79668 Federal Register / Vol. 89, No. 189 / Monday, September 30, 2024 / Notices 

11 15 U.S.C. 78s(b)(3)(A)(ii). 

12 17 CFR 240.19b–4(f)(2). 13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5https://www.theocc.com/Company-Information/ 

Documents-and-Archives/By-Laws-and-Rules. 

furtherance of the purposes of the Act. 

As discussed above, market participants 

are not forced to connect to and trade 

on all exchanges. The Exchange believes 

that the proposed pass-through of costs 

for materials for technical support will 

not cause any burden on inter-market 

competition because none of these 

changes impact other exchanges’ ability 

to compete. 

Accordingly, the Exchange does not 

believe its proposed fee changes impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

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)(ii) of the Act 11 and Rule 

19b–4(f)(2) 12 thereunder. 

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 

change 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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

MIAX–2024–36 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–MIAX–2024–36. 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 (https://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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–MIAX–2024–36 and should be 

submitted on or before October 21, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–22262 Filed 9–27–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101151; File No. SR OCC– 

2024–012] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by The 

Options Clearing Corporation 

Concerning Updates to OCC’s Capital 

Management Policy 

September 24, 2024. 

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

Securities Exchange Act of 1934 

(‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule 

19b–4 thereunder,2 notice is hereby 

given that on September 16, 2024, The 

Options Clearing Corporation (‘‘OCC’’ or 

‘‘Corporation’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared primarily by OCC. OCC filed 

the proposed rule change pursuant to 

Section 19(b)(3)(A) 3 of the Act and Rule 

19b–4(f)(6) 4 thereunder. 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 

This proposed rule change would to: 

(1) revise OCC’s Capital Management 

Policy to update its plan for raising 

additional capital (‘‘Replenishment 

Plan’’) should OCC experience potential 

general business losses, (2) amend 

OCC’s schedule of fees necessary to 

reflect the proposed change in OCC’s 

Capital Management Plan, and (3) 

update OCC Rule 101 to maintain 

consistency with the proposed change 

in OCC’s Capital Management Policy. 

Proposed changes to OCC’s Capital 

Management Policy, schedule of fees, 

and Rule 101 are included in Exhibits 

5A, 5B, and 5C to File No. SR–OCC– 

2024–012, respectively. Material 

proposed to be added is marked by 

underlining and material proposed to be 

deleted is marked in strikethrough text. 

All capitalized terms not defined herein 

have the same meaning as set forth in 

the OCC By-Laws and Rules.5

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. 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 189 / Monday, September 30, 2024 / Notices 79669 

6The Capital Management Policy defines 

‘‘Equity’’ as shareholders’ equity as shown on 

OCC’s Statement of Financial Condition. 7The Capital Management Policy defines 

‘‘LNAFBE’’ as the level of cash and cash 

equivalents, no greater than Equity, less any 

approved adjustments (i.e., agency-related liabilities 

such as Section 31 fees held by OCC and the 

Minimum Corporate Contribution). 

8 17 CFR 240.17Ad–22(e)(15)(iii). 

9 Id. (emphasis added). 

10OCC’s Capital Management Policy explains 

how OCC sets its Target Capital Requirement, 

including how OCC may set its Target Capital 

Requirement to retain ‘‘additional Equity generated 

from revenue.’’ To conform with the proposed 

changes, OCC proposes to modify those references 

to ‘‘additional Equity generated from revenue, in 

the form of LNAFBE.’’ Specifically, OCC’s proposed 

changes would clarify that OCC can retain 

additional Equity generated from revenue, in the 

form of LNAFBE, for capital expenditures following 

a recommendation by Management and Board 

approval. OCC’s proposed changes would also 

clarify that the Board would (a) determine if the 

capital needs are necessary and appropriate and, if 

so, (b) determine whether to (i) increase the Target 

Capital Requirement or (ii) retain the additional 

Equity, in the form of LNAFBE, as an amount in 

excess of the Target Capital Requirement. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

1. Purpose 

OCC’s Capital Management Policy 

was adopted in 2019, and it establishes 

the principles used to quantify, monitor 

and manage the level of OCC’s Equity 6

such that OCC maintains liquid net 

assets funded by equity (‘‘LNAFBE’’) 7 to 

cover potential general business losses 

and continue operations and services as 

a going concern if losses materialize 

under a range of scenarios, including 

adverse market conditions. 

