 240.17Ad–22(e)(3). 

16The following are examples of such changes. 

All of the charters would be amended to state that 

the Board or the relevant committee will review the 

charter ‘‘at least once every twelve months’’ instead 

of ‘‘annually’’ to provide further clarity around the 

intended frequency. The statement in the TC 

Charter that the TC ‘‘shall also have the authority 

to perform any other duties’’ consistent with the TC 

Charter would be revised to provide that the TC ‘‘is 

authorized to perform any other duties’’ consistent 

with the TC Charter. The statement in the AC 

Charter that the committee shall ‘‘approve material 

changes in accounting principles and practices’’ 

would instead state that it ‘‘is authorized to approve 

material changes in accounting principles and 

practices.’’ Consistent with this change, where a 

charter currently states that the Board or a 

committee ‘‘shall approve’’ a particular matter, 

certain changes are proposed, as appropriate, to 

state instead that the Board or a committee is 

‘‘authorized to approve.’’ OCC believes such 

changes properly clarify the oversight role of the 

Board and the committees and that approval is not 

mandatory. 

17Certain variations on some of these changes 

that are specific to the Board Charter are also 

described below in the section addressing the Board 

Charter. 

18See 17 CFR 240.17Ad–22(e)(2)(ii) (requiring 

governance arrangements that prioritize the covered 

clearing agency’s ‘‘safety and efficiency’’), (e)(2)(iii) 

(requiring governance arrangements that support 

the ‘‘public interest requirements’’ applicable to 

covered clearing agencies), and (e)(2)(vi) (requiring 

governance arrangements that consider the interests 

of all ‘‘relevant stakeholders’’). 

(‘‘TC Charter’’) and (6) Board of 

Directors (‘‘Board’’) Charter (‘‘Board 

Charter’’) 5 for consistency with 

requirements that are applicable to OCC 

under Rules 17Ad–22(e)(2) 

(Governance) and (3) (Framework for 

the Comprehensive Management of 

Risks).6 As described in greater detail 

below, the proposed changes are 

designed, in general, to clarify and 

assign certain responsibilities for the 

governance and oversight of OCC among 

the Board and its respective committees 

in order to provide for governance 

arrangements that are clear and 

transparent and that specify clear and 

direct lines of responsibility. In turn, 

these changes would help ensure that 

OCC has governance arrangements that 

are organized to support its ability to 

promptly and accurately serve Clearing 

Members and the markets for which it 

clears and effectively manage the range 

of risks that arise in the course of 

providing such clearance and settlement 

services. 

Background 

On September 28, 2016, the 

Commission adopted amendments to 

Rule 17Ad–22 7 and added new Rule 

17Ab2–2 8 pursuant to Section 17A of 

the Securities Exchange Act of 1934, as 

amended (‘‘Exchange Act’’ or ‘‘Act’’),9

and the Payment, Clearing, and 

Settlement Supervision Act of 2010 10 to 

establish enhanced standards for the 

operation and governance of those 

clearing agencies registered with the 

Commission that meet the definition of 

a ‘‘covered clearing agency,’’ as defined 

by Rule 17Ad–22(a)(5) 11 (collectively, 

the new and amended rules are herein 

referred to as the ‘‘CCA rules’’). OCC 

meets the definition of a covered 

clearing agency and is therefore subject 

to the requirements of the CCA rules.12

Relevance of CCA Rules Regarding OCC 

Charters 

Certain of the CCA rules impose 

requirements regarding governance 

arrangements and OCC’s risk 

management framework that relate to its 

(1) AC Charter, (2) CPC Charter, (3) GNC 

Charter, (4) RC Charter, (5) TC Charter 

and (6) Board Charter. Specifically, 

Rules 17Ad–22(e)(2) and (3) require 

OCC to, among other things, establish, 

implement, maintain, and enforce 

written policies and procedures 

reasonably designed to, as applicable: 

• Provide for governance 

arrangements that are clear and 

transparent; clearly prioritize safety and 

efficiency of the covered clearing 

agency; support the public interest 

requirements in Section 17A of the 

Act 13 and the objectives of owners and 

participants; establish that the board of 

directors and senior management have 

appropriate experience and skills to 

discharge their duties and 

responsibilities; specify clear and direct 

lines of responsibility; consider the 

interests of enumerated stakeholders;14

and 

• maintain a sound risk management 

framework for comprehensively 

managing legal, credit, liquidity, 

operational, general business, 

investment, custody, and other risks 

that arise in or are borne by the covered 

clearing agency.15

OCC is proposing changes to its Board 

and Board committee charters to better 

align its governance and risk 

management processes with these 

requirements, including by shifting 

responsibility to the Board for enterprise 

risk management and aligning 

committee responsibilities accordingly. 

These changes are described below 

regarding each charter and key aspects 

of the proposed changes are noted by 

bullets at the beginning of each section. 

Many of the proposed changes are 

intended only to reduce redundancy 

and better organize the content of the 

charters and in some cases would 

remove provisions for readability in 

light of the fact that they are not 

required. Therefore, OCC proposes to 

relocate existing content and change 

word choices for readability and to more 

clearly state what a committee is 

authorized to do or must do, which OCC 

believes would not substantively alter 

the responsibilities or activities of the 

relevant committee.16 Because such 

changes would not change the operation 

or meaning of the charter provisions, 

they are not further described herein. 

OCC also notes that the Board Charter 

and committee charters are intended to 

set forth key responsibilities, 

procedures, and guiding principles for 

the Board and the committees. The 

charters therefore do not enumerate 

every action that may be taken by the 

Board or committees, and OCC notes 

that its By-Laws, Rules and policies also 

set forth certain duties and 

responsibilities of the Board and 

committees (e.g., Sections 4 

(Committees) and 8 (Power of the Board 

of Directors) of Article III of OCC’s ByLaws). 

Common Changes 

Certain of the proposed changes 

represent common changes that would 

be made in all or most of the charters.17

For instance, OCC proposes to amend 

the charters to provide that in carrying 

out their responsibilities the Board and 

the committees shall prioritize the 

safety and efficiency of OCC, generally 

support the stability of the broader 

financial system and consider legitimate 

interests of Clearing Members, 

customers of Clearing Members and 

other relevant stakeholders, including 

its Exchange Shareholders and other 

participant exchanges, taking into 

account prudent risk management 

standards (including systemic risk 

mitigation) and industry best practices, 

as is consistent with Rules 17Ad– 

22(e)(2)(ii), (iii) and (vi).18 OCC also 


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19This same change would not be added to the 

Board charter. It would also not be added to the 

GNC Charter because it is already addressed. 

20 17 CFR 240.17Ad–22(e)(2)(v). 

21See 17 CFR 240.17Ad–22(e)(3)(i) (requiring 

periodic review and annual Board approval of the 

CCA’s risk management framework). 

22 17 CFR 240.17Ad–22(e)(2)(i) and (v). 

23The purpose of these changes is to promote 

governance arrangements that clearly prioritize the 

safety and efficiency of OCC and specify clear and 

direct lines of responsibility in its governance 

arrangements. See 17 CFR 240.17Ad–22(e)(2)(ii) 

and (v). 

24OCC notes that a comparable provision to this 

exists in the RC Charter. 

25OCC notes that comparable language currently 

appears in the AC Charter, GNC Charter, and TC 

Charter. 

26 17 CFR 240.17Ad–22(e)(3). 

27 17 CFR 240.17Ad–22(e)(2)(i). 

28The GNC is required to provide the results of 

its own assessment to the Board. 

29 17 CFR 240.17Ad–22(e)(2)(v). 

proposes to amend the committee 

charters to address committee member 

vacancies to provide that in the event of 

a vacancy, the applicable committee 

will continue to undertake its 

responsibilities, so long as the 

remaining committee members are 

capable of satisfying the quorum 

requirement.19 In addition, to promote 

compliance with the requirement in 

Rule 17Ad–22(e)(2)(v) 20 that 

governance arrangements provide for 

clear and direct lines of responsibility, 

OCC proposes to amend all of the 

charters to specify that the Board and 

each committee may delegate authority 

to one or more designated officers of 

OCC or may refer a risk under its 

oversight to another committee or the 

Board as advisable or appropriate. The 

proposed revisions would further 

provide, however, that the Board or the 

committee would retain the obligation 

to oversee any such delegation or 

referral and assure itself that delegation 

and reliance on the work of any delegate 

is reasonable. OCC also proposes 

amendments to acknowledge, where 

relevant, that its Executive Chairman 

(‘‘EC’’) also serves as its Chief Executive 

Officer (‘‘CEO’’) and therefore certain 

responsibilities and considerations that 

currently apply to the EC would also 

apply regarding the CEO. All charters 

would also be revised to state that a role 

of the Board or the committee, as 

applicable, is to advise management. In 

addition, committees would be required 

to submit their charters to the GNC for 

potential approval in addition to 

submitting them to the Board in 

connection with a required review once 

every twelve months of committee 

charters, consistent with Rule 17Ad– 

22(e)(3)(i).21 Moreover, consistent with 

Rules 17Ad–22(e)(2)(i) and (v) regarding 

the establishment of governance 

arrangements that are clear and 

transparent and that specify clear and 

direct lines of responsibility,22 changes 

would be made to clarify that where the 

Board or a committee has authority to 

approve reports or other proposals in its 

business judgment, such as materials 

provided by management, it is not 

obligated to approve, and related 

modifications would articulate a clear 

means of recourse for the committee or 

the Board if it does not approve.23

The committee charters would also be 

amended to provide that each 

committee shall perform and is 

authorized to perform such other 

responsibilities and functions as shall 

from time to time be assigned to it under 

the By-Laws and Rules, other policies, 

or delegated to it by the Board.24 OCC 

also proposes to amend the committee 

charters to provide that each committee 

shall perform any other duties 

consistent with their respective charters 

as the committee deems necessary or 

appropriate, or as the Board shall 

further delegate to the particular 

committee.25 OCC believes that these 

changes will provide for flexibility for 

each committee to supervise and 

account for matters naturally within the 

scope of their responsibility or that may 

be assigned to them by the Board. OCC 

believes these changes also promote 

compliance with Rule 17Ad–22(e)(3) 26

by establishing a sound risk 

management framework to 

comprehensively manage the varying 

risks and other matters each committee 

must manage and to effectively identify 

new risks that may arise. 

Finally, in order to the promote 

compliance with the requirement in 

Rule 17Ad–22(e)(2)(i) 27 that OCC’s 

governance arrangements be clear and 

transparent, OCC proposes to make a 

number of changes to its Board 

committee charters to clarify that, where 

certain actions were required to be 

performed ‘‘annually’’ under the 

charters, those actions would now be 

required to occur ‘‘each calendar year.’’ 

OCC believes that it is appropriate to 

make clear it in its rules actions which 

the Board or a committee may be 

required to perform on an every twelve 

months-basis, particularly in cases 

where a regulatory requirement exists 

(e.g., Risk Committee requirement to 

review and have the authority to 

approve at least once every twelve 

months the adequacy of OCC’s Recovery 

and Orderly Wind-Down Plan and 

recommend approval thereof to the 

Board) and those which they would 

only be required to perform on a 

calendar year basis. These changes 

include amending the committee 

charters to provide that the following 

activities must occur on a calendar year 

basis: (i) The appointment of directors 

to particular committees; (ii) that 

committees meet regularly, and no less 

than once per calendar year, with 

certain members of management in 

separate executive sessions; (iii) that 

each committee must provide reports to 

the Board summarizing its activities for 

the prior year; (iv) that each committee 

confirm to the Board that all 

responsibilities outlined in its Charter 

have been carried out; and (v) that each 

committee assess its and its individual 

members’ performance and provide 

results of such assessment to the GNC28

for review. 

