Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 44105 

42 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3OCC’s By-Laws and Rules can be found on 

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

Company-Information/Documents-and-Archives/ 

By-Laws-and-Rules. OCC’s Board and Board 

Committee Charters are also available on OCC’s 

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

corporate-information/board-charter. 

(Solicitation of Comments) of the 

Exhibit 1A in the General Instructions to 

Form 19b–4, the Commission does not 

edit personal identifying information 

from comment submissions. 

Commenters should submit only 

information that they wish to make 

available publicly, including their 

name, email address, and any other 

identifying information. 

All prospective commenters should 

follow the Commission’s instructions on 

how to submit comments, available at 

https://www.sec.gov/regulatory-actions/ 

how-to-submit-comments. General 

questions regarding the rule filing 

process or logistical questions regarding 

this filing should be directed to the 

Main Office of the Commission’s 

Division of Trading and Markets at 

tradingandmarkets@sec.gov or 202– 

551–5777. 

NSCC reserves the right not to 

respond to any comments received. 

III. Date of Effectiveness of the 

Proposed Rule Change, and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NSCC–2021–011 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–NSCC–2021–011. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of NSCC and on DTCC’s website 

(http://dtcc.com/legal/sec-rulefilings.aspx). All comments received 

will be posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–NSCC– 

2021–011 and should be submitted on 

or before September 1, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–17074 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92584; File No. SR–OCC– 

2021–007] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing of Proposed Rule Change 

Concerning The Options Clearing 

Corporation’s Governance 

Arrangements 

August 5, 2021. 

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 July 30, 2021, The Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared primarily by OCC. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

This proposed rule change by OCC 

would provide OCC’s Board of Directors 

(‘‘Board’’) with the discretion to elect 

either an Executive Chairman or a NonExecutive Chairman to preside over the 

Board, provide OCC’s Board and 

stockholders with the discretion to elect 

a Management Director, clarify the 

respective authority and responsibility 

of any Executive Chairman or NonExecutive Chairman, and make other 

clarifying, conforming, and 

administrative changes to OCC’s rules. 

The proposed changes to OCC’s ByLaws, Rules, Board of Directors Charter 

and Corporate Governance Principles 

(‘‘Board Charter’’), Audit Committee 

Charter, Compensation and Performance 

Committee Charter, Governance and 

Nominating Committee Charter, Risk 

Committee Charter, Technology 

Committee Charter (such committee 

charters collectively being the ‘‘Board 

Committee Charters’’), and Amended 

and Restated Stockholders Agreement 

(‘‘Stockholders Agreement’’) (all 

collectively, the ‘‘OCC Governing 

Documents’’) have been provided as 

Exhibits 5A–5I of OCC filing SR–OCC– 

2021–007. Material proposed to be 

added to the OCC Governing Documents 

is marked by underlining. Material 

proposed to be deleted from the OCC 

Governing Documents is marked by 

strikethrough. All terms with initial 

capitalization that are not otherwise 

defined herein have the same meaning 

as set forth in OCC’s By-Laws and 

Rules.3

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 


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44106 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

4For example, the National Securities Clearing 

Corporation and Fixed Income Clearing Corporation 

have a Non-Executive Chairman presiding over 

each of their respective boards of directors. See ByLaws of National Securities Clearing Corporation, 

Article II, Section 2.8 and By-Laws of Fixed Income 

Clearing Corporation, Article II, Section 2.8 

(available at http://www.dtcc.com/legal/rules-andprocedures). Alternatively, The Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) and Cboe 

Exchange, Inc. each retain flexibility in their ByLaws to elect an Executive or Non-Executive 

Chairman. See FINRA, By-Laws of the Corporation, 

Article VII, Section 4 (available at https://

www.finra.org/rules-guidance/rulebooks/corporateorganization/laws-corporation) and Eleventh 

Amended and Restated Bylaws of Cboe Exchange, 

Inc., Section 3.6 (available at: https://

markets.cboe.com/us/options/regulation/). 

5Member Directors include Clearing Members or 

representatives of a Clearing Member who are 

selected based on, among other things: (i) 

Consideration of balanced representation among all 

Clearing Members; (ii) balanced representation of 

all business activities of Clearing Members; (iii) the 

nature of the firm with which each prospective 

Director is associated; (iv) industry affiliations; (v) 

assuring that not all Member Directors are 

representatives of the largest Clearing Members 

based on the prior year’s volume; and (vi) 

developing a mix of Member Directors that includes 

representatives of Clearing Members that are 

primarily engaged in agency trading on behalf of 

retail customers or individual investors. 