A main component of the Capital 

Management Policy is OCC’s plan to 

replenish its capital in the event it falls 

close to or below its target capital (as 

defined below, ‘‘Replenishment Plan’’), 

as required by SEC Rule 17Ad– 

22(e)(15)(iii).8 This rule provides that 

OCC must maintain a ‘‘viable plan, 

approved by the board of directors and 

updated at least annually, for raising 

additional Equity should its Equity fall 

close to or below the amount required 

under SEC Rule 17Ad–22(e)(15)(ii).’’ 9 In 

satisfaction with SEC Rule 17Ad– 

22(e)(15)(iii), OCC’s Replenishment Plan 

establishes a plan for accessing 

additional capital should OCC’s Equity 

fall below certain thresholds. 

OCC’s existing Replenishment Plan 

provides that (i) should OCC’s Equity 

less the Minimum Corporate 

Contribution fall below 110% of the 

Target Capital Requirement (as defined 

by the Capital Management Policy, 

‘‘Early Warning’’), Management would 

recommend to the Board whether to 

implement a fee increase in an amount 

the Board determines necessary and 

appropriate to raise additional Equity; 

(ii) should OCC’s Equity less the 

Minimum Corporate Contribution fall 

below 90% of the Target Capital 

Requirement or fall below the Target 

Capital Requirement for a period of 

ninety consecutive days (as defined in 

the Capital Management Policy, 

‘‘Trigger Event’’), OCC would contribute 

the funds held under OCC’s Executive 

Deferred Compensation Plan Trust 

which are (a) deposited on and after 

January 1, 2020 in respect of the 

Corporation’s Executive Deferred 

Compensation Plan (‘‘EDCP’’) and (b) in 

excess of amounts necessary to pay for 

the benefits accrued and vested under 

the EDCP as of such date (defined in 

Chapter 1 of OCC’s Rules as ‘‘EDCP 

Unvested Balance’’); and (iii) should the 

contribution of the EDCP Unvested 

Balance fail to cure the Trigger Event, or 

if a further Trigger Event occurs, OCC 

will charge an Operational Loss Fee in 

equal shares to the Clearing Members. 

OCC’s existing Replenishment Plan 

states that in the event of a Trigger 

Event, OCC will first contribute the 

funds necessary to cure such loss with 

the EDCP Unvested Balance. If the loss 

cannot be cured after applying all 

available EDCP Unvested Balance, OCC 

will then charge an Operational Loss 

Fee in equal share to each Clearing 

Member. 

The purpose of this proposed rule 

change is to revise the Replenishment 

Plan in the Capital Management Policy 

so that the Early Warning and Trigger 

Event are measured against LNAFBE 

rather than Equity. At the time the 

Capital Management Policy was 

adopted, LNAFBE and Equity were 

much closer in size than they are 

currently. Given the growing difference 

between Equity and LNAFBE, it is 

possible that in the event of an 

operational loss, LNAFBE may fall 

below the Target Capital Requirement, 

but Equity would remain above the 

Early Warning and Trigger Event. In that 

instance, OCC would not be able to 

access the Operational Loss Fee to bring 

LNAFBE above the Target Capital 

Requirement because OCC’s Equity 

would still be above the Trigger Event. 

Consequently, OCC proposes to amend 

the Replenishment Plan in the Capital 

Management Policy such that the Early 

Warning and Trigger Event are 

measured against LNAFBE, rather than 

Equity. As defined in the Capital 

Management Policy, LNAFBE will 

always be less than or equal to Equity. 

