Document ID: SEC-2020-0180-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Options Clearing Corp.
Posted Date: 2020-02-11T05:00Z

[Federal Register Volume 85, Number 28 (Tuesday, February 11, 2020)]
[Notices]
[Pages 7812-7816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-02622]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88120; File No. SR-OCC-2020-801]

Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of Advance Notice Concerning a Master Repurchase 
Agreement as Part of OCC's Overall Liquidity Plan

February 5, 2020.
    Pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act, entitled Payment, Clearing 
and Settlement Supervision Act of 2010 (``Clearing Supervision Act'') 
\1\ and Rule 19b-4(n)(1)(i) \2\ under the Securities Exchange Act of 
1934 (``Exchange Act'' or ``Act''),\3\ notice is hereby given that on 
January 10, 2020, the Options Clearing Corporation (``OCC'') filed with 
the Securities and Exchange Commission (``Commission'') an advance 
notice as described in Items I, II and III below, which Items have been 
prepared by OCC. The Commission is publishing this notice to solicit 
comments on the advance notice from interested persons.
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    \1\ 12 U.S.C. 5465(e)(1).
    \2\ 17 CFR 240.19b-4(n)(1)(i).
    \3\ 15 U.S.C. 78a et seq.
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I. Clearing Agency's Statement of the Terms of Substance of the Advance 
Notice

    This advance notice is filed by OCC this advance notice is filed by 
OCC [sic] in connection with a proposed change to its operations in the 
form of enter into a committed master repurchase agreement with a bank 
counterparty as part of OCC's overall liquidity plan. All terms with 
initial capitalization that are not otherwise defined herein have the 
same meaning as set forth in the OCC By-Laws and Rules.\4\
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    \4\ OCC's By-Laws and Rules can be found on OCC's public 
website: http://optionsclearing.com/about/publications/bylaws.jsp.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Advance Notice

    In its filing with the Commission, OCC included statements 
concerning the purpose of and basis for the advance notice and 
discussed any comments it received on the advance notice. 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 and B below, 
of the most significant aspects of these statements.

(A) Clearing Agency's Statement on Comments on the Advance Notice 
Received From Members, Participants, or Others

    Written comments were not and are not intended to be solicited with 
respect to the proposed change and none have been received.

(B) Advance Notices Filed Pursuant to Section 806(e) of the Payment, 
Clearing, and Settlement Supervision Act

