Document ID: SEC-2013-1399-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Options Clearing Corp.
Posted Date: 2013-08-07T04:00Z

[Federal Register Volume 78, Number 152 (Wednesday, August 7, 2013)]
[Notices]
[Pages 48214-48216]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-19040]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70092; File No. SR-OCC-2013-11]

Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
To: (i) Provide Clarification Regarding the Applicability of Certain 
Provisions of OCC's By-Laws and Rules to Certain U.S. Dollar-Settled 
Gold Futures Designed to Replicate Positions in the Spot Market; and 
(ii) Remove Provisions Applicable Only to the Now-Discontinued U.S. 
Dollar-Settled Gold Futures That Were Based on the Value of Gold in the 
Spot Market With an Additional Daily Cost of Carry Feature

August 1, 2013.
    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 25, 2013, The Options Clearing Corporation (``OCC'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change described in Items I, II and III below, which 
Items have been prepared primarily by OCC. OCC filed the proposed rule 
change pursuant to Section 19(b)(3)(A)(iii) \3\ of the Act and Rule 
19b-4(f)(4)(ii) \4\ thereunder, so that the proposal was effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the rule change from interested parties.
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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)(iii).
    \4\ 17 CFR 240.19b-4(f)(4)(ii).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    OCC proposes to do the following: (i) Provide clarification 
regarding the applicability of certain provisions of OCC's By-Laws and 
Rules to certain U.S. dollar-settled gold futures designed to replicate 
positions in the spot market (``GLN 10 oz. Gold Futures'') \5\ proposed 
to be traded by NASDAQ OMX Futures Exchange, Inc. (``NFX''); and (ii) 
remove provisions applicable only to the now-discontinued U.S. dollar-
settled gold futures that were based on the value of gold in the spot 
market with an additional daily cost of carry feature that was designed 
to reflect the difference between the overnight lease rate for gold and 
the overnight interest rate for the U.S. dollar, which were also traded 
by NFX (``Swap Point Gold Futures'').
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    \5\ ``GLN'' will be the ticker symbol for these futures 
contracts.
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II. Clearing Agency'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 these 
statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    OCC is proposing to modify its rules to provide clarification 
regarding the applicability of certain provisions of OCC's By-Laws and 
Rules to the clearance and settlement of GLN 10 oz. Gold Futures, which 
are proposed to be traded by NFX. A GLN 10 oz. Gold Future is a U.S. 
dollar-settled futures contract that tracks spot gold prices using a 
single contract month for a particular year. OCC's existing By-Laws and 
Rules already adequately accommodate OCC's clearing and settlement of 
GLN 10 oz. Gold Futures. However, OCC is proposing certain amendments 
in order to eliminate any potential confusion regarding the 
applicability of certain provisions that were specific to the now-
discontinued Swap Point Gold Futures contracts. GLN 10 oz. Gold Futures 
differ from Swap Point Gold Futures, which previously were but are no 
longer cleared by OCC, in that they do not include a Cost of Carry 
Payment (defined below). Swap Point Gold Futures were U.S. dollar-
settled futures contracts based on the value of gold with an additional 
daily cost of carry/interest payment feature that was designed to 
reflect the difference between the overnight lease rate for gold and 
the overnight interest rate for the U.S. dollar (the ``Cost of

[[Page 48215]]