6Public Directors are independent directors who 

are not affiliated with any national securities 

exchange or national securities association or with 

any broker or dealer. 

7Management Directors also serve as employees 

of the Corporation. See Article III, Section 7 of the 

OCC By-Laws. 

8See Article IV, Sections 1 and 2 of the OCC ByLaws. The Executive Chairman, CEO, and COO may 

also delegate authority for certain responsibilities to 

other senior executives and officers. 

9See Article IV, Section 6 of the OCC By-Laws. 

10OCC’s COO supports the operations of the 

Corporation in accordance with the directions and 

under the oversight of the Chief Executive Officer. 

See Article IV, Section 8 of the OCC By-Laws. 

11For example, at the end of 2013, OCC’s then 

Chairman and CEO retired, and the Board changed 

OCC’s governance structure by separating the roles 

of Chairman and CEO and creating the new 

Executive Chairman position. See Securities 

Exchange Act. Release No. 34–70076 (July 30, 

2013), 78 FR 47449 (August 5, 2013) (SR–OCC– 

2013–09). In 2014, upon the resignation of the then 

President and CEO, the Board composition was 

changed to include only one Management Director 

(the Executive Chairman). See Securities Exchange 

Act. Release No. 34–73785 (December 8, 2014), 79 

FR 73915 (December 12, 2014) (SR–OCC–2014–18). 

In 2017, the roles of Executive Chairman and CEO 

were temporarily combined and then subsequently 

separated in 2018. See Securities Exchange Act 

Release No. 80531 (April 26, 2017), 82 FR 20502 

(May 2, 2017) (SR–OCC–2017–002) and Securities 

Exchange Act Release No. 34–85129 (February 13, 

2019), 84 FR 5129 (February 20, 2019) (SR–OCC– 

2018–015). 

12See Article IV, Section 1 of the OCC By-Laws. 

13See, e.g., Article III, Sections 1 and 7 of the 

OCC By-Laws. 

14See e.g., Article IV, Section 1 of the OCC ByLaws. 

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 

Background 

Generally speaking, the board of 

directors of a company is responsible for 

its own structure and processes and 

applies its business judgment to board 

leadership decisions. A board’s 

leadership structure is determined 

based on several factors, including the 

board’s culture and practices and the 

capabilities, leadership styles, 

expectations, personal characteristics, 

and relationships of its potential 

leaders. Board leadership roles are 

context dependent and evolve 

depending on the circumstances of the 

company and the board. Specifically, 

the board of directors generally has 

discretion to determine whether, for 

example, the chairman of the board 

should also be an employee of the 

company. An ‘‘Executive Chairman’’ is 

typically employed by the company and 

may work for the company on a fulltime or part-time basis. An Executive 

Chairman fulfills responsibilities to 

manage the board while also being more 

involved with management decisions 

and ‘‘day-to-day’’ aspects of the 

company. A ‘‘Non-Executive Chairman’’ 

