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[Federal Register Volume 89, Number 248 (Friday, December 27, 2024)]
[Notices]
[Pages 105645-105650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-31089]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-102013; File No. SR-OCC-2024-017]

Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Update the Options Clearing Corporation's Schedule of Fees

December 20, 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 December 19, 2024, The Options Clearing 
Corporation (``OCC'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared primarily by OCC. OCC 
filed the proposed rule change pursuant to Section 19(b)(3)(A)(ii) \3\ 
of the Act and Rule 19b-4(f)(2) \4\ thereunder so that the proposal was 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change would revise OCC's schedule of fees 
effective January 1, 2025, to implement an increase in clearing fees. 
Specifically, OCC proposes to increase the per contract clearing fee 
from $0.02 to $0.025 and to remove the flat per transaction fee 
(currently $55.00 for transactions of 2,751 or more contracts) 
entirely. The fee change is designed to address OCC's anticipated cash 
flow needs based on interest rate forecasts, projected operating 
expenses, projected volumes, and capital needs. Proposed changes to 
OCC's schedule of fees are included [sic] as Exhibit 5 to File Number 
SR-OCC-2024-017. Material proposed to be added to OCC's schedule of 
fees as currently in effect is italicized and material proposed to be 
deleted is marked in strikethrough text. All capitalized terms not 
defined herein have the same meaning as set forth in the OCC By-Laws 
and Rules.\5\
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    \5\ OCC'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.

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[[Page 105646]]

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    In its filing with the Commission, OCC included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. OCC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of these 
statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

