Document ID: SEC-2014-0179-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Options Clearing Corp.
Posted Date: 2014-01-30T05:00Z

[Federal Register Volume 79, Number 20 (Thursday, January 30, 2014)]
[Notices]
[Pages 4988-4989]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-01812]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71396; File No. SR-OCC-2013-18]

Self-Regulatory Organizations; The Options Clearing Corporation; 
Order Approving Proposed Rule Change Concerning the Governance 
Committee Charter

January 24, 2014.

I. Introduction

    On November 26, 2013, The Options Clearing Corporation (``OCC'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change SR-OCC-2013-18 pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder.\2\ The proposed rule change was published for comment in 
the Federal Register on December 16, 2013.\3\ The Commission received 
no comment letters on the proposed rule change. For the reasons 
discussed below, the Commission is granting approval of the proposed 
rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4. OCC also filed the proposed change as an 
advance notice under Section 806(e)(1) of Title VIII of the Dodd-
Frank Wall Street Reform and Consumer Protection Act titled the 
Payment, Clearing, and Settlement Supervision Act of 2010. 12 U.S.C. 
5465(e)(1). The Commission published notice of the advance notice on 
December 16, 2013. See Release No. 34-71803 (Dec. 16, 2013), 78 FR 
77181 (Dec. 20, 2013) (SR-OCC-2013-807).
    \3\ See Securities Exchange Act Release No. 71030 (Dec. 11, 
2013), 78 FR 76182 (Dec. 16, 2013) (SR-OCC-2013-18).
---------------------------------------------------------------------------

II. Description

    This proposed rule change concerns OCC's Board of Directors 
(``Board'') formation of a Governance Committee (``GC'') and the GC 
Charter. The stated purpose of the GC is to review the overall 
corporate governance of OCC and recommend improvements to OCC's Board. 
The GC Charter describes the role the GC plays in assisting the Board 
in fulfilling its responsibilities, as described in OCC's By-Laws and 
Rules, as well as specifying the policies and procedures governing the 
membership and organization, scope of authority, and specific functions 
and responsibilities of the GC. In addition, the guidelines for the 
composition of the GC as well as the policies regarding its meeting 
schedule, quorum rules, minute-keeping and reporting requirements are 
set forth in the GC Charter and conform to applicable requirements 
specified in OCC's By-Laws and Rules.
    The GC is composed of not fewer than five Directors with at least 
one Public Director, one Exchange Director, and one Member Director. 
Management Directors will not be members of the GC. The Board will 
designate a GC Chair and if the Chair is not present at a meeting, the 
members who are present will designate a member to serve as the Acting 
Chair. The GC will meet at least four times a year and a majority of 
the GC members constitutes a quorum. The GC is permitted to call 
executive sessions from which guests of the GC may be excluded, and GC 
members are permitted to participate in all meetings by conference 
telephone call or other means of communication that permit all meeting 
participants to hear each other. The GC Chair, or the Chair's designee, 
will report regularly to the Board on the GC's activities.
    The GC Charter sets forth certain functions and responsibilities 
for the GC including, but not limited to, the

[[Page 4989]]

following: review the composition of the Board as a whole, including 
the Board's balance of participant and non-participant directors, 
business specialization, technical skills, diversity and other desired 
qualifications; review the Board's Charter for consistency with 
regulatory requirements, transparency of the governance process and 
other sound governance practice and recommend changes to the Board, 
where appropriate; review the committee structure of the Board, 
including the GC, and recommend changes to the Board, where 
appropriate; review OCC's policies and procedures for identifying and 
reviewing Board nominee candidates, including the criteria for Board 
nominees; develop and recommend to the Board a periodic process of 
self-evaluation of the role and performance of the Board, its 
committees and management in the governance of OCC; review OCC's 
policies on conflicts of interest of directors, including the OCC 
Directors Code of Conduct and recommend changes, where appropriate; and 
review OCC's new director orientation program as well as OCC's training 
and education programs for Board members and recommend changes, where 
appropriate. In addition to the foregoing, the GC may undertake other 
activities, as appropriate, or as may be delegated to it by the Board. 
In discharging its role, the GC shall confer with management and other 
employees of OCC to the extent the GC deems it necessary to fulfill its 
duties.\4\
---------------------------------------------------------------------------

    \4\ The GC, subject to the approval of the Board, is permitted 
to hire specialists or rely on outside advisors or specialists to 
assist it in carrying out the GC's activities. The GC has the 
authority to approve the fees and retention terms of such advisors 
and specialists.
---------------------------------------------------------------------------

III. Discussion

    Section 19(b)(2)(C) of the Act directs the Commission to approve a 
proposed rule change of a self-regulatory organization if it finds that 
the proposed rule change is consistent with the requirements of the 
Act.\5\ Section 17A(b)(3)(F) of the Act requires that the rules of a 
clearing agency be designed to protect investors and the public 
interest.\6\ Rule 17Ad-22(d)(8) requires clearing agencies to 
establish, implement, maintain, and enforce written policies and 
procedures reasonably designed to have governance arrangements that are 
clear and transparent to fulfill the public interest requirements in 
Section 17A of the Act.\7\
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(2)(C).
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
    \7\ 17 CFR 240.17Ad-22(d)(8).
---------------------------------------------------------------------------

    The Commission finds that the proposed rule change is consistent 
with Section 17A(b)(3)(F) of the Act and Rule 17Ad-22(d)(8) thereunder. 
By reviewing and recommending improvements to OCC's governance 
structure, the GC and the GC Charter may help ensure that OCC's 
governance structure is designed to protect investors and the public 
interest. In addition, by way of clarifying the duties and operations 
of the GC the GC Charter may help OCC establish, implement, maintain, 
and enforce policies and procedures reasonably designed to have 
governance arrangements that are clear and transparent.

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \8\ and the 
rules and regulations thereunder.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (File No. SR-OCC-2013-18) be and 
hereby is approved.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(2).
    \10\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-01812 Filed 1-29-14; 8:45 am]
BILLING CODE 8011-01-P