is typically not an employee of the 

company and focuses on leading and 

supporting the board. Self-regulatory 

organizations (‘‘SROs’’) registered with 

the Commission, including registered 

clearing agencies, employ a variety of 

board of director and management 

structures, with both Executive and 

Non-Executive Chairmen presiding over 

the board of directors of SROs.4

Article III, Section I of OCC’s By-Laws 

currently requires that the Board be 

composed of nine Member Directors,5

five Exchange Directors, five Public 

Directors,6 and an Executive Chairman 

(who also serves as a Management 

Director 7). The Board is generally 

responsible for advising management 

and overseeing the management of the 

business and affairs of OCC. The Board 

performs its oversight role, either 

directly or indirectly, through 

delegating certain authority to its 

committees to ensure that OCC is 

managed and operated in a manner 

consistent with the discharge of OCC’s 

regulatory responsibilities as a 

systemically important financial market 

utility and that OCC has the critical 

capabilities necessary to achieve its 

objectives and obligations in a safe and 

efficient manner. The Board is also 

responsible for electing OCC’s Executive 

Chairman and appointing certain key 

officers of OCC, including but not 

limited to, OCC’s Chief Executive 

Officer (‘‘CEO’’) and Chief Operating 

Officer (‘‘COO’’).8 Each member of 

OCC’s executive management team is 

ultimately responsible for the day-today operations and performance of his 

or her applicable business area. For 

example, OCC’s Executive Chairman is 

responsible for certain control functions 

of the Corporation, including internal 

audit and public affairs and government 

relations,9 and its CEO is responsible for 

all aspects of the Corporation’s business 

and of its day-to-day affairs, including 

enterprise risk management and 

compliance, and all other aspects of the 

business of the Corporation that do not 

report directly to the Executive 

Chairman.10

OCC’s Board continually evaluates 

OCC’s governance arrangements, 

including the composition of the Board 

and OCC’s senior management team. 

OCC’s Board and management structure 

have evolved over time in response to 

changing business conditions and 

regulatory obligations as well as to 

changes in personnel and the 

knowledge, skills, and experience of its 

various Board members and senior 

officers.11 OCC’s By-Laws currently 

require the Board to elect an Executive 

Chairman from among the employees of 

OCC.12 While OCC’s By-Laws also 

contemplate discretion for the Board 

and stockholders to elect a Management 

Director,13 the Executive Chairman, by 

virtue of being elected to his or her 

office, serves as the Management 

Director.14

Proposed Changes 

OCC proposes to revise the OCC 

Governing Documents to give the Board 

discretion to elect either an Executive or 

Non-Executive Chairman to preside over 

the Board. In addition, the proposed 

rule change would provide OCC’s Board 

and stockholders discretion to elect 

Management Directors from OCC’s 

management, which would be necessary 

if OCC does not have an Executive 

Chairman. The proposed rule change 

would also provide clarity around the 

authority and responsibilities of an 

Executive Chairman versus a NonExecutive Chairman. OCC also proposes 

to make additional clarifying, 

conforming, and administrative changes 

to the OCC Governing Documents. OCC 

believes the proposed changes would 

provide appropriate flexibility to the 

Board to evaluate OCC’s governance 

arrangements, including whether OCC 

should have an Executive or NonExecutive Chairman, and more quickly 


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Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 44107 

15OCC notes that the proposed change, along 

with the potential election of a Management 

Director that is not an Executive Chairman 

(discussed below), could result in the Board having 

up to 21 total directors as opposed to its current 20 

directors. OCC also notes that if the Board elects a 

Non-Executive Chairman that is determined to be 

an independent Public Director, such a Chairman 

would be eligible to serve as the chair of any of 

OCC’s Board Committees pursuant to the 

requirements of each Board Committee Charter. 

OCC does not believe that the potential addition of 

a Public Director to its Board, increasing the overall 

Board size by one director, would materially impact 

the composition, representation, or decision-making 

process of the Board. 

adjust the composition of OCC’s Board 

and leadership structure in response to 

changing business conditions and 

personnel and the knowledge, skills, 

and experience of its various Board 

members and senior officers. The 

proposed changes are discussed in 

detail below. 

Proposed Changes to OCC’s By-Laws 

OCC proposes to revise Article III, 

Section 9 and Article IV, Sections 1 and 

6 of its By-Laws to give its Board the 

discretion to elect either an Executive or 

Non-Executive Chairman. Under OCC’s 

current By-Laws, OCC’s Chairman is 

described as an ‘‘Executive Chairman.’’ 

As a result of this specificity, even 

though there is no legal or regulatory 

requirement that OCC have either an 

Executive or Non-Executive Chairman, 

and the Board’s desire to cast as wide 

a net as possible for qualified candidates 

for an important leadership role, the 

Board likely would not consider NonExecutive Chairman candidates if the 

ability to do so were not already in the 

By-Laws. OCC believes that revising its 

By-Laws to allow the Board the option 

to elect either an Executive or NonExecutive Chairman would dramatically 

increase the potential pool of qualified 

candidates for the position and enable 

the Board to select the best Chairman for 

the company at any given time. 

