65538 Federal Register / Vol. 75, No. 205 / Monday, October 25, 2010 / Notices 

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

2 15 U.S.C. 78s(b)(3)(A)(iii). 

3 17 CFR 240.19b–4(f)(4). 

4Fees would include exchange, clearing, and 

other fees related to the transaction. 5The OCC Roundtable is an OCC sponsored 

advisory group comprised of representatives from 

OCC’s participant exchanges, OCC, a cross-section 

of OCC clearing members, and industry service 

bureaus. The Roundtable considers operational 

improvements that may be made to increase 

efficiencies and lower costs in the options industry. 

As a separate but related matter, the Roundtable 

also asked OCC to eliminate the requirement that 

clearing members to a CMTA arrangement represent 

they have entered into a ‘‘written’’ agreement when 

registering their arrangement in order to support 

their ability to enter into agreements electronically. 

6For commissions, OCC’s systems will be 

configured to permit clearing members to specify 

either a particular commission rate or a flat 

commission rate, provided that no commission rate 

could exceed $9.99/contract and no flat rate could 

exceed $50,000 per entry. For fees, OCC’s systems 

will be configured to permit clearing members to 

input any combination of fees subject to a $50,000 

cap per transaction. Use of this service by registered 

clearing members remains optional (i.e., OCC’s 

systems will not require registered firms to input 

fee and commission information in order to effect 

a CMTA-related transfer). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63120; File No. SR–OCC– 

2010–17] 

Self-Regulatory Organizations; the 

Options Clearing Corporation; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change Relating to 

Clearing Member Trade Assignment 

Arrangements 

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

Securities Exchange Act of 1934,1 notice 

is hereby given that on October 4, 2010, 

The Options Clearing Corporation 

(‘‘OCC’’) filed with the Securities and 

Exchange Commission the proposed 

rule change as described in Items I, II, 

and III below, which Items have been 

prepared primarily by OCC. OCC filed 

the proposed rule change pursuant to 

Section 19(b)(3)(A)(iii) of the Act 2 and 

Rule 19b-4(f)(4) 3 so that the proposal 

was effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The proposed rule change would 

provide a new service for clearing 

members that are parties to a Clearing 

Member Trade Assignment (‘‘CMTA’’) 

arrangement. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

OCC included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. OCC has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

The purpose of the proposed rule 

change is to provide a new service for 

clearing members that are parties to a 

CMTA arrangement. Clearing members 

electing to participate in the new service 

will authorize OCC to facilitate on a 

non-guaranteed basis settlement of 

commissions and fees 4 relating to 

position transfers effected between the 

clearing members pursuant to their 

CMTA arrangement. This service is 

being offered in response to a request 

made by OCC’s Roundtable.5

1. Background 

CMTA is the process by which an 

authorized executing clearing member 

directs the transfer of an exchange 

transaction to a designated account of a 

carrying clearing member. To correct 

mis-clears and other bona fide 

processing errors, an executing clearing 

member also may transfer to a carrying 

clearing member as a part of their 

CMTA arrangement positions that 

resulted from transactions that were 

directly cleared into an account of an 

executing clearing member but were 

intended for give-up to the carrying 

clearing member. Currently, fees and 

commissions that are owed by the 

carrying clearing member to the 

executing clearing member with respect 

to these transfers are tracked and billed 

bilaterally between the firms. This 

process, which has long been 

considered inefficient, results in 

increased collection times and 

reconciliation problems for the firms 

involved. At the request of the 

Roundtable, OCC has developed a 

centralized solution to reduce some of 

these inefficiencies. OCC therefore 

proposes to modify its systems and rules 

to provide for the non-guaranteed 

settlement of fees and commissions 

associated with position transfers 

effected pursuant to registered CMTA 

arrangements. 

2. Rule Changes 

OCC proposes to add system 

functionality to support the calculation 

and non-guaranteed settlement of fees 

and commissions based on entries made 

by the executing clearing member. 

Firms desiring to make use of this 

functionality will be required to 

reregister their CMTA arrangement and 

specifically authorize OCC to make such 

settlements without any further 

authorization from the carrying clearing 

member. Accordingly, OCC is proposing 

to amend Rule 403, relating to CMTA 

processing, to provide that clearing 

members electing to use this new 

service must register that aspect of their 

CMTA arrangement with OCC. Such 

registration, when accepted by OCC’s 

systems, will authorize an executing 

clearing member to make entries into 

OCC’s systems with respect to fees and 

commissions subject to any system 

checks imposed by OCC.6 Such 

registration will also authorize OCC to 

settle on a non-guaranteed basis the 

total of such amounts on the business 

day next following the date the entries 

were made without any further 

authorization from the carrying clearing 

member. If the clearing members 

terminate their CMTA arrangement, 

OCC would be authorized to settle any 

fee and commission amounts entered 

prior to the effective time of such 

termination as determined in 

accordance with Rule 403. 

