Document ID: SEC-2016-0207-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Options Clearing Corp.
Posted Date: 2016-02-09T05:00Z

[Federal Register Volume 81, Number 26 (Tuesday, February 9, 2016)]
[Notices]
[Pages 6915-6916]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02437]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77042; File No. SR-OCC-2015-018]

Self-Regulatory Organizations; The Options Clearing Corporation; 
Order Approving the Adoption of a Charter of a New Committee of The 
Options Clearing Corporation's Board of Directors, the Technology 
Committee

February 3, 2016.
    On December 8, 2015, The Options Clearing Corporation (``OCC'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change SR-OCC-2015-018 pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder.\2\ On December 24, 2015, the proposed rule change was 
published for comment in the Federal Register.\3\ The Commission did 
not receive any comments on the proposed rule change. This order 
approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 76686 (December 18, 
2015), 80 FR 80422 (December 24, 2015) (SR-OCC-2015-018).
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I. Description

    OCC is adopting a Charter for a new committee of OCC's Board of 
Directors (``Board''), the Technology Committee (``TC''). Additionally, 
OCC is adding a description of the TC into Article III, Section 9 of 
OCC's By-Laws. The Board formed the TC in order to enhance the Board's 
understanding and oversight of key technology, information security, 
and cyber-security risk issues at OCC. Consistent with OCC's other 
Board-level committee charters, the TC Charter sets forth: (i) The 
purpose, functions, and responsibilities of the TC; and (ii) the 
composition and organization of the TC.
    As set forth in the TC Charter, the TC will be responsible for: (i) 
Overseeing major information technology (``IT'') related strategies, 
projects, and technology architecture decisions; (ii) monitoring 
whether OCC's IT programs effectively support OCC's business objectives 
and strategies; (iii) monitoring OCC's IT risk management efforts as 
well as the security of OCC's information systems and physical security 
of information system assets; and (iv) conferring with OCC's senior IT 
management team and informing the Board on IT-related matters.
    Further, and with respect to the TC Charter's role in the oversight 
of OCC's IT strategy and projects, the TC Charter provides that the TC 
will be specifically tasked with: (i) Evaluating OCC's IT strategy, 
including the financial, tactical, and strategic benefits of IT 
projects and technology architecture initiatives; (ii) critically 
reviewing IT projects and technology architecture decisions, including 
review of the process related to approval of capital expenditures as 
they relate to IT projects; and (iii) making recommendations to the 
Board with respect to IT-related projects and investments that require 
Board approval. In addition, the TC Charter will require that the TC: 
(i) Monitor the quality and effectiveness of OCC's IT and physical 
security, including periodically reviewing and appraising OCC's 
disaster recovery capabilities and crisis management plans; (ii) in 
coordination and cooperation with the Audit Committee of the Board, 
monitor the quality and effectiveness of OCC's IT systems and processes 
that relate to or affect OCC's internal controls and assess OCC's 
management of IT-related compliance risks; (iii) report to the Board 
and the Audit Committee about IT risks and controls; and (iv) serve in 
an advisory role with respect to IT decisions at OCC. In connection 
with carrying out its responsibilities, the TC will also, in general, 
inform and make recommendations to the Board and other Board-level 
committees with respect to IT-related matters.
    The TC Charter will provide that the TC be comprised of three or 
more directors, and meet at least four times per year.\4\ The TC will 
function in a manner similar to the other Board-level committees in 
that it will have the ability to hire specialists and meet in executive 
session as well as be required to report to the Board on an annual 
basis. The TC will also have to annually confirm to the Board that its 
responsibilities, as set forth in the TC Charter, have been carried out 
and evaluate its and its members' performance on a regular basis.
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    \4\ Members of the TC will not need to be technology experts.
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II. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \5\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if it 
finds that the rule change, as proposed, is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such organization.
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    \5\ 15 U.S.C. 78s(b)(2)(C).
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    The Commission finds that the proposed rule change is consistent 
with Section 17A(b)(3)(F) of the Act. This section requires, among 
other things, that the rules of a clearing agency promote the prompt 
and accurate clearance and settlement of securities transactions.\6\ 
The rule change should enhance the effectiveness of the Board's 
oversight on OCC's business and operational processes. Specifically, it 
should enhance technology-related processes (such as disaster recovery 
and crisis management plans), as well as IT systems that relate to 
internal controls and compliance risks, through a dedicated Board-level 
committee's oversight of such processes. Accordingly, the proposed rule 
change will increase the likelihood that OCC's technology processes 
work as expected, including those processes tied to the clearance and 
settlement of securities transactions.
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    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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    Additionally, the Commission finds that the proposed rule change is 
consistent with Rule 17Ad-22(d)(8). This rule requires a clearing 
agency's the written policies and procedures to: (i) Have governance 
arrangements that are clear and transparent to fulfill the public 
interest requirements in Section 17A of the Act; (ii) support the 
objectives of OCC's owners and participants; and (iii) promote the 
effectiveness of OCC's risk management procedures.\7\ First, the TC 
Charter delineates a clear and transparent governance arrangement 
designed to increase the likelihood that OCC's technology processes 
work as expected (including those processes tied to the clearance and 
settlement of securities transactions). By increasing the likelihood 
that OCC's technology processes work as expected, the TC Charter also 
supports the objective of OCC's owners and participants to promote the 
prompt and accurate clearance and settlement of securities

[[Page 6916]]

transactions. Finally, the TC Charter promotes the effectiveness of 
OCC's risk management procedures by establishing a Board-level 
committee focused on reducing IT-related risk at OCC.
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    \7\ 17 CFR 240.17Ad-22(d)(8).
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III. 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.
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    \8\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-OCC-2015-018) be, and it 
hereby is, approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Robert W. Errett,
Deputy Secretary.
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    \10\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-02437 Filed 2-8-16; 8:45 am]
 BILLING CODE 8011-01-P