(1) Purpose
    As the sole clearing agency for standardized equity options listed 
on national securities exchanges registered with the Commission, and 
with respect to OCC's clearance and settlement of futures and stock 
loan transactions, OCC maintains policies and procedures to manage the 
risks borne by OCC as a central counterparty. One such risk that OCC 
manages is general business risk--that is, the risk of potential 
impairment to OCC's financial position resulting from a decline in 
revenues or an increase in expenses. To manage this risk and help to 
ensure that OCC can continue operations and services as a going concern 
if general business losses materialize, OCC has filed, and the 
Commission has approved, OCC's Capital Management Policy,\6\ which 
provides the framework by which OCC manages its capital. Amending OCC's 
schedule of fees is one action used by OCC to manage its capital.
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    \6\ See Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Concerning Updates to OCC's Capital Management Policy, 
Exchange Act Release No. 101151 (Sep. 24, 2024), 89 FR 79668 (Sep. 
30, 2024) (SR-OCC-2024-012); Order Approving Proposed Rule Change to 
Establish OCC's Persistent Minimum Skin-In-The-Game, Exchange Act 
Release No. 92038 (May 27, 2021), 86 FR 29861 (June 3, 2021) (SR-
OCC-2021-003); Order Approving Proposed Rule Change, as Modified by 
Partial Amendment No. 1, Concerning a Proposed Capital Management 
Policy That Would Support the Option Clearing Corporation's Function 
as a Systemically Important Financial Market Utility, Exchange Act 
Release No. 88029 (Jan. 24, 2020), 85 FR 5500 (Jan. 30, 2020) (SR-
OCC-2019-007); see also Notice of Filing of Partial Amendment No. 1 
and Notice of No Objection to Advance Notice, as Modified by Partial 
Amendment No. 1, Concerning a Proposed Capital Management Policy 
That Would Support the Option Clearing Corporation's Function as a 
Systemically Important Financial Market Utility, Exchange Act 
Release No. 87257 (Oct. 8, 2019), 84 FR 55194 (Oct. 15, 2019) (SR-
OCC-2019-805).
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    In accordance with the Capital Management Policy, OCC management 
reviews the fee schedule at regularly scheduled meetings and, 
considering factors including, but not limited to, interest rate 
forecasts, anticipated cashflows, projected operating expenses, 
projected volumes, and capital needs, recommends to the Board (or a 
committee to which the Board has delegated authority) whether a fee 
change should be made. In accordance with such procedures, OCC 
management recommended, and the Compensation and Performance Committee 
of OCC's Board approved, the proposed fee change. The purpose of this 
proposed rule change is to revise OCC's schedule of fees, effective 
January 1, 2025, to implement an increase in clearing fees, as further 
described below.
Proposed Fee Change
    OCC proposes to implement an increase in clearing fees, effective 
January 1, 2025, to better align its clearing fees with the costs of 
providing its clearing and settlement services to Clearing Members. OCC 
serves market participants as a financially responsible steward of 
clearing services while ensuring that it meets regulatory expectations 
and responsibly invests in its infrastructure. OCC has in place 
policies and procedures, including the Capital Management Policy, to 
control costs and regularly review fees and operating expenses, 
including during its annual budgeting process. Consistent with the 
Capital Management Policy, OCC's clearing fees are based on the sum of 
OCC's annual budgeted or forecasted operating expenses, a defined 
operating margin, cash flow needs and OCC's capital requirement. OCC 
currently has a two-tier clearing fee structure: OCC charges a $0.02 
clearing fee per contract for transactions involving 2,750 or fewer 
contracts (the ``Per Contract Clearing Fee''); and OCC charges a flat 
clearing fee of $55.00 per transaction for transactions of 2,751 or 
