12232 Federal Register / Vol. 80, No. 44 / Friday, March 6, 2015 / Notices 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 204.19b–4. On October 15, 2014, OCC 

also filed an emergency notice with the 

Commission to suspend the effectiveness of the 

second sentence of Rule 1001(a). See infra note 10 

and accompanying discussion. 

3Exchange Act Release No. 73685 (November 25, 

2014) 78 FR 71479 (December 2, 2014) (SR–OCC– 

2014–21). 

4 Id. 

5On January 5, 2015, pursuant to Section 

19(b)(2)(A)(ii)(II) of the Exchange Act, as amended, 

OCC consented to an extension until March 2, 2015, 

for the Commission to approve the proposed rule 

change, disapprove the Proposed Rule Change, or 

institute proceedings to determine whether to 

disapprove the Proposed Rule Change. 15 U.S.C. 

78s(b)(2)(A)(ii)(II). 

6 15 U.S.C. 78s(b)(2)(B). 

7OCC Rule 1001(a). 

8See OCC By-Laws, Article IX, Section 14(c). 

9 Id. 

10On October 15, 2014, OCC also filed an 

emergency notice with the Commission pursuant to 

Section 806(e)(2) of the Payment, Clearing, and 

Settlement Supervision Act of 2010 (‘‘Clearing 

Supervision Act’’). 12 U.S.C. 5465(e)(2). See 

Securities Exchange Act Release No. 73579 

(November 12, 2014), 79 FR 68747 (November 18, 

2014) (SR–OCC–2014–807). 

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 Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing will also be available for 

inspection and copying at the NYSE’s 

principal office and on its Internet Web 

site at www.nyse.com. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–NYSE– 

2015–08 and should be submitted on or 

before March 27, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–05159 Filed 3–5–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74406; File No. SR–OCC– 

2014–21] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove a 

Proposed Rule Change in Order To 

Permit OCC To Adjust the Size of Its 

Clearing Fund on an Intra-Month Basis 

March 2, 2015. 

I. Introduction 

On November 13, 2014, The Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–OCC–2014–21 

(‘‘Proposed Rule Change’’) pursuant to 

Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Exchange 

Act’’) 1 and Rule 19b–4 thereunder.2 In 

the Proposed Rule Change, OCC 

proposes to amend its Rule 1001(a) to 

delete the requirement that OCC 

readjust the size of its clearing fund on 

a monthly basis.3 On December 2, 2014, 

the proposed rule change was published 

in the Federal Register.4 The 

Commission received no comments to 

the Proposed Rule Change.5 This order 

institutes proceedings under Section 

19(b)(2)(B) of the Exchange Act 6 to 

determine whether to approve or 

disapprove the Proposed Rule Change. 

II. Description of the Proposed Rule 

Change 

OCC proposed this Proposed Rule 

Change to permit OCC to collect 

additional financial resources from its 

clearing members by increasing the size 

of its clearing fund on an intra-month 

basis when OCC determines that such 

action should be taken to ensure the 

clearing fund has sufficient resources to 

protect OCC against potential losses 

under simulated default scenarios. 

Specifically, OCC’s Proposed Rule 

Change proposes to amend Rule 1001(a) 

to delete the second sentence, which 

states, ‘‘[s]uch [clearing fund resizing 

calculations] shall be made on a daily 

basis, and the size of the Clearing Fund 

shall be readjusted monthly based upon 

the average of such daily calculations 

performed during the preceding 

month.’’ 7

A. Background 

In emergency circumstances and 

subject to certain conditions, Article IX, 

Section 14, of OCC’s By-Laws permit 

OCC’s Board of Directors, Executive 

Chairman, or President to waive or 

suspend its by-laws, rules, policies and 

procedures, or any other rules issued by 

OCC, or extend the time fixed thereby 

for the doing of any act or acts for up 

to thirty calendar days. To extend such 

a wavier or suspension for more than 

thirty calendar days, OCC’s by-laws 

require it to submit a proposed rule 

change to the Commission seeking 

approval of such waiver.8 Upon 

submission of a rule filing, the waiver 

may continue in effect until the 

Commission approves or disapproves 

the proposed rule change.9

Although OCC monitors the 

sufficiency of its clearing fund on a 

daily basis, OCC Rule 1001(a) provides 

that it may only readjust the size of the 

clearing fund on a monthly basis. On 

October 15, 2014, in order to address 

certain unanticipated intra-month 

market volatility OCC’s Executive 

Chairman, pursuant to emergency 

authority, temporarily waived the OCC 

Rule 1001(a) requirement that OCC 

readjust the size of its clearing fund on 

a monthly basis, allowing OCC to resize 

the clearing fund intra-month. OCC was 

concerned that its current financial 

resources might not meet the total 

financial resources required to cover the 

default of its largest participant family. 

