Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Notices 49453 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange proposes to change the title of 

Section IV from ‘‘Access Services’’ to ‘‘Connectivity 

Fees.’’ 

All submissions should refer to File 

Number SR–ISE–2017–91. 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 the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–ISE–2017–91 and should be 

submitted on or before November 15, 

2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–23118 Filed 10–24–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81902; File No. SR–GEMX– 

2017–48] 

Self-Regulatory Organizations; Nasdaq 

GEMX, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the 

Exchange’s Schedule of Fees 

October 19, 2017. 

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 

16, 2017, Nasdaq GEMX, LLC (‘‘GEMX’’ 

or ‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to: (i) Delete 

fees and descriptions thereof for 

connectivity no longer used by the 

Exchange; and (ii) add new fees for colocation services, direct circuit 

connections to the Exchange, 

connections to third party services, 

point of presence (‘‘POP’’) connectivity, 

and connectivity to the Exchange’s Test 

Facility (the ‘‘Test Facility’’). 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at www.ise.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 

Exchange 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. The 

Exchange 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 

1. Purpose 

The Exchange proposes to amend its 

Fee Schedule to eliminate certain fees 

associated with legacy options for 

connecting to GEMX and to replace 

them with fees associated with new 

options for connecting to the Exchange 

that are similar to those that GEMX’s 

sister exchanges presently offer. 

GEMX is engaged in an initiative to 

migrate the Exchange’s trading system 

to the Nasdaq INET architecture. As part 

of that initiative, GEMX proposes to 

retire certain obsolete connectivity 

associated with the Exchange’s legacy 

trading system and the fees associated 

with such connectivity. 

Specifically, the Exchange proposes to 

discontinue offering Ethernet 

connectivity to the Exchange and also 

eliminate the fees it charges for such 

connectivity in Section IV.C of its Fee 

Schedule, entitled ‘‘Network Fees.’’ 3

The Exchange currently offers four 

Ethernet connection options: A 1 Gb 

connection at a cost of $1,000 per 

month, a 10 Gb connection at a cost of 

$4,500 per month, a 10 Gb low latency 

connection at a cost of $8,000 per 

month, and a 40 Gb low latency 

connection at a cost of $15,000 per 

month. 

Additionally, the Exchange proposes 

to stop offering customers the ability to 

connect to the Exchange via an 

Application Programming Interface 

(‘‘API’’) session or a Financial 

Information eXchange (‘‘FIX’’) session, 

as these connection options are 

becoming obsolete with respect to the 

new trading system. The Exchange 

correspondingly proposes to eliminate 

paragraphs 1 and 2 of Section IV.E of its 

Fee Schedule, entitled ‘‘Port Fees.’’ The 

Exchange presently charges Electronic 

Access Members (‘‘EAMs’’) monthly per 

session API fees and FIX session fees. 

In lieu of the above, the Exchange 

proposes to offer customers various new 

options to connect to the Exchange and 

to assess fees for such connectivity. The 

connectivity options that the Exchange 

proposes to offer—colocation, direct 

circuit connectivity, connectivity to 

third party services, POP connectivity, 

and connectivity to the Exchange’s Test 

Facility—and the fees that the Exchange 

proposes to assess for such connectivity 

are similar to those that ISE’s affiliated 

Nasdaq, Inc. markets—including The 

NASDAQ Stock Market, LLC 

(‘‘Nasdaq’’), Nasdaq BX, Inc. (‘‘BX’’), 

and Nasdaq Phlx LLC (‘‘Phlx’’)— 

presently offer and assess to their 

customers under their respective rules. 

They are also the same as the 

connectivity options and fees that 

Nasdaq ISE, LLC (‘‘ISE’’) and Nasdaq 

MRX, LLC (‘‘MRX’’) propose to offer and 

assess under their respective rules in 

tandem with this filing. This proposal, 

in other words, seeks to harmonize the 

Exchange’s connectivity offerings and 

fees with those of its sister exchanges. 

