86868 Federal Register / Vol. 89, No. 211 / Thursday, October 31, 2024 / Notices 

5 Id. 

6 17 CFR 200.30–3(a)(31). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 98959 

(Dec. 5, 2023), 88 FR 84454 (Dec. 5, 2023) (File No. 

S7–21–22) (‘‘SEC Adopting Release’’), https://

www.govinfo.gov/content/pkg/FR-2023-12-05/pdf/ 

2023-25807.pdf. 

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

OCC’s public website: https://www.theocc.com/ 

Company-Information/Documents-and-Archives/ 

By-Laws-and-Rules. 

5The term ‘‘covered clearing agency’’ is defined 

in Exchange Act Rule 17Ad–22(a)(5) to mean ‘‘a 

registered clearing agency that provides the services 

of a central counterparty or central securities 

depository.’’ 17 CFR 240.17Ad–22(a)(5). 

6 17 U.S.C. 78q–1(b)(3)(C). 

7 17 CFR 240.17Ad–(22)(e)(2)(i) and (3)(iv). 

8See 88 FR 44675 (July 13, 2023) (‘‘CFTC 

Adopting Release’’), https://www.govinfo.gov/ 

content/pkg/FR-2023-07-13/pdf/2023-14361.pdf. 

Proposed Rule Change, the Commission 

finds that it is appropriate to designate 

a longer period within which to take 

action on the Proposed Rule Change. 

Accordingly, the Commission, 

pursuant to Section 19(b)(2) of the 

Exchange Act,5 designates December 10, 

2024, as the date by which the 

Commission shall either approve, 

disapprove, or institute proceedings to 

determine whether to disapprove 

proposed rule change SR–ICC–2024– 

005. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

J. Matthew DeLesDernier, 

Deputy Secretary. 

[FR Doc. 2024–25323 Filed 10–30–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101444; File No. SR–OCC– 

2024–015] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing of Proposed Rule Change 

Concerning Modifications to Its 

Governance Documents To Align With 

Recently Adopted SEC Governance 

Rules 

October 25, 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 October 21, 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. 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 

make modifications to its governance 

documents, including OCC’s charters, 

Fitness Standards, and Third-Party Risk 

Management Framework, as part of an 

effort to achieve compliance with the 

recently adopted governance 

requirements 3 by the Commission for 

clearing agencies registered with the 

Commission (‘‘registered clearing 

agencies’’) that became effective on 

February 5, 2024. Registered clearing 

agencies, like OCC, must comply with 

most of the governance requirements by 

December 5, 2024. However, the 

governance requirement for 

independent directors, as described in 

further detail below, has a compliance 

date of December 5, 2025. 

In addition to the proposed 

modifications that OCC believes are 

necessary to comply with the recently 

adopted governance requirements, OCC 

is also including proposed 

modifications to its governance 

documents that reflect changes 

identified during OCC’s annual review 

process. The proposed changes related 

to the governance requirements and the 

proposed changes related to OCC’s 

annual review process are differentiated 

throughout this filing and described in 

further detail below. For clarification, 

OCC’s Board of Directors Charter and 

Corporate Governance Principles 

(‘‘Board Charter’’), Governance and 

Nominating Committee (‘‘GNC’’) 

Charter, Risk Committee Charter, 

Technology Committee Charter, 

Compensation and Performance 

Committee (‘‘CPC’’) Charter, Regulatory 

Committee Charter, Audit Committee 

Charter, Fitness Standards, Third-Party 

Risk Management Framework, and 

Article III of OCC’s By-Laws are 

collectively referred to in this proposed 

rule change as OCC’s ‘‘governance 

documents.’’ 

The proposed changes to OCC’s 

governance documents are contained in 

Exhibits 5A through 5J, respectively, to 

File No. SR–OCC–2024–015. Material 

proposed to be added is marked by 

underlining and material proposed to be 

deleted is marked with strikethrough 

text. 

All terms with initial capitalization 

that are not otherwise defined herein 

have the same meaning as set forth in 

the OCC By-Laws 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 

OCC is the sole clearing agency 

registered with the Commission for 

standardized equity options listed on 

national securities exchanges. OCC 

operates under the jurisdiction of both 

the Commission and the Commodity 

Futures Trading Commission (‘‘CFTC’’). 

OCC also clears and settles certain stock 

loan transactions and transactions in 

futures and options on futures. In 

connection with its clearance and 

settlement of transactions in securities, 

OCC is a ‘‘covered clearing agency’’ 5

regulated by the Commission. In 

connection with its clearance and 

settlement activities for transactions in 

futures and options on futures, OCC is 

a derivatives clearing organization 

(‘‘DCO’’) regulated by the CFTC. OCC is 

also designated as a systemically 

important financial market utility 

(‘‘SIFMU’’) by the Financial Stability 

Oversight Council pursuant to Title VIII 

of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act of 2010 

(‘‘Dodd-Frank Act’’). 

As an SEC registered clearing agency 

and a CFTC registered DCO, OCC is 

already subject to regulations that 

impose requirements on its governance 

structure. For example, the Exchange 

Act requires OCC’s rules to assure a fair 

representation of its shareholders and 

Clearing Members in the selection of its 

directors and the administration of its 

affairs.6 In addition, SEC rules, among 

other things, require OCC to have 

governance arrangements that are clear 

and transparent and that provide 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.7 In July of 

2023, the CFTC also finalized new 

governance requirements for DCOs.8

Those requirements, among other 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 211 / Thursday, October 31, 2024 / Notices 86869 

9See Securities Exchange Act Release No. 100194 

(May 21, 2024), 89 FR 46205 (May 28, 2024) (SR– 

OCC–2024–005). 

10See SEC Adopting Release, 88 FR 84454. 

11 17 CFR 240.17Ad–25(b)(1), (2). 

12 17 CFR 240.17Ad–25(c)(1). 

13 17 CFR 240.17Ad–25(c)(2). 

14 17 CFR 240.17Ad–25(c)(3). 

15 17 CFR 240.17Ad–25(c)(4). 

16 17 CFR 240.17Ad–25(d)(1). 

17 17 CFR 240.17Ad–25(d)(2). 

18 17 CFR 240.17Ad–25(e). 

19 17 CFR 240.17Ad–25(g)(1)(2). 

20 17 CFR 240.17Ad–25(h). 

21 17 CFR 240.17Ad–25(i)(1)–(4). 

22 17 CFR 240.17Ad–25(j). 

things, require the establishment of one 

or more market participant risk advisory 

working groups as a forum to seek riskbased input from a broad array of 

market participants. OCC previously 

filed a proposed rule change with the 

SEC to implement changes to address 

these requirements.9

OCC currently maintains a robust 

governance structure that is designed to 

comply with existing requirements of 

the Commission and CFTC. Recently, 

the Commission adopted new 

regulations regarding governance 

requirements for registered clearing 

agencies (‘‘SEC Governance Rules’’) that 

supplement the existing governance 

requirements applicable to OCC as a 

registered clearing agency.10 The SEC 

Governance Rules require, among other 

things, that registered clearing agencies: 

(i) Establish requirements that a 

majority of the members of the board of 

directors of the registered clearing 

agency be independent directors, as 

defined in 17Ad–25(a), and that each 

registered clearing agency consider all 

the relevant facts and circumstances to 

affirmatively determine that a director 

does not have a material relationship 

with the registered clearing agency or an 

affiliate of the registered clearing agency 

that would preclude services as an 

independent director.11

(ii) Establish a nominating committee 

and a written evaluation process 

whereby such committee evaluates 

nominees for service as directors and 

evaluating the independence of 

nominees and directors,12 and require 

that a majority of the directors on the 

nominating committee be independent 

directors, including the chair of the 

nominating committee.13 The fitness 

standards for service as a director must 

be specified by the nominating 

committee, documented in writing and 

approved by the board of directors.14

The nominating committee must also 

document the outcome of the written 

evaluation process consistent with the 

fitness standards required in 17Ad– 

25(c)(3).15

(iii) Establish a risk management 

committee or committees of the board to 

assist the board of directors in 

overseeing the risk management of the 

registered clearing agency, and the 

membership of each risk management 

committee must be re-evaluated 

annually and at all times include 

representatives from the owners and 

participants of the registered clearing 

agency.16 The risk management 

committee must be able to provide a 

risk-based, independent, and informed 

opinion on all matters presented to the 

committee for consideration in a 

manner that supports the overall risk 

management, safety and efficiency of 

the registered clearing agency.17

(iv) Establish composition 

requirements for committees that have 

authority to act on behalf of the board 

of directors, such that the composition 

of that committee must have at least the 

same percentage of independent 

directors as is required for the board of 

directors.18

(v) Maintain policies and procedures 

to identify and document existing or 

potential conflicts of interest in the 

decision-making process of the clearing 

agency involving directors or senior 

managers of the registered clearing 

agency and mitigate or eliminate and 

document the mitigation or elimination 

of such conflicts of interest.19

(vi) Maintain policies and procedures 

reasonably designed to require a 

director to document and inform the 

registered clearing agency promptly of 

the existence of any relationship or 

interest that reasonably could affect the 

independent judgment or decisionmaking of the director.20

(vii) Maintain policies and procedures 

reasonably designed to: (1) require 

senior management to evaluate and 

document the risks related to an 

agreement with a service provider for 

core services, including under changes 

to circumstances and potential 

disruptions, and whether the risks can 

be managed in a manner consistent with 

the clearing agency’s risk management 

framework; (2) require senior 

management to submit to the board of 

directors for review and approval any 

agreement that would establish a 

relationship with a service provider for 

core services, along with the risk 

evaluation; (3) require senior 

management to be responsible for 

establishing the policies and procedures 

that govern relationships and manage 

risks related to such agreements with 

service providers for core services and 

require the board of directors to be 

responsible for reviewing and approving 

such policies and procedures; and (4) 