Description of Change
    This advance notice is being filed in connection with a proposed 
change to OCC's operations through which OCC would enter into a 
committed master repurchase agreement with a bank counterparty (the 
``Repo Liquidity Facility'') to access an additional committed source 
of liquidity to meet its settlement obligations.
Background
    OCC's current liquidity plan provides it with access to a diverse 
set of funding sources, including OCC's syndicated credit facility,\5\ 
a committed master repurchase program with institutional investors such 
as pension funds (the ``Non-Bank Liquidity Facility'') \6\ and Clearing 
Member minimum Cash Clearing Fund Requirement.\7\ The Repo Liquidity 
Facility would provide OCC with an additional source of liquidity 
resources. The facility would take the form of OCC executing a 
committed master repurchase agreement (``MRA'') with a commercial bank 
counterparty. OCC would perform a review and ongoing monitoring of the 
counterparty to obtain reasonable assurance that the counterparty has 
the financial and operational ability to satisfy its obligations under 
the agreement. This review would include the counterparty's standing on 
OCC's watch list including key metrics and ratios from the financial 
statements, the proposed level of activity including a comparison to 
the counterparty's regulatory capital levels, proposed operational 
processes associated with the agreement, past relevant operational 
incidents, and research of adverse counterparty news.
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    \5\ See Securities Exchange Act Release No. 85924 (May 23, 
2019), 84 FR 25089 (May 30, 2019) (SR-OCC-2019-803).
    \6\ See Securities Exchange Act Release No. 76821 (Jan. 4, 
2016), 81 FR 3208 (Jan. 20, 2016) (SR-OCC-2015-805).
    \7\ See OCC Rule 1002.
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    Although the MRA would be based on the standard form of master 
repurchase agreement,\8\ OCC would require the MRA, or an annex 
thereto, to contain certain additional provisions tailored to help 
ensure certainty of funding and operational effectiveness, as described 
in more detail below. OCC believes that these provisions are necessary 
and appropriate to integrate the program into its operations and in 
order to promote safety and soundness consistent with OCC's systemic 
responsibilities. A summary of the additional terms and conditions 
applicable to the MRA are set forth in the Summary of Terms attached 
[sic] to this filing as confidential Exhibit 3a.\9\
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    \8\ The standard form master repurchase agreement is published 
by the Securities Industry and Financial Markets Association 
(``SIFMA'') and is commonly used in the repurchase market by 
institutional investors.
    \9\ In addition, OCC is attaching to this filing as Exhibit 3b 
responses to certain information requests from staff of the Division 
of Trading and Markets (``Staff'') concerning the additional 
provisions summarized in confidential Exhibit 3a as reflected in a 
draft of this advance notice provided to Staff.
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The Proposed Program: Standard Repurchase Agreement Terms
    The MRA would be structured like a typical repurchase arrangement 
in which the buyer (i.e., the bank counterparty) would purchase from 
OCC, from time to time, United States government securities (``Eligible 
Securities'').\10\ OCC, as the seller, would transfer Eligible 
Securities to the buyer in exchange for a payment by the buyer to OCC 
in immediately available funds (``Purchase Price''). The buyer would 
simultaneously agree to transfer the purchased securities back to OCC 
at a specified later date (``Repurchase Date'') or on OCC's demand 
against the transfer

[[Page 7813]]

