Federal Register / Vol. 87, No. 106 / Thursday, June 2, 2022 / Notices 33535 

61 Id. 

62 17 CFR 240.17Ad–22(e)(21). 

63 Id. 

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

2 17 CFR 240.19b–4. 

3The Committees supporting OCC’s Board 

include an Audit Committee (the ‘‘AC’’), a 

Compensation and Performance Committee (the 

‘‘CPC’’), a Governance and Nominating Committee 

(the ‘‘GNC’’), a Risk Committee (the ‘‘RC’’), and a 

Technology Committee (the ‘‘TC’’) (collectively, the 

‘‘Committees’’). The purpose, form, and function of 

the Committees is governed by each Committee’s 

respective charter (i.e., the ‘‘AC Charter,’’ the ‘‘CPC 

Charter,’’ the ‘‘GNC Charter,’’ the ‘‘RC Charter,’’ and 

the ‘‘TC Charter’’) (collectively, the ‘‘Committee 

Charters’’). 

4See Notice of Filing infra note 5, 87 FR at 10881. 

5Securities Exchange Act Release No. 94283 (Feb. 

18, 2022), 87 FR 10881 (Feb. 25, 2022) (File No. SR– 

OCC–2022–002) (‘‘Notice of Filing’’). 

6The comment on the Proposed Rule Change is 

available at https://www.sec.gov/comments/sr-occ2022-002/srocc2022002.htm. 

7Capitalized terms used but not defined herein 

have the meanings specified in OCC’s Rules and ByLaws, available at https://www.theocc.com/about/ 

publications/bylaws.jsp. 

8See Fitness Standards for Directors, Clearing 

Members, and Others, available at https://

www.theocc.com/getmedia/40ab0b06-5e8a-441e97e3-fab85d3cfe0b/fitness_standards.pdf. 

9See By-Laws Art. III § 6A & Interpretation and 

Policy .01. 

10See Securities Exchange Act No. 30328 (Jan. 31, 

1992), 57 FR 4784 (Feb. 7, 1992) (File No. SR–OCC– 

92–2). 

11See Exchange Act Release No. 44434 (June 15, 

2001), 66 FR 33283 (June 21, 2001) (File No. SR– 

OCC–2001–05). 

12See Notice of Filing supra note 5, 87 FR at 

10882. 

13 Id. 

is consistent with Rule 17Ad– 

22(e)(19).61

F. Consistency With Rule 17Ad– 

22(e)(21) 

Rule 17Ad–22(e)(21) under the 

Exchange Act requires a covered 

clearing agency to establish, implement, 

maintain, and enforce written policies 

and procedures reasonably designed to 

be efficient and effective in meeting the 

requirements of its participants and the 

markets it serves, including the clearing 

agency’s clearing and settlement 

arrangements and the scope of products 

cleared or settled.62

As described above in Section II.B.(1) 

and (2), the proposal is designed to 

reflect the current structure of the 

bilateral securities lending market, 

ensuring that relevant features and 

market participants subject to differing 

regulatory requirements and existing 

contractual relationships can be 

accommodated as part of the service 

provided by NSCC. For example, the 

proposal would allow for central 

clearing of SFTs with a one business 

day term, in order to provide a 

scheduled settlement date so that the 

transaction may be eligible for balance 

sheet netting benefit as explained in 

Section II.(B)(1). Second, the proposal 

would allow accelerated settlement so 

that certain market participants are able 

to quickly unwind their SFTs to satisfy 

applicable regulatory requirements. 

Third, the proposed membership 

categories would accommodate 

principal and agency trading to allow 

different types of market participants to 

enter into the new SFT central clearing 

service, consistent with their business 

models and applicable regulatory 

requirements. 

Accordingly, the Commission believes 

that the proposal is reasonably designed 

to be efficient and effective in meeting 

the requirements of its participants and 

the market it serves, and consistent with 

Rule 17Ad–22(e)(21).63

VI. Conclusion 

It is therefore noticed, pursuant to 

Section 806(e)(1)(I) of the Clearing 

Supervision Act, that the Commission 

does not object to Advance Notice (SR– 

NSCC–2022–801) and that NSCC is 

authorized to implement the proposal as 

of the date of this notice or the date of 

an order by the Commission approving 

proposed rule change SR–NSCC–2022– 

003, whichever is later. 

By the Commission. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–11839 Filed 6–1–22; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94988; File No. SR–OCC– 

2022–002] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Order 

Granting Approval of Proposed Rule 

Change Concerning the Options 

Clearing Corporation’s Governance 

Arrangements 

May 26, 2022. 

I. Introduction 

On February 7, 2022, the Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change SR–OCC–2022– 

002 (‘‘Proposed Rule Change’’) pursuant 

to Section 19(b) of the Securities 

Exchange Act of 1934 (‘‘Exchange 

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

amend certain of its governing 

documents by (1) clarifying that OCC’s 

Public Directors (defined below) may 

not be affiliated with any designated 

contract market (‘‘DCM’’) or futures 

commission merchant (‘‘FCM’’); (2) 

allowing OCC’s board of directors (the 

‘‘Board’’) to delegate certain authorities 

to Board-level committees 3 or officers; 

(3) amending OCC’s by-laws (the ‘‘ByLaws’’) with regard to stockholder 

consent; and (4) applying additional 

housekeeping amendments to the 

charter of the Board (‘‘Board Charter’’) 

and Committee Charters (collectively, 

the ‘‘Charters’’).4 The Proposed Rule 

Change was published for public 

comment in the Federal Register on 

February 25, 2022.5 The Commission 

received one comment regarding the 

Proposed Rule Change.6 This order 

approves the Proposed Rule Change. 

II. Background 7

A. Public Director Qualifications 

The Proposed Rule Change would 

amend Sections 6A and 12 of Article III 

of the By-Laws, the Fitness Standards 

adopted by the Board thereunder,8 and 

the Board Charter to codify OCC’s 

practice of nominating Public Directors 

who are, in addition to other 

qualifications, unaffiliated with DCMs 

and FCMs. Currently, OCC’s By-Laws 

and Fitness Standards define Public 

Directors as individuals who are not 

affiliated with a national securities 

exchange, national securities 

association, or a broker or dealer in 

securities.9 OCC notes that these 

restrictions were intended to broaden 

the mix of viewpoints and business 

expertise represented on the Board.10

Subsequent to implementing these 

restrictions, OCC added futures market 

clearing memberships and expanded its 

services to include clearance of futures 

and futures options.11 OCC’s practice 

has been and is to nominate Public 

Directors who are independent from 

DCMs and FCMs, and it believes it is 

appropriate to codify this practice in its 

By-Laws, Fitness Standards, and Board 

Charter.12 Similar to the existing 

restrictions related to national securities 

exchanges, securities associations, and 

brokers and dealers, OCC believes that 

the proposal to exclude DCM- or FCMaffiliated Public Directors would 

broaden the mix of viewpoints and 

business expertise represented on the 

Board.13

B. Delegated Authority 

OCC proposes to amend the Charters 

to delegate authority from the Board to 

the Committees to review and approve 

certain routine initiatives and policies. 

