62684 Federal Register / Vol. 79, No. 202 / Monday, October 20, 2014 / Notices 

5 Id. 

6 Id. 

7 17 CFR 200.30–3(a)(12). 

1 12 U.S.C. 5465(e)(1). 

2 17 CFR 240.19b–4(n)(1)(i). 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to ICC, in particular, to 

Section 17(A)(b)(3)(F),5 because ICC 

believes that the proposed rule change 

will assure the prompt and accurate 

clearance and settlement of securities 

transactions, derivatives agreements, 

contracts, and transactions. The 

proposed changes to the ICC Rules 

provide additional clarity regarding 

ICC’s intention to return any House 

Initial Margin used as an internal 

liquidity resource. ICC believes the 

proposed revisions provide further 

clarity and transparency in the ICC 

Rules. ICC believes clarity and 

transparency in its Rules is of value to 

the market in order to provide a 

comprehensive understanding of ICC’s 

available liquidity resources and default 

management procedures related to 

liquidity. As such, the proposed rule 

change is designed to promote the 

prompt and accurate clearance and 

settlement of securities transactions, 

derivatives agreements, contracts, and 

transactions within the meaning of 

Section 17A(b)(3)(F) 6 of the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

ICC does not believe the proposed 

rule change would have any impact, or 

impose any burden, on competition. 

The clarification regarding the unwind 

of the liquidity exchange with respect to 

a Clearing Participant’s House Initial 

Margin applies uniformly across all 

market participants. Therefore, ICC does 

not believe the proposed rule change 

imposes any burden on competition that 

is inappropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Written comments relating to the 

proposed rule change have not been 

solicited or received. ICC will notify the 

Commission of any written comments 

received by ICC. 

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 of such date (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– 

ICC–2014–16 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–ICC–2014–16. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

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

filings also will be available for 

inspection and copying at the principal 

office of ICE Clear Credit and on ICE 

Clear Credit’s Web site at https://

www.theice.com/clear-credit/regulation. 

All comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–ICC–2014–16 and should 

be submitted on or before November 10, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24776 Filed 10–17–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73343; File No. SR–OCC– 

2014–805] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing of an Advance Notice 

Concerning Enhancements to the Risk 

Management Framework Applied to the 

Clearance of Confirmed Trades 

Executed in Extended and Overnight 

Trading Sessions 

October 14, 2014. 

Pursuant to Section 806(e)(1) of Title 

VIII of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

entitled the Payment, Clearing, and 

Settlement Supervision Act of 2010 1

(‘‘Payment, Clearing and Settlement 

Supervision Act’’) and Rule 19b– 

4(n)(1)(i) 2 of the Securities Exchange 

Act of 1934 notice is hereby given that 

on September 17, 2014, The Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

advance notice as described in Items I 

and II below, which Items have been 

prepared by OCC. The Commission is 

publishing this notice to solicit 

comments on the advance notice from 

interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Advance 

Notice 

This advance notice is filed by OCC 

in connection with a proposed change 

to OCC’s operations that is designed to 

enhance the risk management 

framework applied to the clearance of 

confirmed trades executed in extended 

and overnight trading sessions 

(hereinafter, ‘‘overnight trading 

sessions’’) offered by exchanges for 

which OCC provides clearance and 

settlement services. 


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3ELX Futures LP (‘‘ELX’’) previously submitted 

overnight trading activity to OCC, but currently 

does not submit trades from overnight trading 

sessions to OCC. OCC will re-evaluate ELX’s risk 

controls in the event ELX re-institutes its overnight 

trading sessions. 

4See CFE–2014–010 at http://cfe.cboe.com/

publish/CFErulefilings/SR-CFE-2014-010.pdf . 

5The Chicago Board Options Exchange, 

Incorporated (‘‘CBOE’’) has approached OCC to 

provide clearance services for a proposed overnight 

trading session from 2:00 a.m. to 8:15 a.m. (Central 

Time) Monday through Friday (‘‘Extended Trading 

Hours’’). CBOE initially plans to list VIX and SPX 

options during Extended Trading Hours. 