The first new connectivity option that 

the Exchange proposes to offer its 

customers is co-location. Co-location is 

a suite of hardware, power, 

telecommunication, and other ancillary 

products and services that allow market 

participants and vendors to place their 

trading and communications equipment 


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49454 Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Notices 

4Clients will not be permitted to install routers 

in or rent cabinet space directly from the Exchange 

at the POPs. Accordingly, the fee schedule for POP 

connectivity will not include fees for these services. 

5The SIPs link the U.S. markets by processing 

and consolidating all protected bid/ask quotes and 

trades from every registered exchange trading venue 

and FINRA into a single data feed, and they 

disseminate and calculate critical regulatory 

information, including the National Best Bid and 

Offer, Limit Up Limit Down price bands, short sale 

restrictions and regulatory halts. 

6Third Party Services includes not only SIP data 

feeds, but also data feeds from other exchanges and 

markets. For example, Third Party Connectivity will 

support connectivity to the FINRA/Nasdaq Trade 

Reporting Facility, BATS Depth Feeds, and NYSE 

Feeds. A customer must separately subscribe to the 

third party services to which it connects with a 

Third Party Connectivity subscription. The 

Exchange notes that customers that do not wish to 

subscribe to Direct Circuit Connectivity to Third 

Party Services may alternatively connect through an 

extranet provider or a market data redistributor. 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(5). 

in close physical proximity to the 

quoting and execution facilities of the 

Exchange and other Nasdaq, Inc. 

markets. The Exchange provides colocation services and imposes fees 

through Nasdaq Technology Services 

LLC and pursuant to agreements with 

the owner/operator of its data center 

where both the Exchange’s quoting and 

trading facilities and co-located 

customer equipment are housed. Users 

of colocation services include private 

extranet providers, data vendors, as well 

as Exchange members and nonmembers. The use of co-location 

services is entirely voluntary. 

Like its sister exchanges, and as 

detailed in the proposed co-location fee 

schedule, the Exchange proposes to 

impose a uniform, non-discriminatory 

set of fees for various co-location 

services, including: fees for co-located 

connections to the Exchange and to 

third party services (described below) in 

various bandwidths; fees for cabinet 

space usage, or options for future space 

usage; installation and related power 

provision for hosted equipment; 

connectivity among multiple cabinets 

being used by the same customer as well 

as customer connectivity to the 

Exchange and telecommunications 

providers; and related maintenance and 

consulting services. Fees related to 

cabinet and power usage are 

incremental, with additional charges 

being imposed based on higher levels of 

cabinet and/or power usage, the use of 

non-standard cabinet sizes or special 

cabinet cooling equipment, or the reselling of cabinet space. 

In addition to co-location services, the 

Exchange proposes to offer several other 

connectivity options for customers that 

are located outside of the Exchange’s 

primary data center in Carteret, New 

Jersey. 

First, the Exchange proposes to offer 

a ‘‘Direct Circuit Connectivity’’ service, 

whereby subscribers may connect their 

facilities directly to the Exchange’s 

primary data center using a circuit they 

obtain from an external 

telecommunications provider. For this 

form of connectivity, the Exchange’s 

proposal offers customers the choice of 

1 GB, 1 GB Ultra, and 10 GB 

connections. The installation fee for all 

such connections will be $1,500 and the 

monthly fee will be $7,500 for 10 GB 

connections and $2,500 for both 1 GB 

and 1 GB Ultra connections. The 

Exchange also proposes to charge a fee 

to customers that choose to install a 

cable router in its data center and a 

monthly fee for customers that choose to 

install equipment in the Exchange’s data 

center to support the connectivity. 

Specifically, the Exchange proposes an 

installation fee of $925 per router, 

switch or modem, and a monthly fee of 

$150 to rent cabinet space based on a 

unit height of approximately 1.75 inches 

(commonly called a ‘‘U’’ space) and a 

maximum power of 125 Watts per U 

space. 

