Document ID: SEC-2006-1219-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Options Clearing Corp.
Posted Date: 2006-09-21T04:00Z

[Federal Register: September 21, 2006 (Volume 71, Number 183)]
[Notices]               
[Page 55258-55259]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21se06-92]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54448; File No. SR-OCC-2006-07]

 
Self-Regulatory Organizations; The Options Clearing Corporation; 
Order Approving Proposed Rule Change Relating to a Surcharge for Non-
Clearing Member Subscribers That Have Not Met a Mandated Conversion 
Date for Its Data Distribution Service

September 14, 2006.

I. Introduction

    On May 15, 2006, The Options Clearing Corporation (``OCC'') filed 
with the Securities and Exchange Commission (``Commission'') proposed 
rule change SR-OCC-2006-07 pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal 
was published in the Federal Register on July 10, 2006.\2\ On July 21, 
2006, OCC amended the proposed rule change.\3\ No comment letters were 
received. For the reasons discussed below, the Commission is approving 
the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 54060 (June 28, 2006), 
71 FR 38961.
    \3\ The amendment, as noted below, is not substantive and did 
not require republication of the notice. Infra, note 4 and 
accompanying text.

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[[Page 55259]]

II. Description

    The purpose of the rule change is to implement a surcharge to the 
monthly service fee charged to non-clearing member subscribers of OCC's 
Data Distribution Service (``DDS'') that have not converted to the new 
DDS format by the revised mandated conversion date of September 29, 
2006.
    Both clearing members and non-clearing members may subscribe to 
DDS. A clearing member may subscribe to DDS in order to receive in a 
machine readable format data processed by OCC that is proprietary to 
such clearing member (e.g., position and post-trade entries) as well as 
non-proprietary data (i.e., data not specific to the clearing member) 
produced by OCC (e.g., information relating to series and prices). Non-
clearing members may subscribe to DDS in order to receive certain non-
proprietary data.
    In December, 2004, OCC informed all DDS subscribers that OCC was 
requiring them to convert to the new ENCORE DDS format by February 28, 
2006. Although OCC diligently worked with subscribers to facilitate 
their implementation of the new DDS format, it became apparent that 
some subscribers needed additional time in order to complete their 
systems work. Accordingly, in December, 2005, OCC announced an 
extension of the mandated conversion date to September 29, 2006.
    After the mandated conversion date, OCC will continue to support 
the old legacy data service distribution system. However, for 
subscribers that do not meet the revised conversion date of September 
29, 2006, OCC will charge a monthly surcharge of $1,000 per month in 
order to reasonably allocate the costs of continuing to support the old 
legacy data distribution system.\4\ The surcharge will be imposed 
starting with the October 2006 billing cycle and will continue until 
the subscriber converts to the new DDS format and ceases to receive any 
legacy data service distribution transmissions. OCC will terminate all 
legacy data service transmissions after March 30, 2007.\5\
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    \4\ Pursuant to a separate rule change, OCC will impose the 
$1,000 per month surcharge on clearing member subscribers to DDS 
that likewise fail to convert to the new format. Implementation of 
the surcharge on clearing members is pending approval of this rule 
filing by the Commission. Securities Exchange Act Release No. 54059 
(June 28, 2006), 71 FR 38962 (July 10, 2006) [File No. SR-CC-2006-
06].
    \5\ The March 30, 2007, termination date was the subject of the 
amendment to the proposed rule change filed on July 21, 2006.
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III. Discussion

    Section 17A(b)(3)(D) of the Act requires that the rules of a 
clearing agency provide for the equitable allocation of reasonable 
dues, fees, and other charges.\6\ The Commission finds that OCC's 
proposed rule change is consistent with this requirement because by 
establishing a surcharge for continued use of its old legacy data 
distribution system, OCC will be able to more equitably allocate its 
cost of providing continued service to those DDS subscribers that have 
failed to convert to OCC's ENCORE DDS format.
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    \6\ 15 U.S.C. 78q-1(b)(3)(D).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 17A of the Act and the rules and regulations 
thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (File No. SR-OCC-2006-07) be and 
hereby is approved.
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ 17 CFR 200.30-3(a)(12).
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    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06-7839 Filed 9-20-06; 8:45 am]

BILLING CODE 8010-01-P