more contracts (the ``Per Transaction Clearing Fee''). After an 
evaluation of OCC's financial position in consideration of such 
factors, including interest rate forecasts, anticipated cash flows, 
projected operating expenses, projected volumes, and capital needs, OCC 
determined that it should increase the Per Contract Clearing Fee from 
$0.02 to $0.025 and remove the Per Transaction Clearing Fee. 
Accordingly, going forward, OCC will have a single tier clearing fee 
structure, i.e., OCC will charge one rate for clearing every contract, 
regardless of the size of the transaction.
    OCC has not increased clearing fees since 2019. On April 1, 2019, 
OCC increased the Per Contract Clearing Fee from $0.05 to $0.055 and 
adjusted the quantity of contracts at which the Per Transaction 
Clearing Fee applied from greater than 1,100 contracts to greater than 
999 contracts per transaction.\7\ Since that time, OCC decreased 
clearing fees twice in accordance with the Capital Management 
Policy.\8\ On September 1, 2020, OCC decreased the Per Contract 
Clearing Fee from $0.055 to $0.045 and adjusted the quantity of 
contracts at which the Per Transaction Clearing Fee applied from 
transactions with more than 999 contracts to transactions with more 
than 1,222 contracts per transaction.\9\ On June 1, 2021, OCC decreased 
the Per Contract Clearing Fee from $0.045 to its current fee of $0.02 
and adjusted the quantity of contracts at which the Per Transaction 
Clearing Fee applied from transactions with more than 1,222 contracts 
to transactions with more than 2,750 contracts.\10\ OCC also 
implemented a fee holiday for the period of November 2021 to December 
2021 to decrease all clearing fees to $0 for the last two months of 
2021.\11\
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    \7\ See Exchange Act Release No. 85322 (Mar. 14, 2019), 84 FR 
10377 (Mar. 20, 2019) (File No. SR-OCC-2019-001) (modifying the 
schedule of fees to (i) increase the Per Contract Clearing Fee from 
$0.05 to $0.055 and (ii) adjust the quantity of contracts at which 
the Per Transaction Clearing Fee begins from greater than 1,100 
contracts per transaction to greater than 999 contracts per 
transaction).
    \8\ Under the Capital Management Policy as drafted at the time 
of the fee decreases, if OCC's Equity is above 110% of the Target 
Capital Requirement and other approved capital needs, OCC's Board 
may use tools to lower costs for Clearing Members, including 
lowering fees, declaring a fee holiday, or issuing refunds. See 
Exchange Act Release No. 88029 (Jan. 24, 2020), 85 FR 5500, 5502 
(Jan. 30, 2020) (SR-OCC-2019-007). The Commission recently approved 
a change to OCC's Capital Management Policy, such that OCC's Board 
may use such tools to lower the costs for Clearing Members if liquid 
net assets funded by equity, rather than Equity, is above 110% of 
the Target Capital Requirement. See Exchange Act Release No. 101151 
(Sept. 24, 2024), 89 FR 79668, 79670 (Sept. 30, 2024) (File No. SR-
OCC-2024-12).
    \9\ See Exchange Act Release No. 89534 (Aug. 12, 2020), 85 FR 
50858 (Aug. 18, 2020) (File No. SR-OCC-2020-009) (modifying the 
schedule of fees to (i) decrease the Per Contract Clearing Fee from 
$0.055 to $0.045 and (ii) adjust the quantity of contracts at which 
the Per Transaction Clearing Fee begins from transactions with more 
than 999 contracts per transaction to transactions with more than 
1,222 contracts per transaction).
    \10\ See Exchange Act Release No. 91920 (May 18, 2021), 86 FR 
27916 (May 24, 2021) (File No. SR-OCC-2021-006) (modifying the 
schedule of fees to (i) decrease the Per Contract Clearing Fee from 
$0.045 to $0.02 and (ii) adjust the quantity of contracts at which 
the Per Transaction Clearing Fee begins from transactions with more 
than 1,222 contracts per transaction to transactions with more than 
2,750).
    \11\ See Exchange Act Release Nos. 93195 (Sept. 29, 2021), 86 FR 
55039 (Oct. 5, 2021) (File No. SR-OCC-2021-009) and 93612 (Nov. 18, 
2021), 86 FR 67108 (Nov. 24, 2021) (File No. SR-OCC-2021-012).