Next, the Exchange proposes to offer 

a ‘‘POP Connectivity’’ service, whereby 

subscribers may use external 

telecommunication circuits to connect 

directly to one or more of the 

Exchange’s satellite data centers (each, a 

‘‘POP’’) that are located in places other 

than Carteret. Each POP, in turn, has a 

fully redundant connection to the 

Exchange’s primary data center, such 

that subscribers may connect to the 

primary data center through its 

connection to a POP. For POP 

Connectivity to the Exchange, the 

Exchange proposes to offer 1 GB Ultra 

and 10 GB connections. The installation 

fee for all such connections will be 

$1,500 and the monthly fee will be 

$7,500 for 10 GB connections and 

$2,500 for 1 GB Ultra connections.4

Additionally, the Exchange proposes 

to offer connectivity to third party 

services. The Exchange is proposing to 

offer this service to both non-co-location 

customers (via a direct circuit 

connection) and co-location customers 

alike. This connectivity will enable 

customers to receive third party market 

data feeds, including Securities 

Information Processors (‘‘SIPs’’) 5 data, 

and other non-exchange services.6 The 

Exchange will offer this service to 

customers in both 10 GB Ultra and 1 GB 

Ultra bandwidths. The installation fee 

for both 10 GB Ultra and 1 GB Ultra 

direct connections will be $1,500. 

Meanwhile, the monthly fee will be 

$5,000 for 10 GB Ultra connections and 

$2,000 for 1 GB Ultra hand-offs. For 1 

GB Ultra or 10 GB Ultra connections for 

UTP only, the installation fee and 

monthly fee will be waived for the first 

two connections and thereafter the 

installation fee will be $100 and the 

monthly fee also will be $100. As with 

Direct Circuit Connectivity, the 

Exchange proposes to charge a $925 fee 

to customers that choose to install a 

cable router in its data center for 

purposes of receiving the third party 

services as well as a monthly fee of $150 

for customers that choose to install 

equipment in the Exchange’s data center 

to support that connectivity. 

Furthermore, the Exchange proposes 

to offer connectivity to its Test Facility. 

The Test Facility provides subscribers 

with a virtual system test environment 

that closely approximates the 

production environment and on which 

they may test their automated systems 

that integrate with the Exchange. For 

example, subscribers may test upcoming 

Exchange releases and product 

enhancements, as well as test software 

prior to implementation. The Exchange 

proposes to assess certain fees for use of 

the Test Facility. Specifically, the 

Exchange proposes that subscribers to 

the Test Facility located in Carteret, 

New Jersey shall pay a fee of $1,000 per 

hand-off, per month for connection to 

the Test Facility. The hand-off fee will 

includes [sic] either a 1 GB or 10 GB 

switch port and a cross connect to the 

Test Facility. Subscribers will also pay 

a one-time installation fee of $1,000 per 

handoff. 

Finally, for each of the connectivity 

options discussed above, the Exchange 

proposes to include language in the fee 

schedule which states that connectivity 

to the Exchange also applies to 

connectivity to all of the other Nasdaq, 

Inc. markets, including Nasdaq, BX, 

Phlx, MRX, and ISE. This purpose of 

this proposal is to specify that a client 

can use the connections it establishes 

and maintains to connect, not only to 

the Exchange, but also to any or all of 

its sister exchanges, and in doing so, it 

will be billed only once. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,7 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,8

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest. 

The Exchange believes that it is 

reasonable to eliminate its existing 


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Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Notices 49455 

9See Nasdaq Rule 7030, BX Rule 7030, and 

Nasdaq Phlx LLC Pricing Schedule Section VII.E 

(Test Facility); Nasdaq Rule 7034(b), BX Rule 

7034(b), and Nasdaq Phlx LLC Pricing Schedule 

Section X (co-location); Nasdaq Rule 7051, BX Rule 

7051, and Nasdaq Phlx LLC Pricing Schedule 

Section XI (direct connectivity). 

