[Federal Register Volume 77, Number 167 (Tuesday, August 28, 2012)]
[Notices]
[Page 52082]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-21106]



[[Page 52082]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67706; File No. SR-OCC-2012-10]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Order Approving Proposed Rule Change To Amend OCC's By-Laws and Rules 
To Terminate OCC's Pledge Program

August 22, 2012.

I. Introduction

    On June 28, 2012, The Options Clearing Corporation (``OCC'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change SR-OCC-2012-10 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 July 16, 2012.\3\ The Commission received no 
comment letters. 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.
    \3\ Securities Exchange Act Release No. 34-67392 (July 10, 
2012), 77 FR 41835 (July 16, 2012).
---------------------------------------------------------------------------

II. Description

    The proposed rule change would terminate OCC's pledge program (the 
``Program''). Since implementation of the Program, only a limited 
number of clearing members participated and those that did participate 
did so on a sporadic basis. OCC is eliminating the Program in its 
entirety.
    The Program was adopted by OCC in the early 1980s to facilitate the 
ability of an OCC clearing member to finance positions by permitting 
the clearing member to pledge unsegregated long positions in cleared 
securities (other than securities futures) for a loan of cash. The 
Program was initially designed for, and used by, firms clearing market 
maker business; however, use of the Program diminished as market making 
operations were acquired by larger wire houses. While OCC occasionally 
receives an inquiry regarding the Program, it has been essentially 
dormant for some time. OCC recently reviewed the Program and determined 
that any potential benefits that OCC may gain through updating the 
Program are greatly offset by the resources required for such 
modernization. Accordingly, OCC is terminating the Program in its 
entirety.
    OCC is eliminating Rule 614 in its entirety as well as references 
to the Program and Rule 614 in its Rules and in its By-Laws.

 III. Discussion

    Section 19(b)(2)(C) of the Act \4\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if it 
finds that such 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 \5\ 
requires, among other things, that the rules of a clearing agency are 
designed to remove impediments to and perfect the mechanism of a 
national system for the prompt and accurate clearance and settlement of 
securities transactions.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The changes to OCC's Rules and By-Laws are designed to allow OCC to 
remove a rarely used operational function and focus its resources on 
core clearing operations. Moreover, the elimination of the Program will 
not materially affect clearing members given its limited and infrequent 
use. The rule change is not inconsistent with any rules of OCC, 
including any proposed to be amended. As a result, the rule change is 
consistent with the requirements of Section 17A(b)(3)(F) of the Act.

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 \6\ and the 
rules and regulations thereunder.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\7\, that the proposed rule change (File No. SR-OCC-2012-10) be, and 
hereby is, approved.\8\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(2).
    \8\ 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.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-21106 Filed 8-27-12; 8:45 am]
BILLING CODE 8011-01-P