In addition, OCC proposes to amend its 


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14Under OCC’s By-Laws, the Board may elect one 

or more officers as it may from time to time 

determine are required for the effective 

management and operation of the Corporation. ByLaws Art. IV § 1. In addition, the Chairman, Chief 

Executive Officer and Chief Operational Officer 

each may appoint such officers, in addition to those 

elected by the Board, and such agents as they each 

shall deem necessary or appropriate to carry out the 

functions assigned to them. By-Laws Art. IV § 2. 

15See Board Charter, available at https://

www.theocc.com/about/corporate-information/ 

board-charter (stating that ‘‘[t]he Board may form 

and delegate authority to committees and may 

delegate authority to one or more of its members 

and to one or more designated officers of OCC. 

However, in all instances, the Board retains the 

obligation to oversee such delegated activity and to 

assure itself that delegation and reliance on the 

work of such delegates is reasonable.’’). 

16The Board has delegated the approval of fee 

change-related filings to the CPC, and the Board 

may delegate authority for approving individual 

filings on a case-by-case basis. 

17See Notice of Filing supra note 5, 87 FR at 

10882. 

18 Id. 

19For example, with respect to risk managementrelated policies, OCC would amend the RC Charter 

by deleting the provisions requiring the RC to 

recommend changes to certain risk-related policies 

to the Board for approval. Instead, the RC would be 

authorized to approve such regulatory filings. The 

Board would continue to review OCC’s risk 

management policies, procedures, and systems 

annually, but would delegate authority to approve 

intra-year changes to such policies and procedures 

to the RC. 

20These include policies for which the Board has 

determined to retain oversight. For example, the 

Board would remain the sole authority to approve 

policies addressing decision-making in crises and 

emergencies. See Board Charter, available at https:// 

www.theocc.com/about/corporate-information/ 

board-charter. 

21Amendments requiring a supermajority vote 

include amendments of the introduction to Chapter 

X of the Rules (involving Clearing Fund 

contributions), Rule 1002, Rule 1006, Rule 1009, 

and Rule 1010. By-Laws Art. XI § 2. 

22The RC Charter currently grants the RC 

authority to ‘‘authorize the filing of regulatory 

submissions pursuant to’’ the performance of the 

responsibilities and functions that the Board shall 

delegate to the RC from time to time. See RC 

Charter, available at https://www.theocc.com/ 

about/corporate-information/board-charter. 

23See Notice of Filing supra note 5, 87 FR at 

10883. 

By-Laws and Committee Charters to 

delegate authority to authorize certain 

regulatory filings to a Committee or, in 

limited cases, an OCC officer.14

However, as provided under the current 

Board Charter, in all instances, the 

Board would retain the obligation to 

oversee such delegated activity.15

Currently, the Charters delegate to the 

Committees the review of many routine 

initiatives or policies, but not usually 

the approval. Regulatory filings 

generally require approval by the full 

Board.16 OCC believes that its current 

governance processes have several 

disadvantages, including mandating that 

numerous matters that otherwise would 

not occupy the time and attention of the 

Board be brought to the full Board for 

approval.17 OCC also believes that 

requiring Board approval makes it more 

difficult to obtain authorization for 

regulatory filings between regularly 

scheduled Board meetings absent a 

special Board meeting.18 In practice, the 

Board routinely delegates authority to 

Committees to approve initiatives, 

policy changes, and rule filings on a 

case-by-case basis when proposed 

changes are expected to be ready for 

Board-level review between regular 

Board meetings, in part because the 

Board relies on the business expertise of 

the directors appointed to the 

Committees to review and approve 

proposed changes within the scope of 

each Committee’s responsibilities. 

The Proposed Rule Change would 

delegate to the Committees authority for 

the review and approval of certain 

initiatives and policies, as well as 

approval of proposed rule changes for 

matters within the scope of authority of 

each Committee. Specifically, OCC 

proposes to amend the Charters to 

delegate authority to the Committees to 

review and approve the following 

initiatives and policies that currently 

require Board approval: 

Committee Initiatives and Policies 

Audit .........................................................................................

Committee (‘‘AC’’) ....................................................................

evaluation and appointment of an external auditor 

Compensation and Performance Committee (‘‘CPC’’) ............ review and approval of the: 

• corporate performance report (formerly the ‘‘Corporate Plan’’); and 

• annual budget 

Governance and Nominating Committee (‘‘GNC’’) .................. review and approval of the: 

• Director Code of Conduct 

• Related Party Transaction Policy 

• Board self-evaluation questionnaire 

Risk Committee (‘‘RC’’) ............................................................ review and approval of: 

• risk appetites and risk tolerances 

• changes to existing models 

For matters that are within the scope 

of the Committee’s responsibilities, each 

Committee generally would have the 

authority to amend OCC policies filed 

with the Commission as rules pursuant 

to the Exchange Act.19 The Board 

would, however, retain sole approval 

authority for certain policies.20 The 

Board would also retain the authority to 

revoke delegated authority and limit or 

modify the scope of such delegated 

authority, either in whole or in part, by 

Board resolution. OCC would also 

amend Article XI, Section 2 of the ByLaws to allow the Board to delegate 

authority to Committees to authorize the 

filing of proposed amendments to OCC’s 

rules. Board approval would continue to 

be required for filings related to 

amendments that require a 

supermajority vote pursuant to Article 

XI, Section 2 of the By-Laws.21 OCC 

would amend the Committee Charters to 

include among each Committee’s 

functions and responsibilities the 

authorization of regulatory submissions 

within the scope of the functions and 

responsibilities delegated to each 

Committee.22

OCC also proposes to allow the Board 

to delegate authority to an OCC officer 

to make certain regulatory filings. OCC 

believes that such delegated authority 

would help OCC to more efficiently 

revise its rules to improve their clarity 

and ensure their consistency.23 Factors 

the Board would consider in delegating 

such authority to an officer include, but 

are not limited to, the responsibilities 

and expertise of the officer to whom 

authority would be delegated and any 

limitations on the scope of the delegated 

authority, including limitations to the 

subject matter, materiality of the 

changes, the regulatory approval process 

required to implement the amendments, 

and the manner in which the officer 

must notify the Board or a Committee 

about filings approved pursuant to such 

authority. Such delegation authority and 

related factors are described in OCC’s 

proposed changes to the Board Charter 

and Section 2 of Article XI of the ByVerDate Sep<11>2014 20:23 Jun 01, 2022 Jkt 256001 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 E:\FR\FM\02JNN1.SGM 02JNN1

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24OCC anticipates that if implemented, the Board 

would delegate authority to the Chief Legal Officer 

and Chief Regulatory Counsel to authorize 

regulatory filings that (1) may be filed for 

immediate effectiveness pursuant to Section 

19(b)(3) of the Exchange Act, and (2) proposed rule 

changes that the Chief Legal Officer or Chief 

Regulatory Counsel determines in his or her 

discretion to constitute clarifications, corrections or 

minor changes, in each case other than filings that 

would amend OCC’s By-Laws, Rules that require a 

supermajority vote of the Board to amend pursuant 

to Article XI, Section 2 of the By-Laws, or rule-filed 

policies for which the Board has retained oversight 

vis-a`-vis the Committees. In addition, OCC 

anticipates that if implemented, the Board’s 

delegation of authority would be conditioned on the 

officers notifying the Board of regulatory filings 

approved by delegated authority at the next 

regularly scheduled Board meeting. OCC expects to 

implement procedures to ensure the Board is so 

notified. See Notice of Filing supra note 5, 87 FR 

at 10883. 

