Document ID: SEC-2014-2094-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Options Clearing Corp.
Posted Date: 2014-12-12T05:00Z

[Federal Register Volume 79, Number 239 (Friday, December 12, 2014)]
[Notices]
[Pages 73915-73916]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29110]

[[Page 73915]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73785; File No. SR-OCC-2014-18]

Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of Amendment No. 1, and Order Granting Accelerated 
Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To 
Provide That The Options Clearing Corporation's President Will Be Its 
Chief Operating Officer, and That the President Will Not Be a 
Management Director

December 8, 2014.
    On October 31, 2014, The Options Clearing Corporation (``OCC'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change SR-OCC-2014-18 pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder.\2\ The proposed rule change was published for comment in 
the Federal Register on November 7, 2014.\3\ On November 11, 2014, OCC 
filed Amendment No. 1 to the proposal.\4\ The Commission did not 
receive any comments on the proposal. The Commission is publishing this 
notice to solicit comments on Amendment No. 1 and is approving the 
proposed rule change, as modified by Amendment No. 1, on an accelerated 
basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 73497 (November 3, 
2014), 79 FR 66440 (November 7, 2014) (SR-OCC-2014-18).
    \4\ In Amendment No. 1, OCC amended the proposal to clarify that 
the proposal as described also amended Article IV, Section 1, of 
OCC's By-Laws to reflect OCC's Board of Directors' decision that the 
President should not be a Management Director. Specifically, OCC is 
amending Article IV, Section 1 of its By-Laws to refer only to the 
Executive Chairman, and not the President, as a Management Director.
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I. Description of the Proposal

    The purpose of this rule change, as amended, is to provide that 
OCC's President will be its Chief Operating Officer, rather than its 
Chief Executive Officer, and that the President will not be a 
management director on OCC's Board of Directors. These changes are 
being made in connection with the resignation of OCC's former President 
and Chief Executive Officer, a transition plan that includes the 
election of OCC's current Chief Operating Officer as President and 
Chief Operating Officer, and the appointment of an Ad Hoc Search 
Committee to identify an appropriate candidate to become OCC's Chief 
Executive Officer (collectively, the ``Transition Plan''). According to 
OCC, OCC's Board of Directors has determined that in light of the 
resignation of the former President and Chief Executive Officer and the 
election of the current Chief Operating Officer as President, the 
positions of President and Chief Executive Officer should be separated 
and the position of President should instead be combined with the 
position of Chief Operating Officer. To reflect this change, OCC is 
revising Section 8 of Article IV of its By-Laws to state that the 
President will be OCC's Chief Operating Officer, rather than its Chief 
Executive Officer.
    According to OCC, while OCC's existing By-Laws provide that the 
President, who is also the Chief Executive Officer, serves as a 
Management Director on OCC's Board of Directors, given the separation 
of the President and Chief Executive Officer positions and the pending 
search for a new Chief Executive Officer, OCC's Board of Directors has 
also determined that the President should not be a Management Director. 
Accordingly, OCC is revising Section 7 of Article III and Section 1 of 
Article IV of its By-Laws to refer only to the Executive Chairman, and 
not the President, as a Management Director. OCC also is making a 
conforming revision to Section 8 of Article IV of its By-Laws to state 
that the President will not preside at meetings of the Board of 
Directors or the stockholders in the absence or disability of the 
Executive Chairman and the Management Vice Chairman because the 
President will no longer serve as a Management Director.
    OCC is also amending its Stockholder Agreement, Board of Directors 
Charter and Fitness Standards for Directors, Clearing Members and 
Others. In each case, conforming changes are being made to provide that 
only the Executive Chairman, not the President, will serve as a 
Management Director.
    Once a replacement Chief Executive Officer has been elected by the 
Board of Directors, OCC intends to reconsider the appropriate number of 
Management Directors. According to OCC, the rule change, as proposed 
and amended, represents a short-term measure to implement the 
Transition Plan and is not intended as a permanent change in the 
composition of the Board of Directors. As indicated in the filing, once 
OCC's Board of Directors has elected a Chief Executive Officer, OCC 
will propose further changes to its By-Laws, Stockholders Agreement, 
Board of Directors Charter and Fitness Standards for Directors, 
Clearing Members and Others. OCC believes that the short-term 
flexibility reflected in the foregoing changes will assist OCC and its 
Board of Directors in implementing the Transition Plan efficiently and 
governing OCC effectively.

II. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \5\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if it 
finds that the proposed rule change is consistent with the requirements 
of the Act and the rules and regulations thereunder applicable to such 
organization.
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    \5\ 15 U.S.C. 78s(b)(2)(C).
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    The Commission finds that the proposed rule change is consistent 
with Section 17A(b)(3)(F) of the Act,\6\ which requires that the rules 
of a registered clearing agency be designed to, among other things, 
remove the impediments to and perfect the mechanism of a national 
system for the prompt and accurate clearance and settlement of 
securities transactions, and in general, to protect investors and the 
public interest. The proposed rule change, as amended, is consistent 
with Section 17A(b)(3)(F) because it should remove the impediments to 
and perfect the mechanism of a national clearance and settlement system 
and protecting investors and the public interest by providing 
transparency with respect to the composition of OCC's management 
structure and Board of Directors during the Transition Plan. By 
clarifying who from senior management is acting in the role of OCC's 
President and clarifying which senior management position is serving as 
a management director on OCC's Board of Directors during the 
Transition, both OCC's members and the public will have more 
information on the overall structure of management and the Board of 
Directors at OCC and more information on the level of authority of 
specific senior management positions. Additionally, this proposed rule 
change is consistent with Section 17A(b)(3)(F) because the Transition 
Plan will facilitate uninterrupted, ongoing, operations at OCC 
notwithstanding the above described changes at OCC.
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    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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III. Accelerated Approval of the Proposed Rule Change As Modified by 
Amendment No. 1

    The Commission finds good cause, pursuant to Section 
19(b)(2)(C)(iii) of the Act,\7\ for approving the proposed rule change, 
as modified by Amendment No. 1, earlier than 30 days after the date

[[Page 73916]]

of publication of notice in the Federal Register.
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    \7\ 15 U.S.C. 78s(b)(2)(C)(iii).
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    As discussed above, OCC filed Amendment No. 1 to describe the 
proposed change to Article IV, Section 1 of OCC's By-Laws to reflect 
OCC's Board of Directors' decision that the President should not be a 
Management Director. Specifically, OCC is amending Article IV, Section 
1 of its By-Laws to refer only to the Executive Chairman, and not the 
President, as a Management Director. Amendment No. 1 provides the 
Commission with clarifying information about how OCC is implementing 
and providing transparency about the Transition Plan. By allowing OCC 
to implement the proposed changes, as amended, on an accelerated basis, 
OCC will be able to implement the Transition Plan sooner, which should 
allow OCC to manage and govern OCC more efficiently and effectively.
    Accordingly, the Commission finds good cause to approve the 
proposed rule change, as modified by Amendment No. 1, on an accelerated 
basis.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-OCC-2014-18 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-2014-18. 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 OCC. 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-2014-18 and should be 
submitted on or before January 2, 2015.

V. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \8\ and the 
rules and regulations thereunder.
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    \8\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-OCC-2014-18), as modified by 
Amendment No. 1, be, and it hereby is, approved on an accelerated 
basis.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29110 Filed 12-11-14; 8:45 am]
BILLING CODE 8011-01-P