Newly proposed Article III, Section 9 

(currently Reserved) would provide 

that, upon the nomination of the 

Governance and Nominating 

Committee, the Board shall elect from 

among its members a Chairman of the 

Board (as opposed to an Executive 

Chairman), and if the Chairman is 

elected from among the employees of 

OCC, such Chairman would be an 

‘‘Executive Chairman’’ for purposes of 

OCC’s By-Laws and Rules. OCC also 

proposes to revise Article I of its ByLaws to add a definition for the term 

‘‘Chairman,’’ which would be defined to 

mean the individual elected by the 

Board as the Chairman of the Board 

pursuant to Article III, Section 9 of the 

By-Laws and that may be, but would not 

be required to be, an Executive 

Chairman. In addition, OCC would 

revise Article III, Section I of the ByLaws to provide that the Board may 

have no less than five Public Directors. 

The proposed change would allow OCC 

to have a sixth Public Director serving 

on its Board if there is a Public Director 

serving as Chairman.15

Pursuant to proposed Article III, 

Section 9 of the By-Laws, the Chairman 

would preside at all meetings of the 

Board of Directors, be responsible for 

carrying out the policies of the Board, 

have general supervision over the Board 

and its activities, and provide overall 

leadership to the Board of Directors. 

Additionally, the By-Laws would be 

revised to provide OCC’s Board with 

additional flexibility to define the role 

of the Chairman. Article IV, Section 6 of 

the By-Laws currently states that the 

Executive Chairman is responsible for 

certain control functions of OCC, 

including internal audit and public 

affairs and government relations, and 

has supervision of the officers and 

agents appointed by him. This By-Law 

requirement would be replaced by a 

more general statement in proposed 

Article III, Section 9 that the Chairman 

would have those powers and perform 

such duties as the Board may designate. 

The proposed change would provide 

appropriate flexibility for the Board to 

assign or remove responsibilities of the 

Chairman based on whether such 

Chairman is an Executive or NonExecutive Chairman and based upon the 

needs of OCC at a given point in time, 

as discussed in further detail below. 

OCC would also make conforming 

changes to Article IV, Section 8 to 

clarify that the CEO would be 

responsible for all aspects of OCC’s 

business and for its day-to-day affairs, 

except for those that may report directly 

to the Chairman, as determined by the 

Board. 

OCC also proposes to revise the 

following sections of its By-Laws so that 

any Chairman (whether Executive or 

Non-Executive) retains the authority 

and responsibility currently given to the 

Executive Chairman and which OCC 

believes relate to governance matters 

appropriately assigned to any Chairman 

of the Board. This includes the 

following sections of the By-Laws. 

• Article II, Sections 2 and 4 

concerning the authority to call and 

provide notice of meetings of OCC’s 

stockholders; 

• Article III, Section 10 concerning 

the authority to receive notice of 

resignation of a member of the Board; 

• Article III, Section 14 concerning 

the authority to call special meetings of 

the Board; 

• Article III, Section 15 concerning 

the authority to exercise emergency 

powers and call special meetings of the 

Board during such an emergency; 

• Article IV, Sections 2, 3, 9 and 13 

concerning the authority to appoint 

officers, fix the salaries of any appointed 

officers, and remove such officers; 

• Article VIIB, Section 1, 

Interpretation and Policy .01 concerning 

the responsibility to promptly provide 

Non-Equity Exchanges with information 

the Chairman considers to be of 

competitive significance to such NonEquity Exchanges that was disclosed to 

Exchange Directors at or in connection 

with any meeting or action of the Board 

or one of its committees; 

• Article IX, Section 12 concerning 

the authority to sign certificates for 

shares of OCC; and 

• Article IX, Section 14 concerning 

the authority to suspend the rules of 

OCC in emergency circumstances. 

OCC would also revise its By-Laws to 

transfer certain responsibilities that 

currently belong to the Executive 

Chairman, and that would no longer 

belong to any Chairman, to OCC’s CEO. 

Specifically, OCC proposes to revise 

Article VI, Section 11 of the By-Laws to 

assign the responsibility for 

participating in the Securities 

Committee and panels thereof for 

purposes of contract adjustments to the 

CEO. OCC also proposes similar changes 

to its By-Laws concerning the fixing of: 

(i) Underlying interest values of binary 

and range options (Article XIV, Section 

5), (ii) exercise settlement amounts of 

yield-based Treasury options (Article 

XVI, Section 4), (iii) exercise settlement 

amounts of cash-settled securities 

options other than OTC index options 

(Article XVII, Section 4), (iv) exercise 

settlement amounts of cash-settled 

foreign currency options (Article XXII) 

in circumstances where certain prices or 

values are determined to be unavailable 

or inaccurate for the contracts in 

question, and (v) the Closing Price for 

BOUNDs contracts (Article XXIV). OCC 

believes these responsibilities are best 

discharged by the CEO—the senior 

executive of the company directly 

familiar with the day-to-day operations 

of the company and with no directorrelated responsibilities—than an 

Executive Chairman. Furthermore, the 

proposed changes would ensure these 

responsibilities remain clearly and 

transparently assigned to an executive 

officer of the company in the event the 

Board elects a Non-Executive Chairman. 