6Comparable controls are applied to futures and 

future option trades executed in overnight trading 

sessions currently cleared by OCC, although such 

controls have been implemented by clearing futures 

commission merchants (‘‘clearing FCMs’’) pursuant 

to Commodity Futures Trading Commission 

(‘‘CFTC’’) Regulation 1.73, which also requires such 

clearing FCMs to monitor for adherence to such 

controls during regular and overnight trading 

sessions. OCC believes that it may reasonably rely 

on such regulation to reduce risk presented to OCC 

during futures markets overnight trading sessions. 

See 17 CFR 1.73. OCC also confirmed CFE 

maintains kill switch capabilities. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Advance Notice 

In its filing with the Commission, 

OCC included statements concerning 

the purpose of and basis for the advance 

notice and discussed any comments it 

received on the advance notice. 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) and (B) below, of the 

most significant aspects of these 

statements. 

(A) Clearing Agency’s Statement on 

Comments on the Advance Notice 

Received From Members, Participants or 

Others 

Written comments on the advance 

notice were not and are not intended to 

be solicited with respect to the advance 

notice and none have been received. 

(B) Advance Notices Filed Pursuant to 

Section 806(e) of the Payment, Clearing 

and Settlement Supervision Act 

Description of Change 

This advance notice is being filed in 

connection with a proposed change to 

OCC’s operations to enhance the risk 

management framework applied to the 

clearance of confirmed trades executed 

in overnight trading sessions offered by 

exchanges for which OCC provides 

clearance and settlement services. OCC 

currently clears overnight trading 

activity for CBOE Futures Exchange, 

LLC (‘‘CFE’’).3 The total number of 

trades submitted to OCC from overnight 

trading sessions is nominal, typically 

less than 3,000 contracts per session. 

However, OCC has recently observed an 

industry trend whereby exchanges are 

offering overnight trading sessions 

beyond traditional hours. Exchanges 

offering overnight trading sessions have 

indicated that such sessions benefit 

market participants by providing 

additional price transparency and 

hedging opportunities for products 

traded in such sessions, which, in turn, 

promotes market stability.4

OCC recently has re-evaluated the 

risks associated with providing clearing 

services for overnight trading sessions 

and, based on such review, is proposing 

to enhance its risk management 

framework for clearing overnight trading 

activity by incorporating a procedure to 

confirm that the relevant exchanges 

have implemented certain applicable 

pre-trade risk controls, complemented 

by kill-switch capabilities, and 

minimum exchange operational staffing 

requirements during overnight trading 

sessions.5 OCC also is proposing to 

implement enhanced monitoring and 

credit risk controls as well as imposing 

minimum operational staffing 

requirements on clearing members that 

participate in such sessions. These 

changes (described in greater detail 

below) are designed to reduce and 

mitigate the risks associated with 

clearing trades executed in overnight 

trading sessions. 

OCC’s standards for determining 

whether to provide clearing services for 

overnight trading sessions offered by an 

exchange and enhanced risk 

management framework are designed to 

work in conjunction with the risk 

controls of the exchanges that allow 

overnight trading sessions. OCC will 

confirm an exchange’s risk controls as 

well as its staffing levels as they relate 

to overnight trading sessions to 

determine if OCC may reasonably rely 

on such risk controls to reduce risk 

presented to OCC by the exchange’s 

overnight trading sessions. Such 

exchange risk controls may consist of: 

(1) Price reasonability checks, (2) 

controls to prevent orders from being 

executed beyond a certain percentage 

(determined by the exchange) from the 

initial execution price, (3) activity based 

protections such as a maximum quantity 

per order and the ability to cancel all 

quotes when a threshold of contracts are 

traded in an individual option during a 

brief window, and (4) kill switch 

capabilities, which may be initiated by 

the exchange and can cancel all open 

quotes or all orders of a particular 

participant. OCC believes that 

confirming the existence of applicable 

pre-trade risk controls as well as 

overnight staffing at the relevant 

exchanges is essential to mitigating risks 

presented to OCC from overnight 

trading sessions.6 Providing clearing 

services to exchanges offering such 

sessions is consistent with OCC’s 

mission to provide market participants 

with clearing and risk management 

solutions that respond to changes in the 

marketplace. Cleared contract volume 

also may increase as a result of 

providing such services. 