25 Id. 

26See Exchange Act Release No. 43630 (Nov. 28, 

2000), 65 FR 75991, 75991 (Dec. 5, 2000) (File No. 

SR–OCC–00–05) (‘‘Each of OCC’s stockholders is a 

participant exchange of OCC, and each is entitled 

to elect one ‘exchange director’ to OCC’s board of 

directors. It has been the practice of OCC and the 

exchanges to consider the affirmative vote of each 

exchange director to be the required approval of the 

stockholder that elected that exchange director. 

OCC is proposing to amend Article XI, Section 1 to 

provide more explicit authorization for this 

procedure.’’). 

27 Id. 

28See Notice of Filing supra note 5, 87 FR at 

10884. Such matters would include amendments to 

Sections 2, 3 and 5 of Article II (By-Laws pertaining 

to Stockholders, including those addressing Special 

Meetings, Quorum, and Voting), Article III (ByLaws pertaining to the Board), as well as other 

Articles listed in Article XI. By-Laws Art. XI § 1. 

29 Id. 

30Many of the components of the Proposed Rule 

Change may serve more than one purpose and 

could, therefore, be discussed in more than one 

category herein. The categorization of changes is 

not designed to denote otherwise. 

31For example, OCC provides thought leadership 

and education to market participants and the public 

about the prudent use of products that OCC clears. 

32Such reviews include, but are not limited to, 

regulatory inspection reports and OCC’s system of 

internal controls. 

33See Notice of Filing supra note 5, 87 FR at 

10885. 

Laws.24 Based on the factors identified 

above, OCC believes that the Chief Legal 

Officer and Chief Regulatory Officer 

have the appropriate responsibility and 

expertise to identify matters suitable for 

delegated approval based on the limits 

imposed with respect to the method of 

filing the proposed changes under the 

Exchange Act and the materiality of the 

proposed changes.25

C. By-Law Article XI 

OCC proposes to amend Article XI of 

the By-Laws to remove the provision 

that allows OCC to treat an Exchange 

Director’s vote as the consent of the 

stockholder who elected the Exchange 

Director for those amendments to the 

By-Laws that require stockholder 

consent. According to OCC, the 

provision codified a long-standing 

understanding between OCC and the 

stockholders to consider the affirmative 

vote of each Exchange Director as the 

approval of the stockholder.26 To avoid 

potential conflicts between an Exchange 

Director’s fiduciary duty as a director of 

OCC and the Exchange Director’s 

fiduciary duty to the stockholder, the 

By-Laws provide that an Exchange 

Director may disclaim such stockholder 

consent.27 It is OCC’s current practice to 

obtain written consent from the 

stockholders for all matters that require 

such consent.28 OCC contends that the 

Proposed Rule Change would eliminate 

the outdated authority in OCC’s ByLaws to impute an Exchange Director’s 

vote to constitute stockholder consent 

and better reflect current practice.29 As 

a result, OCC’s By-Laws would require 

written consent from the stockholders 

for all matters that require such consent. 

D. Other Amendments to the Board 

Charter and Corporate Charters 

The Proposed Rule Change would 

make other amendments to the Charters 

arising from the annual review of OCC’s 

governance arrangements. These 

proposed amendments are intended to 

increase consistency across OCC’s 

governance arrangements and to make 

other conforming changes to improve 

their clarity and transparency. These 

changes are described and broadly 

categorized below.30

(1) Clarity and Transparency 

The Proposed Rule Change would 

amend the Board Charter to provide for 

a minimum of four meetings per year, 

rather than five. This change would 

align the Board Charter with the 

Committee Charters, which generally 

require at least four meetings each year. 

The Proposed Rule Change would also 

modify the attendance guidelines to 

provide that attendance telephonically 

or by videoconference for meetings 

scheduled for in-person attendance is 

discouraged. This change conforms with 

the current Director Code of Conduct 

and would be applied to each of the 

Committee Charters. 

The Proposed Rule Change would 

also amend the discussion of the 

Board’s mission to more accurately 

reflect that OCC’s services to the 

industry are not limited to clearance 

and settlement.31 The amendments 

would also clarify that the Board 

approves ‘‘material,’’ rather than 

‘‘major,’’ changes in auditing and 

accounting principles and practices. 

This proposed change would align the 

Board Charter with language in the AC 

Charter. 

The Proposed Rule Change would 

also revise the description of the 

Conflict of Interest Policy within the 

Board Charter. The current Conflict of 

Interest Policy does not define ‘‘conflict 

of interest,’’ but rather refers variously 

throughout the policy to different types 

of conflicts, including potential 

conflicts and apparent conflicts, which 

are referred to as those that may ‘‘be 

reasonably perceived by others to raise 

questions about potential conflicts of 

interest.’’ OCC would streamline the 

policy by defining ‘‘conflict of interest’’ 

as ‘‘actual, potential or apparent 

conflicts of interest’’ and referring to the 

new defined term ‘‘conflict of interest’’ 

throughout the policy instead of 

identifying specific types of conflicts 

(i.e., potential or apparent) at various 

points throughout the policy. 

Accordingly, OCC would remove the 

current references to potential and 

apparent conflicts of interest scattered 

throughout the policy, including the 

references to apparent conflicts of 

interest described as matters that may 

‘‘be reasonably perceived by others to 

raise questions about potential conflicts 

of interest.’’ These changes would align 

the Board Charter with the current 

Director Code of Conduct, which 

employs the same defined term. The 

Board Charter’s discussion of ethics and 

conflicts of interest would also be 

amended to reflect the full title of the 

Director Code of Conduct and the 

corporate title for OCC’s general 

counsel. In addition, the Board Charter 

would be updated to clarify that an 

Exchange Director’s, Member Director’s, 

or Public Director’s qualification as 

independent for purposes of service on 

the AC is subject to the assessment of 

the Board and GNC, which includes 

other disqualifying material 

relationships, as provided by the current 

Board Charter. 

OCC is also proposing to update the 

cadence of certain AC reviews to reflect 

that the AC shall conduct such reviews 

at each regular meeting of the AC.32 The 

current AC Charter contemplates that 

the AC shall conduct certain reviews 

quarterly based on the assumption that 

regular meetings will occur quarterly. 