require senior management to perform 

ongoing monitoring of the relationship, 

and report to the board of directors for 

its evaluation of any action taken by 

senior management to remedy 

significant deterioration in performance 

or address changing risks or material 

issues identified through such 

monitoring; or if the risks or issues 

cannot be remedied, require senior 

management to assess and document 

weaknesses or deficiencies in the 

relationship with the service provider 

for submission to the board of 

directors.21

(viii) Maintain policies and 

procedures for the board to solicit, 

consider, and document its 

consideration of the views of 

participants and other relevant 

stakeholders of the registered clearing 

agency regarding material developments 

in the registered clearing agency’s risk 

management and operations.22

OCC already maintains risk and 

nominating committees of the Board, 

fitness standards for directors, and 

written procedures for directors to 

identify and disclose conflicts of 

interest. However, to implement a 

compliant approach with those 

requirements for which OCC believes 

changes will be necessary, OCC is 

proposing to revise its governance 

documents such that the documents set 

clear and transparent governance 

standards and provide a framework for 

compliance. OCC’s proposed changes to 

its governance documents establish 

requirements that provide: (i) OCC’s 

Board be comprised of a majority of 

independent directors; (ii) each Boardlevel committee that has delegated 

authority from the Board be comprised 

of a majority of independent directors; 

(iii) OCC’s existing Risk Committee and 

GNC align with the related requirements 

in the SEC Governance Rules regarding 

the responsibilities and composition of 

the committees; (iv) OCC’s Fitness 

Standards align with the related 

requirements in the SEC Governance 

Rules for directors; and (v) OCC’s Board 

Charter and Third-Party Risk 

Management Framework incorporate the 

requirements in the SEC Governance 

Rules regarding review, approval, and 

monitoring of agreements with service 

providers for core services. OCC also 

plans to revise other internal policies 

and procedures to align with the 

remaining requirements in the SEC 

Governance Rules that include, among 

other things, the identification and 

analysis of directors for independence, 

and the management of risks from 

relationships with service providers for 


lotter on DSK11XQN23PROD with NOTICES1
86870 Federal Register / Vol. 89, No. 211 / Thursday, October 31, 2024 / Notices 

23OCC has included as confidential Exhibits 3A 

through 3E to File No SR–OCC–2024–015 the other 

internal policies and procedures referenced here. 

24 17 CFR 240.17Ad–25. 

25See SEC Adopting Release at 84454. 

26 Id. 

27Terms regarding service by Public Directors are 

set forth in OCC’s By-Laws and in OCC’s Fitness 

Standards. See e.g., OCC By-Laws Article III, 

Section 6A; Fitness Standards at ‘‘Additional 

Criteria for the Public Directors,’’ See supra note 4. 

28Terms regarding service by Exchange Directors 

are set forth in OCC’s By-Laws and in OCC’s Fitness 

Standards. See e.g., OCC By-Laws Article III, 

Section 6; Fitness Standards at ‘‘Additional Criteria 

for Exchange Directors’’ Id. 

29Terms regarding service by Member Directors 

are set forth in OCC’s By-Laws and in OCC’s Fitness 

Standards. See e.g., OCC By-Laws Article III, 

Section 2; Fitness Standards at ‘‘Additional Criteria 

for Member Directors’’ Id. 

30Terms regarding service by the Management 

Director are set forth in OCC’s By-Laws. For 

example, the Management Director must be an OCC 

employee. See e.g., OCC By-Laws Article III, 

Section 7 Id. 

core services.23 OCC believes that the 

proposed changes will allow OCC to 

appropriately comply with the SEC 

Governance Rules by including the 

proposed provisions in OCC’s 

governance documents. 

1. Purpose 

The purpose of this proposed rule 

change by OCC is to modify its 

governance documents to implement 

changes that are designed to comply 

with requirements in the SEC 

Governance Rules, which are found in 

17 CFR 240.17Ad–25 (‘‘Rule 17Ad– 

25’’).24 In the Commission’s adopting 

release, the Commission clarifies that it 

is adopting new rules to improve the 

governance of registered clearing 

agencies by reducing the likelihood that 

conflicts of interest may influence a 

board of directors or equivalent 

governing body of a registered clearing 

agency.25 In addition, the SEC 

Governance Rules identify certain 

responsibilities of a clearing agency 

board, increase transparency into board 

governance, and, more generally, 

improve the alignment of incentives 

among owners and participants of a 

registered clearing agency.26

In addition to the proposed rule 

changes necessary to comply with the 

SEC Governance Rules, OCC proposes a 

series of rule changes identified during 

OCC’s annual review process. While 

these proposed changes to OCC’s 

governance documents are described in 

further detail below, thematically, they 

consist of the following: 

i. Proposed changes in effort to 

achieve compliance with the SEC 

Governance Rules: 

• Revisions to OCC’s Board Charter to 

specify: (i) a majority of OCC’s Board be 

comprised of independent directors (ii) 

that each Board-level committee 

established by the Board and that has 

delegated authority from the Board be 

comprised of a majority of independent 

directors, and (iii) the Board’s oversight 

role of senior management as it relates 

to management of risks from 

relationships with service providers for 

core services. 

• Revisions to the charters for OCC’s 

six Board-level committees that have 

delegated authority from the Board of 

Directors, including the GNC Charter, 

Risk Committee Charter, Technology 

Committee Charter, CPC Charter, 

Regulatory Committee Charter, and 

Audit Committee Charter, to specify that 

each committee be comprised of a 

majority of directors who are 

independent. 

• Revisions to OCC’s GNC Charter to 

specify the responsibilities of the GNC, 

including that: (i) the GNC specify 

fitness standards for serving as a 

director that are documented in writing 

and approved by the Board; (ii) the GNC 

maintain a written evaluation process to 

evaluate all nominees for potential 

service as directors and evaluate the 

independence of nominees and 

directors for consistency with regulatory 

requirements; and (iii) the outcome of 

that evaluation process be documented 

consistent with regulatory requirements. 

• Revisions to OCC’s Risk Committee 

Charter to specify that in making their 

nominations for the Risk Committee, the 

GNC and the Board will take into 

consideration the ability of the Risk 

Committee to provide a risk-based, 

independent, and informed opinion on 

all matters presented to the Risk 

Committee for consideration. 

• Revisions to OCC’s Fitness 

Standards to include the consideration 

of: (i) whether the nominee would help 

demonstrate that the Board, taken as a 

whole, has a diversity of skills, 

knowledge, experience, and 

perspectives, and (ii) the views of other 

stakeholders, aside from owners and 

participants, who may be affected by 

decisions of OCC’s Board. 

• Revisions to OCC’s Third-Party Risk 

Management Framework to incorporate 

the requirements in the SEC Governance 

Rules related to management of risks 

from relationships with service 

providers for core services. This 

includes requiring senior management 

to: (i) evaluate and document risks 

related to an agreement with a service 

provider for core services; (ii) submit to 

the Board for review and approval any 

agreement establishing a relationship 

with a service provider for core services 

along with a risk evaluation; and (iii) 

perform ongoing monitoring of service 

providers for core services and report to 

the Board any action taken by senior 

management to remedy significant 

deterioration in performance, address 

material issues, and assess and 

document weaknesses or deficiencies 

that cannot be remedied. 

ii. Proposed changes identified during 

OCC’s annual review process: 

• Revisions to OCC’s Board Charter to 

provide specific requirements used to 

determine what constitutes a Public 

Director. 

• Revisions to Article III, Section 6A 

of OCC’s By-Laws to incorporate the 

proposed changes to OCC’s definition of 

a Public Director. 

• Revisions to OCC’s Fitness 

Standards to incorporate the proposed 

changes to OCC’s definition of a Public 

Director. 

• Revisions to OCC’s CPC Charter to 

expand the description of the role of the 

CPC as it relates to oversight of the 

development and administration of 

OCC’s Human Resources programs. 

• Revisions to OCC’s Regulatory 

Charter to incorporate minor 

grammatical updates. 

• Revisions to OCC’s Third-Party Risk 

Management Framework to: (i) define 

‘‘Exchange Relationship’’ as it relates to 

risks arising from third-party 

relationships; (ii) update the description 

of ‘‘Information Technology and 

Security risks and ‘‘Legal and 

Regulatory risks’’ to align with current 

practice; (iii) update the name and 

abbreviation of OCC’s working group to 

reflect the combination of two preexisting working groups; and (iv) 

provide additional clarifying 

information on how OCC engages and 

manages vendor relationships. 