10 15 U.S.C. 78s(b)(3)(A)(iii). 

11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

12 17 CFR 240.19b–4(f)(6). 

13 17 CFR 240.19b–4(f)(6)(iii). 

14For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

Ethernet, FIX, and API connectivity 

offerings and their associated fees as the 

Exchange is migrating to a new platform 

that will offer new connectivity options. 

The Exchange notes that its customers 

have had ample prior notice of this 

transition. 

The Exchange believes that proposed 

new connectivity fees are reasonable as 

a means of covering its costs associated 

with providing new connectivity 

options. Moreover, these new fees are 

reasonable because they are similar to or 

the same as the connectivity fees that 

the Exchange’s sister exchanges, 

including Nasdaq, BX, and Phlx, charge 

under their respective rules.9 They are 

also the same as those connectivity fees 

that ISE and MRX are proposing to 

assess in filings being submitted to the 

Commission concurrently with this one. 

The Exchange also believes that it is 

reasonable and in the interest of the 

public and investors to harmonize all of 

the Exchange’s connectivity options and 

connectivity fees now that all of the 

Nasdaq, Inc. exchanges are on a 

common platform. 

The Exchange believes that the 

proposed new fees are an equitable 

allocation and are not unfairly 

discriminatory because the Exchange 

will apply the same fees to all 

subscribers to the same connectivity 

options. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. In terms of 

inter-market competition, the Exchange 

notes that it operates in a highly 

competitive market in which market 

participants can readily favor competing 

venues if they deem fee levels at a 

particular venue to be excessive, or 

rebate opportunities available at other 

venues to be more favorable. In such an 

environment, the Exchange must 

continually adjust its fees to remain 

competitive with other exchanges and 

with alternative trading systems that 

have been exempted from compliance 

with the statutory standards applicable 

to exchanges. Because competitors are 

free to modify their own fees in 

response, and because market 

participants may connect to third 

parties instead of directly connecting to 

the Exchange, the Exchange believes 

that the degree to which fee changes in 

this market may impose any burden on 

competition is extremely limited. 

In this instance, the proposed changes 

to the charges assessed for connectivity 

to the Exchange are consistent with the 

fees assessed by other exchanges for the 

same or similar connectivity. Moreover, 

the Exchange must assess fees to cover 

the costs incurred in providing 

connectivity and members had been 

assessed fees for Exchange connectivity 

prior to the sunset of the old Exchange 

architecture. As a consequence, 

competition will not be burdened by the 

proposed fees. In sum, if the changes 

proposed herein are unattractive to 

market participants, it is likely that the 

Exchange will lose market share as a 

result. Accordingly, the Exchange does 

not believe that the proposed changes 

will impair the ability of members or 

competing order execution venues to 

maintain their competitive standing in 

the financial markets. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 10 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.11

A proposed rule change filed under 

Rule 19b–4(f)(6) 12 normally does not 

become operative prior to 30 days after 

the date of the filing. However, Rule 

19b–4(f)(6)(iii) 13 permits the 

Commission to designate a shorter time 

if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange states that the 

proposed rule change does not 

significantly affect the protection of 

investors or the public interest because 

it will eliminate obsolete connectivity 

services and replace them with services 

that customers will need to connect to 

the Exchange via its new trading 

platform. The Exchange further states 

that such connectivity services will be 

similar, or the same, as those that are 

currently offered by other Nasdaq, Inc. 

exchanges. Moreover, the Exchange 

states that the fees for such connectivity 

that are similar to, or the same, as fees 

charged by the other Nasdaq, Inc. 

exchanges. 

The Commission believes that waiver 

of the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. The 

Commission notes that the proposal 

harmonizes the Exchange’s co-location 

offerings and fees with those of the 

other Nasdaq, Inc. exchanges. 