of funds by OCC to the buyer in an amount equal to the outstanding 
Purchase Price plus the accrued and unpaid price differential 
(together, ``Repurchase Price''), which is the interest component of 
the Repurchase Price.
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    \10\ OCC would use U.S. government securities that are included 
in Clearing Fund contributions by Clearing Members and margin 
deposits of any Clearing Member that has been suspended by OCC for 
the repurchase arrangements. OCC Rule 1006(f) and OCC Rule 1104(b) 
authorize OCC to obtain funds from third parties through securities 
repurchases using these sources. The officers who may exercise this 
authority include the Executive Chairman, Chief Executive Officer, 
and Chief Operating Officer.
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    At all times while a transaction is outstanding, OCC would be 
required to maintain a specified amount of securities or cash margin 
with the buyer.\11\ The market value of the securities supporting each 
transaction would be determined daily, typically based on a price 
obtained from a generally recognized pricing source. If the market 
value of the purchased securities is determined to have fallen below 
OCC's required margin, OCC would be required to transfer to the buyer 
sufficient cash or additional securities reasonably acceptable to the 
buyer so that OCC's margin requirement is satisfied.\12\ If the market 
value of the purchased securities is determined to have risen to above 
OCC's required margin, OCC would be permitted to require the return of 
excess purchased securities from the buyer.
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    \11\ OCC expects that it would be required to maintain margin 
equal to 102% of the Repurchase Price, which is a standard rate for 
arrangements involving U.S. government securities.
    \12\ OCC expects that it would use Clearing Fund securities and 
securities posted as margin by defaulting Clearing Members, as more 
fully discussed in footnote 8.
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    As in a typical master repurchase agreement, an event of default 
would occur with respect to the buyer if the buyer failed to purchase 
securities on a Purchase Date, failed to transfer purchased securities 
on any applicable Repurchase Date, or failed to transfer any interest, 
dividends or distributions on purchased securities to OCC within a 
specified period after receiving notice of such failure. An event of 
default would occur with respect to OCC if OCC failed to transfer 
purchased securities on a Purchase Date or failed to repurchase 
purchased securities on an applicable Repurchase Date. The MRA would 
also provide for standard events of default for either party, including 
a party's failure to maintain required margin or an insolvency event 
with respect to the party. Upon the occurrence of an event of default, 
the non-defaulting party, at its option, would have the right to 
accelerate the Repurchase Date of all outstanding transactions between 
the defaulting party and the non-defaulting party, among other rights. 
For example, if OCC were the defaulting party with respect to a 
transaction and the buyer chose to terminate the transaction, OCC would 
be required to immediately transfer the Repurchase Price to the buyer. 
If the buyer were the defaulting party with respect to a transaction 
and OCC chose to terminate the transaction, the buyer would be required 
to deliver all purchased securities to OCC. If OCC or the buyer did not 
timely perform, the non-defaulting party would be permitted to buy or 
sell, or deem itself to have bought or sold, securities as needed to be 
made whole and the defaulting party would be required to pay the costs 
related to any covering transactions. Additionally, if OCC was required 
to obtain replacement securities as a result of an event of default, 
the buyer would be required to pay the excess of the price paid by OCC 
to obtain replacement securities over the Repurchase Price.
The Proposed Program: Customized Features To Promote Certainty of 
Funding and Operational Effectiveness
    In addition to the typical repurchase arrangements, OCC would 
require the MRA, or an annex thereto, to contain certain additional 
provisions tailored to help ensure certainty of funding and operational 
effectiveness.\13\
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    \13\ OCC expects that the MRA will also include other, more 
routine, provisions such as the method for giving notices and basic 
due authorization representations by the parties.
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Commitment to Fund
    The buyer would provide a funding commitment of $500 million, with 
the commitment extending for one year and one day. The buyer would be 
obligated to enter into transactions under the MRA up to its committed 
amount so long as no default had occurred and OCC transferred 
sufficient Eligible Securities. The buyer would be obligated to enter 
into transactions even if OCC had experienced a material adverse 
change, such as the failure of a Clearing Member. This commitment to 
provide funding would be a key departure from ordinary repurchase 
arrangements and a key requirement for OCC.
Funding Mechanics
    Funding mechanics would be targeted so that OCC would receive the 
Purchase Price in immediately available funds within 60 minutes of its 
request for funds and delivery of Eligible Securities and, if needed, 
prior to OCC's regular daily settlement time.\14\ These targeted 
funding mechanics would allow OCC to receive needed liquidity in time 
to satisfy settlement obligations, even in the event of a default by a 
Clearing Member or a market disruption. The funding mechanism may be, 
for example, delivery versus payment/receive versus payment \15\ or 
another method acceptable to OCC that both satisfies the objectives of 
the Repo Liquidity Facility and presents limited operational risks.\16\
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    \14\ This would include OCC's regular daily settlement time and 
any extended settlement time implemented by OCC in an emergency 
situation under Rule 505.
    \15\ Delivery versus payment/receive versus payment is a method 
of settlement under which payment for securities must be made prior 
to or simultaneously with delivery of the securities.
    \16\ Unlike for the Non-Bank Liquidity Facility, OCC would not 
require the Repo Liquidity Facility counterparty to maintain cash 
and investments in a designated account in which OCC has visibility. 
OCC required a designated account for Non-Bank Liquidity Facility 
counterparties in order to facilitate prompt funding by 
counterparties that, unlike the Repo Liquidity Facility 
counterparty, are not commercial banks and therefore are not in the 
business of daily funding.
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No Rehypothecation
    The buyer would not be permitted to grant any third party an 
interest in purchased securities. This requirement is important to 
reduce the risk that a third party could interfere with the buyer's 
transfer of the purchased securities on the Repurchase Date. Further, 
the buyer would agree to provide OCC with daily information about the 
account the buyer uses to hold the purchased securities. This 
visibility would allow OCC to act quickly in the event the buyer 
violates any requirements.
Early Termination Rights
    OCC would have the ability to terminate any transaction upon 
written notice to the buyer, but the buyer would only be able to 
terminate a transaction upon the occurrence of an event of default with 
respect to OCC, as further described below. A notice of termination by 
OCC would specify a new Repurchase Date prior to the originally agreed 
upon Repurchase Date. Upon the early termination of a transaction, the 
buyer would be required to return all purchased securities to OCC and 
OCC would be required to pay the Repurchase Price. This optional early 
termination right is important to OCC because OCC's liquidity needs may 
change unexpectedly over time and as a result OCC may not want to keep 
a transaction outstanding as long as originally planned.
Substitution
    OCC would have the ability to substitute any Eligible Securities 
for purchased securities in its discretion by a specified time, so long 
as the Eligible Securities satisfy any applicable criteria contained in 
the MRA and the transfer