OCC believes that, while it is generally 

the case that regular meetings are 

scheduled each quarter, the proposed 

change would avoid the need to call 

special meetings to address items on a 

quarterly cadence if a regularly 

scheduled meeting happens to fall at the 

beginning of the next quarter or the end 

of the last quarter.33 The cadence of 

reviews for other reports described as 

‘‘periodic’’ or occurring ‘‘regularly’’ 


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would also be amended to reflect that 

that the review would be conducted at 

each regular meeting of the AC. Similar 

changes would be made to the CPC 

Charter and TC Charter. 

OCC would amend the CPC Charter 

by removing gendered pronouns that 

assume the Chairman and Chief 

Executive Officer necessarily will be 

individuals who identify as male. 

Similar changes would be applied to the 

Board Charter and AC Charter. The 

Proposed Rule Change would also 

provide for CPC oversight of OCC’s 

succession planning for ‘‘critical roles,’’ 

in alignment with terminology in OCC’s 

policies and procedures that address 

succession planning. In addition, 

references to the ‘‘Corporate Plan’’ 

would be replaced with references to 

the ‘‘corporate performance report,’’ 

which better describes the initiative by 

which the CPC assesses OCC’s 

performance against its corporate goals. 

OCC would amend the RC Charter by 

changing the minimum number of 

meetings from six to four to align with 

the other Committee Charters, which 

generally require at least four meetings 

each year. 

The Proposed Rule Change also 

includes administrative changes 

designed to enhance the clarity and 

conciseness of the Charters. For the 

Board Charter, OCC is proposing the 

following: 

• Under the ‘‘Mission of the Board’’ 

heading, in the tenth bulleted item 

describing the Board’s oversight role, 

removing ‘‘such officer’’ from 

‘‘approving the compensation of each 

such officer’’ so that the bullet would 

state ‘‘[o]verseeing the development and 

design of employee compensation, 

incentive, and benefit programs and 

evaluating the performance of any 

Executive Chairman, the Chief 

Executive Officer, and the Chief 

Operating Officer and approving the 

compensation of each’’; 

• under the ‘‘Board Issues’’ heading 

and ‘‘Membership’’ subheading: In the 

first paragraph of the ‘‘Selection of 

Member Directs and Public Directors’’ 

section, removing ‘‘in order’’ in ‘‘retain 

a search firm in order to assist [the GNC] 

in these efforts’’; 

• in the second paragraph of the same 

section, replacing ‘‘such annual 

meeting’’ with ‘‘the annual meeting,’’ 

deleting ‘‘as in effect from time to time’’ 

from ‘‘the Director Nomination 

Procedure as in effect from time to 

time,’’ and deleting the introductory 

clause beginning the sentence, ‘‘With 

respect to Member Directors’’; 

• in the ‘‘Member Directors Changing 

Their Employment’’ paragraph of the 

‘‘Retirement’’ section, deleting ‘‘with 

respect thereto’’ and ‘‘requirements of 

the’’ in ‘‘the [GNC] . . . shall 

recommend to the Board any action to 

be taken with respect thereto, consistent 

with the requirements of the By-Laws 

concerning the continued eligibility of 

such person to remain a Member 

Director;’’ 

• under the ‘‘Board Issues’’ heading 

and ‘‘Conduct’’ subheading, the second 

paragraph of ‘‘Distribution of Materials; 

Board Presentations’’ in the ‘‘Board 

Meetings’’ section, replacing 

‘‘summaries/slides of presentations’’ 

with ‘‘materials’’; and 

• under the ‘‘Management Structure, 

Evaluation and Succession’’ heading 

and ‘‘Management Structure’’ section, 

deleting ‘‘what is in’’ in the phrase ‘‘the 

specific needs of the business and what 

is in the best interest of OCC and the 

market participants it serves.’’ 

OCC is also proposing certain 

administrative changes designed to 

enhance the clarity, conciseness, and 

consistency of the AC Charter. 

Specifically, OCC is proposing the 

following: 

• Changing the reference to the AC’s 

review of the ‘‘Compliance Policy’’ to 

the ‘‘Compliance Risk Policy’’ to align 

with the current title of that policy; 

• modifying reference to the General 

Counsel to reflect that the General 

Counsel is OCC’s Chief Legal Officer; 

• clarifying that, in the section 

addressing competencies of AC 

members, ‘‘working familiarity with 

basic finance and accounting practices’’ 

means ‘‘financial literacy’’; 

• under the ‘‘Membership and 

Organization’’ section, (i) in the first 

paragraph of the ‘‘Composition’’ section, 

abbreviating ‘‘Board of Directors’’ and 

removing extraneous references to the 

‘‘full’’ Board and ‘‘full Committee 

membership,’’ and (ii) in the first 

paragraph of the ‘‘Meetings’’ section, 

replacing ‘‘The Committee will’’ with 

‘‘The Committee shall’’ for consistency 

with the language of similar 

requirements; and 

• under the ‘‘Functions and 

Responsibilities’’ section, in the ninth 

bulleted item concerning the AC’s 

functions and responsibilities in 

discharging is oversight role, replacing 

‘‘at least once in a calendar year’’ with 

‘‘at least once every calendar year.’’ 

For the CPC Charter, OCC is 

proposing the following: 

• In the ‘‘Membership and 

Organization’’ section, (i) in the first 

paragraph of the ‘‘Composition’’ section, 

replacing ‘‘The Committee shall consist 

of’’ with ‘‘The Committee shall be 

comprised of’’; and (ii) in the first 

paragraph of the ‘‘Meetings’’ section, 

replacing ‘‘The Committee will’’ with 

‘‘The Committee shall’’ and deleting 

‘‘is’’ in the phrase ‘‘as is necessary’’; 

• in the ‘‘Authority’’ section and 

‘‘Scope’’ subsection, correcting a 

reference to ‘‘employees of the OCC,’’ 

which should be ‘‘employees of OCC;’’ 

• for the bulleted items discussing the 

CPC’s functions and responsibilities in 

discharging its oversight role in the 

‘‘Functions and Responsibilities’’ 

section: In the fifth bulleted item, 

deleting the phrase ‘‘with respect 

thereto’’; in the eighth bulleted item 

replacing ‘‘For each calendar year’’ with 

‘‘Each calendar year’’; and fifteenth 

bulleted item, replacing ‘‘every two 

years’’ with ‘‘every two calendar years.’’ 

For the GNC Charter, OCC is 

proposing the following: 

• Under the ‘‘Membership and 

Organization’’ section, in the first 

paragraph of the ‘‘Composition’’ section, 

(i) replacing ‘‘The Committee will be 

composed’’ with ‘‘The Committee shall 

be comprised,’’ (ii) inserting ‘‘at least’’ 

before the required number of Exchange 

Director and Member Director 

membership on the GNC, and (iii) 

replacing ‘‘The Committee Chair will be 

designated by the Board from among the 

Public Director Committee members’’ 

with ‘‘The Chair shall be a Public 

Director’’; and 

• for the bulleted items discussing the 

GNC’s functions and responsibilities in 

discharging its oversight role in the 

‘‘Functions and Responsibilities’’ 

section: In the eleventh bulleted item, 

replacing ‘‘For each calendar year’’ with 

‘‘Each calendar year’’; and in the 

thirteenth bulleted item, replacing ‘‘the 

manner in which’’ with ‘‘how.’’ 