Furthermore, waiver of the 30-day 

operative delay will eliminate the 

confusion that could occur if different 

co-location offerings were available on 

each of Nasdaq. Inc.’s affiliated 

exchanges. Accordingly, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposed rule change as operative upon 

filing.14

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: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or 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 


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49456 Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Notices 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

OCC’s public Web site: http://optionsclearing.com/ 

about/publications/bylaws.jsp. 

4 17 CFR 240.17Ad–22. 

5 17 CFR 240.17Ab2–2. 

6 15 U.S.C. 78q–1. 

7 12 U.S.C. 5461 et seq. 

8 17 CFR 240.17Ad–22(a)(5). 

9 17 CFR 240.17Ad–22(e)(3). 

10 Id. 

11Under the proposed RMF, ‘‘Key Risks’’ would 

be defined as risks that are related to the 

foundational aspects of CCP clearing, settlement 

and risk management services. 

12 17 CFR 240.17Ad–22(e)(3). 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

GEMX–2017–48 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–GEMX–2017–48. 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 the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–GEMX–2017–48 and 

should be submitted on or before 

November 15, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–23117 Filed 10–24–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81909; File No. SR–OCC– 

2017–005] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing of Proposed Rule Change 

Related to a Comprehensive Risk 

Management Framework 

October 19, 2017. 

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 

10, 2017, The Options Clearing 

Corporation (‘‘OCC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by OCC. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

This purpose of the proposed rule 

change is to adopt a comprehensive Risk 

Management Framework Policy, which 

would describe OCC’s framework for 

comprehensive risk management, 

including OCC’s framework to identify, 

measure, monitor, and manage all risks 

faced by OCC in the provision of 

clearing, settlement and risk 

management services. The Risk 

Management Framework Policy is 

included in confidential Exhibit 5 of the 

filing. The proposed rule change does 

not require any changes to the text of 

OCC’s By-Laws or Rules. All terms with 

initial capitalization that are not 

otherwise defined herein have the same 

meaning as set forth in the OCC ByLaws and Rules.3

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, 

OCC included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. OCC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

(1) Purpose 

Background 

On September 28, 2016, the 

Commission adopted amendments to 

Rule 17Ad–22 4 and added new Rule 

17Ab2–2 5 pursuant to Section 17A of 

the Securities Exchange Act of 1934 

(‘‘Exchange Act’’) 6 and the Payment, 

Clearing and Settlement Supervision 

Act of 2010 (‘‘Clearing Supervision 

Act’’) 7 to establish enhanced standards 

for the operation and governance of 

those clearing agencies registered with 

the Commission that meet the definition 

of a ‘‘covered clearing agency,’’ as 

defined by Rule 17Ad–22(a)(5) 8

(collectively, the new and amended 

rules are herein referred to as ‘‘CCA’’ 

rules). The CCA rules require that 

covered clearing agencies, among other 

things: 

‘‘[E]stablish, implement, maintain and 

enforce written policies and procedures 

reasonably designed to . . . [m]aintain a 

sound risk management framework for 

comprehensively managing legal, credit, 

liquidity, operational, general business, 

investment, custody, and other risks that 

arise in or are borne by the covered clearing 

agency, which . . . [i]ncludes risk 

management policies, procedures, and 

systems designed to identify, measure, 

monitor, and manage the range of risks that 

arise in or are borne by the covered clearing 

agency, that are subject to review on a 

specified periodic basis and approved by the 

board of directors annually . . .’’ 9

OCC is defined as a covered clearing 

agency under the CCA rules, and 

therefore is subject to the requirements 

of the CCA rules, including Rule 17Ad– 

22(e)(3).10 Accordingly, OCC proposes 

to adopt a Risk Management Framework 

Policy (‘‘RMF’’), as described below, to 

formalize and update its overall 

framework for comprehensively 

managing the Key Risks 11 that arise in 

or are borne by OCC to promote 

compliance with Rule 17Ad–22(e)(3).12

Proposed Policy 

OCC proposes to adopt a new RMF 

document. The purpose of the RMF is 

to describe OCC’s framework for 


sradovich on DSK3GMQ082PROD with NOTICES