[[Page 7814]]

of the Eligible Securities would not create a margin deficit, as 
described above.\17\ This substitution right is important to OCC 
because it must be able to manage requests of Clearing Members to 
return excess or substitute Eligible Securities in accordance with 
established operational procedures.
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    \17\ In addition to its substitution rights, OCC could cause the 
return of purchased securities by exercising its optional early 
termination rights under the Master Repurchase Agreement. If OCC 
were to terminate the transaction, the buyer would be required to 
return purchased securities to OCC against payment of the 
corresponding Repurchase Price.
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Events of Default
    Beyond the standard events of default for a failure to purchase or 
transfer securities on the applicable Purchase Date or Repurchase Date, 
as described above, OCC would require that the MRA not contain any 
additional events of default that would restrict OCC's access to 
funding. Most importantly, OCC would require that it would not be an 
event of default if OCC suffers a ``material adverse change.'' \18\ 
This provision is important because it provides OCC with certainty of 
funding, even in difficult market conditions. Upon the occurrence of an 
event of default, in addition to the non-defaulting party's right to 
accelerate the Repurchase Date of all outstanding transactions or to 
buy or sell securities as needed to be made whole, the non-defaulting 
party may elect to take the actions specified in the ``mini close-out'' 
provision of the MRA, rather than declaring an event of default. For 
example, if the buyer fails to transfer purchased securities on the 
applicable Repurchase Date, rather than declaring an event of default, 
OCC may (1) if OCC has already paid the Repurchase Price, require the 
buyer to repay the Repurchase Price, (2) if there is a margin excess, 
require the buyer to pay cash or delivered purchased securities in an 
amount equal to the margin excess, or (3) declare that the applicable 
transaction, and only that transaction, will be immediately terminated, 
and apply default remedies under the MRA to only that transaction. 
Therefore, if the buyer fails to deliver purchased securities on any 
Repurchase Date, OCC would have remedies that allow it to mitigate risk 
with respect to a particular transaction, without declaring an event of 
default with respect to all transactions under the MRA.
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    \18\ When included in a contract, a ``material adverse change'' 
is typically defined as a change that would have a materially 
adverse effect on the business or financial condition of a company.
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Anticipated Effect on and Management of Risk
    Completing timely settlement is a key aspect of OCC's role as a 
clearing agency performing central counterparty services. OCC believes 
that the overall impact of the Repo Liquidity Facility on the risks 
presented by OCC would be to reduce settlement risk associated with 
OCC's operations as a clearing agency. The Repo Liquidity Facility 
would reduce settlement risk by providing an additional source of 
liquidity that would promote the reduction of risks to OCC, its 
Clearing Members and the options market in general because it would 
allow OCC to obtain short-term funds to address liquidity demands 
arising out of the default or suspension of a Clearing Member, in 
anticipation of a potential default or suspension of Clearing Members, 
the insolvency of a bank or another securities or commodities clearing 
organization, or the failure of a bank or another securities or 
commodities clearing organization to achieve daily settlement. The 
resulting reduction in OCC settlement risk would lead to a 
corresponding reduction in systemic risk and would have a positive 
impact on the safety and soundness of the clearing system by enabling 
OCC to have continuous access to funds to settle its obligations to its 
Clearing Members. In order to sufficiently perform this key role in 