AC Charter 

OCC proposes modifications to its AC 

Charter. Key aspects of the proposed 

changes regarding the AC Charter 

include: 

• New responsibility for oversight of 

legal risks, including existing, pending 

and threatened litigation; 

• Transfer of the oversight of Clearing 

Member investigations and enforcement 

matters to the RC; 

• Increased oversight of OCC’s 

compliance department, including its 

structure, resources and budget; and 

• Introduction of mandatory periodic 

reporting from OCC’s Chief Audit 

Executive (‘‘CAE’’), Chief Compliance 

Officer (‘‘CCO’’) and General Counsel 

(‘‘GC’’). 

OCC proposes to amend the AC 

Charter to establish new responsibilities 

for the AC that include reviewing the 

impact of litigation and other legal 

matters that may have a material impact 

on OCC’s financial statements and 

overseeing the structure, independence 

and objectivity, staffing, resources, and 

budget of OCC’s compliance and audit 

departments. OCC believes that it is 

appropriate to extend these 

responsibilities to the AC since they are 

highly germane to its current functions 

(e.g., assisting the Board in overseeing 

OCC’s financial reporting process, 

OCC’s system of internal control, OCC’s 

auditing process, and OCC’s process for 

monitoring compliance with applicable 

laws and regulation) and would 

promote compliance with Rule 17Ad– 

22(e)(2)(v) 29 by specifying clear and 

direct lines of responsibility. In 

addition, the responsibility for the 

oversight of Clearing Member 

investigations and enforcement would 

be transferred to the RC as the RC has 

the required expertise to properly 

oversee the process (as discussed further 

below). The AC Charter would also be 


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30 17 CFR 240.17Ad–22(e)(3)(iii) and (iv). 

31 17 CFR 240.17Ad–22(e)(2)(v). 

32OCC proposes certain other streamlining 

changes to the AC Charter, such as providing that 

the AC will review OCC’s Reporting Concerns and 

Whistleblower Policy (and specifying that such 

review will occur each calendar year) rather than 

providing a more detailed description of what the 

reporting concerns and whistleblower procedures 

under the relevant policy entail. 

33OCC also believes that these quarterly reports 

to the AC help specify clear and direct lines of 

responsibility in OCC’s governance arrangements by 

ensuring that these officers keep the AC apprised 

of OCC’s ongoing performance or handling of these 

matters, which in turn will allow the AC to more 

effectively carry out its oversight functions and the 

responsibilities associated therewith. See 17 CFR 

240.17Ad–22(e)(2)(v) and (e)(3). 

34 17 CFR 240.17Ad–22(e)(2)(i). 

35 17 CFR 240.17Ad–22(e)(3)(iii) and (iv). 

36OCC similarly proposes to amend the AC 

charter to provide that the AC is authorized to 

approve OCC’s audited financial statements after 

review, is authorized to oversee the timing and 

process for implementing a rotation of the 

engagement partner of the external auditor, and is 

authorized to discuss certain significant issues with 

the external auditor. 

37See 15 U.S.C. 78q–1(b)(3)(F). 

38See 17 CFR 240.17Ad–22(e)(2)(v) (requiring 

governance arrangements with clear and direct lines 

of responsibility), (e)(3)(i) (requiring periodic 

review and annual Board approval of risk 

management policies, procedures and systems) and 

(e)(3)(iii) (requiring a risk management framework 

that provides internal audit personnel with 

sufficient authority, but also access to the Board). 

39As described below, OCC also proposes certain 

other non-substantive changes to the AC Charter to 

provide additional clarity. For example, OCC 

proposes to replace reference to ‘‘financial and 

senior management’’ to OCC’s ‘‘Corporate Finance 

Department’’ in describing the AC’s responsibility 

to facilitate open communication between external 

auditors and certain groups within OCC. As an 

additional example, the AC Charter would be 

amended to provide that the AC is authorized to 

approve the ‘‘issuance of the annual financial’’ 

statements after its review of such statements. 

Similarly, OCC proposes to enhance certain 

descriptions of the AC’s responsibilities. For 

example, OCC proposes to revise text describing the 

role of the AC, along with external auditors, as 

responsible for ‘‘planning and carrying out audit 

work, as appropriate’’ rather than ‘‘planning and 

carrying out a proper audit.’’ OCC’s description of 

the AC’s power to delegate to the CAE ‘‘within the 

external audit limits’’ would be changed for 

accuracy to read ‘‘within the co-sourced audit hour 

limits.’’ This change is meant to reflect the fact that 

OCC co-sources its internal audit function through 

a partnership between OCC’s in-house internal 

audit department and a third party internal audit 

service provider. 

amended to clarify that the AC shall 

oversee the independence and 

objectivity of the internal audit 

department, consistent with OCC’s 

obligations under Rules 17Ad– 

22(e)(3)(iii) and (iv) 30 to provide 

internal audit personnel with sufficient 

authority, resources, independence from 

management, and access to the board of 

directors and provide for oversight of 

internal audit personnel by an 

independent audit committee of the 

board of directors. Under the proposed 

rule change, the AC Charter would also 

be amended to provide that the AC is 

authorized to approve deviations to the 

audit plan that may arise over the 

course of an audit, which OCC believes 

is a natural extension of the AC’s role 

and responsibilities. In addition, OCC 

proposes to amend the AC Charter to 

provide that the AC shall identify risk 

issues relating to the areas that the 

committee oversees that should be 

escalated to the Board for its review and 

consideration, which OCC believes 

promotes compliance with Rule 17Ad– 

22(e)(2)(v) 31 by specifying clear and 

direct lines of responsibility. 

OCC also proposes to amend the AC 

Charter to provide that certain 

mandatory reports be sent to the AC for 

review, including quarterly reports from 

the CAE regarding the internal audit 

plan and the GC regarding existing, 

pending, or threatened litigation.32 OCC 

notes that either the AC or another 

committee already has responsibilities 

in these areas and OCC believes that 

such quarterly reports will help provide 

the AC with the necessary information 

to appropriately discharge its duties and 

responsibilities.33

OCC also proposes to streamline its 

description of the AC’s responsibility 

with respect to its compliance 

department by providing more generally 

that the AC shall review ongoing 

compliance monitoring activities by 

reviewing reports and other 

communications prepared by the CCO 

and inquire of management regarding 

steps taken to deal with items raised. As 

a result of this change, the AC Charter 

would no longer specify that the AC is 

responsible for approving the annual 

Compliance Testing Plan, monitoring 

progress against the annual Compliance 

Testing Plan, and approving any 

recommendations by the CCO relating to 

that plan. The purpose of this change is 

to shift OCC’s compliance department to 

a monitoring role and away from its 

historic role of creating a specific plan 

to follow. This change would also help 

facilitate the transition of validation 

responsibilities to OCC’s internal audit 

department, over which the compliance 

department would have monitoring 

responsibilities. OCC believes that this 

change promotes governance 

arrangements that are clear and 

transparent in accordance with Rule 

17Ad–22(e)(2)(i).34

In a number of instances, OCC 

proposes to amend the AC charter to 

provide that the AC is authorized to 

perform certain functions. For example, 

OCC proposes to amend the AC charter 

to provide that the AC is authorized to 

approve management’s recommendation 

to appoint or replace the CCO or CAE, 

which is a governance arrangement that 

OCC believes is consistent with Rules 

17Ad–22(e)(3)(iii) and (iv) 35 in that it 

furthers the AC’s oversight of the CCO 

and CAE and their independence from 

management.36 OCC believes that 

framing the AC’s responsibilities in this 

manner would provide appropriate 

flexibility for the committee to carry out 

its oversight and advisory 

responsibilities using its business 

judgment. OCC also proposes to amend 

the AC Charter (and the RC Charter) to 

transfer responsibility for reviewing the 

investigation and enforcement outcomes 

of disciplinary actions taken by OCC 

against Clearing Members from the AC 

to the RC. OCC believes that the RC is 

appropriately situated to review 

disciplinary actions against Clearing 

Members given its broader role in 

overseeing OCC’s management of third 

party risks, (which includes OCC 

counterparties such as Clearing 

Members). 

OCC proposes to further amend the 

AC Charter to provide that the AC shall 

review the effectiveness of the internal 

audit function, including conformance 

with the Institute of Internal Auditor’s 

Code of Ethics and the International 

Standards for Professional Practice of 

Internal Auditing. OCC believes that 

this is a natural extension of the AC’s 

role and responsibility to help ensure 

the integrity of OCC’s audits and is 

consistent with the public interest and 

the protection of investors.37

In addition, the AC Charter currently 

provides that the AC is authorized to 

determine appropriate compensation for 

audit services and pre-approve all audit 

services, subject to annual approval by 

the Board. As proposed, the AC charter 

would no longer expressly require 

annual Board approval regarding these 

items. However, under the AC Charter 

the committee would still be required to 

confirm annually to the Board that all of 

its responsibilities have been carried out 

and provide an annual report to the 

Board summarizing its activities during 

the previous year, consistent with Rules 

17Ad–22(e)(2)(v) and 17Ad–22(e)(3)(i) 

and (iii).38 OCC also proposes to amend 

the AC Charter to provide that, in 

addition to the CAE and CCO, the Chief 

Financial Officer (‘‘CFO’’) also would be 

authorized to communicate directly 

with the Chair of the AC with respect to 

any of the responsibilities of the AC 

between meetings of the AC given the 

CFO’s role as part of OCC’s executive 

team and his/her responsibility for OCC 

finances.39


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40 17 CFR 240.17Ad–22(e)(3)(i). 

41 17 CFR 240.17Ad–22(e)(2)(v). 

42OCC believes that quarterly reporting by 

management to the CPC, as described in this 

discussion of the CPC Charter, helps specify clear 

and direct lines of responsibility in OCC’s 

governance arrangements by ensuring that 

management keeps the CPC apprised of OCC’s 

ongoing performance on these matters, which in 

turn will allow the CPC to more effectively carry 

out its oversight functions and the responsibilities 

associated therewith. See 17 CFR 240.17Ad– 

22(e)(2)(v) and (e)(3). 43 17 CFR 240.17Ad–22(e)(2)(v). 

CPC Charter 

OCC proposes a number of revisions 

to its CPC Charter, the key aspects of 

which would include: 

• New responsibility to oversee and 

monitor certain activities of OCC’s 

Administrative Committee, including 

the approval of the Administrative 

Committee’s charter and changes 

thereto, and approval of the members of 

the Administrative Committee; 

• Introduction of mandatory quarterly 

reporting on OCC’s corporate plan, 

corporate budget and capital plan; and 

• Annual requirement to review 

succession planning activities regarding 

OCC’s Management Committee 

(‘‘Management Committee’’). 

OCC proposes to amend the CPC 

Charter to state that the CPC assists the 

Board in overseeing risks related to 

OCC’s general business, regulatory 

capital, investments, corporate 

planning, compensation and human 

capital in addition to assisting the Board 

in executive management succession 

planning and performance assessments. 

The existing CPC Charter already 

addresses these aspects of the 

committee’s responsibilities generally. 

The proposed revisions are designed to 

emphasize the committee’s 

responsibility to help the Board oversee 

such risks and to clarify that the 

committee has an oversight role while it 

remains OCC management’s 

responsibility to identify, manage, 

monitor and report the associated risks, 

as is consistent with the Rule 17Ad– 

22(e)(3)(i) requirement that risk 

management policies, procedures and 

systems be subject to periodic review 

and annual approval by the Board 40 and 

the Rule 17Ad–22(e)(2)(v) requirement 

that governance arrangement ‘‘specify 

clear and direct lines of 

responsibility.’’ 41

The CPC Charter would continue to 

provide that the committee oversees the 

corporate plan and corporate budget and 

makes recommendations to the Board 

regarding their approval. However, the 

proposed changes would clarify that the 

corporate plan and budget are annual 

arrangements and that the committee 

oversees their alignment with OCC’s 

business strategy. In addition, a new 

provision would require management to 

provide a quarterly report to the 

committee that contains information on 

OCC’s performance against the 

corporate plan and the budget.42

The CPC Charter would continue to 

provide that the committee oversees 

OCC’s capital plan and would be 

revised to clarify that this oversight 

includes the written policies adopted 

thereunder, which include OCC’s fee, 

dividend and refund policies (which are 

existing responsibilities of the CPC). 