Enhanced Risk and Operational 

Controls at OCC 

In order to mitigate the risks 

associated with the clearance of 

transactions executed during overnight 

trading sessions, and to promote robust 

risk management, OCC proposes to 

implement enhancements to its risk 

management framework specific to 

overnight trading sessions. The 

enhanced risk management framework 

will include post-trade credit controls 

that have been designed to identify and 

mitigate credit risk associated with 

clearing trades executed during 

overnight trading sessions as well as 

requiring clearing members that 

participate in overnight trading sessions 

to have operational staff available to 

OCC during overnight trading sessions. 

1. Overnight Monitoring and Credit 

Controls 

OCC plans to implement overnight 

monitoring and credit controls in order 

to better monitor clearing members’ 

credit risk during overnight trading 

sessions. Such monitoring of credit risk 

is similar to existing OCC practices 

concerning futures cleared during 

overnight trading hours and includes 

automated processes within ENCORE to 

measure, by clearing member: (i) the 

aggregate mark-to-market amounts of a 

clearing member’s positions, including 

positions created during overnight 

trading, based on current prices using 

OCC’s Portfolio Revaluation system, (ii) 

the aggregate incremental margin 

produced by all positions resulting from 

transactions executed during overnight 

trading, and (iii) with respect to options 

cleared during overnight trading hours, 

the aggregate net trade premium 

positions resulting from trades executed 

during overnight trading (each of these 

measures being a ‘‘Credit Risk 

Number’’). ENCORE will generate 

hourly credit reports, which will 

contain the Credit Risk Numbers 

expressed in terms of both dollars and, 

except for the mark-to-market position 

values, as a percentage of net capital for 

each clearing member trading during 

overnight trading sessions. The Credit 

Risk Numbers are the same information 


tkelley on DSK3SPTVN1PROD with NOTICES
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7OCC’s Member Services staff will also receive 

alerts in order to contact clearing members as may 

be necessary. 8See OCC Rule 1201(b). 

9Total risk charge is a number derived from 

STANS outputs and is the sum of expected 

shortfall, stress test charges and any add-on charges 

computed by STANS. STANS is OCC’s proprietary 

margin methodology. 

used by OCC staff to evaluate clearing 

member exposure during regular trading 

hours and, in addition to OCC’s 

knowledge of its clearing members’ 

businesses, are effective measures of the 

risk presented to OCC by each clearing 

member. OCC’s Operations staff will 

review such reports as they are 

generated and, in the event that any of 

the Credit Risk Numbers for positions 

established by a clearing member during 

an overnight trading session exceeds 

established thresholds, staff will alert 

OCC’s Financial Risk Management 

staff 7 of the exceedance in accordance 

with established procedures, as 

described below. Financial Risk 

Management staff will follow a 

standardized process concerning such 

exceedances, including escalation to 

OCC’s management, if required by such 

process. Given the nominal volume of 

trades executed in overnight trading 

sessions that are presently submitted for 

clearance, no changes in current staffing 

levels that support overnight clearing 

activities is contemplated at this time. 

However, such staffing levels will be 

periodically assessed and adjusted, as 

appropriate. 