OCC also proposes to revise its ByLaws and Stockholder Agreement to 

provide OCC’s Board and stockholders 

with the discretion to elect a 

Management Director. Currently, under 


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44108 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

16As part of this proposed change, OCC would 

relocate from the By-Laws to each of the Board 

Committee Charters the requirement that committee 

members are selected by the Board from among the 

directors recommended by the then-constituted 

Governance and Nominating Committee after 

consultation with the Chairman and serve at the 

pleasure of the Board. 

17OCC notes that the CEO and COO would also 

continue to have authority to take the following 

actions. 

18See Securities Exchange Act Release No. 87577 

(November 20, 2019) 84 FR 65202 (November 26, 

2019) (SR–OCC–2019–008). 

the By-Laws and Stockholder 

Agreement, the Executive Chairman is 

also elected as the Management Director 

of OCC. Under the proposed rule 

change, however, OCC’s Board would 

have the discretion to elect a NonExecutive Chairman. OCC therefore 

proposes to revise Article VIIA, Section 

3 of the By-Laws and Sections 2 and 3 

of the Stockholder Agreement to 

provide the Board and stockholders 

with the discretion to elect a 

Management Director if the Board has 

elected a Non-Executive Chairman 

should they choose. OCC would also 

revise Article III, Section 12 of the ByLaws to reflect that any vacancy in the 

position of Management Director may be 

filled by the Board until the next 

meeting of the stockholders and would 

not be limited to the selection of the 

Executive Chairman to serve as 

Management Director. In addition, OCC 

proposes to revise Article IV, Sections 1 

and 7 of the By-Laws to relocate certain 

provisions concerning the election of 

the Vice Chairman of the Board. 

Finally, OCC proposes to revise 

Article III, Section 4 of the By-Laws to 

remove specific references to various 

Board committees and their 

compositions. OCC notes that each of 

the Board Committee Charters are filed 

with the Commission as rules of OCC, 

and as a result, this information is 

unnecessarily duplicated in OCC’s ByLaws. OCC believes that maintaining 

this information in multiple places does 

not add any benefit to the rules of OCC 

and only increases the possibility for 

inconsistent statements among the OCC 

Governing Documents to the detriment 

of clear and transparent governance 

arrangements.16

Proposed Changes to OCC’s Rules 

OCC proposes changes to its Rules in 

connection with the proposed By-Law 

changes described above. OCC would 

revise the following Rules so that any 

Chairman (whether Executive or NonExecutive) retains the following 

authority and responsibility currently 

given to the Executive Chairman. 

• Rule 505 concerning the authority 

to extend settlement times upon a 

determination that an emergency or 

force majeure condition exists; 

• Rule 609A concerning the authority 

to waive margin deposits in limited 

circumstances; 

• Rule 1006(f) concerning the 

authority to use Clearing Fund assets to 

borrow or otherwise obtain funds from 

third parties; 

• Rule 1104, Interpretation and Policy 

.02 concerning the authority to elect to 

use one or more private auctions to 

liquidate collateral, open positions and/ 

or exercised/matured contracts of a 

suspended Clearing Member; and 

• Rule 1110 concerning the authority 

to appoint an appeals panel to 

considered and decided appeals by 

suspended Clearing Members. 

OCC believes it is appropriate for the 

Chairman to retain the authority to 

make certain critical decisions, which 

primarily involve emergency or exigent 

circumstances or other activities 

generally outside of OCC’s day-to-day 

activities. The proposed change would 

help to ensure the efficient management 

and operation of OCC in such 

circumstances if other authorized 

officers are absent or otherwise unable 

to perform their duties. 