Revisions also would clarify that the 

committee must review the capital plan 

at least once every twelve months and 

that the committee makes 

recommendations to the Board 

concerning capital requirements, refund 

payments, and dividend payments. In 

addition, a provision would be added to 

require management to provide a 

quarterly performance report to the 

committee against the capital plan. 

OCC proposes to revise the CPC 

Charter to provide that the Committee 

would oversee and monitor the 

activities of OCC’s Administrative 

Committee, including the approval of 

the Administrative Committee’s charter 

and changes thereto and of the members 

of the Administrative Committee. OCC 

believes that these allocations of 

responsibility are appropriate given the 

CPC’s current oversight of the 

Administrative Committee, whereby the 

CPC is responsible for, among other 

things, appointing members of the 

Administrative Committee and 

overseeing and monitoring the activities 

of the Administrative Committee with 

respect to retirement and retirement 

savings plans. 

In addition, OCC proposes changes to 

clarify the role that the committee plays 

in oversight of succession planning 

regarding OCC’s Management 

Committee. A new provision would also 

provide that the committee must review 

the results of Management Committee 

succession planning activities at least 

once every twelve months. 

Regarding the committee’s review of 

Public Director compensation and the 

recommendations that it provides to the 

Board related thereto, a requirement 

would be added to the CPC Charter for 

the committee to engage in these 

activities not less than once every two 

years. OCC believes that a two year 

period is appropriate for such a review 

because the overall trends in industry 

compensation generally do not change 

dramatically from year to year. The CPC 

would continue to look at overall Public 

Director compensation each year for 

informational purposes, but it would 

not be required to perform a full review 

of each of the components of Public 

Director compensation packages and 

recommend adjustments to the Board on 

a yearly basis. 

The CPC Charter would also be 

amended to clarify that that committee 

is not authorized to adopt or amend 

compensation, retirement and welfare 

benefit plans that require Board 

approval and to add a new requirement 

that the committee must review OCC’s 

insurance program at least once every 

twelve months. 

Certain specific responsibilities stated 

in the CPC Charter would be removed 

in favor of a more general statement that 

the committee is required to perform 

activities consistent with the CPC 

Charter as it deems necessary or 

appropriate or as are delegated to the 

committee by the Board, furthering the 

purposes of the Rule 17Ad–22(e)(2)(v) 

requirement that a covered clearing 

agency’s governance arrangements 

specify clear and direct lines of 

responsibility.43 For example, an 

existing provision would be removed 

that states that the committee reviews 

special financial matters as requested by 

the Board. Provisions would also be 

removed that specifically address the 

committee’s review and approval of 

policies and programs regarding salary 

compensation and incentive 

compensation and its review of material 

changes to executive management 

benefits. 

GNC Charter 

OCC also proposes changes to its GNC 

Charter. The key aspects of the proposed 

changes regarding the GNC Charter 

include: 

• New responsibility for review and 

approval of related party transactions; 

and 

• New responsibility for advising on 

matters pertaining to director leadership 

development and succession planning. 

OCC proposes to amend the GNC 

Charter to establish new responsibilities 

for the GNC to approve all material 

changes to written policies concerning 

related party transactions and 

recommend such changes to the Board 

for approval. The GNC Charter would 

also be amended to provide that the 

GNC shall review and, if appropriate, 

approve or ratify any related party 

transactions involving OCC in 

accordance with the written policy 

governing such transactions. Because 

the GNC is already responsible for the 

review of conflicts of interests of 

directors and the manner in which such 

conflicts will be monitored and 


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44 17 CFR 240.17Ad–22(e)(2)(iv). 45OCC also proposes to reframe the introductory 

paragraph of the GNC charter to explicitly reference 

relevant provisions of Rule 17Ad–22(e)(2) and 

specify that the GNC is responsible for assessing the 

clarity and transparency of OCC’s governance 

arrangements, consistent with Rule 17Ad– 

22(e)(2)(i). See 17 CFR 240.17Ad–22(e)(2)(i). 46For example, rather than providing that the 

GNC would work toward developing a Board with 

a broad spectrum of experience and expertise, OCC 

proposes to provide that the GNC shall identify, for 

purposes of making recommendations to the Board, 

the criteria, skills, experience, expertise, attributes 

and professional backgrounds (collectively, the 

‘‘Standards’’) desirable in directors to ensure the 

Board is able to discharge its duties and 

responsibilities. In this same vein, OCC proposes to 

delete language providing that the GNC is 

responsible for recommending to the Board for 

approval and overseeing the implementation and 

effectiveness of OCC’s policies and procedures for 

identifying and reviewing Board nominee 

candidates, including the criteria for Board 

nominees. OCC believes that this deletion is 

appropriate because it is adequately covered by the 

other provisions in the GNC charter regarding 

directors’ qualifications, as revised, and 

contemplates that the Standards are approved by 

the Board. These changes are designed to be 

consistent with Rule 17Ad–22(e)(2)(iv) (regarding 

the establishment of governance arrangements that 

ensure ‘‘board of directors and senior management 

have appropriate experience and skills to discharge 

their duties and responsibilities’’). See 17 CFR 

240.17Ad–22(e)(2)(iv). 

47OCC believes this change would help ensure 

that the committee’s time and resources would be 

utilized appropriately, furthering the purpose of 

Rule 17Ad–22(e)(2)(ii) requiring that a covered 

clearing agency’s governance arrangements 

prioritize the ‘‘efficiency’’ of the covered clearing 

agency. See 17 CFR 240.17Ad–22(e)(2)(ii). 

48This is intended to be consistent with 17 CFR 

17Ad–22(e)(2)(iii) (requiring governance 

arrangements that support the ‘‘public interest 

requirements’’ in 17 U.S.C. 78q–1). 

49 Id. 

50See OCC By-Law Article III, Sections 5 and 6A. 

OCC proposes to specify in the GNC Charter that 

the GNC’s role in this context applies specifically 

to Public Directors and Member Directors to 

promote consistency with the By-Laws. 

51The RC Charter currently provides that the 

committee is responsible for overseeing OCC’s 

overall ERM framework, including ‘‘reviewing 

material policies and processes relating to (i) 

membership criteria and financial safeguards, (ii) 

member and other counterparty risk exposure 

assessments, (iii) liquidity requirements and 

maintenance of financial resources, (iv) risk 

modeling and assessments, (v) default management 

planning, and (vi) risks related to new initiatives.’’ 

As described in greater detail below, the revised 

descriptions in the RC Charter regarding its 

oversight of these areas would continue to involve 

responsibilities related to credit, market, liquidity 

and systemic risk but would no longer include 

responsibility for overseeing those aspects related to 

the ERM program. The committee would also 

continue to be responsible for identifying risks 

associated with its responsibilities that should be 

escalated to the Board for its review and 

consideration. 

resolved, OCC believes that it is 

appropriate for the GNC to assume the 

additional responsibility of reviewing 

related party transactions. OCC also 

believes that it would be appropriate for 

the GNC to advise the Board on matters 

pertaining to director leadership and 

development to promote compliance 

with the Rule 17Ad–22(e)(2)(iv) 44

requirement that OCC’s governance 

arrangements establish that Board 

directors have appropriate experience 

and skills to discharge their duties and 

responsibilities.45

OCC also proposes a number of other 

changes to the GNC charter, which 

include: (i) Reframing the GNC’s 

responsibilities with respect to ensuring 

that directors are appropriately 

qualified,46 (ii) removing the ability for 

a designee of the chair of the GNC to 

call an additional meeting beyond the 

four times per year that the GNC will 

meet,47 (iii) specifying that the GNC 

shall review the composition of the 

Board for consistency with public 

interest and regulatory requirements at 

least every three years rather than 

periodically,48 (iv) expanding the GNC’s 

yearly review of the Board Charter for 

consistency with the public interest and 

other regulatory requirements to also 

include a review of the charters of the 

Board committees,49 (v) specifying that 

the GNC shall identify risk issues that 

should be escalated to the Board for its 

review and consideration, and (vi) 

providing that the GNC shall annually 

review and advise the Board with regard 

to whether directors are independent as 

defined by the Board. In addition, OCC 

proposes to revise the GNC charter to no 

longer provide that the GNC is 

responsible for recommending to the 

Board candidates for nomination for 

election or re-election by the 

stockholders and any Board vacancies 

that are to be filled by the Board. The 

requirement that the GNC nominate 

candidates is provided explicitly in the 

By-Laws, and OCC further believes that 

this responsibility is adequately 

captured in OCC’s revised description of 

the GNC’s role to identify, screen, and 

review individuals qualified to be 

elected or appointed to serve as Member 

Directors or Public Directors.50

RC Charter 

OCC also proposes a number of 

changes to its RC Charter. The key 

aspects of the proposed changes 

regarding the RC Charter include: 

• Transition of responsibilities 

regarding Enterprise Risk Management 

(‘‘ERM’’) to the Board; 

• Increased responsibilities with 

respect to OCC’s risk management 

related to credit, collateral, liquidity and 

third party risks; 

• Transfer of the oversight of Clearing 

Member investigations and enforcement 

matters to the RC; and 

• Introduction of mandatory periodic 

reporting on the effectiveness of OCC’s 

management of risks. 

OCC proposes to amend the RC 

Charter’s statement of the committee’s 

responsibilities. First, the RC Charter 

currently provides that the RC assists 

the Board in overseeing OCC’s policies 

and processes for identifying and 

addressing strategic, operational and 

financial (e.g., credit, market, liquidity 

and systemic) risks. This would be 

replaced by a narrower and more 

specific statement that the RC would 

have responsibility for assisting the 

Board in its oversight of financial, 

collateral, risk model and third party 

risk management processes.51 In 

addition, the oversight of responsibility 

for Clearing Member investigations and 

enforcement outcomes of disciplinary 

actions would be transferred from the 

AC to the RC as the RC has the required 

expertise to properly oversee the 

process given its current responsibility 

for overseeing the framework for 

Clearing Membership, including (i) 

periodically reviewing and revising, as 

appropriate, OCC’s initial and ongoing 

requirements for Clearing Membership, 

(ii) overseeing the processes established 

for reviewing and monitoring Clearing 

Membership (including in respect of the 

continuance of potentially problematic 

members), and (iii) making 

recommendations to the Board, as 

applicable, for final determinations in 

respect of the foregoing. 

The committee would also continue 

to be responsible for functions delegated 

to it under the By-Laws and Rules and 

as may be delegated to it by the Board. 

A removal of continued responsibility 

for strategic and operational risks would 

be consistent with additional changes to 

the RC Charter that provide that the RC 

would no longer have responsibilities 

related to the ERM program and such 

responsibilities would be transitioned to 

the Board (which is discussed in further 

detail below). OCC believes that these 

changes are appropriate because issues 

regarding enterprise risk management 

are central to OCC’s comprehensive 

management of risk and would therefore 

benefit from the experience and 

attention of the full Board. 

Corresponding changes would also be 

made to clarify that the committee has 

an oversight role regarding its 

responsibilities and that it remains OCC 

management’s responsibility to identify, 

manage, monitor and report risks in 

these areas. 

A clarifying statement would also be 

added to the RC Charter to state that the 

RC is required to perform its 

responsibilities in accordance with the 

provisions of the RC Charter and 

applicable regulatory requirements. A 


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52 17 CFR 240.17Ad–22(e)(2)(v), (e)(3)(iii) and 

(iv). 

53For example, the report regarding the 

effectiveness of the management of credit exposures 

would include the results of: (i) A comprehensive 

analysis of OCC’s existing stress testing scenarios, 

models and underlying parameters and 

assumptions, and (ii) a sensitivity analysis of OCC’s 

margin models and a review of the associated 

parameters and assumptions for back testing. 