OCC’s Existing Governance Structure 

Currently, OCC’s Board of Directors is 

composed of Public Directors,27

Exchange Directors,28 Member 

Directors,29 and a Management 

Director.30 OCC’s current Board is 

comprised of up to twenty-one directors 

total, including nine Member Directors, 

up to six Public Directors, five Exchange 

Directors, and one Management 

Director. In this way, the directors that 

serve on the Board represent a range of 

different stakeholders from the markets 

that OCC serves. OCC’s Board already 

reviews the independence of each 

director through its Director 

Questionnaire, which is used to 

facilitate the analysis of whether a 

director appropriately can be considered 

independent, as defined by the Board, 

and to identify and document any 

potential conflicts of interest. OCC’s 

current processes require, among other 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 211 / Thursday, October 31, 2024 / Notices 86871 

31See Board Charters, Board Committee Charters 

and Other Governance Documents, available at 

https://www.theocc.com/company-information/ 

documents-and-archives/board-charters. 

32See 88 FR 44675 (July 13, 2023) (‘‘CFTC 

Adopting Release’’), https://www.govinfo.gov/ 

content/pkg/FR-2023-07-13/pdf/2023-14361.pdf. 

33OCC’s FRAC Guiding Principles is included as 

confidential Exhibit 3F to File No. SR–OCC–2024– 

015, and provides more information on the 

responsibilities and composition of the non-Boardlevel risk management committee. 

34 17 CFR 240.17Ad–25(j). 

35 17 CFR 240.17Ad–25(i)(3). 

36 17 CFR 240.17Ad–25(a). 

37 17 CFR 240.17Ad–25(b). 

38 Id. 

39 17 CFR 240.17Ad–25(i)(2),(3). 

40 17 CFR 240.17Ad–25(i)(4). 

41 Id. 

42 17 CFR 240.17Ad–25(a). 

things, an annual attestation of the 

information included in the Director 

Questionnaire. OCC also maintains a 

Code of Conduct for OCC Directors that 

requires that directors update the 

necessary documents and information if 

there are any changes. 

OCC also already maintains a Boardlevel Risk Committee and GNC, as 

required by the SEC Governance Rules. 

In addition to the Risk Committee and 

GNC, OCC’s Board oversees four other 

Board-level committees that are 

comprised of certain Board directors 

and that assist the Board in carrying out 

its supervisory role. The other 

committees include the Regulatory 

Committee, the Technology Committee, 

the Audit Committee, and the CPC. In 

connection with OCC’s existing Board 

and Board committee structure, OCC 

maintains charters for the Board and all 

Board-level committees, and Fitness 

Standards for Directors, Clearing 

Members and Others (‘‘Fitness 

Standards’’). The charters, Fitness 

Standards, and Code of Conduct are all 

publicly available on OCC’s website.31

In addition to maintaining a Boardlevel Risk Committee, OCC also 

maintains a non-Board-level risk 

management committee. This nonBoard-level risk management committee 

is a subset of OCC’s existing Financial 

Risk Advisory Counsil (‘‘FRAC’’) and is 

comprised of clearing members and 

customers of clearing members. As 

required by the recently adopted CFTC 

governance rules,32 OCC consults with 

this non-Board-level risk committee on 

all matters that could materially affect 

the risk profile of OCC.33 As such, OCC 

believes this also satisfies the SEC 

Governance Rules requirement for the 

board of directors to solicit and consider 

viewpoints of participants and other 

relevant stakeholders regarding material 

developments in its risk management 

and operations.34

Lastly, OCC already maintains a 

Third-Party Risk Management 

Framework that is reviewed and 

approved at least annually by OCC’s 

Risk Committee and Board. OCC’s 

Third-Party Risk Management 

Framework outlines OCC’s approach to 

identify, measure, monitor, and manage 

risks arising from third-party 

relationships, consistent with certain 

requirements in the SEC Governance 

Rules that require senior management to 

be responsible for establishing policies 

and procedures that govern 

relationships and manage risks related 

to agreements with service providers for 

core services, and that require the board 

of directors to review and approve such 

policies and procedures.35

Proposed Changes to OCC’s Board 

Charter 

The Mission of the Board 

The SEC Governance Rules require 

the Board to be comprised of a majority 

of ‘‘independent directors’’ as that term 

is defined in the SEC Governance 

Rules.36 To align with this requirement, 

OCC proposes to modify its Board 

Charter to clarify that a majority of 

directors, rather than a substantial 

portion of directors, be independent 

directors, as defined by the SEC 

Governance Rules 37 and the judgement 

of the Board. Specifically, OCC’s 

proposed changes to the Board Charter 

would provide that as part of the 

Board’s mission, the Board fulfills its 

oversight role by ensuring that at least 

a majority of the directors on the Board 

are independent as determined by the 

Board and in accordance with Securities 

and Exchange Commission Rule 17Ad– 

25(b) adopted on December 5, 2023.38

OCC’s proposed changes expand the 

requirement that all Board-level 

committees, not just the Audit 

Committee, be comprised of 

independent directors. Specifically, 

OCC’s proposed changes eliminate the 

reference that only the Audit Committee 

of the Board be comprised of 

independent directors and provide that 

at least a majority of the directors on 

each Board-level committee be 

comprised of independent directors. 

The SEC Governance Rules also 

require OCC to have written policies 

and procedures designed to address 

certain aspects of risk management in 

connection with relationships with 

service providers for core clearing 

agency services, and require senior 

management to be responsible for 

establishing the policies and procedures 

and the Board to be responsible for 

reviewing and approving such policies 

and procedures.39 The SEC Governance 

Rules also require senior management to 

perform ongoing monitoring of the 

relationship with a service provider for 

core services and report to the Board for 

its evaluation of any action taken by 

senior management to remedy 

significant deterioration in performance 

or address changing risks or material 

issues identified through such 

monitoring.40 If the risks or issues 

cannot be remedied, the SEC 

Governance Rules require that senior 

management assess and document 

weaknesses or deficiencies in the 

relationship with the service provider 

for submission to the Board.41 To align 

with these requirements, OCC’s 

proposed changes to the Board Charter 

would provide that as part of the 

Board’s mission, the Board fulfills its 

oversight role by overseeing service 

providers that provide core services for 

OCC, including reviews of risk 

assessments for current vendors and 

approving terms for new vendors that 

will provide core services for OCC. 

OCC’s proposed changes would also 

provide that the Board fulfills its 

oversight role by overseeing senior 

management’s review and approval of 

an agreement that establishes a 

relationship with a service provider for 

core services, and overseeing senior 

management’s risk assessment for such 

agreements. In addition, OCC’s 

proposed changes provide that the 

Board review and approve policies and 

procedures established by senior 

management that govern relationships 

and manage risks related to agreements 

with service providers for core services. 

Lastly, OCC’s proposed changes provide 

that the Board evaluate any action taken 

by senior management to remedy 

significant deterioration in performance 

or address changing risks or material 

issues identified through senior 

management’s monitoring of 

relationships with a service provider for 

core services, and oversee senior 

management’s assessment and 

document of weaknesses or deficiencies 

with the service provider if such risks 

or issues cannot be remedied. 

Board Issues—Size of Board; 

Composition 

The SEC Governance Rules define 

independent director as ‘‘a director of 

the registered clearing agency who has 

no material relationship with the 

registered clearing agency or any 

affiliate thereof.’’ 42 The SEC 

Governance Rules require that the 

Committee affirmatively determine and 

document whether a nominee or 

director is appropriately categorized as 

an independent director, as defined in 


lotter on DSK11XQN23PROD with NOTICES1
86872 Federal Register / Vol. 89, No. 211 / Thursday, October 31, 2024 / Notices 

43 17 CFR 240.17Ad–25(b)(2). 

44 17 CFR 240.17Ad–25(a). 

45 17 CFR 240.17Ad–25(c). 

46 17 CFR 240.17Ad–25(e). 

47See Nasdaq Listing Rule 5605(c)(2) and Section 

303A.06 of NYSE Listed Company Manual. 

48See supra note 4, Article III, Section I of the 

By-Laws. 49 Id. 

the SEC Governance Rules.43 To align 

with this requirement, OCC proposes to 

modify its Director Questionnaire to 

align OCC’s analysis of potential 

conflicts with the applicable regulatory 

requirements in the SEC Governance 

Rules and facilitate the analysis of 

whether a nominee or director 

appropriately can be considered 

independent. 

Furthermore, to reflect the definition 

of independent director as defined by 

the SEC Governance Rules,44 OCC’s 

proposed changes to the Board Charter 

would also state that it is the policy of 

the Board that the Board at all times 

reflect that a majority, rather than a 

substantial portion, of directors be 

‘‘independent’’ as defined by the SEC 

Governance Rules and the judgment of 

the Board. OCC’s proposed changes 

remove the reference that a substantial 

portion of directors must be 

independent ‘‘of OCC and OCC’s 

management.’’ OCC believes these 

proposed changes to the Board 

composition section of the Board 

Charter will satisfy the independent 

director requirement, as defined in the 

SEC Governance Rules. 

Board Issues—Selection of Exchange 

Directors 

As described in more detail below, 

the SEC Governance Rules contain 

several requirements related to the 

responsibilities of a nominating 

committee.45 Currently, all OCC 

directors are subject to a standard 

criterion outlined in OCC’s existing 

Fitness Standards that is applicable to 

all directors and used when determining 

the nomination of a director. The SEC 

Governance Rules require that the 

nominating committee must have a 

written evaluation process whereby the 

nominating committee shall evaluate 

nominees under consideration for a 

directorship and evaluate the 

independence of nominees and 

directors. OCC’s proposed changes to 

the Board Charter clarify this 

requirement and the role of the GNC 

when describing the selection of 

Exchange Directors. OCC’s proposed 

changes state that as provided in the ByLaws, each Exchange Director shall, 

after evaluation by the Governance and 

Nominating Committee, be elected by 

the Equity Exchange entitled to vote for 

such Exchange Director at each annual 

meeting of stockholders. 