OCC also proposes certain 

administrative changes to the RC 

Charter, including (i) to specify that the 

RC recommends changes to OCC’s 

Recovery and Orderly Wind-Down Plan 

‘‘for approval,’’ consistent with language 

used with respect to policies for which 

the Board has retained approval 

authority with respect to amendments; 

and (ii) to replace ‘‘examinations’’ with 

‘‘audits’’ in the description of the RC’s 

oversight of internal or external audits 

of OCC’s financial, collateral, risk model 

and third party risk management 

processes, consistent with the use of the 

term ‘‘audit’’ elsewhere in that 

description. 

The proposed changes also include a 

few administrative changes designed to 

enhance the clarity and concision in the 

TC Charter. These minor administrative 

changes remove unnecessary verbiage or 

otherwise modify the verbiage in certain 

provisions. 


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34See Notice of Filing supra note 5, 87 FR at 

10884. 35See AC Charter, available at https://

www.theocc.com/about/corporate-information/ 

board-charter. 36See CPC Charter, available at https://

www.theocc.com/about/corporate-information/ 

board-charter. 

37See GNC Charter, available at https://

www.theocc.com/about/corporate-information/ 

board-charter. 38See RC Charter, available at https://

www.theocc.com/about/corporate-information/ 

board-charter. 

39See TC Charter, available at https://

www.theocc.com/about/corporate-information/ 

board-charter. 

40See Notice of Filing supra note 5, 87 FR at 

10884. 

41 Id. 

(2) Clear and Direct Lines of 

Responsibility 

The Proposed Rule Change would 

amend the Board Charter by clarifying 

that the Board has delegated to 

Committees the ‘‘oversight’’ of specific 

risks, not the ‘‘management’’ of those 

risks. OCC believes that this proposed 

change better aligns the Board Charter 

with the Committee Charters and better 

distinguishes responsibilities of the 

Board, Committees, and management.34

The Board Charter would also be 

amended to replace reference to ‘‘senior 

management’’ or management in 

instances where referring to OCC’s 

Management Committee would more 

clearly delineate OCC’s governance 

structure. 

The AC assists the Board in 

overseeing OCC’s financial reporting 

process, OCC’s system of internal 

control, OCC’s auditing process, OCC’s 

process for monitoring compliance with 

applicable laws and regulation, and 

OCC’s compliance and legal risks.35 The 

Proposed Rule Change would amend the 

AC Charter, and specifically the 

discussion of the AC’s functions and 

responsibilities, by adding the AC’s 

oversight of management’s 

responsibility to ‘‘measure’’ compliance 

and legal risks to conform with the 

Board Charter, which provides that the 

Board oversees OCC’s processes and 

frameworks for comprehensively 

managing such risks. In addition, the 

proposed changes provide that the AC 

recommends material changes in 

accounting principles and practices for 

Board approval, which aligns with the 

Board Charter, which provides that the 

Board oversees OCC’s financial 

reporting, internal and external 

auditing, and accounting and 

compliance processes, including the 

approval of such major (i.e., material) 

changes. 

The Board established the CPC to 

assist in overseeing general business, 

regulatory capital, investment, corporate 

planning, and compensation and human 

capital risks, as well as executive 

management succession planning and 

performance assessment.36 Consistent 

with the proposed change to the AC 

Charter, OCC proposes to amend the 

CPC Charter by describing the CPC’s 

oversight of management’s 

responsibility to ‘‘measure’’ general 

business risks, including as they relate 

to OCC’s corporate performance report 

(formerly the ‘‘Corporate Plan’’) and 

corporate budget, capital requirements, 

human capital, compensation and 

benefit programs, management 

succession planning, and management 

performance assessment processes, 

arising from OCC’s business activities in 

light of OCC’s role as a systemically 

important financial market utility, to 

conform with similar language in the 

Board Charter. With respect to oversight 

of OCC’s human resources programs, the 

Proposed Rule Change would amend the 

CPC Charter to reflect the CPC’s 

oversight of OCC’s diversity, equity, and 

inclusion efforts. 

The Board established the GNC to 

assist the Board in overseeing OCC’s 

corporate governance processes, 

including assessing the clarity and 

transparency of OCC’s governance 

arrangements, establishing the 

qualifications necessary for Board 

service to ensure that the Board is able 

to discharge its duties and 

responsibilities, identifying and 

recommending to the Board candidates 

eligible for service as Public Directors 

and Member Directors, and resolving 

certain conflicts of interests.37 The 

proposed changes to the GNC Charter 

are designed to clarify the Board’s 

expectation that the GNC assist the 

Board in reviewing and proposing 

changes to the Board Charter, by stating 

that the GNC would recommend to the 

Board, where appropriate, changes to 

the Board Charter and Corporate 

Governance Principles. 

The Board established the RC to assist 

the Board in overseeing OCC’s financial, 

collateral, risk model and third-party 

risk management processes, among 

other responsibilities.38 Consistent with 

the foregoing Committee Charter 

changes, the Proposed Rule Change 

would amend the RC Charter by 

describing the committee’s oversight of 

management’s responsibility to 

‘‘measure’’ these risks arising from 

OCC’s business activities in light of 

OCC’s role as a systemically important 

financial market utility, which conforms 

with similar language in the Board 

Charter. OCC would also amend the RC 

Charter to provide that the RC shall 

review, and have the authority to 

approve, OCC’s risk appetites and risk 

tolerances at least once every twelve 

months. Such a change would be 

consistent with the proposed delegation 

of authority for such reviews and 

approvals, discussed above. In addition, 

the Proposed Rule Change would 

consolidate discussion of the RC’s 

functions and responsibilities with 

respect to oversight and annual review 

of OCC’s management of liquidity risks 

and the adequacy of OCC’s committed 

liquidity facilities. This change would 

streamline the RC Charter’s discussion 

of liquidity risks. 

The Board established the TC to assist 

the Board in overseeing OCC’s 

information technology (‘‘IT’’) strategy 

and other company-wide operational 

capabilities.39 Consistent with the 

foregoing Committee Charter changes, 

this proposed rule change would amend 

the TC Charter by describing the TC’s 

oversight of management’s 

responsibility to ‘‘measure’’ IT and other 

operational risks arising from OCC’s 

business activities in light of OCC’s role 

as a systemically important financial 

market utility to conform with similar 

language in the Board Charter. The 

Proposed Rule Change would also 

amend the TC Charter to reflect the TC’s 

current practice of overseeing all 

security risks, not just information 

security risks. 