OCC also proposes conforming 

changes to its Rules concerning those 

responsibilities and authorities that 

would remain with any Executive 

Chairman of the Corporation. This 

includes the following: 17

• Rule 1104(b) concerning the 

authority to delay the immediate 

liquidation of a suspended Clearing 

Member’s margin deposits and to use 

such deposits to borrow or otherwise 

obtain funds from third parties; 

• Rule 1106(e) concerning the 

authority to determine not to close out 

a suspended Clearing Member’s 

unsegregated long positions or short 

positions in options or BOUNDs, or long 

or short positions in futures; and 

• Rule 1106(f) concerning the 

authority to execute hedging 

transactions to reduce the risk 

associated with any collateral or 

positions not immediately liquidated or 

closed out pursuant to Rules 1104(b) 

and 1006(e). 

While these responsibilities and 

authorities involve important aspects of 

OCC’s default management process, 

OCC does not believe they rise to the 

level of emergency or exigent 

circumstances. OCC believes it is 

appropriate for these responsibilities to 

remain with senior executives more 

closely familiar with the day-to-day 

operations of the Corporation. As a 

result, OCC would not substantively 

change the requirements in its existing 

rules. 

Proposed Changes to OCC Board 

Charters 

OCC proposes several conforming 

changes to its Board Charters in 

connection with the proposed changes 

to its By-Laws and Rules. OCC also 

proposes administrative changes to its 

Board Charters relating to its Board 

Committee composition requirements. 

The proposed changes to each of the 

charters are described below. 

Board Charter 

OCC proposes to revise its Board 

Charter to conform to the proposed 

changes to OCC’s By-Laws discussed 

above. First, OCC would remove the 

qualifier ‘‘Executive’’ before most 

occurrences of ‘‘Executive Chairman’’ 

throughout the charter. In addition, OCC 

would revise the Board Charter to 

clarify that those provisions relating to 

management structure, evaluation, and 

succession would be applicable only to 

any Executive Chairman. The proposed 

changes would also clarify that, with 

respect to employee compensation, the 

Board would be responsible for the 

compensation, incentive, and benefit 

programs and evaluating the 

performance of any Executive 

Chairman. OCC also proposes to revise 

the Board Charter to reflect that the 

election of a Management Director 

would be at the discretion of the Board 

and provide that a Management Director 

would no longer be eligible to serve if 

he or she ceases to hold a senior officer 

position at OCC, by virtue of which he 

or she was elected as a Management 

Director. 

OCC also proposes to revise the Board 

Charter to include the Regulatory 

Committee in the list of charters 

required to be established by the 

Board.18 In addition, OCC proposes to 

revise its Board Charter to remove 

specific requirements around the 

composition of the Governance and 

Nominating Committee, which would 

align with proposed changes to the 

Governance and Nominating Committee 

discussed below. 

Audit Committee Charter 

OCC proposes changes to its Audit 

Committee Charter regarding the 

functional and administrative reporting 

lines for the Chief Audit Executive 

(‘‘CAE’’) and Chief Compliance Officer 

(‘‘CCO’’) and the review and oversight of 

OCC’s Internal Audit and Compliance 

functions to accommodate the proposed 

changes to OCC’s By-Laws. The Audit 

Committee Charter currently provides 


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Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 44109 

19Administrative reporting may include, for 

example, reporting concerning budgeting and 

accounting issues, human resource administration, 

administration of OCC’s internal policies and 

procedures, and other day-to-day communication 

and updates concerning the respective function. 

20 15 U.S.C. 78q–1. 

21 15 U.S.C. 78q–1(b)(3)(A). 

22See supra note 4. 

23 15 U.S.C. 78q–1(b)(3)(A). 

24 17 CFR 240.17Ad–22(e)(2)(i) and (v). 

that the CAE reports functionally to the 

Audit Committee and 

administratively 19 to the Executive 

Chairman and that the committee 

consults with the Executive Chairman 

and CEO in reviewing the performance 

of the Internal Audit function and CAE. 