Committees—Board Committees 

As noted above, OCC maintains six 

Board-level committees including the 

GNC, the Risk Committee, Technology 

Committee, CPC, Regulatory Committee 

and Audit Committee. Subject to the 

direction of the Board, all six 

committees are empowered to act on 

behalf of the Board with respect to any 

matter necessary or appropriate to the 

accomplishment of the purpose and 

responsibilities set forth in the 

committee charters. The SEC 

Governance Rules specify that any 

Board committee that has the authority 

to act on behalf of the Board must have 

at least the same percentage of 

independent directors as the Board itself 

as identified in paragraph (b)(1) of Rule 

17Ad–25.46 To reflect this requirement, 

OCC’s proposed changes to its Board 

Charter provide that each committee 

established by the Board must be 

comprised of a majority of directors who 

are deemed independent by the Board 

and in accordance with the SEC 

Governance Rules. 

Committees—Independence for Audit 

Committee Service 

For clarity and consistency, OCC also 

proposes to add the word ‘‘additional’’ 

prior to the word ‘‘independence’’ when 

describing the independence criteria for 

the Audit Committee service. This helps 

to clarify that OCC maintains separate 

independence requirements for the 

Audit Committee, which are also 

consistent with listed company Audit 

Committee standards 47 and are in 

addition to the requirements outlined in 

the SEC Governance Rules. 

Proposed Changes to OCC’s Board 

Charter and By-Laws Identified During 

OCC’s Annual Review Process 

As part of OCC’s annual review of its 

Board Charter, OCC is proposing 

changes to its Board Charter and Article 

III of the By-Laws to provide specific 

requirements used to determine whether 

an individual director meets the 

definition of a Public Director. As 

outlined in Article III of OCC’s current 

By-Laws, OCC’s existing Board of 

Directors must be composed of nine 

Member Directors, up to five Exchange 

directors, no less than five Public 

Directors, and may include one 

Management Director.48 To account for 

changes in regulatory requirements, 

OCC’s proposed changes to the Board 

Charter provide that OCC’s Board must 

be comprised of no less than five 

directors who are not an associated 

person or employee of (i) an entity that 

is registered or exempt from registration 

with the Securities and Exchange 

Commission or Commodity Futures 

Trading Commission or (ii) affiliate of 

such an entity described in (i). OCC 

proposes to remove reference to the 

language that the director must not be 

affiliated with any national securities 

exchange, national securities 

association, designated contract market, 

futures commission merchant, or broker 

or dealer in securities. 

To incorporate these proposed 

changes in the definition of a Public 

Director as described in OCC’s Board 

Charter, OCC also proposes to modify 

Article III, Section 6A of the By-Laws.49

OCC’s proposed changes to Article III, 

Section 6A of the By-Laws provide that 

prior to each annual meeting of 

stockholders at which one or more 

Public Directors are to be elected, the 

GNC shall, for each directorship among 

the Public Directors to be filled at such 

annual meeting, nominate one person 

who is not an associated person or 

employee of an: (i) entity that is 

registered or exempt from registration 

with the Commission or CFTC; or (ii) 

affiliate of such an entity described in 

(i) and submit a list of its nominations 

in writing to the Board of Directors. To 

remain consistent with the proposed 

changes in OCC’s Board Charter and 

provide specific requirements for Public 

Directors, OCC proposes to eliminate 

reference to the language that the person 

must not be affiliated with any national 

securities exchange, national securities 

association, designated contract market, 

futures commission merchant, or broker 

or dealer in securities. 

OCC believes these proposed changes 

to its Board Charter and By-Laws 

identified during the annual review 

process provide specific requirements 

for how OCC determines whether a 

director is affiliated in the industry and 

the requirements applicable to a Public 

Director. 

Proposed Changes to OCC’s GNC 

Charter 

Purpose 

The SEC Governance Rules require, 

among other things, that registered 

clearing agencies establish a nominating 

committee and a written evaluation 

process for evaluating board nominees 

and the independence of nominees and 

directors and specify requirements with 

respect to its composition, director 

fitness standards, and documentation of 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 211 / Thursday, October 31, 2024 / Notices 86873 

50 17 CFR 240.17Ad–25(c). 

51 17 CFR 240.17Ad–25(c)(2). 

52 Id. 

53 17 CFR 240.17Ad–25(c)(1). 

54 17 CFR 240.17Ad–25(c)(4)(iv). 

55See supra note 4. 

56 17 CFR 240.17Ad–25(c)(3). 

57 17 CFR 240.17Ad–25(c)(4)(iii). 

58 17 CFR 240.17Ad–25(c)(1). 

59 17 CFR 240.17Ad–25(d)(1). 

the outcome of the written evaluation 

process.50 As noted above, OCC already 

maintains a GNC, and maintenance of 

OCC’s existing GNC is consistent with 

the requirement in the SEC Governance 

Rules that OCC must have a nominating 

committee. OCC’s existing GNC Charter 

provides that the purpose of the GNC is 

to assist the Board in overseeing OCC’s 

corporate governance processes, 

including assessing that OCC’s 

governance arrangements are clear and 

transparent, establishing the 

qualifications necessary for Board 

service to ensure that the Board is able 

to discharge its duties and 

responsibilities, identifying and 

recommending to the Board candidates 

eligible for service as Public Directors 

and Member Directors, and resolving 

certain conflicts of interest. To clarify 

the role of the GNC and more closely 

align with the language in the SEC 

Governance Rules requirement that the 

nominating committee evaluate board 

nominees, OCC’s proposed changes to 

the GNC Charter provide that the GNC 

is to assist the Board in overseeing 

OCC’s corporate governance processes, 

including evaluating candidates for 

Board service. 

Membership and Organization 

The SEC Governance Rules require a 

majority of directors serving on the 

nominating committee be independent 

directors, and the chair of the 

nominating committee be an 

independent director.51 To reflect this 

requirement, OCC’s proposed changes to 

the GNC Charter provide that at least a 

majority of the Committee must be 

comprised of directors who are 

independent directors, consistent with 

the Securities and Exchange 

Commission Rule 17Ad–25(c)(2) and the 

judgment of the Board. OCC’s proposed 

changes also specify that the Chair must 

be a Public Director, who is also an 

independent director as defined in 

accordance with Securities and 

Exchange Commission Rule 17Ad– 

25(c)(2).52 OCC believes these proposed 

changes align with the SEC Governance 

Rules requirements related to 

composition requirements for a 

nominating committee. 

Functions and Responsibilities 

The SEC Governance Rules also 

contain several other requirements 

related to the responsibilities of a 

nominating committee. These 

requirements provide that: (i) the 

nominating committee must have a 

written evaluation process that includes 

the evaluation of all nominees, no 

matter the source of nomination, and an 

evaluation of all nominees and directors 

regarding status as independent 

directors; 53 and (ii) the nominating 

committee must document the outcome 

of its written evaluation processes, 

including identification of whether each 

nominee or director meets the definition 

of independent director, as defined in 

the SEC Governance Rules.54 To align 

with these responsibilities, OCC’s 

proposed changes to the GNC Charter 

provide that the GNC must maintain a 

written evaluation process, which will 

be documented in meeting materials 

and minutes, to evaluate all nominees 

for potential service as directors and 

evaluate the independence of nominees 

and directors for consistency with 

regulatory requirements. As part of 

OCC’s written evaluation process that 

will be documented in meeting 

materials and minutes, the GNC will 

review a packet of materials that 

contains background information for all 

Board candidates as well as any other 

documentation that describes other 

relevant information and criteria for 

Board candidates. Additionally, OCC 

maintains various written documents 

that would guide the GNC’s evaluation 

of director candidates (e.g., Fitness 

Standards, director questionnaire). 

These documents provide the 

requirements for director candidates 

and articulate what the GNC must 

consider when evaluating prospective 

Board members. OCC’s proposed 

changes also specify that the outcome of 

the written evaluation process must be 

documented consistent with applicable 

regulatory requirements. OCC’s existing 

GNC Charter provides that the GNC 

identifies, screens and reviews 

individuals qualified to be elected or 

appointed as Member Directors or 

Public Directors. The nomination of 

Exchange Directors is separately the 

responsibility, under the By-Laws, of 

each OCC stockholder exchange.55 To 

reflect the requirements outlined in the 

SEC Governance Rules, OCC’s proposed 

changes provide that the GNC must 

identify, screen, and review individuals 

qualified to be elected or appointed, as 

the case may be, to serve as Directors. 

Here, OCC’s proposed changes eliminate 

the specific terms ‘‘Member Directors’’ 

and ‘‘Public Directors’’ and generally 

use the term ‘‘Directors’’ because the 

SEC Governance Rules require that the 

GNC perform the same evaluation 

process for all nominees for potential 

service as directors. 

An additional requirement of the 

nominating committee that is outlined 

in the SEC Governance Rules is that the 

fitness standards for serving as a 

director must be specified by the 

nominating committee, documented in 

writing, and approved by the Board.56

Although OCC already maintains fitness 

standards for directors, OCC’s proposed 

changes to the GNC Charter state that 

the GNC must specify fitness standards 

for serving as a director that are 

documented in writing and approved by 

the Board in order to comply with Rule 

17Ad–25(c)(3). 