By amending the Replenishment Plan in 

the Capital Management Policy so that 

the Early Warning and Trigger Event are 

measured against LNAFBE, rather than 

Equity, OCC will have the ability to 

access its Replenishment Plan, 

including the Operational Loss Fee, in 

the event its LNAFBE falls below 

regulatory minimums. 

To implement the proposed changes 

in the Replenishment Plan in the 

Capital Management Policy, OCC also 

proposes to update its schedule of fees 

to revise the Operational Loss Fee such 

that OCC would charge the Operational 

Loss Fee if OCC’s LNAFBE falls below 

the Trigger Event. 

Proposed Changes 

As described in detail below, OCC 

proposes to revise the Replenishment 

Plan under its Capital Management 

Policy so that the Early Warning and 

Trigger Event are measured against 

LNAFBE, rather than Equity. OCC also 

proposes to make conforming changes to 

its schedule of fees necessary to 

implement the proposed changes in the 

Replenishment Plan to promote 

compliance with SEC Rule 17Ad– 

22(e)(15)(iii). 

In addition, OCC proposes to 

incorporate several non-substantive 

changes to the Capital Management 

Policy, including updating the header 

text at the beginning of the document to 

incorporate additional sections to 

promote clarity and consistency for 

document use and management. 

Specifically, OCC’s proposed changes 

add the following sections to the header 

at the beginning of the document: (i) 

Policy Owner, (ii) Document Type, (iii) 

Board Approval, (iv) Rule Filed, and (iv) 

Version Number. To promote additional 

clarity, OCC’s proposed changes also 

add the term ‘‘version’’ prior to the 

header labeled as ‘‘effective date.’’ 

Finally, OCC’s proposed changes 

eliminate the header labeled as ‘‘scope’’ 

as OCC believes this section is 

unnecessary for document use and 

management. 

Replenishment Plan 

i. Early Warning 

OCC would revise the Replenishment 

Plan’s Early Warning so that it is 

measured against LNAFBE. Specifically, 

the Capital Management Policy would 

define the Early Warning to be when 

LNAFBE, rather than Equity less the 

Minimum Corporate Contribution, falls 

below 110% of the Target Capital 

Requirement.10 OCC proposes replacing 

Equity with LNAFBE within the Capital 

Management Policy to reflect this 

change to the Early Warning as well as 

the change to the definition of Trigger 

Event described below. After this 


ddrumheller on DSK120RN23PROD with NOTICES1
79670 Federal Register / Vol. 89, No. 189 / Monday, September 30, 2024 / Notices 

11OCC has outlined when the Operational Loss 

Fee can be charged in OCC’s Schedule of Fees in 

Exhibit 5B. 

12Separately from the Capital Management 

Policy’s measurement of LNAFBE against the Early 

Warning and Trigger Event, OCC also reviews its 

Equity on an at-least monthly basis for purposes of 

measuring its financial resources, including OCC’s 

own capital and any other financial resources 

deemed acceptable by the CFTC, to satisfy the 

CFTC’s requirement that OCC cover its operating 

costs for a period of at least one year on a rolling 

basis. See 17 CFR 39.11(a)(2). 

13https://www.theocc.com/CompanyInformation/Documents-and-Archives/By-Lawsand-Rules. 

replacement, the Capital Management 

Policy would explain that in the event 

of an operational loss, OCC would first 

use LNAFBE, rather than Equity less the 

Minimum Corporate Contribution, 

above 110% of Target Capital. The 

proposed changes would further 

describe that in the event OCC’s 

LNAFBE, rather than equity, breaches 

the Early Warning, Management would 

recommend to the Board whether to 

implement a fee increase in an amount 

the Board determines necessary and 

appropriate to raise additional LNAFBE, 

rather than Equity. The 

recommendation whether to implement 

the fee increase would be informed by 

several factors including, but not 

limited to, the facts, circumstances and 

root cause of a decrease in LNAFBE, 

rather than Equity, below the Early 

Warning. 

ii. Trigger Event 

OCC would further revise the 

Replenishment Plan’s Trigger Event so 

that it is measured against LNAFBE. 

