Document ID: SEC-2012-1691-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Options Clearing Corp.
Posted Date: 2012-10-16T04:00Z

[Federal Register Volume 77, Number 200 (Tuesday, October 16, 2012)]
[Notices]
[Pages 63398-63399]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-25341]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68025; File No. SR-OCC-2012-18]

Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Reduce the Per Contract Clearing Fee for Routing Trades Executed in 
Accordance With the Options Order Protection and Locked/Crossed Market 
Plan to $.01 Per Contract

October 10, 2012.
    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 September 28, 2012, 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 substantially by OCC. OCC filed the proposal 
pursuant to Section 19(b)(3)(A)(ii) \3\ of the Act and Rule 19b-4(f)(2) 
\4\ thereunder 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    OCC proposes to reduce the per contract clearing fee for routing 
trades executed in accordance with the Options Order Protection and 
Locked/Crossed Market Plan (``Plan'') to $.01 per contract.

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.\5\
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    \5\ The Commission has modified the text of the summaries 
provided by OCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of this proposed rule change is to amend OCC's Schedule 
of Fees to set the per contract clearing fee for routing trades 
executed in accordance with the Plan at $.01 per contract. (Such fee is 
identified as a ``Linkage Fee'' on OCC's Schedule of Fees).
    OCC calculates clearing fees for valid trades using its fee 
schedule, which takes into consideration the type of trade, size of the 
trade, and any new product discounts that may be applicable. In 2009, 
OCC's participant exchanges created the Plan, which was designed to 
promote fair markets by ensuring that public customer orders receive 
the best price available across participating exchanges. If an exchange 
receiving a customer option order is not at the National Best Bid/Offer 
(``NBBO''), the exchange will use a private routing broker to send the 
order to an exchange at the NBBO. Once the order is filled at the away 
exchange, the routing broker assumes the other side of the trade at the 
NBBO and fills the original customer order at the originating exchange. 
The routing broker in this situation essentially has executed a 
``scratch trade'' \6\ across exchanges (``Routed Broker Scratch 
Trade''). Such trades are currently subject to OCC's standard fee 
schedule even though they may be considered scratch trades that serve 
to facilitate fair and orderly markets.
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    \6\ A purchase and sale of the same securities, at the same 
quantity and price, and at or around the same time (e.g., one day).
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    Conversely, trades originated by market makers or specialists are 
eligible for a reduction in fees if they deemed ``scratch trades'' 
(``Market Maker/Specialist Scratch Trades''). OCC considers Market 
Maker/Specialist Scratch Trades to be the same day purchase and sale of 
identical option contracts in the same quantity and price by a market 
maker on the same exchange or across exchanges. Such trades are subject 
to a reduced clearing fee of $.01 per contract in recognition of a 
market maker's obligation to continuously maintain a fair and orderly 
market.
    In response to a request from its participant exchanges, OCC 
determined that the same $.01 per contract Market Maker/Specialist 
Scratch Trade fee should apply to Routed Broker Scratch Trades since 
the two trades are both ``scratch trades'' that facilitate fair and 
orderly markets. OCC proposes to

[[Page 63399]]

amend its Schedule of Fees so that it may charge the same, $.01 per 
contract for fee, for both Routed Broker Scratch Trades and Market 
Maker/Specialist Scratch Trades.
    The changes to OCC's billing system that are necessary to implement 
the proposed revision to the Schedule of Fees would be installed in 
2013. Prior to such installation date, OCC would manually calculate the 
difference between the clearing fees determined by its billing system 
for clearly identifiable routing trades versus those provided for in 
the Schedule of Fees and credit the excess of such fees on a quarterly 
basis to the clearing member that acts as or otherwise represents the 
routing broker.
* * * * *
    The proposed rule change is consistent with Section 17A of the 
Securities Exchange Act of 1934, as amended (the ``Act''), because it 
reduces the clearing fee applied to Routed Broker Scratch Trades so 
that it is equivalent to the rate applied to Market Maker/Specialist 
Scratch Trades. As a result, the proposed change charges the same fee 
rate for analogous trades, thereby providing for the equitable 
application of fees. The proposed rule change is not inconsistent with 
any 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 not necessary or appropriate 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 on the proposed rule change were not and are not 
intended to be solicited with respect to the proposed rule change and 
none have been received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(ii) \7\ of the Act and Rule 19b-4(f)(2) \8\ 
thereunder because it establishes or changes a due, fee, or other 
charge applicable only to a member. OCC will delay the implementation 
of the rule change until it is deemed certified under CFTC Regulation 
Sec.  40.6. At any time within 60 days of the filing of such 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
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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-2012-18 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-OCC-2012-18. 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 Section, 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 will also be 
available for inspection and copying at the principal office of OCC and 
on OCC's Web site (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 Number SR-OCC-2012-18 
and should be submitted on or before November 6, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25341 Filed 10-15-12; 8:45 am]
BILLING CODE 8011-01-P