promoting market stability, it is critical that OCC continuously has 
access to funds to settle its obligations.
    Providing for another committed source of liquidity resources would 
also help OCC manage the allocation between its sources of liquidity by 
giving OCC more flexibility to adjust the mix of liquidity resources 
based on market conditions, availability and shifting liquidity needs. 
If circumstances arise that affect OCC's current liquidity resources 
from another of its facilities,\19\ an additional source of liquidity 
resources would allow OCC to reallocate liquidity resources as 
necessary to avoid a shortfall in its overall liquidity resources.\20\
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    \19\ For example, the existing confirmations under OCC's Non-
Bank Liquidity Facility, totaling $1 billion, expired on January 2, 
2020 and January 6, 2020. In anticipation of their expiration, OCC 
exercised an accordion feature under its syndicated credit facility 
to increase the amount from $2 billion to $2.5 billion. Since 
learning of the Non-Bank Liquidity Facility counterparty's decision 
not to renew its confirmations, OCC has also been working with a 
lending agent to identify interested institutional investors to 
secure replacement commitments to cover the difference between the 
Non-Bank Liquidity Facility's $1 billion in commitments and the $500 
million increase in OCC's syndicated credit facility. The proposed 
$500 million Repo Liquidity Facility would also cover that 
difference.
    \20\ For example, OCC has authority under OCC Rule 1002(a)(i) to 
temporarily increase the cash funding requirement in its Clearing 
Fund for the protection of OCC, Clearing Members or the general 
public. On December 12, 2019, OCC informed Clearing Members that OCC 
would exercise this authority on January 3, 2020 to increase the 
Cash Clearing Fund Requirement temporarily from $3 billion to $3.5 
billion during the monthly sizing of the Clearing Fund.
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    The Repo Liquidity Facility, like any liquidity source, would 
involve certain risks, but OCC would structure the program to mitigate 
those risks. Most of these risks are standard in any master repurchase 
agreement. For example, the buyer could fail to deliver, or delay in 
delivering, purchased securities to OCC by the applicable Repurchase 
Date. OCC will address this risk by seeking a security interest from 
the buyer in that portion of the purchased securities representing the 
excess of the market value over the Repurchase Price, or by obtaining 
other comfort from the buyer that the purchased securities will be 
timely returned. Further, the purchased securities generally will not 
be ``on-the-run'' securities, i.e., the most recently issued Treasury 
securities. The demand in the marketplace for Treasury securities, for 
uses other than collateral, is much greater for on-the-run Treasury 
securities, and therefore, OCC believes the buyer will have little 
incentive to retain the securities transferred by OCC.
    The mechanics under the Repo Liquidity Facility would be structured 
so that OCC could avoid losses by paying the Repurchase Price. For 
example, OCC will have optional early termination rights, under which 
OCC would be able to accelerate the Repurchase Date of any transaction 
by providing written notice to the buyer and paying the Repurchase 
Price. Through this mechanism, OCC can maintain the benefit of the Repo 
Liquidity Facility, while mitigating any risk associated with a 
particular transaction.
    The Repo Liquidity Facility would be structured to avoid potential 
third-party risks, which are typical of repurchase arrangements. The 
prohibition on buyer rehypothecation and use of purchased securities 
would reduce the risk to OCC of a buyer default.
    As with any repurchase arrangement, OCC is subject to the risk that 
it may have to terminate existing transactions and accelerate the 
applicable Repurchase Date with respect to the buyer due to changes in 
the financial health or performance of the buyer. Terminating 
transactions could negatively affect OCC's liquidity position. However, 
any negative effect is