Specifically, the Capital Management 

Policy would define a Trigger Event to 

be when OCC’s LNAFBE, rather than 

Equity less the Minimum Corporate 

Contribution, falls below 90% of the 

Target Capital Requirement or remains 

below the Target Capital Requirement 

for ninety consecutive calendar days. If 

a Trigger Event occurs, OCC would first 

contribute the funds necessary to cure 

such loss with the EDCP Unvested 

Balance. To reflect the new definition of 

Trigger Event, the Capital Management 

Policy would be changed to explain that 

if OCC’s LNAFBE, rather than Equity, 

remains below 90% of the Target 

Capital Requirement after applying the 

EDCP Unvested Balance, or if a further 

Trigger Event occurs after applying all 

available EDCP Unvested Balance, OCC 

would charge an Operational Loss Fee 11

in equal share to each Clearing Member 

payable on five business days’ notice, to 

raise additional capital. The Capital 

Management Policy would be edited to 

provide that, in the event less than the 

full amount of the maximum 

Operational Loss Fee is needed to return 

OCC’s LNAFBE, rather than Equity, to 

110% of the Target Capital 

Requirement, OCC would charge only 

that amount necessary to return OCC’s 

LNAFBE, rather than Equity, to 110% of 

the Target Capital Requirement. This 

change better ensures that OCC holds 

the mandated amount of LNAFBE. The 

proposed changes to the Capital 

Management Policy would also remove 

the term ‘‘threshold’’ after Early 

Warning and Trigger Event where the 

Early Warning and Trigger Event 

already incorporate that concept and 

clarify that Trigger means Trigger Event 

in the Replenishment Plan. 

Capital Monitoring 

OCC proposes to update the heading 

of section B in Exhibit 5A from 

‘‘Monitoring Equity Levels’’ to ‘‘Capital 

Monitoring’’ to more closely align with 

the other headings throughout this 

document, and clarify the information 

that is described in this section. The 

Capital Management Policy describes 

how Management reviews periodic 

analyses of LNAFBE, including 

projecting future volume, expenses, 

cash flows, capital needs and other 

factors to help ensure adequate financial 

resources are available to meet general 

business obligations. The proposed 

changes to the Capital Management 

Policy would provide that Management 

also reviews an analysis of LNAFBE, as 

opposed to Equity,12 at least monthly to 

ensure: (i) an Early Warning has not 

occurred or is not reasonably expected 

to occur prior to the next review; and 

(ii) a Trigger Event has not occurred and 

is not expected to occur prior to the next 

review. The Capital Management Policy 

would explain that at each regularly 

scheduled Board and Compensation and 

Performance Committee (‘‘CPC’’) 

meeting, the Chief Financial Officer 

(‘‘CFO’’) would report on the firm’s 

LNAFBE, rather than Equity, relative to 

the Target Capital Requirements, Early 

Warning and Trigger Event. The Capital 

Management Policy would also provide 

that if OCC suffers a catastrophic or 

sizable loss during the month, and such 

loss amount is known or can reasonably 

be estimated, Management should 

review a forecast of the impact on 

LNAFBE, rather than Equity. Finally, 

the Capital Management Policy would 

state that if such forecast demonstrates 

that LNAFBE, rather than Equity, has 

fallen below the Early Warning or 

Trigger Event, Management should 

promptly notify the Board. 

Capital Management 

In addition to the Replenishment 

Plan, the Capital Management Policy 

also addresses certain actions the Board 

may take based on, and which impact, 

the level of OCC’s Equity or LNAFBE, 

including the circumstances under 

which the Board may consider using 

tools to lower Clearing Members’ cost of 

participation such as through a fee 

decrease, fee hold and fee refund. 