54The committee would also be required to 

review the adequacy of OCC’s secured committed 

liquidity facilities at least once every twelve months 

and recommend the size and composition of such 

facilities to the Board for approval. 

55OCC believes that this quarterly reporting helps 

specify clear and direct lines of responsibility in 

OCC’s governance arrangements by ensuring that 

management keeps the RC apprised of OCC’s 

ongoing performance on these matters, which in 

turn will allow the RC to more effectively carry out 

its oversight functions and the responsibilities 

associated therewith. See 17 CFR 240.17Ad– 

22(e)(2)(v) and (e)(3). 

56 17 CFR 240.17Ad–22(e)(3)(i). 

57This would include the review and approval of 

OCC’s risk model validation plan, plan deviations, 

and related reports and recommendations by OCC’s 

Chief Risk Officer (‘‘CRO’’). 

58 17 CFR 240.17Ad–22(e)(3)(i). 

59 17 CFR 240.17Ad–22(e)(3)(ii). 60 In relevant part, the RC Charter states the 

following. ‘‘The Committee shall review and have 

the authority to approve at least once every twelve 

months the adequacy of OCC’s Recovery and 

Orderly Wind-Down Plan and recommend approval 

thereof to the Board. The Committee shall have the 

authority to approve all material changes to the 

Recovery and Orderly Wind-Down Plan and 

recommend such changes to the Board.’’ 

61 17 CFR 240.17Ad–22(e)(3)(iv). 

62 17 CFR 240.17Ad–22(e)(2)(v). 

new provision would provide that, from 

time to time, the committee may receive 

reports and guidance relating to 

financial risk issues from, among others, 

OCC’s Financial Risk Advisory Council 

(‘‘FRAC’’). The committee would 

consider and discuss such reports in 

respect of financial risk issues that may 

impact the options and futures 

industries. The committee would take 

such guidance into account in the 

exercise of its fiduciary judgment and 

the performance of its functions and 

responsibilities. 

Regarding meetings of the RC, a 

change would be made to the RC 

Charter to specify that joint meetings 

with other Board committees count 

toward the requirement to meet at least 

six times a year. A change would also 

clarify that in-person attendance of 

meetings is preferred. 

In connection with the RC no longer 

having responsibilities regarding the 

ERM program, several related provisions 

would be removed from the RC Charter. 

For example, the committee would no 

longer have responsibility to oversee the 

structure, staffing and resources of the 

ERM program or approve its goals and 

objectives on an annual basis. 

Additionally, it would no longer be 

responsible for reviewing OCC’s risk 

appetite statements and risk tolerances 

because the Board would assume 

responsibility for approval of these 

matters. 

As noted, the proposed changes to the 

RC Charter would clarify the RC’s broad 

responsibilities for overseeing credit, 

collateral, liquidity and third party risks 

in a manner consistent with the Rule 

17Ad–22(e)(3)(iii) and (iv) requirements 

that risk management personnel be 

provided with sufficient authority, 

resources, independence, and access to 

the board of directors, as well as a direct 

reporting line to and oversight by the 

RC, and with the Rule 17 Ad–22(e)(2)(v) 

requirement that OCC’s governance 

arrangements specify clear and direct 

lines of responsibility.52 The RC Charter 

currently contains provisions that 

address the responsibility that the 

committee has for these areas, but they 

would be removed in favor of the more 

specific provisions described below. At 

least once every twelve months the 

committee would be required to review 

the adequacy of OCC’s management of 

credit, collateral, liquidity, and third 

party risks. In connection with these 

responsibilities, the RC would receive 

monthly reports from OCC management 

regarding the effectiveness of OCC’s 

management of credit exposures 53 and 

liquidity risks.54 Management would 

also provide the committee with 

quarterly reports regarding the 

effectiveness of OCC’s management of 

collateral and third party risks.55 And, 

the RC would also be responsible for 

approval of all material changes to 

written policies regarding risk 

management in these areas and 

recommending such changes to the 

Board, consistent with the Rule 17Ad– 

22(e)(3)(i) requirement that a covered 

clearing agency’s risk management 

policies, procedures and systems be 

subject to periodic review and annual 

approval by the Board.56

The RC Charter would continue to 

provide that the committee has 

responsibility regarding OCC’s risk 

models, including margin models, but it 

would be revised to more specifically 

identify the committee’s oversight role 

regarding model validations,57 its 

responsibility for approving any 

material changes to written policies 

regarding model risk management, and 

for recommending any such change to 

the Board, consistent with the Rule 

17Ad–22(e)(3)(i) requirement that a 

covered clearing agency’s risk 

management policies, procedures and 

systems be subject to periodic review 

and annual approval by the Board.58

Responsibilities would also be made 

explicit in connection with the review 

and approval of any new products that 

materially impact OCC’s established risk 

profile or introduce novel or unique 

financial, risk model and third party 

risks. The RC would refer any such new 

products that it approves to the Board 

for its potential approval. 

The RC Charter would also be 

amended to codify the committee’s 

existing responsibility to oversee OCC’s 

Recovery and Orderly Wind-down Plan, 

consistent with the requirement in Rule 

17Ad–22(e)(3)(ii).59 At least once every 

twelve months, this would include 

reviewing the adequacy of the plan. If 

the committee approves the plan, it 

would next recommend the plan to the 

Board for potential Board approval. The 

committee would also have 

responsibility for reviewing and 

approving any material changes to the 

plan; however, in the event the 

committee approves any such changes, 

it would in turn recommend the 

changes to the Board for its potential 

approval.60

The committee would continue to 

have responsibility regarding the 

structure and staffing of OCC’s financial 

risk management group; however, detail 

would be added to the RC Charter to 

clarify the same responsibility for OCC’s 

corporate risk management functions 

and that the RC must review structure 

and staffing in these areas at least once 

every twelve months. A provision 

would also be added to provide that the 

committee would review and approve 

the CRO’s goals and objectives, and any 

material changes thereto, at least once 

every twelve months. OCC believes 

these changes are consistent with the 

Rule 17Ad–22(e)(3)(iv) requirement that 

the RC provide oversight of risk 

management personnel,61 as well as the 

Rule 17Ad–22(e)(2)(v) requirement that 

a covered clearing agency’s governance 

arrangements provide for clear and 

direct lines of responsibility.62

As noted above, OCC also proposes to 

amend the RC Charter to transfer 

responsibility for reviewing the 

investigation and enforcement outcomes 

of disciplinary actions taken by OCC 

against Clearing Members from the AC 

to the RC. OCC believes that the RC is 

appropriately situated to review 

disciplinary actions against Clearing 

Members given the committee’s broader 

role in overseeing OCC’s management of 

third party risks, which includes OCC 

counterparties such as Clearing 

Members. Finally, the RC Charter would 

continue to provide that the RC reviews 

the results of internal and external 

audits and regulatory examinations. 

However, a statement would be added 


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63OCC proposes that the TC would oversee and 

receive quarterly reports from management that 

provide information on: (i) Executing on major IT 

initiatives, technology architecture decisions (as 

applicable) and IT priorities as well as overall IT 

performance; (ii) the effectiveness of the 

management of information security risks; (iii) 

OCC’s Business Continuity and Disaster Recovery 

Programs, including the progress on executing the 

annual test plan and achieving recovery time 

objectives; and (iv) major operational initiatives and 

metrics on the effectiveness of OCC’s operations 

with reference to key indicators. OCC believes that 

such reports would provide the TC with the 

necessary information to discharge its oversight 

duties and responsibilities appropriately and will 

facilitate dialogue between the TC and OCC’s senior 

IT management team. OCC believes that this 

reporting also helps specify clear and direct lines 

of responsibility in OCC’s governance arrangements 

by ensuring that management keeps the TC 

apprised of OCC’s ongoing performance on these 

matters, which in turn will allow the TC to more 

effectively carry out its oversight functions and the 

responsibilities associated therewith. See 17 CFR 

240.17Ad–22(e)(2)(v) and (e)(3). 

64 17 CFR 240.17Ad–22(e)(2)(v). 

65OCC proposes similar changes to the TC 

Charter with respect to certain responsibilities of 

the TC. For example, OCC proposes to reframe the 

TC’s responsibility to monitor and assess OCC’s 

management of IT-related compliance risks as a 

responsibility to monitor and oversee the overall 

adequacy of OCC’s IT and operational control 

environment, including the implementation of key 

controls in response to regulatory requirements. 

66 17 CFR 240.17Ad–22(e)(3). 

67OCC’s CGP and Board Charter are available at 

http://www.theocc.com/about/corporateinformation/what-is-occ.jsp. 

68 17 CFR 240.17Ad–22(e)(2)(i). 

to clarify that the committee is 

responsible for reviewing third party 

assessment reports as to financial, 

collateral, risk model and third party 

risk management processes and for 

reviewing OCC management’s 

remediation efforts pertaining to any 

such examination and reports. 

TC Charter 

In addition, OCC proposes a number 

of changes to its TC Charter. Key aspects 

of the proposed changes regarding the 

TC Charter include: 

• New responsibility for oversight of 

material changes to the operational 

execution and delivery of core clearing 

and settlement services with the 

authority to recommend approval 

thereof to the Board; 

• New responsibility for OCC’s 

operational initiatives, including 

approving major information technology 

(‘‘IT’’) and operational initiatives, 

recommending any major capital 

expenditures to implement to the Board, 

and approving the information 

technology and operational budget for 

each calendar year; 

• New responsibility to review at 

least every twelve months the adequacy 

of OCC’s management of information 

security risks, approve all material 

changes to written polices related to the 

managing information security risks and 

recommend such changes to the Board; 

• Introduction of mandatory periodic 

reporting from management on major IT 

initiatives;63 and 

• New responsibility to oversee and 

receive a quarterly report from 

management on OCC’s Business 

Continuity and Disaster Recovery 

Programs. 

OCC proposes to amend the TC 

Charter to specify clear and direct lines 

of responsibility that provide that the 

TC’s role is one of oversight and that it 

remains the responsibility of OCC 

management to identify, manage, 

monitor and report on IT and other 

operational risks arising from OCC’s 

business activities, consistent with Rule 

17Ad–22(e)(2)(v).64 In addition, OCC 

proposes to amend the TC Charter so 

that it would no longer require that the 

TC work with or report to the AC and 

RC to monitor the quality and 

effectiveness of IT systems and 

processes that relate to or affect OCC’s 

internal control systems and risk 

management systems. As noted above in 

the discussion of common changes to 

the charters, however, the TC and any 

other committee or the Board would 

have certain authority to refer risks 

under their oversight to promote the 

smooth functioning of OCC’s 

governance arrangements. OCC also 

proposes to revise the TC Charter to 

remove specific references to the 

committee’s oversight of OCC’s physical 

security and instead more accurately 

describe the committee’s responsibility 

for overseeing the adequacy of OCC’s 

management of information security 

risks (which generally includes 

oversight of the confidentiality, 

integrity, and availability of OCC data; 

the security of the information systems 

used to process, transmit, and store OCC 

information; and the physical, 

personnel, procedural, administrative, 

and environment security disciplines). 

The TC Charter would continue to 

provide that the TC is responsible for 

assisting the Board in overseeing OCC’s 

IT strategy and other company-wide 

operational capabilities. OCC proposes, 

however, to delete certain general 

statements regarding the TC’s duty to 

make recommendations to the Board 

with respect to IT-related projects and 

investments and critically review the 

progress of such projects and/or 

technology architecture decisions. OCC 

proposes to replace these general 

statements with more specific duties of 

the TC to, for example, receive a report 

on management’s progress in executing 

on major IT initiatives, technology 

architecture decisions (as applicable) 

and IT priority, and review material 

changes to the operational execution 

and delivery of core clearing and 

settlement services as well as material 

changes to written policies concerning 

information security risk and to 

recommend such changes to the Board 

for approval.65

OCC also proposes to remove the 

language stating that the TC will 

‘‘periodically review and appraise . . . 

