Document ID: SEC-2012-1489-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Options Clearing Corp.
Posted Date: 2012-09-11T04:00Z

[Federal Register Volume 77, Number 176 (Tuesday, September 11, 2012)]
[Notices]
[Pages 55887-55888]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-22242]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67782; File No. SR-OCC-2012-12]

Self-Regulatory Organizations; the Options Clearing Corporation; 
Order Approving Proposed Rule Change To Amend OCC's By-Laws To Allow 
the Corporation To Approve OCC's Form of Clearing Member Application 
and Form of Clearing Agreement

September 5, 2012.

I. Introduction

    On July 16, 2012, The Options Clearing Corporation (``OCC'' or the 
``Corporation'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change SR-OCC-2012-12 pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'').\1\ 
The proposed rule change was published for comment in the Federal 
Register on August 1, 2012.\2\ The Commission received no comment 
letters. For the reasons discussed below, the Commission is granting 
approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 34-67506 (July 26, 
2012), 77 FR 45702 (August 1, 2012).
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II. Description

    The proposed rule change would amend OCC's By-Laws to allow the 
Corporation to approve OCC's form of clearing member application and 
form of clearing agreement. The proposed rule change also amends the 
Agreement for OCC Services to reflect operational changes OCC made 
since OCC first created the agreement.

A. Background

    Currently, OCC's Board of Directors must approve the form of OCC's 
clearing member application and form of clearing agreement. OCC 
requires applicants for clearing membership at OCC to complete an 
application and, once an applicant becomes a clearing member, requires 
clearing members to enter into a clearing member agreement. OCC's By-
Laws and Rules set forth the qualifications and requirements for 
clearing membership at OCC. The

[[Page 55888]]

clearing member application is designed to elicit relevant information 
from an applicant for clearing membership in order for OCC to determine 
if the applicant meets OCC's qualifications for clearing membership. 
The clearing member agreement is a contract between OCC and a clearing 
member whereby the clearing member agrees to meet all of the 
requirements of clearing membership at OCC. The By-Laws require OCC's 
Board of Directors to approve both the form of clearing member 
application and the form of clearing member agreement.
    In addition to the clearing member agreement, clearing members may 
also enter into an Agreement for OCC Services. The Agreement for OCC 
Services sets forth certain ancillary services OCC provides to its 
clearing members that are in addition to those services set forth in 
the By-Laws and Rules. The Agreement for OCC Services is set up as a 
master agreement. Clearing members may then choose the specific 
ancillary services they desire and then execute the appropriate 
ancillary services supplement. Such ancillary services may include, for 
example, access to OCC's Data Distribution Services, internet access to 
OCC information and data systems, and OCC's theoretical profit and loss 
values service.

B. Proposed By-Law and Rule Changes

    OCC proposes to amend the applicable provisions of its By-Laws to 
state that both the form of clearing member application and the form of 
clearing member agreement be specified by OCC generally, rather than 
its Board of Directors. The requirement that the Board of Directors 
approve the form of such documents is overly ministerial given that 
OCC's By-Laws specify the substantive requirements of both the clearing 
member application and the clearing member agreement.
    OCC also proposes to amend its Agreement for OCC Services to 
reflect operational changes OCC made since OCC first created the 
agreement. These changes include broader references to ``clearing 
services'' provided by OCC and not only to ``options'' clearing 
services. Advanced notice of 90 days of fee changes would be eliminated 
because fee changes to the ancillary services program are filed as rule 
changes and are infrequent in nature. Language would be added to the 
Agreement for OCC Services such that the clearing member authorizes OCC 
to withdraw funds from the clearing member's firm account, on or after 
the fifth business day following the end of the calendar month. This 
language conforms to OCC Rules. In addition, a provision referring to 
the exclusivity of the warranties set forth in the Agreement for OCC 
Services would be eliminated because the agreement contains no warranty 
provisions. Any applicable warranty provisions would be contained 
within the ancillary supplements to the Agreement for OCC Services.

III. Discussion

    Section 19(b)(2)(C) of the Act \3\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if it 
finds that such proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such organization. Section 17A(b)(3)(F) of the Act \4\ 
requires, among other things, that the rules of a clearing agency are 
designed to remove impediments to and perfect the mechanism of a 
national system for the prompt and accurate clearance and settlement of 
securities transactions.
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    \3\ 15 U.S.C. 78s(b)(2)(C).
    \4\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission believes that these changes are consistent with the 
requirements of Section 17A of the Act \5\ and the rules and 
regulations thereunder applicable to OCC. The changes to OCC's By-Laws 
eliminate inefficient and burdensome administrative procedures which 
unnecessarily require OCC's Board approval for the form of clearing 
member application and agreement. The changes to the Agreement for OCC 
Services are designed to reflect operational changes OCC made since 
creating the agreement.
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    \5\ 15 U.S.C. 78q-1.
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IV. 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 \6\ and the 
rules and regulations thereunder.
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    \6\ Id.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (File No. SR-OCC-2012-12) be, and 
hereby is, approved.\8\
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).

    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. 2012-22242 Filed 9-10-12; 8:45 am]
BILLING CODE 8011-01-P