Consistent with the changes to measure 

the aforementioned thresholds against 

LNAFBE, OCC would amend the Capital 

Management Policy to provide that the 

Board may only use such tools if 

LNAFBE, rather than Equity, is above 

110% of the Target Capital 

Requirement. In practice, OCC would 

not have taken such measures if its 

LNAFBE was below 110% of the Target 

Capital Requirement. This change 

would clearly express that practice in 

the Capital Management Policy. 

Proposed Changes to OCC Rule 101 

Consistent with the proposed changes 

to the Capital Management Policy, OCC 

also proposes to amend the definition of 

‘‘Target Capital Requirement’’ as 

defined in OCC Rule 101.13 The Rules 

use that term to provide for the variable 

amount of skin-in-the-game (i.e., 

LNAFBE in excess of 110% of the Target 

Capital Requirement) that OCC would 

contribute to cover losses or liquidity 

shortfalls arising from a Clearing 

Member default under OCC Rule 1006 

in specified circumstances. As 

described in Exhibit 5C to File No. SR– 

OCC–2024–012, OCC proposes to 

replace the term ‘‘shareholders’ equity’’ 

with ‘‘liquid net asses funded by equity 

(‘‘LNAFBE’’)’’ within the definition of 

Target Capital Requirement. Revising 

the definition of Target Capital 

Requirement to refer to the level of 

LNAFBE, as opposed to shareholder’s 

equity, would maintain consistency 

with the above referenced changes to 

OCC’s Capital Management Policy. 

Fee Schedule 

OCC would also amend its fee 

schedule to reflect the conditions under 

which it would charge the Operational 

Loss Fee. As described in Exhibit 5B to 

File No. SR–OCC–2024–012, OCC 

would charge the Operational Loss Fee 

in equal shares to Clearing Members to 

raise additional capital if OCC’s 

LNAFBE, as opposed to Equity less the 

Minimum Corporate Contribution, falls 

below 90% of the Target Capital 

Requirement or below the Target Capital 

Requirement for a period of ninety 

consecutive calendar days, after first 

applying the unvested balance held in 

respect of OCC’s EDCP. Furthermore, if 

less than the full amount of the 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 189 / Monday, September 30, 2024 / Notices 79671 

14 15 U.S.C. 78q–1. 

15 15 U.S.C. 78q–1(b)(3)(F). 

16 17 CFR 240.17Ad–22(e)(15). 

17 15 U.S.C. 78q–1(b)(3)(F). 

18 12 U.S.C. 5463. 

19FSOC Annual Report, Appendix A, at 187 

(2012), available at https://home.treasury.gov/ 

system/files/261/here.pdf. 

20 Id. 

21 15 U.S.C. 78q–1(b)(3)(F). 

22 17 CFR 240.17Ad–22(e)(15)(iii). 

23 17 CFR 240.17Ad–22(e)(15). 

24 17 CFR 240.17Ad–22(e)(15)(iii). 

25 17 CFR 240.17Ad–22(e)(15). 

26 Id. 

27 15 U.S.C. 78q–1(b)(3)(I). 

28 17 CFR 240.17Ad–22(e)(15)(iii). 

maximum Operational Loss Fee is 

needed to return OCC’s LNAFBE, as 

opposed to Equity, to 110% of the 

Target Capital Requirement, OCC would 

charge only that amount necessary to 

return OCC’s LNAFBE to 110% of the 

Target Capital Requirement. 