The SEC Governance Rules also 

require that the nominating committee 

document the outcome of the written 

evaluation process consistent with the 

fitness standards such that the process 

demonstrate that the nominating 

committee considered the views of other 

stakeholders who may be affected by the 

decisions of the registered clearing 

agency.57 To align with this 

requirement, OCC’s proposed changes 

in the GNC Charter provide that the 

Committee shall, in its evaluation of 

nominees for serving as directors, 

consider the views of other stakeholders 

who may be affected by the decisions of 

the Board of Directors, other than 

owners of the Corporation and Clearing 

Members. 

To align with the process of 

evaluation for determining an 

independent director as described by 

the SEC Governance Rules and the 

requirement for the nominating 

committee to evaluate the independence 

of nominees and directors,58 OCC’s 

proposed changes provide that the GNC 

must review and advise the Board with 

regard to whether directors are 

independent directors in accordance 

with Securities and Exchange 

Commission Rule 17Ad–25(c)(1). 

OCC’s GNC Charter provides that the 

GNC advises the Board with respect to 

committee structure, operations and 

charters, including recommending to 

the Board for its approval the 

appointment of directors to Board 

committees and assignment of 

committee Chairs, in each case after 

consultation with the Chairman. To 

incorporate the requirement that the 

membership of each risk management 

committee be re-evaluated annually as 

defined by 17Ad–25(d)(1),59 OCC’s 

proposed changes to the GNC Charter 

include the requirement that each 


lotter on DSK11XQN23PROD with NOTICES1
86874 Federal Register / Vol. 89, No. 211 / Thursday, October 31, 2024 / Notices 

60 17 CFR 240.17Ad–25(d)(1). 

61 17 CFR 240.17Ad–25(d)(2). 

62 17 CFR 240.17Ad–25(e). 

63 17 CFR 240.17Ad–25(i). 64 17 CFR 240.17Ad–25(i)(1). 65 Id. 66 17 CFR 240.17Ad–25(e). 67 Id. 68 17 CFR 240.17Ad–25(e). 

calendar year, the GNC must 

recommend to the Board for its approval 

the appointment of directors to Board 

committees and assignment of 

committee Chairs, in each case after 

consultation with the Chairman. 

Proposed Changes to OCC’s Risk 

Committee Charter 

Membership and Organization 

The SEC Governance Rules require, 

among other things, the establishment of 

a risk management committee of the 

Board to assist the Board in overseeing 

the risk management of the clearing 

agency.60 As noted above, OCC already 

satisfies this requirement through the 

maintenance of its Risk Committee of 

the Board. In the performance of its 

duties, the SEC Governance Rules 

require the Risk Committee to be able to 

provide a risk-based, independent, and 

informed opinion on all matters 

presented to the committee for 

consideration in a manner that supports 

the overall risk management, safety, and 

efficiency of the registered clearing 

agency.61 To promote clear consistency 

with these requirements, OCC’s 

proposed changes to the Risk Committee 

Charter provide that in making their 

nominations, the GNC and the Board 

take into consideration the desire to 

obtain input from a broad array of 

market participants on risk management 

issues and the ability of the Committee 

to provide a risk-based, independent, 

and informed opinion on all matters 

presented to it for consideration. 

The SEC Governance Rules also 

require that any Board committee with 

the authority to act on behalf of the 

Board must have at least the same 

percentage of independent directors as 

the Board itself.62 Because the Risk 

Committee, subject to the direction of 

the Board, is empowered to act on 

behalf of the Board, with respect to any 

matter necessary or appropriate to the 

accomplishment of the purpose and 

responsibilities set forth in the Risk 

Committee Charter, OCC’s proposed 

changes to the Risk Committee Charter 

provide that at least a majority of the 

Committee must be composed of 

directors who are independent 

directors, consistent with Securities and 

Exchange Commission Rule 17Ad–25(e) 

and the judgment of the Board. 

Functions and Responsibilities 

The SEC Governance Rules require, 

among other things, that a clearing 

agency address the management of risks 

from relationships with service 

providers for core services, as defined 

by the SEC Governance Rules.63 These 

requirements include that each 

registered clearing agency must 

establish, implement, maintain, and 

enforce written policies and procedures 

reasonably designed to require senior 

management to evaluate and document 

the risks related to an agreement with a 

service provider for core services.64

OCC’s existing Risk Committee Charter 

provides that the Committee shall 

receive a quarterly report from 

management that provides information 

on the effectiveness of OCC’s 

management of third-party risks, 

including key linked and vendor 

relationships. To incorporate the SEC 

Governance Rules requirements that 

senior management must evaluate and 

document the risks related to an 

agreement with a service provider for 

core services, OCC’s proposed changes 

to the Risk Committee Charter provide 

that the Committee shall also provide 

risk assessments to the Board for any 

service providers providing core 

services to OCC, consistent with the 

SEC Governance Rules.65

Proposed Changes to OCC’s Technology 

Committee Charter 

Membership and Organization 

The SEC Governance Rules require 

that any Board committee with the 

authority to act on behalf of the Board 

must have at least the same percentage 

of independent directors as the Board 

itself.66 Because the Technology 

Committee, subject to the direction of 

the Board, is empowered to act on 

behalf of the Board, with respect to any 

matter necessary or appropriate to the 

accomplishment of the purpose and 

responsibilities set forth in the 

Technology Committee Charter, OCC’s 

proposed changes to the Technology 

Committee Charter provide that at least 

a majority of the Committee must be 

composed of directors who are 

independent directors, consistent with 

the Securities and Exchange 

Commission Rule 17Ad–25(e) and the 

judgment of the Board. 

Proposed Changes to OCC’s CPC Charter 

Membership and Organization 

The SEC Governance Rules require 

that any Board committee with the 

authority to act on behalf of the Board 

must have at least the same percentage 

of independent directors as the Board 

itself.67 Because the CPC, subject to the 

direction of the Board, is empowered to 

act on behalf of the Board with respect 

to any matter necessary or appropriate 

to the accomplishment of the purpose 

and responsibilities set forth in the CPC 

Charter, OCC’s proposed changes to the 

CPC Charter provide that at least a 

majority of the Committee must be 

composed of directors who are 

independent directors, consistent with 

Securities and Exchange Commission 

Rule 17Ad–25(e) and the judgment of 

the Board. 

Proposed Changes to OCC’s CPC Charter 

Identified During OCC’s Annual Review 

Process 

As part of OCC’s annual review of the 

CPC Charter, OCC also proposes to make 

updates to the CPC Charter to expand 

the description of the role of the CPC as 

it relates to oversight of the 

development and administration of 

OCC’s Human Resources programs. 

OCC’s proposed changes provide that 

the CPC must oversee the development 

and administration of OCC’s Human 

Resources programs and policies, 

including talent acquisition, 

compensation performance 

management, diversity, equity, and 

inclusion programs, training and 

development, benefits, and succession 

planning for critical roles. The purpose 

of these proposed changes to the CPC 

Charter is to more closely align with 

OCC’s existing Human Resources 

programs and policies. 

Proposed Changes to OCC’s Regulatory 

Committee Charter 

Membership and Organization 

The SEC Governance Rules require 

that any Board committee with the 

authority to act on behalf of the Board 

must have at least the same percentage 

of independent directors as the Board 

itself.68 Because the Regulatory 

Committee, subject to the direction of 

the Board, is empowered to act on 

behalf of the Board, with respect to any 

matter necessary or appropriate to the 

accomplishment of the purpose and 

responsibilities set forth in the 

Regulatory Committee Charter, OCC’s 

proposed changes to the Regulatory 

Charter provide that at least a majority 

of the Committee must be composed of 

directors who are independent 

directors, consistent with Securities and 

Exchange Commission Rule 17Ad–25(e) 

and the judgment of the Board. 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 211 / Thursday, October 31, 2024 / Notices 86875 

69 Id. 

70 17 CFR 240.17Ad–25(c)(4)(i), (iii), (iv). 

71 17 CFR 240.17Ad–25(i). 

72 17 CFR 240.17Ad–25(i)(1)–(4). 

73 17 CFR 240.17Ad–25(i)(3). 

74OCC has included its Policy Governance 

Policy, which requires Board review and approval 

of the Third-Party Risk Management Framework, as 

confidential Exhibit 3G to File No SR–OCC–2024– 

015. 

75 17 CFR 240.17Ad–25(i). 

Proposed Changes to OCC’s Regulatory 

Committee Charter Identified During 

OCC’s Annual Review Process 

As part of OCC’s annual review 

process, OCC also proposes to make one 

minor grammatical update to the 

Regulatory Committee Charter by 

replacing the word ‘‘in’’ with the word 

‘‘is’’ where needed in a sentence under 

section II subpart B of the document. 

Proposed Changes to OCC’s Audit 

Committee Charter 

Membership and Organization 

The SEC Governance Rules require 

that any Board committee with the 

authority to act on behalf of the Board 

must have at least the same percentage 

of independent directors as the Board 

itself.69 Because the Audit Committee, 

subject to the direction of the Board, is 

empowered to act on behalf of the 

Board, with respect to any matter 

necessary or appropriate to the 

accomplishment of the purpose and 

responsibilities set forth in the Audit 

Committee Charter, OCC’s proposed 

changes to the Audit Committee Charter 

provide that at least a majority of the 

Committee must be composed of 

directors who are independent 

directors, consistent with Securities and 

Exchange Commission Rule 17Ad–25(e) 

and the judgment of the Board. 