(3) Consideration of Participants’ 

Objectives and Other Relevant 

Stakeholders’ Interests 

The Proposed Rule Change would 

amend provisions governing the 

composition of the Board and the RC to 

reflect OCC’s belief that strong and 

transparent governance with robust 

member input on relevant risk issues is 

necessary to provide effective risk 

management, consistent with OCC’s 

current practice. Changes to the Board 

Charter and RC Charter would codify 

that one of the factors OCC considers 

when nominating Directors to the Board 

and RC is to obtain input from a broad 

array of market participants on risk 

management issues. OCC believes that 

this amendment would align the Board 

Charter and RC Charter with the ByLaws, which require significant Clearing 

Member representation on the Board.40

OCC believes the Proposed Rule Change 

is consistent with the recommendation 

made by certain market participants that 

central counterparties like OCC have 

governance practices in place that 

obtain and address input from a broader 

array of market participants on risk 

issues.41


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42 15 U.S.C. 78s(b)(2)(C). 

43 15 U.S.C. 78q–1(b)(3)(F). 

44 17 CFR 240.17Ad–22(e)(2). 

45 15 U.S.C. 78q–1(b)(3)(F). 

46See Notice of Filing supra note 5, 87 FR at 

10881. 

47The comment on the Proposed Rule Change is 

available at https://www.sec.gov/comments/sr-occ2022-002/srocc2022002.htm. 48 Id. 

III. Discussion and Commission 

Findings 

Section 19(b)(2)(C) of the Exchange 

Act directs the Commission to approve 

a proposed rule change of a selfregulatory organization if it finds that 

such proposed rule change is consistent 

with the requirements of the Exchange 

Act and the rules and regulations 

thereunder applicable to such 

organization.42 After carefully 

considering the Proposed Rule Change, 

the Commission finds that the proposal 

is consistent with the requirements of 

the Exchange Act and the rules and 

regulations thereunder applicable to 

OCC. More specifically, the Commission 

finds that the proposal is consistent 

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

Exchange Act,43 and Rule 17Ad– 

22(e)(2) 44 thereunder, as described in 

detail below. 

A. Consistency With Section 

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

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

Act requires, among other things, that a 

clearing agency’s rules are designed to 

promote the prompt and accurate 

clearance and settlement of securities 

transactions and, to the extent 

applicable, derivative agreements, 

contracts, and transactions; and the 

rules are designed, in general, to protect 

investors and the public interest.45

Based on its review of the record, and 

for the reasons described below, the 

Commission believes that the proposed 

changes to revise OCC’s governance 

arrangements are consistent with being 

organized to facilitate the prompt and 

accurate clearance and settlement of 

securities transactions and derivative 

agreements, contracts, and transactions 

for which OCC is responsible, and 

protect investors and the public interest. 

The Commission believes that OCC’s 

proposed changes to codify its practice 

of nominating Public Directors who are 

unaffiliated with DCMs and FCMs are 

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

This amendment would likely preserve 

OCC’s ability to enhance diversity of 

representation on the Board and aid the 

Board in exercising its oversight of 

OCC’s clearance and settlement 

functions to ensure that they are not just 

prompt and accurate, but are also 

structured to protect investors and 

promote the public interest. The 

Commission believes that the changes to 

OCC’s governing documents to facilitate 

inclusion of the perspectives provided 

by non-DCM- and non-FCM-affiliated 

Public Directors should support the 

protection of the public interest because 

such Public Directors are not affiliated 

with and therefore should not have 

conflicts obligating them to represent 

the views of any DCM or FCM, in 

addition to any national securities 

exchange, securities association, broker, 

or dealer. 

In response to the Notice of Filing,46

the Commission received a comment 

opposing the proposal on the basis that 

it does not consider the interests of 

Clearing Members’ customers, and only 

benefits OCC’s biggest shareholders by 

enabling OCC to increase systemic 

risk.47 The Commission disagrees with 

this assertion, as the proposed change to 

appoint non-DCM- and non-FCMaffiliated Public Directors would 

preserve OCC’s ability to enhance Board 

diversity and improve stakeholder 

representation, rather than decrease it. 

By limiting the appointment of Public 

Directors to candidates unaffiliated with 

securities exchanges, securities 

associations, brokers, dealers, FCMs, 

and DCMs, OCC enhances rather than 

hinders its ability to consider and 

address the interests of stakeholders, 

including Clearing Members’ customers 

and small shareholders. 

OCC’s proposed changes to establish 

a framework for delegated authority are 

also consistent with Section 

17A(b)(3)(F). The Commission believes 

that the Proposed Rule Change would 

establish a clear and transparent 

framework for the delegation of 

authority from the Board to Committees 

and to officers to approve changes to 

certain rules. Such a framework would 

facilitate the efficient maintenance and 

administration of OCC’s rules because it 

would allow the Board to delegate the 

approval of routine regulatory changes 

to Committees or officers, which would 

in turn leverage the specialized 

experience of the Committees or officers 

and expedite review and approval of 

routine matters. Facilitating the efficient 

maintenance and administration of 

OCC’s rules would help to ensure that 

such rules promote the prompt and 

accurate clearance and settlement of 

securities transactions because the 

routine rule changes would not need to 

wait for Board approval. This would 

allow OCC to file such rule changes 

with the Commission more quickly and 

ensure that amendments to the 

clearance and settlement process are 

enacted promptly. 

The commenter opposing the 

proposal argues that the Proposed Rule 

Change would ‘‘concentrate power and 

risk while reducing checks and 

balances’’ by, in part, increasing 

executive control while reducing Board 

control.48 However, the Commission 

does not believe that the proposed 

changes would reduce Board control in 

practice, given that the Board would 

retain the obligation to oversee the 

delegated activity in all instances. 

Moreover, the Committees are 

comprised entirely of Board Directors, 

which means that any issues that are 

delegated to the Committees will be 

presented for Board Directors’ 

consideration regardless. 

The Commission further believes the 

proposed change to Article XI of OCC’s 

By-Laws is consistent with Section 

17A(b)(3)(F). Crucially, the Proposed 

Rule Change does not change the 

existing Article XI requirement that 

certain By-Law amendments cannot 

occur through the action of the Board 

without the approval of all of the 

stockholders. The proposed amendment 

to remove the language attributing an 

Exchange Director’s vote to constitute 

stockholder consent is a reasonable step 

given OCC’s current practice of 

obtaining written stockholder consents 

for all By-Law amendments that require 

them. The separation of the roles of 

individuals serving as both Board 

members and stockholder 

representatives would, in general, 

protect investors and the public interest. 

Additionally, the Commission 

believes that the other housekeeping 

amendments to the Charters arising 

from the annual review of OCC’s 

governance arrangements are consistent 

with Section 17A(b)(3)(F). As described 

above, many of the housekeeping 

amendments would resolve small 

inconsistencies within and across OCC’s 

rules. The proposed changes would also 

more clearly define the responsibilities 

of the Board and Committees as well as 

codify that OCC’s Board seeks to obtain 

input from a broad array of market 

participants on risk management issues. 

These housekeeping amendments to the 

Board and Committee Charters would, 

in general, protect investors and the 

public interest. 

The Commission believes, therefore, 

that the proposal to (i) clarify that OCC’s 

Public Directors may not be affiliated 

with any DCM or FCM; (ii) allow the 

Board to delegate authority to various 

Committees and officers to review and 

approve routine initiatives and policies 

and authorize certain regulatory filings; 

(iii) remove the portion of Article XI, 


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49 15 U.S.C. 78q–1(b)(3)(F). 