2. Statutory Basis 

OCC believes the proposed rule 

change is consistent with Section 17A of 

the Exchange Act 14 and the rules and 

regulations thereunder. In particular, 

OCC believes that the Capital 

Management Policy is consistent with 

Section 17A(b)(3)(F) of the Exchange 

Act 15 and Rule 17Ad–22(e)(15).16

Section 17A(b)(3)(F) of the Exchange 

Act requires, in part, that the rules of a 

clearing agency be designed to promote 

the prompt and accurate clearance and 

settlement of securities transactions, 

and, in general, to protect investors and 

the public interest.17 The Capital 

Management Policy is designed to 

ensure that OCC holds sufficient 

LNAFBE such that it could continue to 

promptly and accurately clear and settle 

securities transactions even if it suffered 

significant operational losses. Holding 

sufficient LNAFBE would help OCC to 

absorb such operational losses and 

avoid a disruption that could negatively 

impact OCC’s prompt and accurate 

clearing and settlement of transactions. 

Furthermore, by maintaining sufficient 

LNAFBE, OCC will ensure adequate 

financial resources are available to meet 

general business obligations. In 

addition, OCC would protect the 

interests of investors and the general 

public through the Capital Management 

Policy, which is designed to ensure that 

such losses would not result in a failure 

or disruption of a Systemically 

Important Financial Market Utility 

(‘‘SIFMU’’), as OCC is designated by the 

Financial Stability Oversight Council 

(‘‘FSOC’’) pursuant to the Payment, 

Clearing and Settlement Supervision 

Act.18 FSOC has concluded that a 

failure or disruption at OCC would 

negatively affect significant dollar value 

and volume transactions in the options 

and futures markets, impose material 

losses on OCC counterparties and create 

liquidity and credit problems for 

financial institutions and others that 

rely on the markets OCC serves, and that 

such credit and liquidity problems 

would spread quickly and broadly 

among financial institutions and other 

markets. 19 Accordingly, FSOC 

determined that a failure or disruption 

at OCC could threaten the stability of 

the U.S. financial system.20 Therefore, 

OCC believes that the Capital 

Management Policy, which is 

reasonably designed to ensure that OCC 

has sufficient LNAFBE to continue 

operations in the event of an operational 

loss, is consistent with the requirements 

of Section 17A(b)(3)(F) of the Exchange 

Act by protecting investors and the 

public interest.21

Rule 17Ad–22(e)(15)(iii) requires, in 

part, that OCC establish, implement, 

maintain and enforce written policies 

and procedures reasonably designed to 

identify, monitor, and manage OCC’s 

general business risk, including by 

maintaining a viable plan, approved by 

the Board and updated at least annually, 

for raising additional equity should its 

equity fall below the required amount 

under Rule 17Ad–22(e)(15)(ii).22 The 

amendments to the Replenishment Plan 

in the Capital Management Policy, 

OCC’s schedule of fees, and OCC’s Rules 

are reasonably designed to establish a 

viable plan to raise additional capital in 

an amount up to the amount the Board 

determines annually to be sufficient to 

ensure recovery or orderly wind-down 

should OCC’s LNAFBE fall close to or 

below its Target Capital Requirements. 

In addition, by providing that the Early 

Warning and Trigger Event be measured 

against LNAFBE, rather than Equity, 

this will ensure that OCC has access to 

its Replenishment Plan, including the 

Operational Loss Fee, to cover potential 

general business losses so that OCC can 

continue operations and services as a 

going concern if those losses 

materialize, as required under Rule 

17Ad–22(e)(15).23 Furthermore, this 

proposed rule change would effectuate 

changes to the Replenishment Plan 

approved by OCC’s Board during its 

annual review, consistent with Rule 

17Ad–22(e)(15)(iii).24

The Capital Management Policy is 

also designed to identify, monitor and 

manage OCC’s general business risk, 

consistent with Rule 17Ad–22(e)(15),25

by providing that OCC would perform 

an analysis of its LNAFBE on at least a 

monthly basis to ensure that OCC’s 

LNAFBE has not fallen below the Early 

Warning or Trigger Event and is not 

likely to fall below those thresholds 

prior to the next review. The Capital 

Management Policy’s requirement that 

Management report on the firm’s 

LNAFBE relative to the Early Warning 

and Trigger Event at each regularly 

scheduled Board meeting is also 

designed to identify, monitor, and 

manage OCC’s general business risk. 