With respect to OCC’s escalation 

thresholds, if any Credit Risk Number of 

a clearing member is $10 million or 

more, or any Credit Risk Number equals 

10% or more of the clearing member’s 

net capital, OCC’s Operations staff will 

be required to provide email notification 

to Financial Risk Management. If any 

Credit Risk Number is $50 million or 

more, or equals 25% or more of the 

clearing member’s net capital, 

Operations staff will be required to 

contact, by telephone: (i) Financial Risk 

Management staff, (ii) the applicable 

exchange for secondary review, and (iii) 

the clearing member’s designated 

contacts. If any Credit Risk Number is 

$75 million or more, or equals 50% or 

more of the clearing member’s net 

capital, Operations staff will be required 

to contact, by telephone, a designated 

Senior Vice President or the Chief Risk 

Officer. Such officer will review the 

situation and determine whether to 

issue an intra-day margin call, increase 

a clearing member’s margin requirement 

in order to prevent the withdrawal of a 

specified amount of excess margin 

collateral, if any, the clearing member 

has on deposit with OCC, whether 

further escalation is warranted in order 

for OCC to take protective measures 

pursuant to OCC Rule 305, as described 

below or contact the exchange in order 

to invoke use of its kill switch. OCC 

chose the above described escalation 

thresholds based on its analysis of 

historical overnight trading activity 

across the futures industry. OCC 

believes that these thresholds strike an 

appropriate balance between effective 

risk monitoring and operational 

efficiency. 

2. Operational/Staffing Requirements 

In order to mitigate operational risks 

associated with clearing for overnight 

trading sessions, clearing members that 

participate in such trading sessions will 

be required to provide contact 

information to OCC for operational 

personnel available to be contacted by 

OCC during such sessions. Under OCC 

Rule 201, each clearing member is 

required to maintain facilities for 

conducting business with OCC, and a 

representative of the clearing member 

authorized in the name of the clearing 

member to take all action necessary for 

conducting business with OCC is 

required to be available at the facility 

during such hours as may be specified 

from time-to-time by OCC. Similarly, 

OCC Rules 214(c) and (d) require 

clearing members to ensure that they 

have the appropriate number of 

qualified personnel and to maintain the 

ability to process anticipated volumes 

and values of transactions. OCC will use 

this existing authority to require 

clearing members trading during 

overnight trading sessions to maintain 

operational staff that may be contacted 

by OCC during such sessions. Each 

morning, shortly after the end of the 

overnight trading sessions, ENCORE 

will generate a report identifying 

clearing members that participated 

during that day’s overnight trading 

sessions that have not provided OCC 

with overnight operational contacts. 

Clearing members who participated 

during overnight trading sessions that 

did not provide operational contacts to 

OCC, or whose operational contacts for 

overnight trading sessions were 

unavailable had OCC attempted to 

contact such individuals, will be subject 

to a minor rule violation fine.8 OCC 

believes that, by having clearing 

member operational contacts available 

during overnight trading hours, 

operational issues that may arise during 

such trading hours can quickly be 

resolved thereby lowering the 

operational risk presented to OCC by 

clearing trades executed in overnight 

trading sessions. 

Existing Risk Controls as They Relate to 

Overnight Trading Hours 

In addition to implementing 

enhanced risk management practices 

specific to clearing trades executed in 

overnight trading sessions, OCC will 

apply, and in certain instances modify, 

existing (or planned) risk management 

controls to mitigate risks presented by 

clearance activities, including OCC’s 

ability to issue an intra-day margin call, 

OCC’s performance of a post-trade price 

reasonableness check and exercising 

OCC’s authority to take protective action 

pursuant to OCC Rule 305. These 

controls, as they relate to clearing trades 

executed in such sessions, are discussed 

below. 