50 17 CFR 240.17Ad–22(e)(2)(i), (iii), (v), and (vi). 

51 17 CFR 240.17Ad–22(e)(2)(i). 

52The comment on the Proposed Rule Change is 

available at https://www.sec.gov/comments/sr-occ2022-002/srocc2022002.htm. The commenter also 

raised concerns abouit ‘‘increasing roadblocks for 

potential new Board members.’’ Id. However, the 

commenter does not specify what portions of the 

Proposed Rule Change would represent a 

‘‘roadblock,’’ if any. In contrast, the Commission 

believes that a significant portion of the Proposed 

Rule Change would in fact make OCC’s governance 

arrangements clearer and more transparent and also 

specify clear and direct lines of responsibility as 

discussed below. 

53 17 CFR 240.17Ad–22(e)(2)(v). 

54 17 CFR 240.17Ad–22(e)(2)(vi). 

55 17 CFR 240.17Ad–22(e)(2)(i), (iii), (v), and (vi). 

56 In approving this Proposed Rule Change, the 

Commission has considered the proposed rules’ 

Continued 

Section 1 of the By-Laws; and (iv) make 

certain housekeeping amendments to 

the Charters is consistent with the 

requirements of Section 17A(b)(3)(F) of 

the Exchange Act.49

B. Consistency With Rule 17Ad–22(e)(2) 

under the Exchange Act 

Rule 17Ad–22(e)(2) under the 

Exchange Act requires that a covered 

clearing agency establish, implement, 

maintain, and enforce written policies 

and procedures reasonably designed to 

provide for governance arrangements 

that, among other things, are clear and 

transparent, support the public interest 

requirements in Section 17A of the 

Exchange Act applicable to clearing 

agencies and the objectives of owners 

and participants, specify clear and 

direct lines of responsibility, and 

consider the interests of participants’ 

customers, securities issues and holders, 

and other relevant stakeholders of the 

covered clearing agency.50

The Commission believes the 

proposed changes to nominate Public 

Directors who are unaffiliated with 

DCMs and FCMs are consistent with 

Rule 17Ad–22(e)(2)(vi). The changes 

serve to enhance the diversity of the 

Board by requiring that OCC look 

beyond parties affiliated with 

exchanges, associations, and other such 

market participants when appointing 

Public Directors. This improved 

representation would in turn enable the 

Board to better consider the interests of 

participants’ customers, securities 

issues and holders, and other relevant 

stakeholders of the covered clearing 

agency. 

OCC’s proposed changes to delegate 

authority are consistent with Rule 

17Ad–22(e)(2)(v). The Commission 

believes that by delegating approval of 

certain regulatory changes to 

Committees, the authority to review and 

approve certain initiatives and policies 

or to direct certain regulatory filings 

would reside with the Committee that 

has oversight authority over the relevant 

subject matter for such initiatives, 

policies, and proposed changes. Such 

delegations would allocate the limited 

time and attention of the Board more 

efficiently. The proposed changes to 

delegate authority aid in specifying 

clear and direct lines of responsibility. 

The Commission believes the 

proposed change to Article XI is 

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

By removing the provision that allows 

OCC to treat an Exchange Director’s vote 

as the consent of the stockholder who 

elected the Exchange Director for those 

amendments to the By-Laws that require 

stockholder consent, the proposed 

change would resolve an Exchange 

Director’s potential conflict of interest of 

acting with fiduciary duty as a director 

while also having a fiduciary duty to the 

stockholder. Given that OCC retains the 

requirement in Article XI for all 

stockholders to approve amendments to 

certain portions of the By-Laws, the 

proposed provision removal would not 

result in any negative impacts to the 

stockholder. Instead, the separation of 

the Exchange Director’s roles as Board 

members and stockholder 

representatives would better support the 

public interest requirements of Section 

17A. 

Moreover, the Commission believes 

that all of the proposed housekeeping 

changes to the Charters are consistent 

with specific subsections of Rule 17Ad– 

22(e)(2) as described below. 

Rule 17Ad–22(e)(2)(i) requires that a 

covered clearing agency establish, 

implement, maintain, and enforce 

written policies and procedures 

reasonably designed to provide for 

governance arrangements that are clear 

and transparent.51 The Commission 

believes that changes described above in 

Section II.D.1 are consistent with Rule 

17Ad–22(e)(2)(i), in that they either 

improve the alignment of the 

governance documents or correct minor 

inaccuracies, which in turn creates 

stronger clarity and transparency. For 

example, OCC proposed changes across 

the charter to require the Board and 

Committees each to hold at least four 

meetings per year. 

The commenter opposing the 

proposal argues that the Proposed Rule 

Change would ‘‘concentrate power and 

risk while reducing checks and 

balances’’ by, in part, reducing meeting 

frequency.52 However, the Commission 

does not believe that the proposed 

changes to the Board’s meeting 

frequency will negatively affect the 

ability of the Board to address 

stockholder concerns. By amending the 

number of Board meetings per year from 

five to four to align with the meeting 

frequency specified in the Committee 

Charters, OCC will potentially increase 

administrative efficiency and better 

ensure the Board or the Committees 

address all isssues critical to 

stakeholders. Additionally, the 

Proposed Rule Change does not 

preclude the Board from holding 

additional meetings as needed. 

Rule 17A–22(e)(2)(v) requires that a 

covered clearing agency establish, 

implement, maintain, and enforce 

written policies and procedures 

reasonably designed to provide for 

governance arrangements that specify 

clear and direct lines of responsibility.53

The Commission believes that the 

changes described above in Section 

II.D.2 are consistent with Rule 17Ad– 

22(e)(2)(v), as they each serve to clarify 

the specific responsibilities of the 

Board, the Committees, and officers. 

Finally, Rule 17Ad–22(e)(2)(vi) 

requires that a covered clearing agency 

establish, implement, maintain, and 

enforce written policies and procedures 

reasonably designed to provide for 

governance arrangements that consider 

the interests of participants’ customers, 

securities issues and holders, and other 

relevant stakeholders of the covered 

clearing agency.54 The proposed 

changes to the Board Charter and RC 

Charter to codify input from a broad 

array of market participants as one of 

the factors considered for nominating 

Directors to the Board and Risk 

Committee are consistent with this Rule, 

as the diversity of opinions would better 

consider a broader array of interests 

among OCC’s relevant stakeholders. 

The Commission believes, therefore, 

that the proposal to (i) clarify that OCC’s 

Public Directors may not be affiliated 

with any DCM or FCM; (ii) allow the 

Board to delegate authority to various 

Committees and officers to review and 

approve routine initiatives and policies 

and authorize certain regulatory filings; 

(iii) remove the portion of Article XI, 

Section 1 of the By-Laws; and (iv) apply 

additional housekeeping amendments is 

consistent with the requirements of Rule 

17Ad–22(e)(2)(i), (iii), (v), and (vi) under 

the Exchange Act.55

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the Proposed 

Rule Change is consistent with the 

requirements of the Exchange Act, and 

in particular, the requirements of 

Section 17A of the Exchange Act 56 and 

the rules and regulations thereunder. 