OCC’s crisis management plans,’’ and, 

instead, add language that the TC will 

oversee and receive a quarterly report 

on ‘‘OCC’s Business Continuity and 

Disaster Recovery Programs’’ as the 

crisis management plans are 

incorporated within its Business 

Continuity and Disaster Recovery 

Programs. As such, the proposed 

revision will better clarify the full 

oversight responsibility of the 

committee and better align with the 

internal practices at OCC. 

In addition, OCC proposes to amend 

the TC Charter to provide that the TC 

shall identify risk issues relating to 

areas that the TC oversees that should 

be escalated to the Board for its review 

and consideration. OCC believes that 

this change promotes compliance with 

the Rule 17Ad–22(e)(3) requirement to 

maintain a sound risk management 

framework for comprehensively 

managing risks that arise in or are borne 

by OCC by charging the TC with the task 

of identifying emerging risks that may 

arise over time.66

Board Charter 

As discussed above, OCC would 

amend its Board Charter by 

incorporating its existing CGP and 

retiring the separate CGP document. The 

title of the consolidated document 

would be changed to reflect that it 

represents OCC’s ‘‘Board of Directors 

Charter and Corporate Governance 

Principles.’’ Both the Board Charter and 

CGP are publicly available on OCC’s 

website today.67 OCC believes this step 

is appropriate to eliminate significant 

overlap between the contents of the two 

existing documents and thereby make 

the consolidated provisions in the Board 

Charter easier for Clearing Members and 

other OCC stakeholders to access, use 

and understand, and thereby further the 

purposes of Rule 17Ad–22(e)(2)(i) by 

improving the clarity and transparency 

of OCC’s governance arrangements.68

For example, the existing CGP and 

Board Charter each address aspects of 

the Board such as its size and 

composition. In addition, the Board 

Charter and CGP also cross-reference 

one another, such as regarding 


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69For example, the CGP provides in one instance 

that all materials for Board meetings are made 

available online by the office of the secretary. This 

particular provision in the CGP would not be 

imported and the Board Charter would be amended 

to provide that OCC operates a portal for the general 

dissemination of meeting and other written 

materials to directors to reflect how OCC actually 

operates. In addition, OCC proposes to make clear 

that Public Directors do not have term limits, 

consistent with the requirements in Article III, 

Section 6 of the OCC By-Laws. 

70See supra notes 16–18 and accompanying text. 

71 17 CFR 240.17Ad–22(e)(2)(iii). 

72 17 CFR 240.17Ad–22(e)(2)(iv). 

73 17 CFR 240.17Ad–22(e)(2)(v). 

74OCC would also provide as a guiding principle 

that the Board is, among other things, mindful of 

the public interest as it fulfills its duties by 

complying with the obligations imposed on it under 

relevant law and that it discloses major decisions 

to relevant stakeholders and the public. 17 CFR 

240.17Ad–22(e)(2)(iii). 

75 17 CFR 240.17Ad–22(e)(2)(v). 

76The amended Board Charter would further 

specify that the Board may form and delegate 

authority to committees and may delegate authority 

to one or more of its members and to one or more 

designated officers of OCC but would note that the 

Board would retain the obligation to oversee any 

such delegation or referral and assure itself that 

delegation and reliance on the work of any delegate 

is reasonable. Specifying this delegation in the 

Board Charter is consistent with the requirement in 

Rule 17Ad–22(e)(2)(v) that a covered clearing 

agency’s governance arrangements specify clear and 

direct lines of responsibility. See 17 CFR 240.17Ad– 

22(e)(2)(v). 

77As a further example, OCC proposes to revise 

the Board’s responsibility to oversee ‘‘OCC’s 

information technology strategy, infrastructure, 

resources and risks’’ to provide that the Board’s 

responsibility is to oversee ‘‘OCC’s technology 

infrastructure, resources, and capabilities to ensure 

resiliency with regard to OCC’s provision of its 

clearing, settlement, and risk management 

services.’’ OCC also proposes to remove oversight 

of human resources programs from the Board 

Charter because that responsibility has been 

delegated to the CPC. 

78For example, OCC also proposes to specify that 

the Board’s authority extends to performing such 

functions as it believes are appropriate or necessary, 

or as otherwise prescribed by rules or regulation, 

including OCC’s By-Laws and Rules, ‘‘or other 

policies.’’ This change is intended to clarify that the 

scope of the Board’s authority extends to all of 

OCC’s policies. 

79Pursuant to this broad responsibility, OCC 

believes that the functions and responsibilities of 

the Board would remain consistent notwithstanding 

certain proposed deletions or rephrasing regarding 

the existing list of responsibilities. For example, the 

Board Charter would no longer specify that the 

Board would review committee charters and reports 

of committee activities; however, it would 

nevertheless provide that the Board is responsible 

for establishing a written charter for each committee 

and that each committee would be responsible for 

providing an annual report to the Board regarding 

its activities. 

80 17 CFR 240.17Ad–22(e)(3)(i). 

81 17 CFR 240.17Ad–22(e)(3)(iii) and (iv). 

qualification standards for directors, 

term limitations, the number of 

meetings per year and the Board’s 

authority to hire specialists and 

advisors, which reduces clarity because 

it requires a reader to turn between the 

two documents to understand the 

Board’s operation. In incorporating the 

CGP within the proposed Board Charter, 

OCC would make changes to the 

contents of the CGP, as appropriate, to 

conform the existing provisions to the 

structure and organization of the Board 

Charter and related requirements in the 

By-Laws and Rules.69 However, the 

majority of the provisions in the CGP 

would be incorporated in their existing 

form and these provisions would 

address in the Board Charter, for 

example, the size of the Board and its 

composition, membership criteria, 

appointment of the GNC, the selection 

of Member, Public, Exchange and 

Management Directors, conduct matters, 

ethics and conflicts of interest, 

compensation, access to senior 

management, and Board and Board 

committee evaluations. 

As a result of these incorporated 

provisions, OCC proposes to remove 

certain existing provisions in the Board 

Charter that specifically reference or are 

duplicative of more comprehensive 

descriptions from the CGP or where the 

imported text from the CGP otherwise 

covers the more truncated discussions 

of these items in the Board Charter. 

Specifically, OCC’s discussions in the 

Board Charter would be supplanted by 

more detailed explanations drawn from 

the CGP with respect to: (i) Board 

composition; (ii) qualification standards 

for directors; (iii) election of directors, 

resignation and disqualification; (iv) 

tenure, term and age limitations; and (v) 

calling of Board meetings, selection of 

agenda items, and attendance. 

OCC also proposes to amend the 

Board Charter to set forth certain key 

considerations and responsibilities in 

the Board Charter consistent with Rule 

17Ad–22 that include and expand upon 

those described above in connection 

with the discussion of proposed changes 

that are common to the charters.70 These 

include providing that the Board shall 

exercise its authority to provide for 

governance arrangements that, among 

other things, ‘‘support [applicable] 

public interest requirements . . . and 

the objectives of owners and 

participants,’’ 71 establish that the Board 

and senior management ‘‘have 

appropriate experience and skills to 

discharge their duties and 

responsibilities,’’ 72 specify ‘‘clear and 

direct lines of responsibility’’ 73 and 

consider the interests of Clearing 

Members’ customers.74 OCC also 

proposes changes designed to provide 

for ‘‘clear and direct lines of 

responsibility’’ 75 by noting that the 

Board has explicitly delegated 

management of specific risks to the 

Board committees and to the extent a 

specific risk is not retained by the Board 

or otherwise assigned to a Board 

committee, such risk shall be overseen 

by the RC.76

Currently, the Board Charter sets forth 

a number of functions and 

responsibilities of the Board. OCC 

proposes to reorganize this list of 

functions and responsibilities in a new 

section regarding the mission of the 

Board and proposes non-substantive 

changes to some of the descriptions of 

the Board’s responsibilities. For 

example, the Board Charter currently 

provides that the Board is responsible 

for advising, approving, and overseeing 

OCC’s business strategies, including 

expansions of clearing and settlement 

services to new business lines, as well 

as monitoring OCC’s performance in 

delivering clearance and settlement 

services. OCC proposes to amend the 

Board Charter to provide that the Board 

is responsible for overseeing OCC’s 

business strategies, including 

expansions of clearance and settlement 

services to new business lines and 

product types, to ensure they reflect the 

legitimate interests of relevant 

stakeholders and are consistent with the 

public interest.77 These changes are 

designed to improve the readability of 

the document as well as to specify 

additional, specific considerations of 

the Board with respect to particular 

responsibilities.78 OCC notes that the 

Board Charter would provide that the 

Board is responsible for the business 

and affairs of OCC and that the Board 

would continue to be responsible for 

performing such other functions as the 

Board believes appropriate or necessary 

or as otherwise prescribed by rules or 

regulations, including OCC’s By-Laws 

and Rules.79

In addition to the changes described 

above, OCC proposes to modify the 

description of the Board’s functions and 

responsibilities as part of the 

description of the mission of the Board 

to include: (i) Overseeing OCC’s 

governance structures and processes to 

ensure that the Board is positioned to 

fulfill its responsibilities effectively and 

efficiently consistent with applicable 

requirements and through performance 

assessments, consistent with the 

requirements of Rule 17Ad– 

22(e)(3)(i); 80 (ii) ensuring that risk 

management, compliance, and internal 

audit personnel have sufficient 

authority, resources, independence from 

management, access to the Board, and a 

direct reporting line to, and oversight 

by, certain committees, consistent with 

the requirements of Rules 17Ad– 

22(e)(3)(iii) and (iv); 81 (iii) ensuring that 

the audit committee of the Board is 


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82 17 CFR 240.17Ad–22(e)(3)(v). 

83See supra note 60 and accompanying text. 

84The Board Charter would provide more 

generally that the Board is responsible for 

overseeing OCC’s activities through regular 

assessments of Board and individual director 

performance. 

85OCC also proposes to amend the Board Charter 

to provide that the annual self-evaluations shall no 

longer include a focus on individual directors’ 

performances but will instead focus primarily on 

the performance of the Board and each committee 

as a whole. OCC has found that because not every 

director has the opportunity to work with each 

other director, focusing the annual self-evaluation 

on individual director performance is less effective 

than focusing on the performance of each 

committee as a whole. 

86However, the amended Board Charter would 

specify that the Board is responsible for approving 

the compensation of such officers. 

87Similarly, OCC proposes to amend the Board 

Charter to provide that the CEO, COO and CAO 

would have the authority to invite employees to 

Board meetings, that such officers encourage 

members of senior management to respond to 

questions posed by directors relating to their areas 

of expertise, and that directors shall coordinate 

access to members of senior management and 

outside advisors through such officers. The criteria 

for Board member eligibility would also be 

expanded to ensure that candidates’ experience and 

expertise are not only adequate to offer advice and 

guidance to the Executive Chairman, but also to the 

CEO, COO, and CAO. 

88 15 U.S.C. 78q–1. 

89 15 U.S.C. 78q–1(b)(3)(F). 

90 15 U.S.C. 78q–1(b)(3)(F). 

91See supra notes 18, 20, 22, 23, 27, 29, 31, 33, 

38, 41–48, 52, 55, 62–64, 71–76 and accompanying 

text for changes related to Rules 17Ad–22(e)(2). 17 

CFR 240.17Ad–22(e)(2). See supra notes 21, 26, 30, 

33–35, 38, 40, 42, 52, 55–56, 58–59, 60, 63, 66, 80– 

83 and accompanying text for changes related to 

Rules 17Ad–22(e)(3). 17 CFR 240.17Ad–22(e)(3). 

independent, consistent with the 

requirements of Rule 17Ad– 

22(e)(3)(v); 82 (iv) transitioning the 

overall oversight of ERM to the Board; 

and (v) assigning responsibility for risk 

decisions and policies to address 

decision-making during a crisis. The 

Board Charter would also be amended 

to codify the Board’s existing 

responsibility for overseeing and 

approving OCC’s Recovery and Orderly 

Wind-Down Plan.83

As noted above, OCC proposes to 

transfer responsibility for the oversight 

of ERM from the RC to the Board. The 

proposed change would allow the Board 

to retain responsibility for the 

comprehensive oversight of OCC’s 

overall risk management framework, 

while retaining the ability to delegate 

oversight of specific risks to designated 

committees, which would then report to 

and be subject to oversight by the Board. 