Proposed Changes to OCC’s Fitness 

Standards 

Criteria Applicable to all Directors 

As described above, OCC already 

maintains Fitness Standards for 

directors. In addition to the requirement 

that the GNC specify the Fitness 

Standards and that the Fitness 

Standards be approved by the Board, the 

SEC Governance Rules also require that 

the GNC’s written evaluation process in 

regards to the Fitness Standards 

consider: (i) the nominee’s expertise, 

availability, and integrity, and 

demonstrate that the Board, taken as a 

whole, has a diversity of skills, 

knowledge experience and perspectives; 

(ii) the views of other stakeholders who 

may be affected by OCC’s decisions; and 

(iii) whether each nominee or director 

would meet the definition of 

independent director in the SEC 

Governance Rules and whether each 

nominee or director has a known 

material relationship with OCC or other 

specified persons.70 To align with these 

requirements more closely, OCC’s 

proposed changes to the Fitness 

Standards provide that in considering 

nominees for election or appointment to 

the Board, the GNC must consider 

whether the individual would help 

demonstrate that the Board, taken as a 

whole, has a diversity of skills, 

knowledge, experience, and 

perspectives and whether the individual 

understands and is able to consider the 

general position and views of other 

stakeholders who may be affected by the 

decisions of the Board of Directors, 

other than the owners of OCC and 

Clearing Members. 

Proposed Changes to OCC’s Fitness 

Standards Identified During OCC’s 

Annual Review Process 

To incorporate the proposed changes 

identified during OCC’s annual review 

process as it relates to the description of 

a Public Director, OCC also proposes 

changes to the criteria for Public 

Directors as outlined in the Fitness 

Standards. To align with the proposed 

changes in OCC’s Board Charter and ByLaws, OCC’s proposed changes to the 

Fitness Standards remove language that 

states the director must not have an 

affiliation with any national securities 

exchange, national securities 

association, designated contract market, 

futures commission merchant, or 

broker-dealer in securities, and replaces 

that with the additional criterion that 

the director must not be an associated 

person or employee of an: (i) entity that 

is registered or exempt from registration 

with the Securities and Exchange 

Commission or Commodity Futures 

Trading Commission; or (ii) affiliate of 

such an entity described in (i). OCC’s 

proposed changes also provide that for 

the avoidance of doubt, this criterion 

will not preclude a person from service 

as a Public Director solely based on 

some other relationship with an entity 

described in (i) or (ii) above that does 

not involve being an associated person 

or employee of the entity, such as might 

be the case, depending on the 

circumstances, in connection with 

serving as a director. OCC believes these 

proposed changes more closely align 

with the requirements under the SEC 

Governance Rules. 

Proposed Changes to OCC’s Third-Party 

Risk Management Framework 

The SEC Governance Rules require 

OCC to have written policies and 

procedures designed to address certain 

aspects of risk management in 

connection with relationships with 

service providers for core clearing 

agency services and require senior 

management to be responsible for 

establishing and the Board to be 

responsible for reviewing and approving 

such policies and procedures.71 More 

specifically, the SEC Governance Rules 

require, among other things, that senior 

management: (i) evaluate and document 

risks related to an agreement with a 

service provider for core services, as 

defined by the SEC Governance Rules; 

(ii) submit to the Board for review and 

approval any agreement establishing a 

relationship with a service provider for 

core services along with a risk 

evaluation; (iii) be responsible for 

establishing the policies and procedures 

that govern relationships and manage 

risks related to such agreements with 

service providers for cores service and 

require the Board to be responsible for 

review and approving such policies and 

procedures; and (iv) perform ongoing 

monitoring of service providers for core 

services and to report to the Board any 

action taken by senior management to 

remedy significant deterioration in 

performance, to address material issues, 

or to assess and document deficiencies 

that cannot be remedied.72

OCC’s existing Third-Party Risk 

Management Framework already meets 

certain requirements in the SEC 

Governance Rules.73 OCC’s Third-Party 

Risk Management Framework outlines 

OCC’s approach to identify, measure, 

monitor, and manage risks arising from 

third-party relationships including, but 

not limited to, those relationships with 

Clearing Members, Clearing Banks, 

custodians, liquidity providers, 

financial institutions, financial market 

utilities, exchanges, and vendors. In 

addition, OCC’s Third-Party Risk 

Management Framework is reviewed 

and approved by OCC’s Risk Committee 

and Board pursuant to OCC’s internal 

policies and procedures.74

To incorporate the remaining 

requirements of the SEC Governance 

Rules regarding review, approval, and 

monitoring of agreements with service 

providers for core services, OCC 

proposes several updates to section III of 

the Third-Party Risk Management 

Framework.75 First, OCC’s proposed 

changes revise the header in section III 

to include the words ‘‘Third-Party’’ 

before ‘‘Relationship Lifecycle’’ to 

provide further clarity and remain 

consistent with other headers 

throughout the document. 

In addition, OCC’s proposed changes 

to the Third-Party Risk Management 


lotter on DSK11XQN23PROD with NOTICES1
86876 Federal Register / Vol. 89, No. 211 / Thursday, October 31, 2024 / Notices 

76 17 CFR 240.17Ad–25(i)(1). 

77 17 CFR 240.17Ad–25(i)(2). 

78 17 CFR 240.17Ad–25(i)(1). 

79 17 CFR 240.17Ad–25(a). 

80 17 CFR 240.17Ad–25(i). 

Framework provide that certain thirdparties may constitute service providers 

for core services and are subject to 

enhanced lifecycle management by 

OCC’s management and Board. OCC’s 

proposed changes specify that this 

enhanced management applies at the 

initial on-boarding stage and on an 

ongoing basis. Consistent with the 

requirements in the SEC Governance 

Rules,76 OCC’s proposed changes 

provide that during the on-boarding 

stage and prior to entering into an 

agreement with a service provider for 

core services, OCC’s Management 

Committee will evaluate and document 

the risks related to the agreement, 

including under changes to 

circumstances and potential 

disruptions, and assess whether the 

risks can be managed in a manner 

consistent with the Third-Party Risk 

Management Framework (the ‘‘Risk 

Analysis’’). OCC’s proposed changes 

also clarify that prior to entering 

agreements establishing a relationship 

with a service provider for core services, 

OCC’s Management Committee will 

submit the agreement, as well as its Risk 

Analysis, to the Board for review and 

approval, in compliance with the 

requirements in the SEC Governance 

Rules.77

Furthermore, OCC’s proposed changes 

state that service providers for core 

services will be monitored on an 

ongoing basis. OCC’s proposed changes 

provide that OCC’s Management 

Committee evaluates performance of 

service providers for core services and 

either: (i) remedies significant 

deterioration in performance of the 

service provider for core services; (ii) 

addresses changing risks or material 

issues with the service provider for core 

services identified through such 

monitoring; or (iii) if such risks or 

material issues cannot be remedied, 

assesses and documents weaknesses or 

deficiencies with the service provider 

for core services. In addition, OCC’s 

proposed changes provide that OCC’s 

Management Committee will report to 

the Board for its evaluation any action 

taken by the Management Committee to 

remedy significant deterioration in 

performance of the service provider for 

core services or address changing risks 

or material issues with the service 

provider for core services. OCC’s 

proposed changes will clarify that if the 

risks or issues with the service provider 

for core services cannot be remedied, 

OCC’s Management Committee will 

assess and document the weaknesses 

and deficiencies and submit to the 

Board the documented weaknesses or 

deficiencies in the relationship with the 

service provider for core services. 

OCC’s existing Third-Party Risk 

Management Framework states that 

risks identified throughout the 

relationship lifecycle are reported and 

escalated through associated working 

groups. OCC’s proposed changes 

provide that each working group has a 

chair and designated Management 

Committee member who are responsible 

for identifying the matters to be 

escalated to the Management 

Committee, ‘‘in accordance with this 

Framework.’’ By including the reference 

‘‘in accordance with this Framework,’’ 

OCC believes this language aligns more 

closely with the requirements in the 

SEC Governance Rules.78

To align with the defined terms in the 

SEC Governance Rules,79 OCC’s 

proposed changes to the Third-Party 

Risk Management Framework include 

the definition of ‘‘Service Provider for 

Core Services.’’ OCC’s proposed changes 

define service provider for core services 

as any person that, through a written 

services provider agreement for services 

provided to or on behalf of OCC, on an 

ongoing basis, directly supports the 

delivery of clearance or settlement 

functionality or any other purposes 

material to the business of OCC. OCC 

believes these proposed changes to the 

Third-Party Risk Management 

Framework satisfy the requirements 

outlined in the SEC Governance Rules.80

Proposed Changes to OCC’s Third PartyRisk Management Framework Identified 

During OCC’s Annual Review Process 

OCC also proposes to incorporate 

additional edits to the Third-Party Risk 

Management Framework, as outlined 

below, to reflect the proposed changes 

determined through OCC’s annual 

review process. 