[[Page 7815]]

reduced by the fact that OCC maintains a number of different financing 
arrangements, and thus will have access to liquidity sources in the 
event the Liquidity Repo Facility is no longer a viable source.
    Under the MRA, OCC would be obligated to transfer additional cash 
or securities as margin in the event the market value of any purchased 
securities decreases. OCC seeks to ensure it can meet any such 
obligation by monitoring the value of the purchased securities and 
maintaining adequate cash resources to make any required payments. Such 
payments are expected to be small in comparison to the total amount of 
cash received for each transfer of purchased securities.
Consistency With the Payment, Clearing and Settlement Supervision Act
    The stated purpose of the Clearing Supervision Act is to mitigate 
systemic risk in the financial system and promote financial stability 
by, among other things, promoting uniform risk management standards for 
systemically important financial market utilities and strengthening the 
liquidity of systemically important financial market utilities.\21\ 
Section 805(a)(2) of the Clearing Supervision Act \22\ also authorizes 
the Commission to prescribe risk management standards for the payment, 
clearing and settlement activities of designated clearing entities, 
like OCC, for which the Commission is the supervisory agency. Section 
805(b) of the Clearing Supervision Act \23\ states that the objectives 
and principles for risk management standards prescribed under Section 
805(a) shall be to:
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    \21\ 12 U.S.C. 5461(b).
    \22\ 12 U.S.C. 5464(a)(2).
    \23\ 12 U.S.C. 5464(b).
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     Promote robust risk management;
     promote safety and soundness;
     reduce systemic risks; and
     support the stability of the broader financial system.
    The Commission has adopted risk management standards under Section 
805(a)(2) of the Clearing Supervision Act and the Exchange Act in 
furtherance of these objectives and principles.\24\ Rule 17Ad-22 
requires registered clearing agencies, like OCC, to establish, 
implement, maintain, and enforce written policies and procedures that 
are reasonably designed to meet certain minimum requirements for their 
operations and risk management practices on an ongoing basis.\25\ 
Therefore, the Commission has stated \26\ that it believes it is 
appropriate to review changes proposed in advance notices against Rule 
17Ad-22 and the objectives and principles of these risk management 
standards as described in Section 805(b) of the Clearing Supervision 
Act.\27\
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    \24\ 17 CFR 240.17Ad-22. See Securities Exchange Act Release 
Nos. 68080 (October 22, 2012), 77 FR 66220 (November 2, 2012) (S7-
08-11) (``Clearing Agency Standards''); 78961 (September 28, 2016), 
81 FR 70786 (October 13, 2016) (S7-03-14) (``Standards for Covered 
Clearing Agencies'').
    \25\ 17 CFR 240.17Ad-22.
    \26\ See, e.g., Securities Exchange Act Release No. 86182 (June 
24, 2019), 84 FR 31128, 31129 (June 28, 2019) (SR-OCC-2019-803).
    \27\ 12 U.S.C. 5464(b).
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    OCC believes that the proposed changes are consistent with Section 
805(b)(1) of the Clearing Supervision Act \28\ because the proposed 
Repo Liquidity Facility would provide OCC with an additional source of 
committed liquidity to meet its settlement obligations while at the 
same time being structured to mitigate certain operational risks, as 
described above, that arise in connection with this committed liquidity 
source. In this way, the proposed changes are designed to promote 
robust risk management; promote safety and soundness; reduce systemic 
risks; and support the stability of the broader financial system.
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    \28\ 12 U.S.C. 5464(b)(1).
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    OCC believes that the Repo Liquidity Facility is also consistent 
with the requirements of Rule 17Ad-22(e)(7) under the Act.\29\ Rule 
17Ad-22(e)(7) requires OCC to establish, implement, maintain and 
enforce written policies and procedures reasonably designed to 
effectively measure, monitor, and manage liquidity risk that arises in 
or is borne by OCC, including measuring, monitoring, and managing its 
settlement and funding flows on an ongoing and timely basis, and its 
use of intraday liquidity, as specified in the rule.\30\ In particular, 
Rule 17Ad-22(e)(7)(i) under the Act \31\ directs that OCC meet this 
obligation by, among other things, ``[m]aintaining sufficient liquid 
resources at the minimum in all relevant currencies to effect same-day 
. . . settlement of payment obligations with a high degree of 
confidence under a wide range of foreseeable stress scenarios that 
includes, but is not limited to, the default of the participant family 
that would generate the largest aggregate payment obligation for [OCC] 
in extreme but plausible market conditions.''
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    \29\ 17 CFR 240.17Ad-22(e)(7).
    \30\ Id.
    \31\ 17 CFR 240.17Ad-22(e)(7)(i).
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    As described above, the Repo Liquidity Facility would provide OCC 
with a readily available liquidity resource that would enable it to, 
among other things, continue to meet its obligations in a timely 
fashion and as an alternative to selling Clearing Member collateral 
under what may be stressed and volatile market conditions. For these 
reasons, OCC believes that the proposal is consistent with Rule 17Ad-
22(e)(7)(i).\32\
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    \32\ Id.
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    Rule 17Ad-22(e)(7)(ii) under the Act requires OCC to establish, 
implement, maintain and enforce written policies and procedures 
reasonably designed to hold qualifying liquid resources sufficient to 
satisfy payment obligations owed to Clearing Members.\33\ Rule 17Ad-
22(a)(14) of the Act defines ``qualifying liquid resources'' to 
include, among other things, lines of credit without material adverse 
change provisions, that are readily available and convertible into 
cash.\34\ The MRA under the Repo Liquidity Facility would not be 
subject to any material adverse change provision and would be designed 
to permit OCC to, among other things, help ensure that OCC has 
sufficient, readily-available qualifying liquid resources to meet the 
cash settlement obligations of its largest Clearing Member Group. 
Therefore, OCC believes that the proposal is consistent with Rule 17Ad-
22(e)(7)(ii).\35\
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    \33\ 17 CFR 240.17Ad-22(e)(7)(ii).
    \34\ 17 CFR 240.17Ad-22(a)(14).
    \35\ 17 CFR 240.17Ad-22(e)(7)(ii).
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    For the foregoing reasons, OCC believes that the proposed changes 
are consistent with Section 805(b)(1) of the Clearing Supervision Act 
\36\ and Rule 17Ad-22(e)(7) \37\ under the Act.
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    \36\ 12 U.S.C. 5464(b)(1).
    \37\ 17 CFR 240.17Ad-22(e)(7).
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III. Date of Effectiveness of the Advance Notice and Timing for 
Commission Action