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impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

57 15 U.S.C. 78s(b)(2). 

58 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See SR–NYSECHX–2022–10. 

5 In 2013, the Commission approved the New 

York Stock Exchange LLC’s (‘‘NYSE’’) adoption of 

FINRA’s disciplinary rules. See Securities Exchange 

Act Release No. 69045 (March 5, 2013), 78 FR 

15394 (March 11, 2013) (SR–NYSE–2013–02). In 

2016, NYSE American LLC (‘‘NYSE American’’) 

adopted its Rule 8000 and Rule 9000 Series based 

on the NYSE and FINRA Rule 8000 and Rule 9000 

Series. See Securities Exchange Act Release Nos. 

77241 (February 26, 2016), 81 FR 11311 (March 3, 

2016) (SR–NYSEMKT–2016–30). In 2018, the 

Commission approved NYSE National, Inc.’s 

(‘‘NYSE National’’) adoption of the NYSE National 

Rule 10.8000 and Rule 10.9000 Series based on the 

NYSE American and FINRA Rule 8000 and Rule 

9000 Series. See Securities Exchange Act Release 

No. 83289 (May 17, 2018), 83 FR 23968 (May 23, 

2018) (SR–NYSENat–2018–02). In 2019, NYSE 

Arca, Inc. (‘‘NYSE Arca’’) adopted the NYSE Arca 

Rule 10.8000 and 10.9000 Series based on the NYSE 

American Rule 8000 and Rule 9000 Series. See 

Securities Exchange Act Release No. 85639 (April 

12, 2019), 84 FR 16346 (April 18, 2019) (SR– 

NYSEArca–2019–15). 

6See note 4, supra. 

7The Exchange adopted its current MRVP in 

1996. See Securities Exchange Act Release No. 

37255 (May 30, 1996), 61 FR 28918 (June 6, 1996) 

(SR–CHX–95–25) (Order). The original procedure 

authorizing the Exchange, in lieu of commencing 

disciplinary proceeding, to impose a fine, not to 

exceed $2,500, on any member, member 

organization, associated person or registered or 

nonregistered employee of a member or member 

organization for any violation of an Exchange rule 

which the Exchange determines to be minor in 

nature was contained in as Article 12, Rule 9, now 

Article 12, Rule 8. The recommended dollar 

amounts for the first, second, third and subsequent 

violations, as calculated on a twelve-month rolling 

basis, of a rule designated as a minor rule violation 

was contained in a separate Recommended Fine 

Schedule in the Fee Schedule. See id., 61 FR at 

28918–19 & n. 10. 

In 2011, the Exchange increased the maximum 

fine pursuant to the MRVP from $2,500 to $5,000 

and also increased the recommended fines from 

$100/$500/$1,000 for 1st, 2nd and 3rd tier fines, 

respectively, to $250/$750/$1,500. The Exchange 

also recommended fines of $500/$1,000/$2,500 for 

other, more serious trading rule violations (i.e., ones 

involving the potential for customer harm), as well 

as violations of the obligation to establish, maintain 

and enforce written supervisory procedures, and to 

provide information to the Exchange in connection 

with regulatory inquiries or other matters. 

Recommended fines of $1,000/$2,500/$5,000 were 

reserved for Trading Ahead violations. The 

Exchange also expanded the rolling time period in 

which violations would result in escalation to the 

next highest tier from 12 to 24 months. See 

Securities Exchange Act Release No. 64370 (April 

29, 2011), 76 FR 25727, 25727 (May 5, 2011) (SR– 

CHX–2011–07) (Notice); Securities Exchange Act 

Release 64686 (June 16, 2011), 76 FR 36596 (June 

22, 2011) (SR–CHX–2011–07) (Order). See also text 

accompanying note 20, infra. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act,57

that the Proposed Rule Change (SR– 

OCC–2022–002) be, and hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.58

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–11784 Filed 6–1–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94987; File No. SR– 

NYSECHX–2022–08] 

Self-Regulatory Organizations; NYSE 

Chicago, Inc.; Notice of Filing and 

Order Granting Accelerated Approval 

of a Proposed Rule Change To Adopt 

Rules 10.9216(b) and 10.9217 in 

Connection With a Companion Filing 

To Adopt Investigation, Disciplinary, 

Sanction, and Other Procedural Rules 

Modeled on the Rules of Its Affiliates 

May 26, 2022. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on May 13, 

2022, the NYSE Chicago, Inc. (‘‘NYSE 

Chicago’’ or the ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons and 

approving the proposal on an 

accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes, in 

connection with a companion filing to 

adopt investigation, disciplinary, 

sanction, and other procedural rules 

modeled on the rules of its affiliates, to 

(1) adopt new Rules 10.9216(b) and 

10.9217 governing minor rule violations 

and fines; (2) add additional rules to the 

Exchange’s list of current minor rule 

violations that would be transposed to 

proposed Rule 10.9217; and (3) move 

the Recommended Fine Schedule for 

minor rule violations from the Fee 

Schedule to proposed Rule 10.9217 and 

make certain amendments and 

corrections. The proposed change is 

available on the Exchange’s website at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization 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 those statements may be examined at 

the places specified in Item III below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

In connection with a companion filing 

to adopt investigation, disciplinary, 

sanction, and other procedural rules 

modeled on the rules of its affiliates,4

the Exchange proposes to (1) adopt new 

Rules 10.9216(b) and 10.9217 governing 

minor rule violations and fines; (2) add 

additional rules to the Exchange’s list of 

current minor rule violations that would 

be transposed to proposed Rule 10.9217; 

and (3) move the Recommended Fine 

Schedule for minor rule violations from 

the Fee Schedule to proposed Rule 

10.9217and make certain amendments 

and corrections. 

Background 

Beginning in 2013, each of the 

Exchange’s affiliates have adopted rules 

relating to investigation, discipline, 

sanction, and other procedural rules 

based on the rules of the Financial 

Industry Regulatory Authority 

(‘‘FINRA’’).5 To facilitate rule 

harmonization among the Exchange’s 

affiliates, the Exchange has separately 

proposed the NYSE Chicago Rule 

10.8000 and 10.9000 Series based on the 

text of the NYSE Arca Rule 10.8000 and 

Rule 10.9000 Series, with certain 

changes, as described in its companion 

filing. In connection with adoption of 

the proposed NYSE Chicago Rule 

10.8000 and 10.9000 Series,6 the 

Exchange proposes to adopt NYSE Arca 

rules related to issuance of minor rule 

fines that would replace the Exchanges 

current Article 12, Rule 8 which sets 

forth the Exchange’s Minor Rules 

Violation Plan (‘‘MRVP’’).7

Under current Article 12, Rule 8, in 

lieu of commencing a ‘‘disciplinary 

proceeding’’ as that term is used in 

Article 12 of the Exchange Rules, the 

Exchange may, subject to the 

requirements set forth in this Rule, 

impose a censure or fine, not to exceed 


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