Under section I, Executive Summary, 

OCC proposes to expand the description 

of risks arising from ‘‘Exchanges’’ to 

risks arising from ‘‘Exchange 

Relationships.’’ This proposed change, 

which is also reflected in section IV, 

Third-Party Relationship Management, 

and throughout the remainder of the 

document, encompasses risks arising 

from third-party relationships including 

options exchanges, futures markets, 

OTC trade sources or loan markets. OCC 

believes this proposed change more 

clearly describes the current risk 

management activities related to thirdparty relationships including exchanges 

and those relationships that are not 

registered exchanges. OCC’s proposed 

changes also relocate the definition of 

Exchange Relationships from footnote 2 

to section V, Definitions, to promote 

clarity and consistency throughout the 

document. 

Under section II, Risk Identification, 

OCC proposes to expand the description 

of (i) Information Technology and 

Security risks and (ii) Legal and 

Regulatory risks. For Information 

Technology and Security risks, the 

current description acknowledges that 

risks arise when third-parties are unable 

to safeguard OCC data or maintain 

capabilities to support OCC’s 

operations. While the current 

description is accurate, it does not 

encompass the full scope of the current 

third-parties’ obligations required by 

OCC. OCC proposes to include that 

Information Technology and Security 

risks also arise when third-parties are 

unable to safeguard OCC’s systems, in 

addition to OCC data. OCC also 

proposes to incorporate the language ‘‘in 

accordance with OCC’s service 

standards’’ into the description to 

clearly outline the enforcement of 

responsibilities. OCC believes this 

change will better define Information 

Technology and Security risks from 

relationships with third-parties related 

to OCC. For Legal and Regulatory risks, 

OCC’s proposed changes provide that 

Legal and Regulatory risks arise when a 

third-party fails to fulfill its obligations 

to OCC or when OCC fails to fulfill its 

obligations to a third-party. OCC’s 

proposed changes provide that Legal 

and Regulatory risks also arise when a 

third-party fails to comply with 

regulatory standards and protocols 

agreed to with OCC. OCC believes these 

proposed changes more clearly define 

Legal and Regulatory risks that arise 

from relationships with third-parties. 

OCC also proposes to make minor, nonsubstantive changes to section II, such 

as decapitalizing the words ‘‘clearing 

fund’’ when needed. 

Under section III, Relationship 

Lifecycle, OCC proposes to revise 

specific language related to off-boarding 

of third-parties. The off-boarding section 

currently provides that OCC finalizes its 

third-party relationship lifecycle by 

completing ‘‘any operational tasks 

necessary to off-board the relationship.’’ 

OCC proposes to include the language 

‘‘in compliance with agreement terms’’ 

to clarify current risk management 

expectations and responsibilities 

relating to third-party off-boarding. This 

revision would be consistent with 

OCC’s current operations and offboarding processes. OCC also proposes 

to make several minor, non-substantive 

changes to this section, including 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 211 / Thursday, October 31, 2024 / Notices 86877 

81 15 U.S.C. 78q–1. 

82 15 U.S.C. 78q–1(b)(3)(F). 

83 Id. 

changing language from ‘‘determination 

to terminate’’ to ‘‘termination of,’’ and 

replacing the word ‘‘relationship’’ with 

‘‘engagement’’ when describing thirdparty arrangements with OCC to 

promote additional clarity. In addition, 

to provide additional clarity, OCC 

proposes to replace the word ‘‘defined’’ 

with ‘‘specified’’ when explaining the 

decision-making authority, functions 

and responsibilities in the working 

group procedure. 

Under section IV, Third-Party 

Relationship Management, OCC 

proposes to revise the header from 

‘‘Exchanges’’ to ‘‘Exchange 

Relationships’’ to reflect the proposed 

changes in section I. OCC’s proposed 

changes update the On-Boarding section 

under ‘‘Exchange Relationships’’ by 

revising the distribution methods of the 

summary activities of exchange 

relationship. The current description 

states that summaries of due diligence 

and on-boarding activities are presented 

to the Board of Directors for approval to 

launch. OCC proposes to clarify the 

reporting requirements by specifying 

where they should be reported. OCC’s 

proposed changes would direct the 

reporting of due diligence and onboarding activities to the Management 

Committee. Further, the proposed 

revisions would direct summaries of 

legal documents and requirements to 

the Board of Directors. These proposed 

revisions would update and clarify the 

description of OCC’s current approach 

to on-boarding third-parties without 

impacting current OCC operations. Also 

under section IV, Third-Party 

Relationship Management, OCC 

proposes to make changes to the 

Ongoing Monitoring sub-section by 

removing reference of legal risk related 

to Exchange Relationships, and 

including the language ‘‘and escalate 

identified legal risks to OCC’s Legal 

Department.’’ This proposed change 

clarifies the responsibilities of OCC’s 

business operations and TPRM teams. 

Legal risks related to Exchange 

Relationships are monitored by OCC 

legal, but if legal risks are identified by 

business operations or TPRM during the 

ongoing monitoring process, these legal 

risks should be escalated. OCC believes 

the proposed change will better describe 

current risk management activities 

related to ongoing monitoring of thirdparty relationships with exchanges. 

OCC also proposes to update language 

in the Off-Boarding sub-section by 

eliminating the specific language that 

states ‘‘such as limiting connectivity 

with the Exchange’’ when referencing 

the immediate actions OCC can take 

upon the termination of an Exchange 

Relationship. OCC proposes to remove 

this language to provide further 

clarification that limiting connectivity 

with an Exchange is not specific only to 

off-boarding situations; OCC’s action of 

limiting connectivity with an Exchange 

can occur in other situations as well. 

OCC believes the elimination of this 

language better aligns with OCC’s 

overall responsibility related to offboarding and provides for greater 

flexibility related to OCC’s immediate 

actions. Finally, OCC proposes several 

non-substantive, grammatical changes to 

the Ongoing Monitoring sub-section 

such as replacing the word 

‘‘communicate’’ with ‘‘communication 

of’’ and ‘‘seek’’ with ‘‘solicitation of.’’ 

Also under section IV, Third-Party 

Relationship Management, OCC 

proposes to make changes to the 

Vendors sub-section of the document. 

OCC’s proposed changes provide that 

prior to commencing on-boarding of a 

new technology vendor, implementing 

new capabilities, or services to existing 

technology, Information Technology 

reviews the request to identify solutions 

and analyze requirements to verify that 

they are in line with enterprise strategic 

requirements. OCC believes these 

proposed changes more clearly assign 

ownership and accountability for 

expectations around risk management 

for new vendors throughout OCC. In 

addition, in the On-Boarding section 

under Vendors, OCC’s proposed 

changes state that an agreement that 

addresses control and business 

requirements is then negotiated with the 

vendor and executed by authorized 

signatories designated through the 

process outlined in the Legal Services 

Policy. OCC’s proposed changes revise 

the language that ‘‘authorized 

signatories’’ rather than an ‘‘OCC 

officer’’ will be responsible for 

executing agreements that address 

control and business requirements. OCC 

believes the revised text more closely 

aligns with current practices. 

Furthermore, this revision would 

encourage OCC’s longstanding practices 

to update internal policies, directing 

staff towards correct procedures and 

personnel requirements. 

OCC’s Third-Party Risk Management 

Framework also states that vendor 

relationship managers (‘‘VRMs’’) and 

Third-Party Risk Management 

(‘‘TPRM’’) monitor vendors to assess 

whether they are delivering services as 

required by applicable agreements. To 

align with current OCC business 

practice and promote clear 

accountability, OCC’s proposed changes 

eliminate reference to ‘‘TPRM’’ because 

it is the VRMs who are responsible for 

monitoring vendors, while TPRM 

gathers information and escalates if 

necessary. 

Under section V, Definitions, OCC’s 

proposed changes in the Watch Level 

section include the addition of ‘‘risk 

management’’ in its list of deteriorations 

which signal a risk response. OCC 

believes this revision would better 

describe the current risk management 

methods related to watch level 

monitoring and would not substantively 

alter existing processes. 

Lastly, OCC’s proposed changes to the 

Third-Party Risk Management 

Framework reflect the name change as 

a result of the combination of two 

working groups. OCC’s Exchange 

Working Group and Vendor Risk 

Working Group will be combined to 

form the Exchange and Vendor Working 

Group, therefore OCC’s proposed 

changes throughout the Third-Party Risk 

Management Framework reflect the 

merger of these two groups. OCC’s 

proposed changes also reflect the 

change in the acronym of the new 

combined working group’s name. 

2. Statutory Basis 

OCC believes the proposed rule 

change is consistent with Section 17A of 

the Exchange Act.81 Section 

17A(b)(3)(F) of the Act 82 requires, 

among other things, that the rules of a 

clearing agency must be designed to 

promote the prompt and accurate 

clearance and settlement of securities 

transactions, safeguard securities and 

funds in its custody or control or for 

which it is responsible, and to foster 

cooperation and coordination with 

persons engaged in the clearance and 

settlement of securities transactions.83

OCC believes that the proposed rule 

changes are consistent with these 

requirements because the proposed 

changes are designed to, among other 

things, modify OCC’s governance 

documents such that: (i) OCC’s Board 

and Board-level committees are 

composed of independent directors, as 

defined by the SEC Governance Rules, 

(ii) OCC’s policies and procedures 

identify, mitigate or eliminate and 

document the identification, mitigation, 

or elimination of conflicts of interest, 

and (iii) OCC’s policies and procedures 

address certain aspects of risk 

management in connection with 

relationships with service providers for 

core clearing agency services. 

