Document ID: SEC-2005-0297-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Options Clearing Corp.
Posted Date: 2005-11-29T05:00Z

[Federal Register: November 29, 2005 (Volume 70, Number 228)]
[Notices]               
[Page 71586-71588]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29no05-113]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52790; File No. SR-OCC-2005-13]

 
Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to Clearing Fees for Certain Transactions Executed on 
OneChicago, LLC

November 17, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 71587]]

(``Act''),\1\ notice is hereby given that on September 29, 2005, The 
Options Clearing Corporation (``OCC'') 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. OCC filed the proposed rule change pursuant to 
Section 19(b)(3)(A)(ii) of the Act,\2\ and Rule 19b-4(f)(2) 
thereunder,\3\ which renders the proposal effective upon filing with 
the Commission. 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\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \3\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of the proposed rule change is to charge clearing fees 
to OneChicago, LLC (``ONE'') for cleared trades where an OCC clearing 
member is on one or both sides of the trade based on OCC's standard 
rebate-eligible fee schedule (``Standard Fee Schedule''), rather than 
under the alternate rebate-ineligible fee schedule (``Alternate Fee 
Schedule'') adopted when OCC and ONE entered into the Security Futures 
Agreement for Clearing and Settlement Services (``ONE Clearing 
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.\4\
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    \4\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Under the Standard Fee Schedule, OCC clearing members pay OCC's 
standard clearing fees and are eligible to receive rebates of excess 
clearing fees when and as determined by OCC's Board of Directors. When 
negotiating its clearing agreement with OCC, ONE preferred to pay OCC's 
clearing fees itself rather than have OCC charge those fees to clearing 
members.\5\ Because ONE wanted to plan on set fees and avoid the 
uncertainty of a rebate that might be less than expected, OCC agreed to 
an Alternate Fee Schedule which provides for the following fees:
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    \5\ At that time, clearing fees under OCC's Standard Fee 
Schedule were:
     9[cent] per side for trades of 1 to 500 contracts.
     7[cent] per side for trades of 501 to 1,000 contracts.
     6[cent] per side for trades of 1,001 to 2,000 
contracts, and
     $110 for trades larger than 2,000 contracts.
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     7[cent] per side for trades of 1 to 500 contracts.
     6[cent] per side for trades of 501 to 1,000 contracts.
     5[cent] per side for trades of 1,001 to 2,000 contracts, 
and
     $85 for trades larger than 2,000 contracts.\6\

    \6\ Securities Exchange Act Release No. 47196 (January 15, 
2003), 68 FR 3922 (January 27, 2003) [File No. SR-OCC-2002-20]. 
Pursuant to the ONE Clearing Agreement, the CME has been designated 
as an associated clearinghouse (``ACH'') for ONE. Under the 
Alternate Fee Schedule, different fees are charged where the ACH is 
on one or both sides of a trade. Those fees are not being changed by 
this filing.
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The Alternate Fee Schedule also includes certain new product 
discounts.\7\ Under the terms of the ONE Clearing Agreement, the 
Alternate Fee Schedule expired on November 8, 2005.

    \7\ Securities Exchange Act Release No. 47196. The ``new 
securities future product'' discounts are as follows:
     First month traded: No fee.
     Second month traded: 2.5[cent] regardless of size.
     Third month traded: The lesser of the total at 5[cent] 
or $85.
     Fourth month traded: Reverts to Alternate Fee Schedule.
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    Since the adoption of the Alternate Fee Schedule, OCC has both 
reduced and discounted its Standard Fee Schedule.\8\ The current 
discounted Standard Fee Schedule is:
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    \8\ See Securities Exchange Act Release Nos. 49436 (March 17, 
2004), 69 FR 13932 (March 24, 2004) [File No. SR-OCC-2004-01], 50080 
(July 26, 2004), 69 FR 45873 (July 30, 2004) [File No. SR-OCC-2004-
12], 50951 (December 30, 2004), 70 FR 1489 (January 7, 2005) [File 
No. SR-OCC-2004-22], and 52034 (July 14, 2005), 70 FR 42134 (July 
21, 2005) [File No. SR-OCC-2005-08].
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     5[cent] per contract for trades of 1 to 500 contracts.
     4[cent] per contract for trades of 501 to 1,000 contracts.
     3[cent] per contract for trades of 1,001 to 2,000 
contracts, and
     $55 for trades larger than 2,000 contracts.

This discounted fee structure remains in effect until further action by 
OCC's Board of Directors.

    In response to a request by ONE, OCC has agreed to charge fees to 
ONE under the Standard Fee Schedule including standard new product fee 
discounts \9\ for trades where at least one side is cleared by an OCC 
clearing member. OCC is willing to provide ONE with the benefit of the 
Standard Fee Schedule for such trades before the date the Alternate Fee 
Structure for ONE is set to expire. Accordingly, effective October 1, 
2005, OCC charged ONE clearing fees based on the Standard Fee Schedule. 
Any refund of clearing fees charged under the Standard Schedule will be 
paid to ONE.
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    \9\ The ``new products'' discounts under the Standard Schedule 
are as follows:
     First month traded: No fee.
     Second month traded: For trades with contracts of:
     1-4,400--1 cent/side.
     > 4,400--$40.
     Third month traded: For trades with contracts of:
     1-2,200--2 cents/side.
     > 2,200--$40.
     Fourth month traded: Reverts to Standard Fee Schedule.
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    OCC believes that the proposed change is consistent with Section 
17A of the Act because it provides the benefit of a discounted, rebate-
eligible clearing fee schedule for certain trades to a market for which 
OCC provides clearance and settlement services. The proposed rule 
change is not inconsistent with the existing rules of OCC, including 
any other rules proposed to be amended.

(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

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A)(ii) of the Act \10\ and Rule 19b-4(f)(2) \11\ 
thereunder because it establishes or changes a due, fee, or other 
charge. At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).

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[[Page 71588]]

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 e-mail to rule-comments@sec.gov. Please include 

File Number SR-OCC-2005-13 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-OCC-2005-13. This 
file number should be included on the subject line if e-mail 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 Section, 100 F Street, 
NE., Washington, DC 20549. 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.optionsclearing.com.

    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-2005-13 
and should be submitted on or before December 20, 2005.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Jonathan G. Katz,
Secretary.
[FR Doc. E5-6618 Filed 11-28-05; 8:45 am]

BILLING CODE 8010-01-P