Document ID: SEC-2014-0332-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Options Clearing Corp.
Posted Date: 2014-02-25T05:00Z

[Federal Register Volume 79, Number 37 (Tuesday, February 25, 2014)]
[Notices]
[Pages 10581-10582]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-03971]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71571; File No. SR-OCC-2013-23]

Self-Regulatory Organizations; The Options Clearing Corporation; 
Order Approving Proposed Rule Change, As Modified by Amendment No. 1, 
To Provide OCC With Authority in Emergency Circumstances To Waive, 
Suspend, or Extend the Time for Compliance With Its By-Laws, Rules, 
Policies and Procedures, or any Other Rules Issued by OCC

February 19, 2014.

I. Introduction

    On December 27, 2013, The Options Clearing Corporation (``OCC'') 
filed with the Securities and Exchange Commission (``Commission'') 
proposed rule change SR-OCC-2013-23 pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder.\2\ On January 8, 2014, OCC filed Amendment No. 1 to the 
proposed rule change.\3\ The proposed rule change was published for 
comment in the Federal Register on January 15, 2014.\4\ The Commission 
received no comments concerning the proposed rule change. For the 
reasons set forth below, the Commission is approving the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, OCC clarified its ability to extend the 
time fixed in certain Rules for the doing of any act or acts in 
emergency situations, and made other technical changes.
    \4\ Securities Exchange Act Release No. 71268 (January 9, 2014), 
79 FR 2739 (January 15, 2014) (SR-OCC-2013-23).
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II. Description

    The rule change, as approved, amends OCC's by-laws to provide OCC 
with authority in emergency circumstances, subject to certain 
conditions, to waive or suspend the operation of its by-laws, rules, 
policies and procedures, or any other rules issued by OCC 
(collectively, ``Rules'') or to extend any time fixed thereby for the 
doing of any act or acts. OCC previously sought action by the Division 
of Trading and Markets on an ad hoc basis whenever OCC needed to 
temporarily waive or suspend certain of its Rules, or extend the time 
for doing any act or acts specified by its Rules, in order to help 
facilitate the national system for the prompt and accurate clearance 
and settlement of securities transactions.\5\ The rule change generally 
aligns OCC's Rules with those of other registered clearing agencies, 
which allow those clearing agencies to waive or suspend their rules, or 
extend the time fixed thereby for performing any act or acts, in 
similar circumstances.
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    \5\ For instance, in one case, OCC needed to waive certain of 
its rules temporarily to facilitate the transfer and assignment of 
the correspondent securities-clearing business of one of its 
clearing members to another. The Division of Trading and Markets 
issued a No-Action Letter advising OCC that the Division would not 
recommend an enforcement action if OCC waived its rules under those 
circumstances. The Options Clearing Corporation, SEC No-Action 
Letter, (June 4, 2012), available at http://www.sec.gov/divisions/marketreg/mr-noaction/2012/occ060412.pdf.
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    Under the rule change, as approved, OCC's Board of Directors, 
Chairman,\6\ Management Vice Chairman, or President is authorized 
either to waive or suspend the Rules or extend any time fixed by the 
Rules for the doing of any act or acts if it is believed that an 
emergency exists and such extension, waiver, or suspension is necessary 
or advisable to protect OCC or allow it to continue to facilitate the 
prompt and accurate clearance and settlement of confirmed transactions 
and to provide its services in a safe and sound manner. If a 
determination to invoke these emergency powers is made by anyone other 
than by the Board of Directors, the Board of Directors must be notified 
as soon as practicable.
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    \6\ Pursuant to Article IV, Section 6 of OCC's By-Laws, the 
Chairman of the Board is also the Executive Chairman.
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    The rule change, as approved, requires OCC to notify the Commission 
and the CFTC within two hours after exercising its emergency powers.\7\ 
OCC is further required to provide the Commission and the CFTC as soon 
as practicable, but not later than three calendar days after exercising 
its emergency powers, with a report setting out the nature of the 
emergency, the identity of the person or persons who invoked OCC's 
emergency powers, and the rationale for doing so.
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    \7\ The Commission's approval of this rule change does not 
relieve OCC of its obligation to submit a filing to the Commission 
pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act when appropriate. See 12 
U.S.C. 5465(e)(1).
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    OCC is permitted to continue the emergency action for up to thirty 
calendar days unless the Commission or the CFTC, as applicable, objects 
in writing. If OCC wishes to continue the emergency action beyond the 
thirty-day period, then OCC is required to file a

[[Page 10582]]

corresponding proposed rule change with the Commission, the CFTC, or 
both during this thirty-day period. In that case, the emergency action 
would remain in effect while the agency or agencies review the 
corresponding proposed rule change. If either the Commission or the 
CFTC objects to the proposed rule change in writing, OCC is required to 
discontinue the emergency extension, waiver, or suspension of its 
rules.

III. Discussion

    Section 19(b)(2)(C) of the Act \8\ 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 and the rules and regulations thereunder applicable to such 
organization. Section 17A(b)(3)(F) of the Act \9\ requires that the 
rules of a registered clearing agency be designed to, among other 
things, promote the prompt and accurate clearance and settlement of 
securities transactions, as well as foster cooperation and coordination 
amongst other persons engaged in the clearance and settlement of 
securities transactions.
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    \8\ 15 U.S.C. 78s(b)(2)(C).
    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission believes that the proposed rule change is consistent 
with the requirements of Section 17A of the Act and the rules and 
regulations thereunder applicable to OCC. By giving OCC the ability to 
respond promptly in the event of an emergency, the proposed rule change 
will help to minimize the risk of a disruption to OCC's clearance and 
settlement services. This will help facilitate the prompt clearance and 
settlement of securities transactions, and will also enable OCC to 
coordinate its actions with those of other clearing agencies that 
already possess emergency powers similar to those at issue here. 
Further, the proposed rule change circumscribes OCC's emergency powers 
by requiring it to notify the Commission and the CFTC whenever OCC 
invokes those powers, and by further requiring OCC to discontinue any 
changes made under those powers if the Commission or the CFTC, as 
applicable, objects. These procedural safeguards will help to ensure 
that OCC exercises its emergency powers only in a manner that is 
consistent with the requirements of the Act and the rules and 
regulations thereunder.

IV. Conclusion

    On the basis of the foregoing, the Commission concludes that the 
proposal is consistent with the requirements of the Act, particularly 
the requirements of Section 17A of the Act \10\ and the rules and 
regulations thereunder.
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    \10\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that proposed rule change SR-OCC-2013-23, as amended, be and 
hereby is approved.\12\
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    \11\ 15 U.S.C. 78s(b)(2).
    \12\ 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).
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    \13\ 17 CFR 200.30-3(a)(12).

For the Commission by the Division of Trading and Markets, pursuant 
to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-03971 Filed 2-24-14; 8:45 am]
BILLING CODE 8011-01-P