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[[Page 105647]]

    Since the current clearing fees were set in 2021, the U.S. economy 
has experienced (i) notable inflation \12\ and (ii) a fluctuating 
interest rate environment. For instance, the dollar had an average 
inflation rate of 5.18% per year between 2021 and 2024, producing a 
cumulative price increase of approximately 16%.\13\ While the proposed 
Per Contract Clearing Fee constitutes a 25% increase from the fee 
adopted in 2021, which is higher than the cumulative price increase, 
OCC believes the proposed fee increase is reasonable given the 
increased expenses associated with its technology infrastructure and 
the lower interest rate environment discussed below. Notably, the costs 
associated with OCC's technology hardware, including upfront and 
maintenance costs, have outpaced the rate of inflation. In addition to 
rising costs associated with inflation, decreasing interest rates will 
have a negative impact on what has been a reliable source of income for 
OCC. Moreover, inflation increases the price of goods and services over 
time, however, the price levels that result from those inflationary 
run-ups tend not to decrease even as inflation decreases, which results 
in OCC's costs remaining at those higher price levels.
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    \12\ Other self-regulatory organizations have referenced such 
inflation when filing fee increases. See, e.g., Exchange Act Release 
Nos. 101017 (Sep. 12, 2024), 89 FR 76545 (Sep. 18, 2024) (File No. 
SR-CboeBYX-2024-032), 100882 (Aug. 30, 2024), 89 FR 72542 (Sep. 5, 
2024) (File No. SR-BOX-2024-19).
    \13\ See the inflation calculator, measuring inflation as of 
October 16, 2024, at https://www.officialdata.org/us/inflation/2021?amount=1.
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    During a review of OCC's fees in 2024, and in consideration of 
factors including, but not limited to, interest rate forecasts, 
anticipated cash flows, projected operating expenses, projected 
volumes, and capital needs, OCC management recommended, and the 
Compensation and Performance Committee of OCC's Board approved, to 
increase the Per Contract Clearing Fee by $0.005 to $0.025 and remove 
the Per Transaction Clearing Fee. The Per Transaction Clearing Fee 
currently limits the fee for clearing transactions with more than 2,750 
contracts to $55.00 per transaction. Removal of the Per Transaction 
Clearing Fee would subject all transactions, regardless of contract 
size, to the same Per Contract Clearing Fee of $0.025. These changes 
are designed to address OCC's anticipated cash flow needs based on 
interest rate forecasts, projected operating expenses, projected 
volumes, and capital needs. In particular, as more fully described 
herein, OCC's anticipated cash flow needs have changed due to a decline 
in projected revenue from interest income; an increase in projected 
expenses associated with the development, maintenance, and 
modernization of OCC's technology infrastructure, including growing 
technology hardware costs and additional employee time; and an increase 
in capital needs, including due to inflation and increased investment 
in growing areas such as cybersecurity.
    The proposed fee change is intended to better align OCC's clearing 
fees with the costs of providing its clearing and settlement services 
to Clearing Members. In determining the fee change, OCC considered 
analyses based on certain assumptions and projections, including 
declining interest rates contributing to a decrease in revenue. The 
effective federal funds rate increased significantly from near zero 
beginning in early 2022 to peaks over 5% in the fall of 2023, 
generating additional income for OCC.\14\ Interest rates have recently 
decreased.\15\ The general expectation in the marketplace is that rates 
will continue to decline into 2025, which will have a negative impact 
on interest and investment revenue from clearing margin cash balances, 
which has been a reliable source of income for OCC over the past three 
years.
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    \14\ See Effective Federal Funds Rate at https://www.newyorkfed.org/markets/reference-rates/effr.
    \15\ Id. As of October 7, 2024, the effective Federal funds rate 
was 4.83%.
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    Moreover, OCC has increased investments in various areas, such as 
compliance, regulatory, legal, and cybersecurity, and headcount, since 
the last time it increased clearing fees. In addition, the costs 
associated with providing OCC's clearing and settlement services, 
including the maintenance, development, and modernization of its 
technology infrastructure, are significant and have increased OCC's 
cash flow needs year-over-year. Investment in OCC's technology 
infrastructure will allow OCC to continue to deliver best-in-class 
service from a risk management and settlement perspective. However, 
such investment has also required OCC to make significant capital 
expenditures, including information technology, employee time, and 
other resources needed to maintain, develop, and modernize its 
infrastructure.
    The proposed fee change would better align OCC's clearing fees with 
the costs of providing its clearing and settlement services to Clearing 
Members. To implement the proposed changes, OCC would update its 
schedule of fees as set out below.
[GRAPHIC] [TIFF OMITTED] TN27DE24.290