OCC would revise the Audit Committee 

Charter to state that the CAE would 

continue to report functionally to the 

Committee and report administratively 

to a member of the Management 

Committee designated by the 

Committee. As noted above, governance 

responsibilities may vary depending on 

OCC’s management structure and the 

Board’s allocation of responsibilities at 

a given point in time. The proposed rule 

change is intended to provide 

appropriate flexibility for the 

administrative reporting line of the CAE 

and in the officers that the committee 

may consult in their review of the 

Internal Audit function. OCC also 

proposes similar changes to the 

functional and administrative reporting 

lines of the CCO, who currently reports 

functionally to the Audit Committee 

and administratively to the CEO, and to 

the consultation requirements in 

reviewing the performance of the CCO 

and Compliance Department. This 

would provide for a consistent approach 

and similar flexibility for the Audit 

Committee’s oversight of OCC’s 

Compliance function. 

Compensation and Performance 

Committee Charter 

OCC proposes to revise its 

Compensation and Performance 

Committee Charter to conform to the 

proposed changes to OCC’s By-Laws. 

Specifically, the proposed revisions 

would reflect that the committee’s 

responsibilities for reviewing the 

performance and compensation of 

OCC’s management team, including the 

executive officers of OCC, would extend 

to any Executive Chairman of OCC. 

Governance and Nominating Committee 

Charter 

OCC proposes to revise its 

Governance and Nominating Committee 

Charter to conform to the proposed 

changes to OCC’s By-Laws by clarifying 

that the Committee would consult with 

any Chairman in its oversight and 

advising responsibilities to OCC’s 

Board. 

Risk Committee Charter 

OCC proposes changes to its Risk 

Committee Charter regarding the 

functional and administrative reporting 

lines for the Chief Risk Officer (‘‘CRO’’). 

Currently, the Risk Committee Charter 

provides that the CRO reports 

functionally to the Committee and 

administratively to the CEO and that the 

Committee consults with the CEO and 

other committees as appropriate in 

reviewing the CRO’s performance. OCC 

proposes to revise the Risk Committee 

Charter to state that the CRO would 

continue to report functionally to the 

Committee and would report 

administratively to a member of the 

Management Committee designated by 

the Committee. The proposed rule 

change is intended to provide flexibility 

for the administrative reporting line of 

the CRO and the particular officers and 

committees the Risk Committee may 

consult in their review of the CRO’s 

performance depending on the Board’s 

allocation of responsibilities at a given 

point in time. 

Technology Committee Charter 

Finally, OCC proposes to revise its 

Technology Committee Charter to 

require that the chair of the committee 

be a Public Director. The proposed 

change is intended to align the 

Technology Committee Charter with 

OCC’s other Board Committee Charters, 

which also require that a Public Director 

serves as committee chair. OCC notes 

that the proposed change would not 

result in any practical change to the 

Technology Committee as it is currently 

chaired by a Public Director. 

(2) Statutory Basis 

OCC believes the proposed rule 

change is consistent with Section 17A of 

the Act 20 and the rules thereunder 

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

of the Act 21 requires, among other 

things, that a clearing agency be so 

organized and have the capacity to be 

able to facilitate the prompt and 

accurate clearance and settlement of 

securities transactions and derivative 

agreements, contracts, and transactions 

for which it is responsible. The 

proposed changes would enable the 

Board to adjust OCC’s Board and 

management structure in a timelier 

fashion based on changing business 

conditions as well as changes in 

personnel and the knowledge, skills, 

and experience of OCC’s various Board 

members and senior officers, 

particularly as it concerns the Chairman 

of OCC’s Board. OCC notes that SROs 

registered with the Commission, 

including registered clearing agencies, 

employ a variety of board of director 

and management structures, with both 

Executive and Non-Executive Chairmen 

presiding over the board of directors of 

SROs.22 In certain cases, SROs maintain 

flexibility to elect Executive and NonExecutive Chairmen as circumstances 

warrant. OCC proposes similar changes 

to its rules so that its Board can 

maintain governance arrangements that 

promote the efficient and effective 

management and operation of OCC. The 

proposed rule change would also clearly 

delineate the authority and 

responsibilities of an Executive 

Chairman versus a Non-Executive 

Chairman. The proposed rule change 

would also provide flexibility in the 

administrative reporting lines for key 

OCC personnel such as the CAE, CCO, 

and CRO, allowing these administrative 

reporting lines to be adjusted, as 

necessary, and develop an appropriate 

review process for the performance of 

OCC’s Internal Audit and Compliance 

functions so that OCC can adapt to its 

evolving Board and management 

structure. For these reasons, OCC 

believes the proposed rule change is 

designed to ensure that OCC is so 

organized and has the capacity to be 

able to facilitate the prompt and 

accurate clearance and settlement of 

securities transactions and derivative 

agreements, contracts, and transaction 

for which it is responsible consistent 

with the requirements of Section 

17A(b)(3)(A) of the Act.23

Exchange Act Rules 17Ad–22(e)(2)(i) 