OCC believes the proposed changes to 

incorporate the independent director 

requirement help to promote the ability 

of the Board to perform its oversight of 


lotter on DSK11XQN23PROD with NOTICES1
86878 Federal Register / Vol. 89, No. 211 / Thursday, October 31, 2024 / Notices 

84 17 CFR 240.17Ad–22(e)(2)(i),(iv),(v). 

85 15 U.S.C. 78q–(b)(3)(I). 

management function, support a 

plurality of viewpoints voiced at the 

Board level, ensure a balance between 

stakeholders with divergent views, and 

reduce the likelihood that conflicts of 

interest may influence the Board. OCC 

believes that establishing requirements 

that the Board be comprised of a 

majority of directors who do not have a 

material relationship with the registered 

clearing agency or affiliate thereof helps 

to promote the integrity of OCC’s risk 

management function, and therefore 

helps to promote prompt and accurate 

clearance and settlement of securities 

transactions and safeguard the securities 

and funds which are in the custody or 

control of OCC or for which OCC is 

responsible, consistent with Section 

17A(b)(3)(F). 

OCC believes the proposed changes 

regarding the Board’s oversight role of 

senior management as it relates to 

management of risks from relationships 

with service providers for core services 

also help to promote the prompt and 

accurate clearance and settlement of 

securities transactions and safeguard 

securities and funds in its custody or 

control or for which OCC is responsible, 

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

The potential failure of a service 

provider for core services to perform its 

obligations could pose a significant 

operational risk to OCC and impact the 

ability for OCC to facilitate prompt and 

accurate clearance and settlement. 

Therefore, by requiring that senior 

management establish policies and 

procedures that govern relationships 

with service providers for core services, 

manage risks related to those 

relationships, and perform ongoing 

monitoring of those relationships, OCC 

believes these proposed changes help to 

promote the prompt and accurate 

clearance and settlement of securities 

transactions and safeguard securities 

and funds which are in the custody or 

control of OCC or for which OCC is 

responsible, consistent with Section 

17A(b)(3)(F). 

OCC’s proposed changes to its 

governance documents establish 

policies and procedures to identify, 

mitigate or eliminate and document the 

identification, mitigation, or elimination 

of conflicts of interest in the decisionmaking process involving directors or 

senior managers of OCC. OCC believes 

these proposed changes assist in 

promoting the integrity of OCC’s 

governance arrangements by helping to 

ensure that potential conflicts of 

interests are identified when they arise, 

and that such conflicts are subject to a 

transparent and uniform process of 

review, mitigation or elimination and 

documentation. By incorporating the 

proposed changes intended to address 

conflicts of interest related to directors 

and senior managers, OCC believes this 

will help to reduce conflicts that could 

undermine the decision-making process 

or interfere with fair representation and 

equitable treatment of clearing members 

or market participants. Therefore, OCC 

believes the proposed changes help to 

foster cooperation and coordination 

with persons engaged in the clearance 

and settlement of securities 

transactions, consistent with Section 

17A(b)(3)(F). 

Finally, OCC also believes the 

proposed changes are consistent with 

Rule 17Ad–22(e)(2). Rule 17Ad–22(e)(2) 

requires OCC to, among other things, 

provide for governance arrangements 

that are clear and transparent, establish 

that the board of directors and senior 

management have appropriate 

experience and skills to discharge their 

duties and responsibilities, and specify 

clear and direct lines of responsibility.84

Modifying OCC’s governance 

documents through the proposed 

changes described in Item III above 

would be consistent with these 

requirements because the changes 

would document in a clear, direct, and 

transparent way the independent 

director composition of the Board and 

Board-level committees, the 

responsibilities of the Board and Boardlevel committees as it relates to 

management of conflicts of interest, 

Board oversight, and management of 

risks for service providers for core 

services. In addition, OCC’s proposed 

changes clearly specify the Fitness 

Standards for serving as a director and 

the criteria applicable to all directors, 

which includes the consideration of 

whether the director nominee would 

help demonstrate that the Board, taken 

as a whole, has a diversity of skills, 

knowledge, experience and perspectives 

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

(B) Clearing Agency’s Statement on 

Burden on Competition 

Section 17A(b)(3)(I) of the Act 85

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 changes 

to modify OCC’s governance documents 

would impact or impose any burden on 

competition. The proposed changes 

would promote OCC’s compliance with 

the SEC Governance Rules that OCC 

must comply with by December 5, 2024 

and December 5, 2025. The proposed 

changes to OCC’s governance 

documents are designed to clearly 

articulate the newly established 

requirements of the SEC Governance 

Rules including, but not limited to, the 

Board and committee composition, 

independent directors, management of 

conflicts of interest, board oversight, 

and management of risks from 

relationships with service providers for 

core services. The proposed changes to 

OCC’s governance documents also aim 

to, among other things, increase 

transparency into board governance and 

improve the alignment of incentives 

among owners and participants of OCC 

by ensuring that a majority of Board 

members and Board-level committee 

members be independent directors, as 

defined by the SEC Governance Rules, 

and that functions and responsibilities 

of the Board and Board-level 

committees are clearly outlined. In 

addition, the proposed changes to OCC’s 

governance documents help to reduce 

the likelihood that conflicts of interest 

may influence the Board. These changes 

to OCC’s governance documents would 

apply to all Equity Exchanges and 

Clearing Members equally and would 

not disadvantage or favor any particular 

user in relation to another user. 

Therefore, OCC believes that the 

proposed changes would not impose 

any burden on competition. 

(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. 

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 selfregulatory organization consents, 

the Commission will: 

(A) by order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

The proposal shall not take effect 

until all regulatory actions required 

with respect to the proposal are 

completed. 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 211 / Thursday, October 31, 2024 / Notices 86879 

86 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange initially filed the proposed 

pricing change on March 1, 2024 (SR–ISE–2024– 

09). On April 29, 2024, the Exchange withdrew that 

filing and submitted SR–ISE–2024–16. The 

Exchange withdrew that filing on June 27, 2024 and 

replaced it with SR–ISE–2024–23. The Exchange 

withdrew SR–ISE–2024–23 and replaced it with 

SR–ISE–2024–44 on September 10, 2024. The 

instant filing replaces SR–ISE–2024–44. 

4The Exchange proposes to exclude the GPS 

Antenna fees from the proposed fee increase 

because, unlike the other fees in General 8, the 

Exchange recently increased its GPS Antenna fees. 

See Securities Exchange Act Release No. 34–99131 

(December 11, 2023), 88 FR 86979 (December 15, 

2023) (SR–ISE–2023–33). The Exchange also 

proposes to exclude the Cabinet Proximity Option 

Fee for cabinets with power density >10kW from 

the proposed fee increase because the Exchange 

recently established such fee. See Securities 

Exchange Act Release No. 34–100209 (May 22, 

2024), 89 FR 46512 (May 29, 2024) (SR–ISE–2024– 

19). Similarly, the Exchange proposes to exclude 

from the proposed fee increase those fees that the 

Exchange recently established for services in its 

new NY11–4 expansion facility. See Securities 

Exchange Act Release No. 34–101266 (October 7, 

2024), 89 FR 82654 (October 11, 2024) (SR–ISE– 

2024–47). 

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-regulations/self-regulatoryorganization-rulemaking); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

OCC–2024–015 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Vanessa Countryman, Secretary, 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 

20549–1090. 

All submissions should refer to file 

number SR–OCC–2024–015. 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–2024–015 and 

should be submitted on or before 

November 21, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.86

J. Matthew DeLesDernier, 

Deputy Secretary. 

[FR Doc. 2024–25322 Filed 10–30–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101441; File No. SR–ISE– 

2024–50] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Its Fees for 

Connectivity and Co-Location Services 

October 25, 2024. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on October 

11, 2024, Nasdaq ISE, LLC (‘‘ISE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by 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 proposes to amend the 

Exchange’s fees for connectivity and colocation services, as described further 

below. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/ise/rules, at the principal 

office of the Exchange, 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. 

A. Self-Regulatory Organization’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 amend the Exchange’s fees 

relating to connectivity and co-location 

services.3 Specifically, the Exchange 

proposes to raise its fees for 

connectivity and co-location services in 

General 8 as well as certain fees related 

to its Testing Facilities in Options 7, 

Section 8 by 10%, with certain 

exceptions. 

General 8, Section 1 includes the 

Exchange’s fees that relate to 

connectivity, including fees for cabinets, 

external telco/inter-cabinet connectivity 

fees, fees for connectivity to the 

Exchange, fees for connectivity to third 

party services, fees for market data 

connectivity, fees for cabinet power 

install, and fees for additional charges 

and services. General 8, Section 2 

includes the Exchange’s fees for direct 

connectivity services, including fees for 

direct circuit connection to the 

Exchange, fees for direct circuit 

connection to third party services, and 

fees for point of presence connectivity. 

With the exception of the Exchange’s 

GPS Antenna fees and the Cabinet 

Proximity Option Fee for cabinets with 

power density >10kW,4 the Exchange 

proposes to increase its fees throughout 

General 8 by 10%. 

In addition to increasing fees in 

General 8, the Exchange also proposes 

to increase certain fees in Options 7, 

Section 8, which relate to the Testing 


lotter on DSK11XQN23PROD with NOTICES1