The waiver permitted OCC to increase 

the size of the clearing fund for the 

remainder of October 2014, prior to the 

next monthly resizing scheduled for the 

first business day of November 2014. As 

a result of the emergency action, OCC’s 

clearing fund for October 2014 was 

increased by $1.8 billion to a total 

amount of $5.8 billion. 

B. Proposed Rule Change SR–OCC– 

2014–21 

OCC submitted the Proposed Rule 

Change, which amends its Rule 1001(a) 

by deleting the provision that requires 

OCC to readjust the size of its clearing 

fund on a monthly basis, allowing OCC 

to continue to collect additional 

financial resources from its clearing 

membership by increasing the size of its 

clearing fund on an intra-month basis 

when OCC determines such action 

should be taken so that the clearing 

fund is sufficient to protect OCC against 

potential loss under simulated default 

scenarios.10 OCC stated that it took this 

action to respond to the potential risk 

under prevailing market conditions that 

the clearing fund could be underfunded, 

which could have affected OCC’s ability 

to provide services in a safe and sound 

manner. As noted, OCC’s waiver of the 

provisions of the second sentence of 

Rule 1001(a) is permitted to continue for 

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Federal Register / Vol. 80, No. 44 / Friday, March 6, 2015 / Notices 12233 

11See supra note 8. 

12See Information Memorandum #35507, dated 

October 31, 2014, http://www.theocc.com/clearing/ 

clearing-infomemos/infomemos1.jsp. 

13See Exchange Release No. 74091 (January 20, 

2015), 80 FR 4001 (January 26, 2015) (SR–OCC– 

2014–811, as modified by Amendment No. 1); 

Exchange Act Release No. 73853 (December 16, 

2014), 79 FR 76417 (December 22, 2014) (SR–OCC– 

2014–22, as modified by Amendment No. 1). 

14On January 27, 2015, the Commission 

requested additional information regarding 

Advance Notice SR–OCC–2014–811, which tolled 

the review period pursuant to Section 806(e)(1) of 

the Clearing Supervision Act. 12 U.S.C. 5465(e)(1). 

OCC has also voluntarily extended the statutory 

review period for the review pursuant to Exchange 

Act Section 19(b)(2)(A)(ii)(II). 15 U.S.C. 

78s(B)(2)(A)(ii)(II). 

15 15 U.S.C. 78s(b)(2)(B). 

16 15 U.S.C. 78s(b)(2)(B). 

17See 15 U.S.C. 78q–1(b)(3)(F). 

18See http://optionsclearing.com/components/

docs/about/occ_financial_guarantee.pdf. 

19See supra note 13 and accompanying text. 

no more than thirty calendar days 

unless OCC submits a proposed rule 

change under Section 19 of the 

Exchange Act seeking approval of such 

waiver.11 By filing this proposed rule 

change, OCC preserved the suspended 

effectiveness of the second sentence of 

Rule 1001(a) beyond thirty calendar 

days. 

OCC stated in its filing that it believes 

that the proposed rule change is 

appropriate: (i) To permit OCC to resize 

the clearing fund more frequently than 

monthly; and (ii) to determine the 

clearing fund’s size in an amount 

sufficient to protect OCC from loss by 

relying on a broader range of sound risk 

management practices than only the 

average daily calculations under Rule 

1001(a) that are performed during the 

preceding calendar month. OCC stated 

that it would use this authority to adjust 

the size of its clearing fund on an intramonth basis only to increase the size of 

the Clearing Fund where appropriate, 

not to decrease the size of the Clearing 

Fund. In continued reliance on the 

emergency rule waiver and the 

emergency notice, OCC set the 

November 2014 clearing fund size at 

$7.8 billion, which included an amount 

determined by OCC to be sufficient to 

protect OCC against loss under 

simulated default scenarios (i.e., $6 

billion), plus a prudential margin of 

safety (the additional $1.8 billion 

collected in October).12

C. Subsequent OCC Filings 

On December 1, 2014, OCC filed an 

Advance Notice pursuant to Section 

806(e)(1) of the Clearing Supervision 

Act and Exchange Act Rule 19b– 

4(n)(1)(i)) and a corresponding proposed 

rule change, to establish procedures 

regarding the monthly resizing of the 

clearing fund and the addition of 

financial resources through intra-day 

margin calls and/or an intra-month 

increase of the clearing fund to ensure 

adequate financial resources.13 The 

monthly clearing fund sizing procedures 

set forth in the advance notice and 

proposed rule change are based on 

broader risk management practices and 

establish the procedures that OCC 

would use to determine the size of the 

clearing fund on a monthly basis. These 

filings, however, do not provide OCC 

with authority to resize the clearing 

fund intra-month. Both filings are 

pending consideration by the 

Commission.14 By their terms, the 

proposals as identified in this advanced 

notice and proposed rule change will 

not take effect until all regulatory 

actions required with respect to the 

proposed rule change presently at issue 

are completed. 

