[Federal Register Volume 70, Number 147 (Tuesday, August 2, 2005)]
[Notices]
[Pages 44414-44415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4111]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52125; File No. SR-OCC-2005-09]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to OCC's Data Distribution Service

July 26, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 24, 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. 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).
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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 adopt a new DDS 
Supplement to support the conversion of OCC's data distribution service 
(``DDS'') \2\ to the technology used by OCC's new clearing system, 
ENCORE.
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    \2\ OCC offers certain ancillary services to clearing members 
that are not set forth in OCC's By-laws and Rules. Examples of such 
services include different channels by which clearing members may 
elect to receive data processed by OCC or to communicate 
instructions to OCC.
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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.\3\
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    \3\ 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

    An OCC clearing member may subscribe to DDS in order to receive in 
a machine readable format a copy of data processed by OCC that is 
proprietary to that clearing member (e.g., position and post-trade 
entries) and that is ``non-proprietary'' (i.e., data not specific to 
the clearing member) produced by OCC, including series, prices, and 
other information. A subscribing clearing member may instruct OCC to 
provide data to its managing clearing member or to its service bureau. 
Parties that are not clearing members may also subscribe to DDS in 
order to receive certain non-proprietary data. Data provided as a part 
of ENCORE DDS is organized into different ``message types'' that a 
subscriber may elect to receive.
    ENCORE DDS has been developed to provide a secure, flexible 
framework for distributing messages to subscribers pursuant to their 
elections.\4\ As is the case today, ENCORE DDS subscribers will be 
permitted to choose whether to access messages from OCC servers or to 
directly receive message transmissions from OCC. Subscribers may elect 
to receive messages on a real time basis (a new DDS offering) and/or on 
a batch basis (a current DDS offering) although not all message types 
will be made available under both methods.\5\ For subscribers electing 
to receive DDS on a real time basis, an ``end of day'' message will 
alert them not to expect any further information from OCC for that day. 
ENCORE DDS will be available to subscribers through leased lines, the 
internet, or both. OCC will support the current DDS format and the 
ENCORE DDS format during a transition period.
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    \4\ Fees charged for DDS to clearing members and non-clearing 
members (as set forth in OCC's Schedule of Fees) will not be changed 
at this time.
    \5\ For example, price messages currently are expected to be 
only offered on a batch basis.
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    The DDS Supplement is structured to fit within OCC's existing 
framework for the Agreement for OCC Services and will replace the 
current form supplement between clearing members and OCC.\6\ The DDS 
Supplement's provisions are generally self-explanatory, and they are 
intended to describe the respective responsibilities of OCC and the 
subscribing clearing member. Section 1 describes DDS and, if 
applicable, permits a clearing member to direct OCC to deliver messages 
to the clearing member's managing clearing member or service bureau, as 
applicable. Section 2 sets forth criteria associated with subscribing 
to DDS. Sections 3 through 5 set forth further responsibilities of the 
parties including limitations on warranties, liability,\7\ and 
indemnification. Section 6 contains general terms regarding survival of 
certain provisions. Annex I provides an overview of message types 
offered as a part of ENCORE DDS. Annex II is a form which permits a 
clearing member to provide contact information regarding its managing 
clearing member and a certification of the managing clearing member 
with respect to DDS. Annex III is a comparable form for service 
bureaus.
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    \6\ The DDS Supplement to be entered into between OCC and 
clearing members subscribing to DDS is attached to the filing of 
proposed rule change as Exhibit 5.
    \7\ The limitation of liability provision contained in the DDS 
Supplement is based on the comparable provisions of the Supplement 
for Internet Access, which was approved by the Commission in 
Securities Exchange Act Release No. 46152 (July 1, 2002) 67 FR 45166 
(July 8, 2002) [File No. SR-OCC-2001-09]. OCC has filed a proposed 
rule change with the Commission to establish a standard of care by 
which any potential liability of OCC to its clearing members would 
be judged [File No. SR-OCC-2003-13]. If approved, that proposed rule 
change would amend supplements to the Agreement for OCC Services to 
the extent a standard of care is established therein to reference 
the standard as it would be set forth in OCC's By-laws.
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    OCC believes that the proposed change is consistent with Section 
17A of the Act because ENCORE DDS provides a more efficient and 
effective means to furnish machine readable clearing-related data to 
clearing members. 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.

[[Page 44415]]

(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 rule change has become effective pursuant to Section 
19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-4(f)(4) \9\ promulgated 
thereunder because the proposal effects a change in an existing service 
of OCC that (A) does not adversely affect the safeguarding of 
securities or funds in the custody or control of OCC or for which it is 
responsible and (B) does not significantly affect the respective rights 
or obligations of OCC or persons using the service. At any time within 
sixty 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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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(4).
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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 [email protected]. Please include 
File Number SR-OCC-2005-09 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 20549-0609.
    All submissions should refer to File Number SR-OCC-2005-09. 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-2005-09 
and should be submitted on or before August 23, 2005.
    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4111 Filed 8-1-05; 8:45 am]
BILLING CODE 8010-01-P