Moreover, shifting enterprise risk 

oversight responsibility from the RC to 

the Board would promote even further 

engagement by and attention from the 

Board regarding OCC’s risk universe and 

how such risks impact OCC’s strategic 

direction and priorities as well as 

provide for more meaningful dialogue 

and discussion at Board meetings. 

Moreover, it would alleviate the 

potential for overburdening the RC and 

establish clearer lines of oversight 

responsibilities for particular risks 

across the Board’s committees. 

Additionally, the expertise represented 

on the Board collectively would be 

available to provide appropriate 

guidance relative to each key risk within 

OCC’s risk universe. 

OCC also proposes a number of other 

changes to the Board Charter, such as 

deletion of the provision noting that the 

Member Vice Chairman of the Board has 

the responsibilities set forth in the ByLaws. OCC believes this is appropriate 

because the responsibilities of the 

Member Vice Chairman are already set 

forth in OCC’s By-Laws. OCC also 

proposes to amend the Board Charter to 

no longer specify that the Board is 

responsible for an annual selfevaluation of its performance and the 

performance of its committees and 

individual directors.84 Because the 

Board has delegated responsibility to 

the GNC for the annual self-evaluation 

of the Board and its committees, which 

is described in text that OCC proposes 

to import from the CGP, OCC believes 

that it is no longer necessary to specify 

that the Board would have this annual 

self-evaluation obligation.85 Similarly, 

OCC proposes to amend the Board 

Charter to no longer provide that the 

Board is responsible for evaluating and 

fixing the compensation of the 

Executive Chairman and certain other 

officers because the Board has delegated 

this responsibility to the CPC.86 Finally, 

OCC proposes to delete the current 

footnote one (1) from the Board Charter, 

which provides an example of an 

instance in which certain provisions of 

the By-Laws provide that the Board 

should not take action. The amended 

Board Charter would continue to 

provide that the Board’s responsibilities 

and duties are subject to any exceptions 

provided in OCC’s Amended and 

Restated Certificate of Incorporation or 

the By-Laws and Rules, but OCC 

believes that the footnote providing an 

example of such an instance is 

unnecessary and its deletion would 

improve readability of the Board 

Charter. 

OCC also proposes to amend the 

Board Charter to provide that a number 

of different activities related to the 

conduct and functioning of the Board 

would involve participation by or input 

from certain other officers of OCC that 

serve functions relevant to the topic 

being discussed. For example, with 

respect to setting the agenda for Board 

meetings, the Board Charter currently 

provides that the Executive Chairman, 

in consultation with other directors or 

officers of OCC, as well as the Corporate 

Secretary, will establish an agenda for 

Board meetings. OCC proposes to 

amend this provision to provide that the 

Executive Chairman and CEO, in 

consultation with the COO and CAO, 

other directors or officers of OCC, and 

the Corporate Secretary shall establish 

the agenda for Board meetings.87 These 

changes are designed to help specify 

clear and direct lines of responsibility 

and promote clear and transparent 

governance arrangements in the public 

interest pursuant to Rule 17Ad–22(e)(2) 

by making clear the roles and authority 

of certain officers and ensuring that 

input from additional officers is 

included where appropriate. 

(2) Statutory Basis 

OCC believes the proposed rule 

change is consistent with Section 17A of 

the Act 88 and the rules thereunder 

applicable to OCC. Section 17A(b)(3)(F) 

of the Act 89 requires, among other 

things, that the rules of a clearing 

agency be designed, in general, to 

protect investors and the public interest. 

When considered together, the proposed 

changes described herein are designed, 

in general, to clarify and assign certain 

responsibilities for the governance and 

oversight of OCC among the Board and 

its respective committees in order to 

provide for governance arrangements 

that are clear and transparent and that 

specify clear and direct lines of 

responsibility. In turn, these changes 

would help ensure that OCC has 

governance arrangements that are 

organized to support its ability to 

promptly and accurately serve Clearing 

Members and the markets for which it 

clears and effectively manage the range 

of risks that arise in the course of 

providing such clearance and settlement 

services. OCC therefore believes that the 

proposed rule change would provide for 

governance arrangements that are 

designed, in general, to protect investors 

and the public interest in a manner 

consistent with Section 17A(b)(3)(F) of 

the Act 90 and that are consistent with 

the rules thereunder, as discussed in 

further detail below.91

Common Changes 

As described in Item II.(A)(1) above, 

OCC believes that all of the proposed 

common changes to the charters are 

designed to provide for governance 

arrangements that clearly prioritize the 

safety and efficiency of OCC, support 

the public interest requirements in 


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92 15 U.S.C. 78q–1. 

93See supra notes 18, 23, and 47 and 

accompanying text. 

94See supra notes 18, 48–49, 71, and 74 and 

accompanying text. 

95See supra note 18 and accompanying text. 

96This same change would not be added to the 

Board Charter. It would also not be added to the 

GNC Charter because it is already addressed. 

97 15 U.S.C. 78q–1(b)(3)(F). 

98 17 CFR 240.17Ad–22(e)(2)(ii), (iii), and (vi). 

99See supra notes 20, 43, and 75–76 and 

accompanying text. 

100See supra notes 22–23 and accompanying text. 

101 15 U.S.C. 78q–1(b)(3)(F). 

102 17 CFR 240.17Ad–22(e)(2)(i). 

103 17 CFR 240.17Ad–22(e)(2)(v). 

104See supra note 27 and accompanying text. 

105 15 U.S.C. 78q–1(b)(3)(F). 

106 17 CFR 240.17Ad–22(e)(2)(i). 

Section 17A of the Act 92 and the 

objectives of owners and participants, 

and consider the interests of 

participants’ customers, securities 

issuers and holders, and other relevant 

stakeholders of OCC. First, the proposed 

rule change would require the Board 

and the committees to prioritize the 

safety and efficiency of OCC in carrying 

out their responsibilities.93 Second, the 

charters, as revised, would require the 

Board and the committees to carry out 

their responsibilities to generally 

support the stability of the broader 

financial system, which OCC believes 

requires them to act in a manner that 

would, in part, also promote the prompt 

and accurate clearance and settlement of 

securities transactions for the protection 

of investors and persons facilitating 

transactions by and acting on behalf of 

investors, which is one of the public 

interest findings in Section 17A of the 

Act.94 Third, the revised charters would 

require the Board and the committees to 

consider the legitimate interests of 

Clearing Members, customers of 

Clearing Members and other relevant 

stakeholders, taking into account 

prudent risk management standards 

(including systemic risk mitigation) and 

industry best practices, which is 

consistent with providing for 

governance arrangements that consider 

the interests of Clearing Member’s 

customers and other relevant 

stakeholders of OCC.95 Moreover, OCC 

would amend the committee charters to 

provide that in the event of a committee 

vacancy, the applicable committee 

would continue to undertake its 

responsibilities (including those 

enumerated above), so long as the 

remaining committee members are 

capable of satisfying the quorum 

requirement, to ensure that the 

committee can continue to effectively 

carry out its responsibilities in such a 

scenario.96 OCC believes the proposed 

changes would enhance the clarity of 

OCC’s Board and committee governance 

arrangements and help ensure that OCC 

has governance arrangements that are 

organized to support its ability to 

promptly and accurately serve Clearing 

Members and the markets for which it 

clears and effectively manage the range 

of risks that arise in the course of 

providing such clearance and settlement 

services and are therefore designed, in 

general, to protect investors and the 

public interest in a manner consistent 

with Section 17A(b)(3)(F) of the Act.97

OCC also believes the proposed changes 

are reasonably designed to establish, 

implement, maintain and enforce 

written policies and procedures 

reasonably designed to provide for 

governance arrangements that clearly 

prioritize the safety and efficiency of 

OCC, support the public interest 

requirements in Section 17A of the Act 

applicable to clearing agencies and the 

objectives of owners and participants, 

and consider the interests of 

participants’ customers, securities 

issuers and holders, and other relevant 

stakeholders of a covered clearing 

agency consistent with Rules 17Ad– 

22(e)(2)(ii), (iii) and (vi).98

OCC believes the proposed common 

changes also would help to provide 

governance arrangements that are clear 

and transparent and that specify clear 

and direct lines of responsibility. For 

example, all charters would be revised 

to clearly state that a role of the Board 

or the committee, as applicable, is to 

advise management. In addition, all of 

the charters would be amended to 

provide that the Board and the 

committees may delegate authority to 

one or more designated officers of OCC 

but that in any such instance the Board 

or the committee retains responsibility 

to oversee the activity and assure itself 

that the reliance on the work of any 

delegate is reasonable.99 As a further 

example, OCC also proposes 

amendments to acknowledge, where 

relevant, that its EC also serves as the 

CEO and therefore certain 

responsibilities and considerations that 

currently apply to the EC would also 

apply regarding the CEO. The charters 

would also be amended to specify clear 

and direct lines of responsibility by 

providing that, in cases where the Board 

or a committee has authority to approve 

reports or other matters that are 

provided to it, the Board or the 

committee is not obligated to approve 

and has clear means of recourse if it 

does not.100 In addition, committees 

would be required to submit their 

charters to the GNC for potential 

approval in addition to submitting them 

to the Board. OCC believes the proposed 

changes would enhance the clarity of 

OCC’s Board and committee governance 

arrangements and help ensure that OCC 

has governance arrangements that are 

organized to support its ability to 

promptly and accurately serve Clearing 

Members and the markets for which it 

clears and effectively manage the range 

of risks that arise in the course of 

providing such clearance and settlement 

services and are therefore designed, in 

general, to protect investors and the 

public interest in a manner consistent 

with Section 17A(b)(3)(F) of the Act.101

OCC also believes the proposed changes 

are reasonably designed to establish, 

implement, maintain and enforce 

written policies and procedures 

reasonably designed to provide for 

governance arrangements that are clear 

and transparent and that specify clear 

and direct lines of responsibility 

consistent with the requirements in 

Rules 17Ad–22(e)(2)(i) 102 and (v).103

OCC also proposes to make a number 

of changes to the charters to clarify that, 

where certain actions were required to 

be performed ‘‘annually’’ under the 

charters, those actions would now be 

required to occur ‘‘each calendar 

year.’’ 104 OCC believes that adding 

more specificity in its charters regarding 

the frequency of these activities would 

provide for governance arrangements 

that are clear and transparent by 

eliminating ambiguity as to when the 

Board or a committee is responsible for 

taking certain actions. OCC believes the 

proposed changes would enhance the 

clarity of OCC’s Board and committee 

governance arrangements and the 

effectiveness of the Board and Board 

committees’ oversight and are therefore 

designed, in general, to protect investors 

and the public interest in a manner 

consistent with Section 17A(b)(3)(F) of 

the Act.105 OCC also believes the 

proposed changes are reasonably 

designed to establish, implement, 

maintain and enforce written policies 

and procedures reasonably designed to 

provide for governance arrangements 

that are clear and transparent consistent 

with the requirements in Rule 17Ad– 

22(e)(2)(i).106

AC Charter Changes 

As described in Item II.(A)(1) above, 

OCC believes certain of the proposed 

changes applicable to the AC Charter are 

generally designed to achieve a risk 

management framework that provides: 

(i) Risk management and internal audit 

personnel with sufficient authority, 

resources, independence from 

management, and access to OCC’s 


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107See supra notes 35, 38, and accompanying 

text. See also supra notes 52 and 81 and 

accompanying text for similar changes to other 

charters. 

108See supra note 35 and accompanying text. See 

also supra notes 52, 62, and 81 and accompanying 

text for similar changes to other charters. 

109See supra note 82 and accompanying text 

(describing a change to the Board Charter to ensure 

an independent audit committee). 