III. Proceedings To Determine Whether 

To Approve or Disapprove SR–OCC– 

2014–21 and Grounds for Disapproval 

Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 15 to determine 

whether the proposed rule change 

should be approved or disapproved. 

Institution of proceedings is appropriate 

at this time in view of the legal and 

policy issues raised by the Proposed 

Rule Change. As noted above, 

institution of proceedings does not 

indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, the 

Commission seeks and encourages 

interested persons to comment on the 

Proposed Rule Change, and provide the 

Commission with arguments to support 

the Commission’s analysis as to whether 

to approve or disapprove the Proposed 

Rule Change, as amended. 

Pursuant to Section 19(b)(2)(B) of the 

Exchange Act,16 the Commission is 

providing notice of the grounds for 

disapproval under consideration. The 

Commission is instituting proceedings 

to allow for additional analysis of, and 

input from commenters with respect to, 

the Proposed Rule Change’s consistency 

with Section 17A of the Exchange Act, 

and in particular, Section 17A(b)(3)(F) 

of the Exchange Act, which requires, 

among other things, that the rules of a 

clearing agency must: (i) Assure the 

safeguarding of securities and funds 

which are in the custody or control of 

a clearing agency; and (ii) to protect 

investors and the public interest.17

Here, the Proposed Rule Change is 

proposing to eliminate the currently 

waived second sentence of Rule 1001(a), 

which would result in the elimination 

of the monthly resizing requirement. In 

the absence of an alternative, OCC’s 

rules are devoid of any timeframes 

within which OCC would be required to 

resize its clearing fund. OCC’s clearing 

fund reinforces OCC’s ability to protect 

against a clearing member’s default, and 

as such, OCC’s clearing fund size (and 

calculation thereof) would correlate 

directly with OCC’s ability to protect the 

clearing agency and its members against 

default.18 Without a robust framework 

and specific requirements in OCC’s 

rules to resize the clearing fund on an 

expressed and periodic basis, it is not 

apparent that OCC will have sufficient 

financial resources to manage the risks 

associated with the default of one or 

more clearing members. Furthermore, 

without such a provision in OCC’s rules, 

clearing members may not be 

sufficiently prepared to fund OCC’s 

clearing fund calls when such calls are 

made. 

With only pending proposals before 

the Commission for determining the 

clearing fund’s size,19 the Proposed Rule 

Change raises concerns about how OCC 

will safeguard securities and funds that 

are in its custody or control, as well as 

how the Proposed Rule Change will 

protect investors and the public interest 

in the absence of any clearing fund 

resizing requirements. Consequently, 

the Commission believes that significant 

questions remain as to whether the 

Proposed Rule Change is consistent 

with the requirements of the Exchange 

Act, particularly when considered in 

combination with OCC’s other proposed 

rule changes and advance notices 

currently pending before the 

Commission. Section 19(b)(2)(B) of the 

Exchange Act provides that proceedings 

to determine whether to approve or 

disapprove a proposed rule change must 

be concluded within 180 days of the 

date of publication of notice of the filing 

of the Proposed Rule Change. The time 

for conclusion of the proceedings may 

be extended for up to an additional 60 

days if the Commission finds good 

cause for such extension and publishes 

its reasons for so finding or if the selfregulatory organization consents to the 

extension. 

IV. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the concerns 

identified above, as well as any others 

they may have with the Proposed Rule 

Change. In particular, the Commission 

invites the written views of interested 

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12234 Federal Register / Vol. 80, No. 44 / Friday, March 6, 2015 / Notices 

20Section 19(b)(2) of the Exchange Act, as 

amended by the Securities Acts Amendments of 

1975, Pub. L. 94–29, 89 Stat. 97 (1975), grants the 

Commission flexibility to determine what type of 

proceeding—either oral or notice and opportunity 

for written comments—is appropriate for 

consideration of a particular proposal by a selfregulatory organization. See Securities Acts 

Amendments of 1975, Report of the Senate 

Committee on Banking, Housing and Urban Affairs 

to Accompany S. 249, S. Rep. No. 75, 94th Cong., 

1st Sess. 30 (1975). 