The Capital Management Policy’s 

requirement that the Board be promptly 

notified in the event of an Early 

Warning or Trigger Event is also 

reasonably designed to ensure that OCC 

can act quickly to ensure OCC’s 

compliance with the LNAFBE-holding 

requirements of Rule 17Ad–22(e)(15).26

(B) Clearing Agency’s Statement on 

Burden on Competition 

Section 17A(b)(3)(I) of the Act 27

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 believes that 

the proposed changes to its Capital 

Management Policy and its schedule of 

fees to measure the Early Warning and 

Trigger Event against LNAFBE, rather 

than Equity, and to its Rules, would not 

have any impact, or impose any burden, 

on competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Exchange Act. As 

described above, the Replenishment 

Plan is designed for OCC to access 

additional capital should OCC’s 

LNAFBE fall below certain thresholds 

so OCC can meet the requirements of 

SEC Rule 17Ad–22(e)(15) and serve its 

Clearing Members and the public 

interest. 

Any barrier to entry that the 

Operational Loss Fee may impose is 

appropriate in furtherance of the 

Exchange Act, and the rules the SEC has 

promulgated thereunder. Pursuant to 

SEC Rule 17Ad–22(e)(15)(iii),28 OCC 

must hold minimum LNAFBE and have 

a viable plan to replenish equity should 

OCC’s equity fall close to or below those 

minimums. It is entirely appropriate 

that the Clearing Members that benefit 

equally from OCC’s services share the 

burden equally should OCC experience 

an operational loss that threatens its 

ability to continue providing those 

services and comply with its regulatory 

obligations. 


ddrumheller on DSK120RN23PROD with NOTICES1
79672 Federal Register / Vol. 89, No. 189 / Monday, September 30, 2024 / Notices 

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

30 17 CFR 240.19b–4(f)(6). 

31Notwithstanding its immediate effectiveness, 

implementation of this rule change will be delayed 

until this change is deemed certified under CFTC 

Regulation 40.6. 32 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants or Others 

Written comments were not and are 

not intended to be solicited with respect 

to the proposed change and none have 

been received. OCC will notify the 

Commission of any written comments 

received by OCC. OCC will notify the 

Commission of any written comments 

received by OCC. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: 

(i) significantly affect the protection of 

investors or the public interest; 

(ii) impose any significant burden on 

competition; and 

(iii) become operative for 30 days 

from the date on which it was filed, or 

such shorter time as the Commission 

may designate, it has become effective 

pursuant to Section 19(b)(3)(A) of the 

Act 29 and Rule 19b–4(f)(6) 30

thereunder. 

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. 

The proposal shall not take effect 

until all regulatory actions required 

with respect to the proposal are 

completed.31

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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

OCC–2024–012 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–2024–012. 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 (https://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 

a.m. and 3 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/CompanyInformation/Documents-and-Archives/ 

By-Laws-and-Rules. 

Do not include personal identifiable 

information in submissions; you should 

submit only information that you wish 

to make available publicly. We may 

redact in part or withhold entirely from 

publication submitted material that is 

obscene or subject to copyright 

protection. All submissions should refer 

to file number SR–OCC–2024–012 and 

should be submitted on or before 

October 21, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.32

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–22265 Filed 9–27–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101148; File No. SR– 

SAPPHIRE–2024–28] 

Self-Regulatory Organizations; MIAX 

Sapphire, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the Fee 

Schedule 

September 24, 2024. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on 

September 10, 2024, MIAX Sapphire, 

LLC (‘‘MIAX Sapphire’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX Sapphire Options 

Exchange Fee Schedule (the ‘‘Fee 

Schedule’’) to amend Section 5)f), 

Technical Support Request Fee. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxglobal.com/markets/ 

us-options/all-options-exchanges/rulefilings, at MIAX Sapphire’s principal 

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange 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. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 


ddrumheller on DSK120RN23PROD with NOTICES1