1. Intra-day Margin Call Authority 

In order to address credit risk 

associated with trading during overnight 

trading sessions, OCC staff will monitor 

and analyze the impact that positions 

established during such sessions have 

on a clearing member’s overall 

exposure. Should the need arise, and 

pursuant to OCC Rule 609, OCC may 

require the deposit of additional margin 

(‘‘intra-day margin’’) by any clearing 

member that increases its incremental 

risk as a result of trading activity during 

overnight trading sessions. Accordingly, 

a clearing member’s positions 

established during such sessions will be 

incorporated into OCC’s intra-day 

margin process. Should a clearing 

member’s exposure significantly 

increase while settlement banks are not 

open to process an intra-day margin 

call, OCC has the authority under OCC 

Rule 601 to increase a clearing 

member’s margin requirement which 

would restrict its ability to withdraw 

excess margin collateral. The 

implementation of these measures is 

discussed more fully below. 

In the event that a clearing member’s 

exposure during overnight trading 

sessions causes a clearing member to 

exceed OCC’s intra-day margin call 

threshold for overnight night trading 

sessions, OCC will require the clearing 

member to deposit intra-day margin 

equal to the increased incremental risk 

presented by the clearing member. 

Specifically, if a clearing member has a 

total risk charge 9 exceeding 25% (a 

reduction of the usual figure of 50%), as 

computed overnight by OCC’s STANS 

system, and a loss of greater than 

$25,000 from an overnight trading 

session(s), as computed by Portfolio 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 202 / Monday, October 20, 2014 / Notices 62687 

10 In addition, OCC Rule 601 provides OCC with 

the authority to fix the margin requirement for any 

account or any class of cleared contracts at such 

amount as it deems necessary or appropriate under 

the circumstances to protect the respective interests 

of clearing members, OCC and the public. 

11Clearing members frequently deposit margin at 

OCC in excess of requirements. 

12Clearing members would be able to substitute 

the locked-up collateral during normal time frames 

(i.e., 6 a.m. to 5 p.m. (Central Time) for equity 

securities). 

13Exchange Act Release No. 32718 (July 30, 

2014), 79 FR 45527 (August 5, 2014) (SR–OCC– 

2014–16). This filing, as amended, is pending 

regulatory approval. 

14See Article VI, Section 7(c); see also Exchange 

Act Release No. 46734 (October 28, 2002), 67 FR 

67229 (November 4, 2002) (SR–OCC–2002–18) 

(approving amendments to OCC’s By-Laws and 

Rules supporting the transition to near real-time 

reporting of matched trade information, including 

amendments to Article VI, Section 7 to allow 

instructions to OCC under certain conditions to 

disregard a matched trade). 

15 12 U.S.C. 5464(b). 

16 12 U.S.C. 5464(b)(1). 

Revaluation, OCC will initiate an intraday margin call. OCC will know at 

approximately 8:30 a.m. if it will need 

to initiate an intra-day margin call on a 

clearing member based on breaches of 

these thresholds. This ‘‘start of 

business’’ margin call is in addition to 

daily margin OCC collects from clearing 

members pursuant to OCC Rule 605, any 

intra-day margin call that OCC may 

initiate as a result of regular trading 

sessions or special margin call that OCC 

may initiate. 

In addition to, or instead of, requiring 

additional intra-day margin, OCC Rule 

60110 and OCC’s clearing member 

margin call policy work together to 

authorize Financial Risk Management 

staff to increase a clearing member’s 

margin requirement which may be in an 

amount equal to an intra-day margin 

call.11 (Any increased margin 

requirement will remain in effect until 

the next business day.) This action will 

immediately prevent clearing members 

from withdrawing any excess margin 

collateral (in the amount of the 

increased margin requirement) the 

clearing member has deposited with 

OCC. With respect to clearing trades 

executed in overnight trading sessions, 

and in the event OCC requires 

additional margin from a clearing 

member, Financial Risk Management 

staff may use increased margin 

requirements as a means of 

collateralizing the increase in 

incremental risk a clearing member 

incurred during such sessions without 

having to wait for banks to open to 

process an intra-day margin call.12 Such 

action may be taken by OCC instead of 

or in addition to issuing an intra-day 

margin call depending on the amount of 

excess margin a clearing member has on 

deposit with OCC and the amount of the 

incremental risk presented by such 

clearing member. The expansion of 

OCC’s intra-day margin call process as 

described in the preceding paragraph, 

including OCC’s ability to manually 

increase clearing members’ margin 

requirements, will mitigate the risk that 

OCC is under-collateralized as a result 

of overnight trading hours. 