21 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 73821 

(December 11, 2014), 79 FR 75217 (‘‘Notice’’). 

4See Securities Exchange Act Release No. 74184, 

80 FR 6558 (February 5, 2015). 

5While a company is not currently subject to the 

compliance periods in the Late Filer Rule in 

connection with the failure to timely file a Form 

persons concerning whether the 

proposed rule change is inconsistent 

with Section 17A of the Exchange Act 

or any other provision of the Exchange 

Act, or the rules and regulations 

thereunder. Although there do not 

appear to be any issues relevant to 

approval or disapproval which would 

be facilitated by an oral presentation of 

views, data, and arguments, the 

Commission will consider, pursuant to 

Rule 19b–4, any request for an 

opportunity to make an oral 

presentation.20

Interested persons are invited to 

submit written data, views, and 

arguments on or before March 27, 2015. 

Any person who wishes to file a rebuttal 

to any other person’s submission must 

file that rebuttal on or before April 10, 

2015. Comments may be submitted by 

any of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

OCC–2014–21 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–OCC–2014–21. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filings also will be available for 

inspection and copying at the principal 

office of OCC and on OCC’s Web site at 

http://www.theocc.com/components/

docs/legal/rules_and_bylaws/sr_occ_14_

21.pdf. All comments received will be 

posted without change; the Commission 

does not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. 

All submissions should refer to File 

Number SR–OCC–2014–21 and should 

be submitted on or before March 27, 

2015. If comments are received, any 

rebuttal comments should be submitted 

on or before April 10, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–05160 Filed 3–5–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74412; File No. SR–NYSE– 

2014–65] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Order 

Approving a Proposed Rule Change 

Amending Its Continued Listing 

Requirements, as Set Forth in Section 

802.01E of the Exchange’s Listed 

Company Manual, in Relation to the 

Late Filing of a Company’s Annual or 

Quarterly Report With the Securities 

and Exchange Commission 

March 2, 2015. 

I. Introduction 

On December 4, 2014, New York 

Stock Exchange LLC (‘‘NYSE’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’), pursuant to section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend its continued listing 

requirements, set forth in section 

802.01E of its Listed Company Manual, 

with respect to companies whose 

required annual or quarterly reports are 

late or defective. The proposed rule 

change was published for comment in 

the Federal Register on December 17, 

2014.3 On January 30, 2015, the 

Commission designated a longer period 

for Commission action on the proposed 

rule change, until March 17, 2015.4 The 

Commission received no comments on 

the proposal. This order approves the 

proposed rule change. 

II. Description of the Proposal 

The Exchange proposes to amend 

section 802.01E of its Listed Company 

Manual (the ‘‘Late Filer Rule’’) to: (i) 

Expand the rule to impose a maximum 

period within which a company must 

file a late quarterly report on Form 

10–Q in order to maintain its listing, 

and (ii) clarify the Exchange’s treatment 

of companies whose annual or quarterly 

reports are defective at the time of filing 

or become defective at some subsequent 

date. 

Currently, the Late Filer Rule deems 

a listed company to be delinquent in 

filing its annual report on Forms 10–K, 

20–F, 40–F or N–CSR with the 

Commission if it fails to submit the 

filing by the date such report was 

required to be filed by the applicable 

form, or if a Form 12b–25 was timely 

filed with the Commission, the 

extended filing due date for the annual 

report. During the six-month period 

from the date of such delinquency, the 

Exchange monitors the company and 

the status of the delinquent annual 

report, including through contact with 

the company, until the filing 

delinquency is cured. If the company 

fails to cure such delinquency within 

the initial six-month period, the 

Exchange may, in its sole discretion, 

allow the company’s securities to be 

traded for up to an additional six-month 

period depending on the company’s 

specific circumstances. The Exchange 

will commence suspension and 

delisting procedures in accordance with 

Section 804.00 of the Listed Company 

Manual if the Exchange determines that 

an additional trading period of up to six 

months is not appropriate, or if the 

Exchange determines that an additional 

trading period of up to six months is 

appropriate and the company fails to 

file its annual report by the end of the 

additional period. 

A company is not currently subject to 

the compliance periods set forth in the 

Late Filer Rule in connection with a 

failure to timely file a quarterly report 

on Form 10–Q with the SEC.5 Moreover, 

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