Carry Payment''). NFX has advised OCC that it has no present intention 
to clear swap point contracts in the future.
(i) OCC's Proposed By-Laws and Rules Changes
    OCC proposes to delete paragraph (f) of Rule 1301, which provided 
for OCC's determination of the Cost of Carry Payment to be paid or 
received by buyers and sellers of outstanding spot futures contracts. 
GLN 10 oz. Gold Futures do not possess this Cost of Carry Payment 
feature, and therefore Rule 1301(f) is not applicable to them. Swap 
Point Gold Futures--the only product previously cleared by OCC that 
possessed the Cost of Carry Payment feature--are no longer cleared by 
OCC, and Rule 1301(f) therefore is no longer needed, and OCC proposes 
to delete the provision from its Rules. Accordingly, the defined terms 
``cost of carry payment'' and ``spot future,'' which were only utilized 
in the context of the cost of carry payment, are both superfluous, and 
OCC proposes to delete them from Article I of the By-Laws. OCC also 
proposes to delete a reference in Section 2(a) of Article XII of OCC's 
By-Laws to the applicability of the cost of carry payment provisions of 
Rule 1301 to buyers and sellers of spot futures.
(ii) OCC's Amendment to the Clearing Agreement and Schedule C
    OCC performs the clearing function for NFX pursuant to the Clearing 
Agreement. The Clearing Agreement provides that NFX will provide 
settlement prices to OCC and indemnify OCC in the event that OCC uses 
an incorrect settlement price provided by NFX. Additionally, it 
provides that NFX will provide certain additional data necessary for 
the calculating of the Cost of Carry Payment (``Swap Point Data'') and 
indemnify OCC in the event OCC uses incorrect Swap Point Data provided 
by NFX. As OCC will no longer be clearing Swap Point Gold Futures, 
there is no need for the Clearing Agreement to address NFX's providing 
Swap Point Data, or for NFX to indemnify OCC for its use of such Swap 
Point Data. Therefore, OCC proposes to enter into an amendment to the 
Clearing Agreement deleting these provisions. The Clearing Agreement 
will continue to provide for NFX's indemnification of OCC in the event 
that OCC uses an incorrect settlement price provided by NFX. A copy of 
the proposed amendment to the Clearing Agreement is attached hereto as 
Exhibit 3A.
    Pursuant to the terms of the Clearing Agreement, OCC has agreed to 
clear the specific types of contracts enumerated in the Agreement and 
may agree to clear additional types through the execution by both 
parties of a new ``Schedule C'' to the Agreement. A copy of the 
proposed new Schedule C providing for the clearance of GLN 10 oz. Gold 
Futures is attached hereto as Exhibit 3B.
(iii) Effect on Clearing Members
    The proposed rule change relates to the clearing of a new product 
and will affect clearing members and their customers to the extent that 
they seek to trade GLN 10 oz. Gold Futures. The change will affect all 
such clearing members equally and should not impose any compliance 
burdens on clearing members, because GLN 10 oz. Gold Futures will be 
cleared using existing systems and will be margined similarly to other 
existing products.
    The proposed changes to OCC's By-Laws and Rules are consistent with 
the purposes and requirements of Section 17A(b)(3)(A) of the Securities 
Exchange Act of 1934, as amended (the ``Exchange Act'' or ``Act'') \6\, 
because they are designed to permit OCC to perform clearing services 
for products that are subject to the jurisdiction of the Commodity 
Futures Trading Commission (the ``CFTC'') without adversely affecting 
OCC's obligations with respect to the prompt and accurate clearance and 
settlement of securities transactions or the protection of securities 
investors and the public interest. They accomplish this purpose by 
providing clarification regarding the applicability of certain 
provisions of OCC's By-Laws and Rules to GLN 10 oz. Gold Futures, and 
remove provisions of OCC's By-Laws and Rules that are only applicable 
to Swap Point Gold Futures, a discontinued product. The proposed rule 
change is not inconsistent with any rules of OCC, including any rules 
proposed to be amended.
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    \6\ 15 U.S.C. 78q-1.
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(B) Clearing Agency's Statement on Burden on Competition

    OCC does not believe that the proposed rule change would impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the Act because it relates solely to a commodity futures 
product subject to the exclusive jurisdiction of the Commodity Futures 
Trading Commission and therefore will not have any impact, or impose 
any burden, on competition in securities markets or any other market 
governed by the Act.

(C) Clearing Agency'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

    This proposed rule change is filed for immediate effectiveness 
pursuant to Section 19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-
4(f)(4)(ii) \8\ thereunder. Pursuant to Rule 19b-4(f)(4)(ii),\9\ a rule 
change may take effect upon filing if it primarily affects the clearing 
operations of the clearing agency with respect to products that are not 
securities and does not significantly affect any securities clearing 
operations of the clearing agency or any rights or obligations of the 
clearing agency with respect to securities clearing or persons using 
such securities-clearing service. As described above, this proposed 
rule change concerns futures products that are subject to the primary 
jurisdiction of the CFTC and does not adversely affect OCC's 
obligations with respect to the prompt and accurate clearance and 
settlement of securities transactions or the protection of securities 
investors and the public interest. Notwithstanding the foregoing, OCC 
will delay its implementation of this rule change until it is deemed 
certified under Regulation Sec.  40.6 \10\ of the CFTC.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(4)(ii).
    \9\ Id.
    \10\ 17 CFR Part 40.
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    At any time within 60 days of the filing of this proposed rule 
change, the Commission summarily may temporarily suspend this 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.\11\
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    \11\ 15 U.S.C. 78s(b)(3)(C).
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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:

[[Page 48216]]

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-2013-11 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-2013-11. 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 of submission. 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 filing also will 
be available for inspection and copying at the principal office of OCC 
and on OCC's Web site at http://www.theocc.com/components/docs/legal/rules_and_bylaws/sr_occ_13_11.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-2013-11 and 
should be submitted on or before August 28, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated Authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-19040 Filed 8-6-13; 8:45 am]
BILLING CODE 8011-01-P