    The proposed fee change is designed to promote cost management in 
compliance with Rule 17Ad-22(e)(15) under the Exchange Act that, among 
other things, requires OCC to establish, implement, maintain and 
enforce written policies and procedures reasonably designed to 
identify, monitor, and manage its general business risk,\16\ which 
includes the risk of potential impairment to OCC's financial position 
resulting from a

[[Page 105648]]

decline in revenues or an increase in expenses. As described above, the 
proposed fee change would better align OCC's clearing fees with the 
costs of providing its clearing and settlement services to Clearing 
Members. Despite increased expenses associated with its technology 
infrastructure and notable inflation, OCC has not increased clearing 
fees since 2019.
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    \16\ See 17 CFR 240.17Ad-22(e)(15).
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    The proposed Per Contract Clearing Fee of $0.025 continues to be in 
line with, or even lower than, the Per Contract Clearing Fees OCC 
assessed in the past five years, which ranged from $0.055 in 2019 to 
$0.02 today. The proposed Per Contract Clearing Fee of $0.025 
represents a 54% decrease from the Per Contract Clearing Fee charged in 
2019. Moreover, removal of the Per Transaction Clearing Fee ensures 
that Clearing Members are charged the same Per Contract Clearing Fee 
per transaction regardless of the size of such transaction. OCC 
believes that charging all Clearing Members the same fee, regardless of 
transaction size, equitably and reasonably allocates the cost of 
providing clearance and settlement services for a given transaction 
regardless of size.\17\ In particular, OCC believes that removing the 
Per Transaction Clearing Fee is equitable because all transactions will 
be charged the same fee regardless of size. OCC also believes that 
removing the Per Transaction Clearing Fee is reasonable because all 
transactions will be charged the same fee of $0.025 per contract, which 
continues to be in line with, or even lower than, the Per Contract 
Clearing Fees OCC assessed in the past five years, as noted above.\18\
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    \17\ See confidential Exhibit 3 to SR-OCC-2024-017 for 
additional detail and analysis regarding the proposed fee change. 
Removing the Per Transaction Clearing Fee allows OCC to limit the 
Per Contract Clearing Fee increase to $0.005, which minimizes impact 
while equitably allocating the cost of providing clearance and 
settlement services for a given transaction regardless of size.
    \18\ Other self-regulatory organizations have filed to remove 
fee caps from their fee schedules. See, e.g., Exchange Act Release 
Nos. 93873 (Dec. 29, 2021), 87 FR 508 (Jan. 5, 2022) (File No. SR-
NSCC-2021-017), 93562 (Nov. 12, 2021), 86 FR 64554 (Nov. 18, 2021) 
(File No. SR-BOX-2021-026).
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    OCC reviewed volume and clearing fees OCC assessed from June 2021 
\19\ through November 2024 to determine the impact of the proposed 
change. OCC determined that the average clearing fee per contract per 
year, including fees generated by the Per Transaction Clearing Fee, was 
approximately $0.019 per contract, which represents only a 5% decrease 
from the lowest per contract clearing fee charged during this time 
frame, i.e., $0.02. Most recently, from January through November 2024, 
the average clearing fee per contract was $0.019, including the Per 
Transaction Clearing Fee, and would have been $0.020 without the Per 
Transaction Clearing Fee, which represents a 5% difference and shows a 
limited impact to Clearing Members from the removal of the Per 
Transaction Clearing Fee.
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    \19\ Due to the fee holiday in November and December 2021, the 
average clearing fee per contract for 2021 was calculated using data 
through October 31, 2021.
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    Furthermore, OCC did not intend the Per Transaction Clearing Fee to 
incentivize transactions over a certain size, nor does OCC believe it 
is necessary for OCC to provide an incentive for such transactions. The 
Per Transaction Clearing Fee is based on the longstanding structure of 
OCC's schedule of fees, which has historically included various tiers 
and caps.\20\ In 2016, OCC filed to modify the schedule of fees to 
adopt a flat, per contract, clearing fee subject to a fixed dollar cap, 
which would promote simplicity and transparency and allow users to 
execute trades without regard to size.\21\ The proposed changes would 
allow OCC to continue to promote simplicity and transparency in its 
schedule of fees by moving to a single tier clearing fee structure, 
which removes the Per Transaction Clearing Fee. As discussed, such 
changes limit the Per Contract Clearing Fee increase to $0.005 while 
equitably allocating the cost of providing clearance and settlement 
services for a given transaction regardless of size.\22\ As described 
above, OCC believes that the Per Contract Clearing Fee is reasonable 
and that it would not be discriminatory or prohibitive to remove the 
Per Transaction Clearing Fee for those Clearing Members that currently 
submit transactions with more than 2,750 contracts such that Clearing 
Members would continue to execute transactions without regard to 
size.\23\ At this time, OCC believes the proposed fee change is 
appropriate in order to raise fees to more closely align with its cash 
flow needs. Such change would ensure that OCC continues to serve market 
participants as a financially responsible steward of clearing services 
while ensuring that it meets regulatory expectations and responsibly 
invests in its infrastructure.
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    \20\ See Exchange Act Release No. 55709 (May 4, 2007), 72 FR 
26669 (May 10, 2007) (File No. SR-OCC-2007-05).
    \21\ See Exchange Act Release No. 77336 (Mar. 10, 2016), 81 FR 
14153 (Mar. 16, 2016) (File No. SR-OCC-2016-005).
    \22\ See supra note 17.
    \23\ OCC believes that removing the Per Transaction Clearing Fee 
would not unfairly disadvantage or burden smaller market 
participants, as larger market participants tend to benefit more 
from the Per Transaction Clearing Fee due to their trading activity.
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Implementation Timeframe
    OCC proposes to make the fee change effective January 1, 2025. To 
provide Clearing Members with adequate time to make any necessary 
adjustments, OCC has provided notice of such changes by Information 
Memorandum at least 30 calendar days in advance of the effective 
date.\24\ This ensures that the industry is prepared to process the new 
fee without disruption. Additionally, OCC would not make the fee change 
operative until after the time required to self-certify the proposed 
change with the Commodity Futures Trading Commission (``CFTC'').
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    \24\ The Information Memorandum can be found on OCC's public 
website: https://infomemo.theocc.com/infomemos?number=55624.
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(2) Statutory Basis
    OCC believes the proposed rule change is consistent with the Act 
\25\ and the rules and regulations thereunder. In particular, OCC 
believes that the proposed fee change is consistent with Section 
17A(b)(3)(D) of the Act,\26\ which requires that the rules of a 
clearing agency provide for the equitable allocation of reasonable 
dues, fees, and other charges among its participants.
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    \25\ 15 U.S.C. 78a, et seq.
    \26\ 15 U.S.C. 78q-1(b)(3)(D).
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    OCC believes that the proposed fee change is reasonable. The 
proposed fee change is intended to better align OCC's clearing fees 
with the costs of providing its clearing and settlement services to 
Clearing Members by ensuring that OCC continues to maintain sufficient 
reserves to cover OCC's cash flows and address potential business or 
operational losses so that OCC can continue to meet its obligations as 
a systemically important financial market utility to Clearing Members 
and the general public if such losses were to materialize. OCC believes 
the proposed fee change is reasonable given increased expenses 
associated with its technology infrastructure, notable inflation, and 
the fluctuating interest rate environment, as discussed above. With 
respect to the removal of the Per Transaction Clearing Fee, OCC 
believes that charging all Clearing Members a flat fee per contract is 
reasonable as it equitably allocates the cost of providing clearance 
and settlement services for a given transaction regardless of size. 
Further, OCC does not believe the proposed Per Contract Clearing Fee 
would create a financial burden as it continues to be in line with, or 
even lower than, the clearing fees assessed by OCC over the past five 
years. OCC also does not believe that removal of the Per

[[Page 105649]]