110 15 U.S.C. 78q–1(b)(3)(F). 

111 17 CFR 240.17Ad–22(e)(3)(iii), (iv), and (v). 

112See supra note 29 and accompanying text. 

113 15 U.S.C. 78q–1(b)(3)(F). 

114 17 CFR 240.17Ad–22(e)(2)(v). 

115 15 U.S.C. 78q–1(b)(3)(F). 

116 17 CFR 240.17Ad–22(e)(3)(i). 

117 17 CFR 240.17Ad–22(e)(2)(v). 

Board; 107 (ii) risk management and 

internal audit personnel with a direct 

reporting line to, and oversight by, a risk 

management committee and an 

independent audit committee of the 

Board; 108 and (iii) an independent audit 

committee.109 For example, the AC 

Charter would be amended to clarify 

that the AC shall oversee the 

independence and objectivity along 

with the budget and resources of OCC’s 

internal audit department so that OCC’s 

risk framework provides internal audit 

personnel with sufficient authority, 

resources, independence from 

management, and access to the Board 

and a direct reporting line to, and 

oversight by, an independent audit 

committee of the Board. OCC also 

proposes to amend the AC charter to 

provide that the AC is authorized to 

review and approve OCC’s audited 

financial statements, oversee the timing 

and process for implementing a rotation 

of the engagement partner of the 

external auditor, and discuss certain 

significant issues with the external 

auditor. OCC believes that framing the 

AC’s responsibilities in this manner 

would provide appropriate flexibility 

for the committee to carry out its 

oversight and advisory responsibilities 

with respect to OCC’s internal audit 

function. OCC believes the proposed 

changes to the AC Charter would 

provide additional clarity regarding 

OCC’s governance arrangements and 

allow the AC to more effectively carry 

out its oversight functions concerning 

those matters for which it has 

responsibility and are therefore 

designed, in general, to protect investors 

and the public interest in a manner 

consistent with Section 17A(b)(3)(F) of 

the Act.110 OCC believes the proposed 

changes are also consistent with the 

requirements of Rules 17Ad– 

22(e)(3)(iii), (iv) and (v) 111 that OCC’s 

risk management framework provide: (i) 

Risk management and internal audit 

personnel with sufficient authority, 

resources, independence from 

management, and access to the board of 

directors; (ii) risk management and 

internal audit personnel with a direct 

reporting line to, and oversight by, a risk 

management committee and an 

independent audit committee of the 

board of directors; and (iii) an 

independent audit committee. 

OCC also believes that certain of the 

proposed amendments to the AC 

Charter are designed to provide for 

governance arrangements that specify 

clear and direct lines of responsibility. 

For example, OCC proposes to amend 

the AC Charter to establish the AC’s 

responsibility for reviewing the impact 

of litigation and other legal matters that 

may have a material impact on OCC’s 

financial statements and overseeing the 

staffing, resources, and budget of OCC’s 

compliance and audit departments.112

As an additional example, OCC 

proposes to amend the AC Charter to 

provide that certain mandatory reports 

must be sent to the AC for review, 

which OCC believes would help specify 

clear and direct lines of responsibility in 

OCC’s governance arrangements by 

ensuring that the AC remains apprised 

of OCC’s ongoing performance in 

respect of matters covered by the 

reports. OCC believes these proposed 

changes to the AC Charter would 

provide additional clarity regarding 

OCC’s governance arrangements and 

allow the AC to more effectively carry 

out its oversight functions concerning 

those matters for which it has 

responsibility and are therefore 

designed, in general, to protect investors 

and the public interest in a manner 

consistent with Section 17A(b)(3)(F) of 

the Act.113 OCC believes the proposed 

changes are also consistent with Rule 

17Ad–22(e)(2)(v),114 which requires 

OCC to provide for governance 

arrangements that specify clear and 

direct lines of responsibility. 

CPC Charter Changes 

As described in Item II.(A)(1) above, 

OCC believes that certain of the 

proposed changes applicable to the CPC 

Charter are designed to provide for 

governance arrangement that specify 

clear and direct lines of responsibility. 

For example, OCC proposes to amend 

the CPC Charter to clarify that the CPC 

assists the Board in overseeing risks 

related to OCC’s general business, 

regulatory capital, investments, 

corporate planning, compensation, and 

human capital in addition to assisting 

the Board in executive management 

succession planning and performance 

assessments. While the CPC Charter 

already addresses these aspects of the 

committee’s responsibilities generally, 

the proposed revisions are designed to 

emphasize the committee’s 

responsibility to help the Board oversee 

such risks and to clarify that the 

committee has an oversight role while it 

remains OCC management’s 

responsibility to identify, manage, 

monitor and report the associated risks. 

OCC also proposes to remove certain 

specific responsibilities stated in the 

CPC Charter in favor of a more general 

statement that the committee is required 

to perform activities consistent with the 

CPC Charter as it deems necessary or 

appropriate or as are delegated to the 

committee by the Board, which OCC 

believes further specifies clear and 

direct lines of responsibility. Changes 

would be made to clarify the role that 

the committee plays in oversight of 

succession planning regarding OCC’s 

Management Committee, and a new 

provision would also provide that the 

committee must review the results of 

Management Committee succession 

planning activities at least once every 

twelve months. Changes would also be 

made to clarify the CPC’s role with 

respect to the oversight of OCC’s 

Administrative Committee, including 

the CPC’s authority to approve the 

Administrative Committee charter. OCC 

believes that these allocations of 

responsibility are appropriate given the 

CPC’s current oversight of the 

Administrative Committee, whereby the 

CPC is responsible for, among other 

things, appointing members of the 

Administrative Committee overseeing 

and monitoring the activities of the 

Administrative Committee with respect 

to retirement and retirement savings 

plans. 

OCC believes these proposed changes 

to the CPC Charter would provide 

clarity regarding the responsibilities of 

the CPC and allow the CPC to more 

effectively carry out its oversight 

functions concerning those risks for 

which it has responsibility and are 

therefore designed, in general, to protect 

investors and the public interest in a 

manner consistent with Section 

17A(b)(3)(F) of the Act.115 Moreover, 

OCC believes the proposed changes to 

the CPC Charter are consistent with, 

among other provisions, the Rule 17Ad– 

22(e)(3)(i) requirement that risk 

management policies, procedures, and 

systems be subject to periodic review 

and annual approval by the Board 116

and the Rule 17Ad–22(e)(2)(v) 

requirement that governance 

arrangement specify clear and direct 

lines of responsibility.117


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118See supra note 46 and accompanying text. 

119 15 U.S.C. 78q–1(b)(3)(F). 

120 17 CFR 240.17Ad–22(e)(2)(iv). 

121 17 CFR 240.17Ad–22(e)(2)(v). 

122See supra notes 54–55, and 58, and 

accompanying text. See also supra notes 21, 33, 38, 

40, 42, 63, and 80 and accompanying text for 

similar changes with respect to other committee 

charters. 

123See supra note 55 and accompanying text. 

124 15 U.S.C. 78q–1(b)(3)(F). 

125 17 CFR 240.17Ad–22(e)(3)(i). 

126See supra note 59 and accompanying text. 

127 15 U.S.C. 78q–1(b)(3)(F). 

128 17 CFR 240.17Ad–22(e)(3)(ii). 

129 15 U.S.C. 78q–1(b)(3)(F). 

GNC Charter Changes 

As described in Item II.(A)(1) above, 

OCC believes that certain of the 

proposed changes applicable to the GNC 

Charter are designed to ensure that 

Board directors have appropriate 

experience and skills to discharge their 

duties and responsibilities and to ensure 

that OCC’s governance arrangements 

specify clear and direct lines of 

responsibility. For example, OCC 

proposes to amend the GNC Charter to 

reframe the GNC’s responsibilities with 

respect to ensuring that directors are 

appropriately qualified,118 and to 

specify that the GNC shall review the 

composition of the Board for 

consistency with public interest and 

regulatory requirements at least every 

three years rather than periodically. 

OCC also proposes to expand the GNC’s 

yearly review of the Board Charter for 

consistency with the public interest and 

other regulatory requirements to also 

include a review of the charters of the 

Board committees, to specify that the 

GNC shall identify risk issues that 

should be escalated to the Board for its 

review and consideration, and to 

provide that the GNC shall annually 

review and advise the Board with regard 

to whether directors are independent as 

defined by the Board. Under the 

proposed rule change, the GNC Charter 

would also be amended to assign new 

responsibility for advising on matters 

pertaining to director leadership 

development and succession planning. 

OCC believes that these proposed 

changes to the GNC Charter would 

enhance OCC’s governance 

arrangements by helping to ensure that 

OCC’s directors are appropriately 

qualified and would help promote clear 

and direct lines of responsibility and are 

therefore designed, in general, to protect 

investors and the public interest in 

accordance with Section 17A(b)(3)(F) of 

the Act.119 OCC also believes the 

proposed changes are consistent with 

the requirement of Rule 17Ad– 

22(e)(2)(iv) 120 that a covered clearing 

agency’s governance arrangements 

establish that Board directors have 

appropriate experience and skills to 

discharge their duties and 

responsibilities and the Rule 17Ad– 

22(e)(2)(v) requirement that a covered 

clearing agency’s governance 

arrangements specify clear and direct 

lines of responsibility.121

RC Charter Changes 

As described in Item II.(A)(1) above, 

OCC believes that certain of the 

proposed changes applicable to the RC 

Charter are designed to provide for a 

sound risk management framework for 

managing legal, credit, liquidity, 

operational, general business, 

investment, custody and other risks that 

arise in or are borne by OCC, including 

risk management policies, procedures, 

and systems that are designed to 

identify, measure, monitor, and manage 

such risks and that are subject to review 

on a periodic basis and approved 

annually by the Board.122 The RC 

Charter currently contains provisions 

that address certain narrow 

responsibilities that the committee has 

for the oversight of credit, collateral, 

liquidity and third party risks. These 

provisions would be removed in favor of 

new provisions that more accurately 

reflect the RC’s broader responsibility to 

oversee these particular risks. For 

example, changes to the RC Charter, 

including those related to the 

committee’s general function and 

responsibilities, would be made to 

better align the RC’s responsibilities 

with OCC’s regulatory requirements and 

would provide that, among other things, 

the RC would be required to review 

OCC’s management of credit, collateral, 

liquidity, and third party risks at least 

once every twelve months and that 

management would be required to 

provide the RC with monthly reports 

regarding the effectiveness of OCC’s 

management of credit exposures and 

liquidity risks and quarterly reports 

regarding the effectiveness of OCC’s 

management of collateral and third 

party risks.123 OCC believes the 

proposed changes to the RC Charter 

would provide additional clarity 

regarding OCC’s governance 

arrangements and improve the 

effectiveness of the RC’s oversight, 

particularly with respect to OCC’s 

credit, collateral, liquidity and third 

party risks, and are therefore designed, 

in general, to protect investors and the 

public interest in accordance with 

Section 17A(b)(3)(F) of the Act.124 OCC 

also believes that the proposed changes 

to the RC Charter are generally 

consistent with, among other 

provisions, the requirements of Rule 

17Ad–22(e)(3)(i) 125 to establish, 

implement, maintain and enforce 

written policies and procedures 

reasonably designed to maintain a 

sound risk management framework for 

managing legal, credit, liquidity, 

operational, general business, 

investment, custody and other risks that 

arise in or are borne by OCC, including 

risk management policies, procedures, 

and systems that are designed to 

identify, measure, monitor, and manage 

such risks and that are subject to review 

on a periodic basis and approved 

annually by the Board. 

