Document ID: SEC-2006-0871-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Options Clearing Corp.
Posted Date: 2006-07-10T04:00Z

[Federal Register: July 10, 2006 (Volume 71, Number 131)]
[Notices]               
[Page 38961-38962]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jy06-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54060; File No. SR-OCC-2006-07]

 
Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of Proposed Rule Change Relating to a Surcharge for 
Non-Clearing Member Subscribers That Have Not Met a Mandated Conversion 
Date for Data Distribution Service

June 28, 2006.
     Pursuant to section 19(b)(1) of the Securities Exchange Act of 
1934 (``Act''),\1\ notice is hereby given that on May 15, 2006, 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. The Commission is publishing this notice to solicit comments on 
the proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would implement a surcharge to the monthly 
service fee charged to non-clearing member subscribers of OCC's Data 
Distribution Service (``DDS'') that have not converted to the new DDS 
format by the revised mandated conversion date of September 29, 2006.

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 these 
statements.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by OCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The proposed rule change would implement a surcharge to the monthly 
ancillary service fee for non-clearing member subscribers that have not 
converted to the new DDS \3\ format by the revised mandated conversion 
date of September 29, 2006.\4\
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    \3\ For a description of the services, including DDS, offered 
through OCC's ancillary services program, see Securities Exchange 
Act File Nos. 53400 (March 2, 2006), 71 FR 12226 (March 9, 2006) 
[File No. SR-OCC-2006-01] and 52125 (July 26, 2005), 70 FR 44414 
(August 2, 2005) [File No. SR-OCC-2005-09].
    \4\ By a separate proposed rule change, OCC will apply the same 
surcharge to clearing member DDS subscribers that likewise do not 
convert to the new DDS format by the mandated date. File No. SR-OCC-
2006-06.
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Background
    Both clearing members and non-clearing members may subscribe to 
DDS. A clearing member may subscribe to DDS in order to receive in a 
machine readable format data processed by OCC that is proprietary to 
such clearing member (e.g., position and post-trade entries) as well as 
non-proprietary data (i.e., data not specific to the clearing member) 
produced by OCC (e.g., options, series and prices). Non-clearing 
members may subscribe to DDS in order to receive certain non-
proprietary data.
Discussion
    In December, 2004, OCC informed all DDS subscribers that OCC was 
requiring them to convert to the new ENCORE \5\ DDS format by February 
28, 2006. Although OCC diligently worked with subscribers to facilitate 
their implementation of the new DDS format, it became apparent that 
subscribers needed additional time in order to complete their systems 
work. Accordingly, in December, 2005, OCC announced an extension of the 
mandated conversion date to September 29, 2006.
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    \5\ ENCORE is OCC's clearing system.
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    After the mandated conversion date, OCC will continue to support 
the legacy data service distribution system. However, for subscribers 
that do not meet the revised conversion date of September 29, 2006, OCC 
proposes to charge a monthly surcharge of $1,000 per month in order to 
reasonably allocate the costs of continuing to support the legacy data 
distribution system. The surcharge will be imposed starting with the 
October, 2006, billing cycle and will continue until the subscriber 
converts to the new DDS format and ceases to receive any legacy data 
service distribution transmissions.
    By a separate proposed rule change, File No. SR-OCC-2006-06, OCC is 
similarly proposing to apply the $1,000 per month surcharge to clearing 
member subscribers to DDS that likewise fail to convert to the new 
format. If this filing, which is to implement the surcharge for

[[Page 38962]]

non-clearing member subscribers, is not approved by the Commission by 
October, 2006, OCC will defer implementing the surcharge to clearing 
members until the Commission has approved this filing.\6\
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    \6\ OCC's amended Schedule of Fees is attached to the proposed 
rule filing.
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    OCC believes that the proposed change is consistent with Section 
17A of the Act, as amended, because it involves a fee, due or charge 
applicable to non-clearing member subscribers of DDS that provides for 
the reasonable allocation of costs to support a legacy system. 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

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period: (i) As the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding; or (ii) as to which the self-regulatory organization consents, 
the Commission will:
    (A) By order approve such proposed rule change or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2006-07 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-OCC-2006-07. 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-2006-07 and should be submitted on 
or before July 31, 2006.
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    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
Nancy M. Morris,
Secretary.
 [FR Doc. E6-10720 Filed 7-7-06; 8:45 am]

BILLING CODE 8010-01-P