Transaction Clearing Fee would create a financial burden as it ensures 
that Clearing Members are charged the same Per Contract Clearing Fee 
per transaction regardless of the size of such transaction.
    As discussed above, OCC determined that the average clearing fee 
per contract per year from June 2021 \27\ through November 2024, 
including fees generated by the Per Transaction Clearing Fee, 
represented only a 5% decrease from the lowest Per Contract Clearing 
Fee charged during this time frame. From January through November 2024, 
the average clearing fee per contract was $0.019, including the Per 
Transaction Clearing Fee, and would have been $0.020 without the Per 
Transaction Clearing Fee, which represents a 5% difference and shows a 
limited impact to Clearing Members from the removal of the Per 
Transaction Clearing Fee. OCC believes that the Per Contract Clearing 
Fee is reasonable and would not be discriminatory without the Per 
Transaction Clearing Fee for those Clearing Members that currently 
submit transactions with more than 2,750 contracts. OCC thus believes 
that it does not constitute an inequitable allocation of fees and is 
not unfairly discriminatory to remove the Per Transaction Clearing Fee. 
In accordance with its current policies and procedures, OCC will 
continue to evaluate the fee schedule at regularly scheduled meetings 
to determine if additional changes, including fee decreases, are 
necessary or appropriate at such time, including once OCC's technology 
infrastructure modernization initiative is complete.
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    \27\ See supra note 19.
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    OCC also believes that the proposed fee change would result in an 
equitable allocation of fees among its participants because it would be 
equally applicable to all Clearing Members transacting at any given 
level of contract volume. As a result, OCC believes that the proposed 
change to OCC's fee schedule provides for the equitable allocation of 
reasonable fees in accordance with Section 17A(b)(3)(D) of the Act.\28\
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    \28\ 15 U.S.C. 78q-1(b)(3)(D).
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    In addition, OCC believes that the proposed rule change is 
consistent with Rule 17Ad-22(e)(15), which requires that OCC establish, 
implement, maintain and enforce written policies and procedures 
reasonably designed to identify, monitor, and manage OCC's general 
business risk and hold sufficient liquid net assets funded by equity to 
cover potential general business losses so that OCC can continue 
operations and services as a going concern if those losses 
materialize.\29\ The proposed changes are designed to promote cost 
management in compliance with this Rule. As described above, the 
proposed fee change would better align OCC's clearing fees with the 
costs of providing its clearing and settlement services to Clearing 
Members to ensure that OCC continues to maintains sufficient reserves 
to cover OCC's cash flow needs and address potential business or 
operational losses so that OCC can continue to meet its obligations as 
a systemically important financial market utility to Clearing Members 
and the general public if such losses were to materialize. Therefore, 
OCC believes that the proposed changes to OCC's schedule of fees are 
consistent with Rule 17Ad-22(e)(15).\30\
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    \29\ 17 CFR 240.17Ad-22(e)(15).
    \30\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

    Section 17A(b)(3)(I) of the Act \31\ requires that the rules of a 
clearing agency not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act. OCC does not 
believe that the proposed rule change would have any impact or impose a 
burden on competition. OCC believes that the proposed rule change would 
not disadvantage or favor any particular user of OCC's services in 
relationship to another user because the proposed fee change would 
apply equally to all Clearing Members. In addition, OCC does not 
believe that the proposed Per Contract Clearing Fee imposes a 
significant burden as the proposed fee continues to be in line with, or 
even lower than, the clearing fees assessed by OCC over the past five 
years. OCC also does not believe that the removal of the Per 
Transaction Clearing Fee imposes a significant burden as it ensures 
that Clearing Members are charged the same Per Contract Clearing Fee 
per transaction regardless of the size of such transaction. 
Accordingly, OCC does not believe that the proposed rule change would 
have any impact or impose a burden on competition.
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    \31\ 15 U.S.C. 78q-1(b)(3)(I).
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(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants or Others

    Written comments were not and are not intended to be solicited with 
respect to the proposed rule change and none have been received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \32\ and paragraph (f) of Rule 19b-4 \33\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. The proposal shall 
not take effect until all regulatory actions required with respect to 
the proposal are completed.\34\
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    \32\ 15 U.S.C. 78s(b)(3)(A).
    \33\ 17 CFR 240.19b-4(f).
    \34\ Notwithstanding its immediate effectiveness, implementation 
of this rule change will be delayed until this change is deemed 
certified under CFTC Regulation 40.6.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-OCC-2024-017 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-OCC-2024-017. 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

[[Page 105650]]

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/Company-Information/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-2024-017 and 
should be submitted on or before January 17, 2025.
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    \35\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-31089 Filed 12-26-24; 8:45 am]
BILLING CODE 8011-01-P
```