and (v) 24 require covered clearing 

agencies to have governance 

arrangements that are clear and 

transparent and that specify clear and 

direct lines of responsibility. As 

discussed above, the proposed rule 

change would further enable OCC’s 

Board to adjust OCC’s governance 

arrangements in a more timely fashion, 

particularly as they relate to OCC’s 

Chairman, so that its governance 

arrangements are continually designed 

to promote the efficient and effective 

management and operation of OCC, 

taking into consideration the Board’s 

culture and practices, business 

circumstances, and the capabilities, 

leadership styles, expectations, personal 

characteristics, and relationships of its 

potential leaders at a given point in 

time. The proposed rule change would 

also clearly delineate the proposed 

authority and responsibilities of an 

Executive Chairman versus a NonVerDate Sep<11>2014 23:05 Aug 10, 2021 Jkt 253001 PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 E:\FR\FM\11AUN1.SGM 11AUN1

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44110 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

25 Id. 

26 15 U.S.C. 78q–1(b)(3)(I). 

27 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Executive Chairman. Finally, OCC 

believes the proposed changes to its 

Board Committee Charters would 

provide OCC’s Board with appropriate 

flexibility to more quickly adjust the 

administrative reporting lines for, and 

oversight of the performance of, OCC’s 

Internal Audit and Compliance 

functions and key OCC personnel, such 

as the CAE, CCO, and CRO, taking into 

account the specific qualifications, 

experience, competence, character, 

skills, incentives, integrity or other 

relevant attributes of Board members 

and senior officers at any given time. 

OCC believes the proposed change 

would provide an appropriate level of 

clarity and transparency regarding the 

limited set of officers to which the CAE, 

CCO, and CRO may report to for 

administrative purposes and the Board’s 

responsibility for designating such 

reporting lines. The proposed changes 

to the Board Committee Charters would 

not alter the responsibilities of the 

Board generally or of any of its 

individual committees or committee 

members. These responsibilities would 

continue to be specified in each of the 

Board Committee Charters. As a result, 

OCC believes the proposed rule change 

is reasonably designed to provide for 

governance arrangements that remain 

clear and transparent and specify clear 

and direct lines of responsibility in 

accordance with Rule 17Ad–22(e)(2)(i) 

and (v).25

(B) Clearing Agency’s Statement on 

Burden on Competition 

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

Act 26 requires that the rules of a 

clearing agency not impose any burden 

on competition not necessary or 

appropriate in furtherance of the Act. 

OCC does not believe that the proposed 

rule change would have any impact or 

impose any burden on competition. The 

proposed rule change would provide 

OCC’s Board with the discretion to elect 

either an Executive Chairman or a NonExecutive Chairman to preside over the 

Board and would clarify the roles and 

responsibilities of an Executive versus a 

Non-Executive Chairman. The proposed 

rule change would also make changes to 

OCC’s Board and Board Committee 

Charters regarding the Board’s oversight 

of the Chairman and other senior 

officers of OCC. The proposed rule 

change would not inhibit access to 

OCC’s services or disadvantage of favor 

any user in relationship to another. As 

a result, OCC believes the proposed rule 

change would not impact or impose a 

burden on competition. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants or Others 

Written comments on the proposed 

rule change were not and are not 

intended to be solicited with respect to 

the proposed rule change and none have 

been received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

OCC–2021–007 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–2021–007. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of OCC and on OCC’s website at 

https://www.theocc.com/CompanyInformation/Documents-and-Archives/ 

By-Laws-and-Rules. 

All comments received will be posted 

without change. Persons submitting 

comments are cautioned that we do not 

redact or edit personal identifying 

information from comment submissions. 

You should submit only information 

that you wish to make available 

publicly. 

All submissions should refer to File 

Number SR–OCC–2021–007 and should 

be submitted on or before September 1, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–17088 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92579; File No. SR–MEMX– 

2021–09] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Its Fee Schedule 

August 5, 2021. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on August 2, 

2021, MEMX LLC (‘‘MEMX’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘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. 


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