OCC also proposes changes to the RC 

Charter to specify the RC’s 

responsibilities concerning plans for 

OCC’s recovery and orderly wind-down 

(‘‘Recovery and Orderly Wind-down 

Plan’’).126 OCC believes the proposed 

changes would provide additional 

clarity regarding OCC’s governance 

arrangements concerning matters of 

critical importance and are therefore 

designed, in general, to protect investors 

and the public interest in accordance 

with Section 17A(b)(3)(F) of the Act.127

OCC also believes these proposed 

changes to the RC Charter are consistent 

with the requirements in Rule 17Ad– 

22(e)(3)(ii) that OCC maintain a sound 

risk management framework that 

includes plans for the recovery and 

orderly wind-down of the covered 

clearing agency necessitated by credit 

losses, liquidity shortfalls, losses from 

general business risk, or any other 

losses.128

Finally, OCC proposes to reassign the 

oversight of the investigations and 

enforcement outcomes of disciplinary 

actions taken by OCC against Clearing 

Members to the RC because OCC 

believes that the RC is more 

appropriately situated to review 

investigations and enforcement 

outcomes of disciplinary actions given 

its oversight of OCC’s Clearing 

Membership framework. OCC believes 

the proposed changes to the RC Charter 

would establish clear and direct 

responsibility for the oversight of 

investigations and enforcement 

outcomes of disciplinary actions taken 

by OCC by an appropriate committee of 

OCC’s Board and are therefore designed, 

in general, to protect investors and 

the public interest in accordance with 

Section 17A(b)(3)(F) of the Act 129 and 

are consistent with the Rule 17Ad– 

22(e)(2)(v) requirement that a covered 

clearing agency’s governance 


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130 17 CFR 240.17Ad–22(e)(2)(v). 

131 15 U.S.C. 78q–1(b)(3)(F). 

132 17 CFR 240.17Ad–22(e)(2)(v). 

133 17 CFR 240.17Ad–22(e)(3). 

134See supra note 68 and accompanying text. 

135See supra note 82 and accompanying text. 

136 15 U.S.C. 78q–1(b)(3)(F). 

137 17 CFR 240.17Ad–22(e)(2)(i). 

138 17 CFR 240.17Ad–22(e)(3). 

139 17 CFR 240.17Ad–22(e)(3)(iii). 

140 15 U.S.C. 78q–1(b)(3)(F). 

arrangements specify clear and direct 

lines of responsibility.130

TC Charter Changes 

As described in Item II.(A)(1) above, 

OCC believes that certain of the 

proposed changes applicable to the TC 

Charter are designed to provide for 

governance arrangements that specify 

clear and direct lines of responsibility 

and to ensure that OCC maintains a 

sound risk management framework for 

comprehensively managing risks that 

arise in or are borne by OCC. For 

example, OCC proposes to amend the 

TC Charter to provide that the TC shall 

identify risk issues relating to areas that 

the TC oversees that should be escalated 

to the Board for its review and 

consideration. As a further example, 

OCC also proposes to amend the TC 

Charter to provide that the TC’s role is 

one of oversight and that it remains the 

responsibility of OCC management to 

identify, manage, monitor and report on 

IT and other operational risks arising 

from OCC’s business activities while the 

Committee will oversee the progress in 

executing on major IT initiatives, 

technology architecture decisions and 

IT priorities. Other language was also 

revised to more clearly describe the TC’s 

responsibilities related to the oversight 

of internal controls, and review of the 

crisis management plans as these topics 

often fall within other areas (such as 

Business Continuity and Disaster 

Recovery). OCC believes these revisions 

will strengthen the transparency and 

clarity of its governance structure. 

Finally, OCC would revise the TC 

Charter to remove specific references to 

the committee’s oversight of OCC’s 

physical security and to more accurately 

describe the committee’s responsibility 

for overseeing the adequacy of OCC’s 

management of information security 

risks (which generally includes 

oversight of the confidentiality, 

integrity, and availability of OCC data; 

the security of the information systems 

used to process, transmit, and store OCC 

information; and the physical, 

personnel, procedural, administrative, 

and environment security disciplines). 

OCC believes that these changes will 

promote a sound risk management 

framework and add greater clarity to the 

responsibilities of the TC. 

For the reasons set forth above, OCC 

believes that the proposed changes to 

the TC Charter would provide 

additional clarity to OCC’s governance 

arrangements and improve the 

effectiveness of the TC’s oversight of 

OCC’s IT and other operational risks 

and are therefore designed, in general, 

to protect investors and the public 

interest in accordance with Section 

17A(b)(3)(F) of the Act.131 Moreover, 

OCC believes the proposed changes are 

reasonably designed to meet the 

requirements of Rule 17Ad– 

22(e)(2)(v) 132 to provide for governance 

arrangements that specify clear and 

direct lines of responsibility and Rule 

17Ad–22(e)(3) 133 to maintain a sound 

risk management framework for 

comprehensively managing risks that 

arise in or are borne by OCC. 

Board Charter Changes 

As described in Item II.(A)(1) above, 

OCC believes that certain of the 

proposed changes applicable to the 

Board Charter are designed to improve 

the clarity and transparency of OCC’s 

governance arrangements and provide 

for governance structures and processes 

that are designed to ensure that the 

Board is positioned to fulfill its 

responsibilities effectively and 

efficiently consistent with applicable 

requirements and through performance 

assessments. For example, as noted 

above, incorporating the CGP within the 

Board Charter would promote clarity 

and transparency by eliminating 

significant overlap between the two 

existing documents and thereby making 

the consolidated provisions in the Board 

Charter easier for Clearing Members and 

other OCC stakeholders to access, use 

and understand.134 As a further 

example, OCC proposes to amend the 

Board Charter to provide that the 

Executive Chairman and CEO, in 

consultation with the COO and CAO, 

other directors or officers of OCC, and 

the Corporate Secretary shall establish 

the agenda for Board meetings, which is 

designed to help specify clear and direct 

lines of responsibility and promote clear 

and transparent governance 

arrangements by making clear the roles 

and authority of certain officers and 

ensuring that input from additional 

officers is included where appropriate. 

As a further example, OCC believes the 

proposed changes to the Board Charter 

would make clear that the Board is 

responsible for ensuring that the AC of 

the Board is independent.135 OCC 

believes that the proposed changes to 

the Board Charter would enhance the 

clarity of OCC’s governance 

arrangements and improve the 

effectiveness of the Board’s oversight 

and are therefore designed, in general, 

to protect investors and the public 

interest in a manner consistent with 

Section 17A(b)(3)(F) of the Act.136

Moreover, OCC believes the proposed 

changes are generally consistent with, 

among other things, the Rule 17Ad– 

22(e)(2)(i) 137 requirement to provide for 

governance arrangements that are clear 

and transparent, the Rule 17Ad– 

22(e)(3) 138 requirement to maintain a 

sound risk management framework for 

comprehensively managing legal, credit, 

liquidity, operational, general business, 

investment, custody, and other risks 

that arise in or are borne by the covered 

clearing agency, and the Rule 17Ad– 

22(e)(3)(iii) 139 requirement to provide 

internal audit personnel with sufficient 

authority, resources, independence from 

management, and access to the board of 

directors. 

In addition, OCC proposes to transfer 

responsibility for the oversight of the 

ERM function from the RC to the Board. 

The proposed change would allow the 

Board to retain responsibility for the 

comprehensive oversight of OCC’s 

overall risk management framework, 

while retaining the ability to delegate 

oversight of specific risks to designated 

committees, which would then report to 

and be subject to oversight by the Board. 

Moreover, shifting enterprise risk 

oversight responsibility from the RC to 

the Board would promote even greater 

director engagement and attention 

regarding OCC’s risk universe (i.e., the 

range of risks to which OCC is exposed) 

and how such risks impact OCC’s 

strategic direction and priorities as well 

as provide for more meaningful dialogue 

and discussion at Board meetings. 

Moreover, it would alleviate the 

potential for overburdening the RC and 

establish clearer lines of oversight 

responsibilities for particular risks 

across the Board’s committees. 

Additionally, the expertise represented 

on the Board collectively would be 

available to provide appropriate 

guidance relative to each key risk within 

OCC’s risk universe. OCC believes that 

the proposed changes to the Board 

Charter would enhance the effectiveness 

of the Board’s oversight, particularly 

with respect to OCC’s ERM functions, 

and are therefore designed, in general, 

to protect investors and the public 

interest in a manner consistent with 

Section 17A(b)(3)(F) of the Act.140 In 

addition, OCC believes the proposed 

change is reasonably designed to 

provide for a sound risk management 

framework for comprehensively 


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141 17 CFR 240.17Ad–22(e)(3). 

142 15 U.S.C. 78q–1(b)(3)(I). 143 17 CFR 200.30–3(a)(12). 

managing legal, credit, liquidity, 

operational, general business, 

investment, custody, and other risks 

that arise in or are borne by OCC 

consistent with Rule 17Ad–22(e)(3).141

Finally, OCC notes that the proposed 

rule change is not inconsistent with the 

existing rules of OCC, including any 

other rules proposed to be amended. 

(B) Clearing Agency’s Statement on 

Burden on Competition 

Section 17A(b)(3)(I) of the Act 142

requires that the rules of a clearing 

agency not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. OCC does not 

believe that the proposed rule change 

would impact or impose any burden on 

competition. The proposed rule change 

addresses the charters used in OCC’s 

governance structure, and all Clearing 

Members would be equally subject to 

these governance arrangements. 

Consequently, the amended charters 

would not provide any Clearing Member 

with a competitive advantage over any 

other Clearing Member. Further, the 

proposed rule change would not affect 

Clearing Member’s access to OCC’s 

services or impose any direct burdens 

on Clearing Members. Accordingly, the 

proposed rule change would not 

unfairly inhibit access to OCC’s services 

or disadvantage or favor any particular 

user in relationship to another user. 

For the foregoing reasons, OCC 

believes that the proposed rule change 

is in the public interest, would be 

consistent with the requirements of the 

Act applicable to clearing agencies, and 

would not impact or impose a burden 

on competition. 

(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 rule-comments@

sec.gov. Please include File Number SR– 

OCC–2018–012 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–2018–012. 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 website (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 website 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 such 

filing also will be available for 

inspection and copying at the principal 

office of OCC and on OCC’s website at 

https://www.theocc.com/about/ 

publications/bylaws.jsp. 

All comments received will be posted 

without change. Persons submitting 

comments are cautioned that we do not 

redact or edit personal identifying 

information from comment submissions. 

You should submit only information 

that you wish to make available 

publicly. 

All submissions should refer to File 

Number SR–OCC–2018–012 and should 

be submitted on or before October 1, 

2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.143

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–19501 Filed 9–7–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: Notice is hereby given, 

pursuant to the provisions of the 

Government in Sunshine Act, Public 

Law 94–409, that the Securities and 

Exchange Commission Investor 

Advisory Committee will hold a 

meeting on Thursday, September 13, 

2018 at 9:00 a.m. (ET). 

PLACE: The meeting will be held in 

Multi-Purpose Room LL–006 at the 

Commission’s headquarters, 100 F 

Street NE, Washington, DC 20549. 

STATUS: This meeting will begin at 9:00 

a.m. (ET) and will be open to the public. 

Seating will be on a first-come, firstserved basis. Doors will open at 8:30 

a.m. Visitors will be subject to security 

checks. The meeting will be webcast on 

the Commission’s website at 

www.sec.gov. 

MATTERS TO BE CONSIDERED: On August 

17, 2018, the Commission issued notice 

of the Committee meeting (Release No. 

33–10531), indicating that the meeting 

is open to the public (except during that 

portion of the meeting reserved for an 

administrative work session during 

lunch), and inviting the public to 

submit written comments to the 

Committee. This Sunshine Act notice is 

being issued because a quorum of the 

Commission may attend the meeting. 

The agenda for the meeting includes: 

Remarks from Commissioners; a 

discussion regarding the U.S. proxy 

voting infrastructure; a discussion 

regarding the Commission’s Proposed 

Transaction Fee Pilot in NMS stocks 

(which may include a recommendation 

of the Market Structure Subcommittee); 

a discussion regarding the implications 

of passive investing; subcommittee 

reports; and a nonpublic administrative 

work session during lunch. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information and to ascertain 


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