2. Post-Trade Price Reasonableness 

In a separate pending rule filing, OCC 

has proposed to add an interpretation 

and policy concerning its 

administration of Article VI, Section 

7(c) of its By-Laws and to implement 

price reasonableness checks in 

connection with the reporting of 

confirmed trades in standardized 

options and futures options to OCC by 

an exchange under Article VI, Section 

7.13 The new Interpretation and Policy 

to Article VI, Section 7(c) will allow 

OCC to review the reasonableness of 

prices for options transactions reported 

as confirmed trades and ask reporting 

exchanges to consider whether new or 

revised trade information is required to 

properly clear the transaction.14 To 

promote OCC’s ability to protect itself 

and clearing members from the negative 

effects of clearing trades in options that 

may contain erroneous premium 

information, OCC will apply a premium 

price threshold to accepted trades that 

will trigger further scrutiny of certain 

trades that exceed the threshold. This 

premium price threshold will apply to 

trades occurring during overnight 

trading sessions, upon regulatory 

approval, and thus will increase OCC’s 

ability to monitor and mitigate risk 

arising from clearing trades executed 

during such trading sessions. 

3. Protective Action Pursuant to OCC 

Rule 305 

Pursuant to OCC Rule 305, the 

Executive Chairman or the President of 

OCC, in certain situations, has the 

authority to impose limitations and 

restrictions on the transactions, 

positions and activities of a clearing 

member. This authority will be used, as 

needed, in the event a clearing member 

accumulates significant credit risk 

during overnight trading sessions, or a 

clearing member’s activities during such 

trading sessions otherwise warrant OCC 

taking protective action. 

Anticipated Effect on and Management 

of Risk 

Clearing transactions executed in 

overnight trading sessions may increase 

risk presented to OCC due to the period 

of time between trade acceptance and 

settlement, the staffing levels at clearing 

members during such trading sessions 

and the deferment of executing intraday margin calls until banking 

settlement services are operational. 

However, OCC will expand its risk 

management practices in order to 

mitigate these risks by implementing, 

and expanding, the various tools 

discussed above. For example, OCC will 

modify its existing risk management 

practices in order to closely monitor 

clearing members’ credit risk from 

trades placed during overnight trading 

sessions as well as implement processes 

so that OCC takes appropriate action 

when such credit risk exceeds certain 

limits. OCC will also use its existing 

authority to require adequate clearing 

member staffing during such trading 

sessions, which will mitigate the 

operational risk associated with clearing 

members trading while they are not 

fully staffed. These risk management 

functions will work in tandem with risk 

controls, including the implementation 

of kill switch capabilities, adopted by 

the exchanges operating overnight 

trading sessions or by clearing FCMs, as 

applicable. 

In addition to the above, OCC will 

adapt existing processes so that such 

processes can be used to mitigate risk 

associated with overnight trading 

sessions. Specifically, OCC will have 

the ability to issue margin calls, and 

prevent the withdrawal of excess margin 

on deposit at OCC, as a result of activity 

during such trading sessions as a means 

of reducing risk. OCC also will apply, 

pending regulatory approval, a posttrade price reasonability check to trades 

reported during overnight trading 

sessions, and therefore mitigate the risk 

of losses from erroneous trades. Finally, 

OCC will be able to take protective 

action pursuant to OCC Rule 305 as a 

result of clearing member activity 

during such sessions. 