    The proposed change may be implemented if the Commission does not 
object to the proposed change within 60 days of the later of (i) the 
date the proposed change was filed with the Commission or (ii) the date 
any additional information requested by the Commission is received. OCC 
shall not implement the proposed change if the Commission has any 
objection to the proposed change.
    The Commission may extend the period for review by an additional 60 
days if the proposed change raises novel or complex issues, subject to 
the Commission providing the clearing agency with prompt written notice 
of the extension. A proposed change may be implemented in less than 60 
days from the date the advance notice is filed, or the date further 
information

[[Page 7816]]

requested by the Commission is received, if the Commission notifies the 
clearing agency in writing that it does not object to the proposed 
change and authorizes the clearing agency to implement the proposed 
change on an earlier date, subject to any conditions imposed by the 
Commission.
    OCC shall post notice on its website of proposed changes that are 
implemented.
    The proposal shall not take effect until all regulatory actions 
required with respect to the proposal are completed.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the advance 
notice is consistent with the Clearing Supervision 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-2020-801 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-OCC-2020-801. 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 website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the advance notice that are filed with the 
Commission, and all written communications relating to the advance 
notice 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 website 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 the self-regulatory 
organization.
    All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly.
    All submissions should refer to File Number SR-OCC-2020-801 and 
should be submitted on or before February 26, 2020.

    By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-02622 Filed 2-10-20; 8:45 am]
BILLING CODE 8011-01-P