Settlement of fees and commissions 

will be done on a non-guaranteed basis 

pursuant to changes being made to Rule 

504. Rule 504 currently provides for 

OCC’s money-only settlement service 

(proposed to be renamed ‘‘nonguaranteed settlement service’’) through 

which clearing members may 

specifically authorize OCC to effect nonguaranteed settlements of monies owed 

between two firms relating to 

transactions cleared by OCC. A new 

provision will be added to Rule 504 in 

order to accommodate the settlement of 

fees and commissions pursuant to an 

effectively registered CMTA 

arrangement. The new provision will 

permit OCC, as agent, to calculate and 

effect settlement of the aggregate of such 

amounts based on entries made by the 

executing clearing member to the CMTA 

arrangement without any further 

consent of the carrying clearing 

member. OCC will have no obligation to 

verify the executing clearing member’s 

entries, and any disputes between the 

firms regarding such amounts will have 

to be resolved between themselves. 

Settlements will occur the business day 

following the business day on which the 

executing clearing member inputs 

necessary information into OCC’s 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 205 / Monday, October 25, 2010 / Notices 65539 

7 15 U.S.C. 78q–1. 

8Above note 2. 

9Above note 3. 

10 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. 

systems. Like other settlements effected 

pursuant to Rule 504, these settlements 

will not be guaranteed by OCC. If a 

settlement draft for these amounts 

against a clearing member’s bank 

account is not honored, OCC will have 

no obligation to effect any payment of 

commissions or fees to the executing 

clearing member. Likewise, OCC will 

have no obligation to effect these 

settlements if OCC has suspended an 

executing or carrying clearing member. 

Finally, OCC proposes to insert 

another new provision into Rule 504. 

First, the new provision will reflect 

OCC’s current practice of not processing 

non-guaranteed settlements until 

settlements pursuant to Rule 502 (for 

premium, mark-to-market, and cash 

exercise and assignment settlement 

amounts) and 605 (margin deficits) have 

been completed. Second, it will also 

permit OCC to defer processing of nonguaranteed settlements on a business 

day. Affected clearing members will be 

notified of OCC’s decision and of the 

business day non-guaranteed 

settlements will be resumed. This 

authority will provide OCC with 

flexibility to defer processing nonguaranteed settlements on a given 

business day in the event a significant 

processing delay makes such action 

advisable or appropriate. 

OCC states that the proposed rule 

change is consistent with Section 17A of 

the Act 7 because it would provide a 

centralized service to facilitate 

collection of fees and commissions 

relating to transfers between clearing 

members that are parties to a CMTA 

arrangement thereby increasing the 

efficiency of the fee and commission 

collection process and reducing costs 

associated therewith. Furthermore, OCC 

states that the proposed rule change is 

not inconsistent with the existing rules 

of OCC including any other rules 

proposed to be amended. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

OCC does not believe that the 

proposed rule change would impose any 

burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

OCC has not solicited or received 

written comments relating to the 

proposed rule change. OCC will notify 

the Commission of any written 

comments it receives. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 8 and Rule 

19b–4(f)(4) 9 because it effects a change 

in an existing service of a registered 

clearing agency that does not adversely 

affect the safeguarding of securities or 

funds in the custody or control of the 

clearing agency or for which it is 

responsible and does not significantly 

affect the respective rights or obligations 

of the clearing agency or persons using 

the service. At any time within 60 days 

of the filing of the proposed rule change, 

the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act 

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 e-mail to rulecomments@sec.gov. Please include File 

No. SR–OCC–2010–17 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC, 20549–1090. 

All submissions should refer to File No. 

SR–OCC–2010–17. This file number 

should be included on the subject line 

if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at OCC’s principal office and on 

OCC’s Web site at (http:// 

www.theocc.com/about/publications/

bylaws.jsp). All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File No. SR–OCC–2010– 

17 and should be submitted on or before 

November 15, 2010. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–26802 Filed 10–22–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63129; File No. SR– 

NYSEArca–2010–91] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Amendment 

to NYSE Arca Equities Rule 8.500 To 

Accommodate Trading of Trust Units 

October 19, 2010. 

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 October 

12, 2010, NYSE Arca, Inc. (the 

‘‘Exchange’’ or ‘‘NYSE Arca’’) 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 self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 


emcdonald on DSK2BSOYB1PROD with NOTICES