Document ID: SEC-2012-1241-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Options Clearing Corp.
Posted Date: 2012-08-01T04:00Z

[Federal Register Volume 77, Number 148 (Wednesday, August 1, 2012)]
[Notices]
[Pages 45702-45703]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-18703]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67506; File No. SR-OCC-2012-12]

Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of 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

July 26, 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 July 16, 2012, The Options Clearing Corporation (``OCC'' or the 
``Corporation'') 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 primarily by OCC. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    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.

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.

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 By-Laws 
to allow the Corporation to approve OCC's form of clearing member 
application and form of clearing agreement. Currently, OCC's Board of 
Directors must approve the form of these documents. OCC is also 
proposing general updates to its Agreement for OCC Services which has 
not been updated for several years.
    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. 
Currently, OCC's By-Laws and Rules set forth the qualifications and 
requirements for clearing membership at OCC. The 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

[[Page 45703]]

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.
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 (see 
Exhibit 5 to OCC's proposed rule filing) 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.
    OCC believes that the proposed changes to its By-Laws and Agreement 
for OCC Services are consistent with the purposes and requirements of 
Section 17A of the Act because they 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.\3\ The 
proposed changes eliminate inefficient and burdensome administrative 
procedures which unnecessarily require OCC's Board approval for the 
form of clearing member application and agreement. The proposed rule 
change is not inconsistent with any rules of OCC, including those 
proposed to be amended.
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    \3\ 15 U.S.C. 78q-1.
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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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments 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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-OCC-2012-12 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-2012-12. 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 inspection and 
copying in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549-1090. Copies of such filing will also be available 
for inspection and copying at the principal office of OCC and on OCC's 
Web site at http://www.optionsclearing.com/components/docs/legal/rules_and_bylaws/sr_occ_12_12.pdf. 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-2012-12 and should be submitted on 
or before August 22, 2012.
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    \4\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\4\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-18703 Filed 7-31-12; 8:45 am]
BILLING CODE 8011-01-P