Consistency with the Payment, Clearing 

and Settlement Supervision Act 

OCC believes that the proposed 

change is consistent with Section 805(b) 

of the Payment, Clearing and Settlement 

Supervision Act 15 because the proposed 

change will promote robust risk 

management.16 OCC believes that the 

proposed enhancements to its risk 

management functions will provide 

OCC with the tools necessary to mitigate 

risks that may occur as a result of 

overnight trading sessions. As described 

above, OCC will implement new risk 

monitoring processes designed to 

identify increases in credit risk 


tkelley on DSK3SPTVN1PROD with NOTICES
62688 Federal Register / Vol. 79, No. 202 / Monday, October 20, 2014 / Notices 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(4)(i). 

presented to OCC as a result of such 

sessions as well as implement changes 

designed to mitigate operational risk 

associated with overnight trading 

sessions. In addition, OCC will adapt 

certain existing practices to 

accommodate these overnight trading 

sessions including its margin call 

process and its authority to take 

protective action pursuant to OCC Rule 

305. The new and modified practices 

are designed to identify and mitigate 

risks that may be presented to OCC as 

a result of overnight trading sessions 

and thereby promote robust risk 

management. 

III. Date of Effectiveness of the Advance 

Notice and Timing for Commission 

Action 

The proposed change may be 

implemented if the Commission does 

not object to the proposed change 

within 60 days of the later of (i) the date 

that the Commission receives the notice 

of proposed change, or (ii) the date the 

Commission receives any further 

information it requests for consideration 

of the notice. The clearing agency shall 

not implement the proposed change if 

the Commission has any objection to the 

proposed change. 

The Commission may extend the 

period for review by an additional 60 

days if the proposed change raises novel 

or complex issues, subject to the 

Commission providing the clearing 

agency with prompt written notice of 

the extension. A proposed change may 

be implemented in less than 60 days 

from the date the advance noticed is 

filed, or the date further information 

requested by the Commission is 

received, if the Commission notifies the 

clearing agency in writing that it does 

not objected to the proposed change and 

authorizes the clearing agency to 

implement the proposed change on an 

earlier date, subject to any conditions 

imposed by the Commission. 

The clearing agency shall post notice 

on its Web site of proposed changes that 

are implemented. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

OCC–2014–805 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–OCC–2014–805. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the advance notice that 

are filed with the Commission, and all 

written communications relating to the 

advance notice between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of OCC and on OCC’s Web site 

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

docs/legal/rules_and_bylaws/sr_occ_14_

805.pdf. 

All comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–OCC–2014–805 and should 

be submitted on or before November 10, 

2014. 

By the Commission. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24779 Filed 10–17–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73348; File No. SR–ICEEU– 

2014–17] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change Relating to 

Rules and Procedures 

October 14, 2014. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on October 

3, 2014, ICE Clear Europe Limited (‘‘ICE 

Clear Europe’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

changes described in Items I, II and III 

below, which Items have been prepared 

primarily by ICE Clear Europe. ICE Clear 

Europe filed the proposal pursuant to 

Section 19(b)(3)(A) of the Act,3 and 

Rules 19b–4(f)(4)(i) thereunder,4 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 Substance of 

the Proposed Rule Change 

The principal purpose of the 

proposed changes is to accommodate 

the transition of trading in certain 

cleared financial and soft commodity 

contracts from the LIFFE 

Administration & Management 

(‘‘LIFFE’’) market to ICE Futures Europe. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, ICE 

Clear Europe 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. ICE 

Clear Europe has prepared summaries, 

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

of the most significant aspects of these 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

ICE Clear Europe currently acts as the 

clearing organization for futures and 

option contracts traded on the LIFFE 

market. These contracts consist of 

futures and options contracts involving 

financial instruments (including interest 

rate futures and option contracts and 

equity futures and option contracts) and 

so-called ‘‘soft’’ commodities (including 

futures and option contracts on cocoa, 

wheat, coffee and sugar) (collectively, 

‘‘financials and softs contracts’’). As has 

been publicly announced, 


tkelley on DSK3SPTVN1PROD with NOTICES