[Federal Register Volume 79, Number 57 (Tuesday, March 25, 2014)]
[Notices]
[Pages 16414-16416]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-06464]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71751; File No. SR-OCC-2014-04]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Make Administrative and Conforming Changes To Rename the Membership/
Risk Committee to Risk Committee, Reflect the Renaming of the Chairman 
Title to Executive Chairman, and Reflect That Two Management Directors 
Are on the Board of Directors

March 19, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on March 6, 2014, 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. OCC filed the proposed rule 
change pursuant to Section 19(b)(3)(A) \3\ of the Act and Rule 19b-
4(f)(3) \4\ thereunder, so that the proposal was effective upon filing 
with the Commission. The Commission is publishing this notice to 
solicit comments on the rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(3).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    OCC proposes to amend its By-Laws and Rules (collectively, 
``Rules'') to make administrative and/or conforming rule changes to 
reflect a proposal that (i) the ``Membership/Risk Committee'' would be 
renamed to ``Risk Committee,'' (ii) the title of ``Chairman'' has been 
replaced with the title of ``Executive Chairman'' and, (iii) two 
Management Directors are members of OCC's Board of Directors 
(``Board'').\5\
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    \5\ OCC filed, and the Commission approved, a proposed rule 
change concerning the creation of the role of Executive Chairman. 
See Securities Exchange Act Release No. 70076 (July 30, 2013), 78 FR 
47449 (August 5, 2013), (SR-OCC-2013-09). As part of SR-OCC-2013-09, 
OCC (1) separated the powers and duties previously combined in the 
office of Chairman into two offices, Executive Chairman and 
President; and (2) provided that the President, by virtue of such 
office, would be a Management Director. As a result, effective 
January 1, 2014, two Management Directors (i.e., the Executive 
Chairman and the President) are on the Board and the Board increased 
in size by one member to a total of 19 directors.

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[[Page 16415]]

    OCC also proposes to make conforming amendments to reflect the 
renaming of the Membership/Risk Committee and the current title of 
Executive Chairman, as applicable, to the following documents: The 
Membership/Risk Committee Charter (``RC Charter''), the Performance 
Committee Charter (``PC Charter'') and the Charter of OCC's Board of 
Directors (``Board Charter'') as well as the Fitness Standards for 
Directors, Clearing Members and Others (``Fitness Standards'') attached 
thereto.\6\ Additional conforming amendments are being made to the RC 
Charter, the PC Charter and the Board Charter (including the Fitness 
Standards) to further reflect the governance changes described in 
footnote 5.
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    \6\ OCC filed, and the Commission approved, certain clarifying 
amendments to the RC Charter and the PC Charter. See Securities 
Exchange Act Release No. 71627 (February 27, 2014), 79 FR 12538 
(March 5, 2014), (SR-OCC-2014-01). The RC Charter, PC Charter and 
Board Charter were initially approved by the Commission on December 
6, 2013. See Securities Exchange Act Release No. 71022 (December 6, 
2013), 78 FR 75659 (December 12, 2013), (SR-OCC-2013-17).
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II. Clearing Agency'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.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

(1) Purpose
    As discussed below, the purpose of this rule filing is to make 
administrative and/or conforming amendments to the Rules and to the 
charters of the Board and certain of its committees. These technical 
amendments reflect that: (1) The Membership/Risk Committee of the Board 
is proposed to be renamed to the Risk Committee; (2) the title of 
``Executive Chairman'' has replaced the title of ``Chairman;'' and (3) 
two Management Directors are members of the Board. Other conforming 
amendments are proposed as well.
Risk Committee Name Change
    OCC's Membership/Risk Committee is a committee of OCC's Board. The 
purpose of this committee, as stated in its charter, is to assist the 
Board in overseeing OCC's policies and processes for identifying and 
addressing strategic, operational and financial risks. OCC believes 
that the name ``Risk Committee'' more accurately reflects this purpose 
and is more commonly used for this type of committee by other 
organizations in the financial industry. The role the committee plays 
in assisting the Board in fulfilling its responsibilities, as described 
in OCC's Rules and the RC Charter, as well as the specific policies and 
procedures governing the membership and organization, scope of 
authority and specific functions and responsibilities of the committee 
has not changed. Accordingly, OCC proposes that existing references to 
Membership/Risk Committee would be replaced with Risk Committee in its 
Rules, the RC Charter and Board Charter (including the Fitness 
Standards).
Executive Chairman Name Change; Number of Management Directors
    On January 1, 2014, OCC implemented an approved change in its 
governance structure that: (1) Split the role of Chairman into two 
offices, the Executive Chairman and President; and (2) provided that 
the President, by virtue of election to that office, became a 
Management Director.\7\ OCC's Rules and the charters of the Board 
(including the Fitness Standards) and certain of its committees contain 
numerous references to the term ``Chairman.'' \8\ OCC proposes to 
replace existing references to Chairman with Executive Chairman in its 
Rules, the RC Charter, the PC Charter and the Board Charter (including 
the Fitness Standards). In connection with making such updates, OCC 
identified instances in which additional conforming changes to the 
Rules and charters of the Board and certain of its committees were 
necessary to reflect that there are now two Management Directors 
serving on OCC's Board.\9\ (As defined in OCC's By-Laws, the Executive 
Chairman and the President both are Management Directors.) The division 
of responsibility between the Executive Chairman and the President, as 
set forth in the By-Laws, is not affected by any of the proposed 
changes, which OCC believes increases the transparency of its 
governance arrangements by appropriately reflecting the title of the 
Executive Chairman and the number of Management Directors on its Board.
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    \7\ See supra note 5.
    \8\ These provisions typically define the Chairman's authority 
to take certain actions in certain circumstances. For example, 
Article III, Section 14 of OCC's By-Laws provides the Chairman with 
authority to call special Board meetings and OCC Rule 505 provides 
that the Chairman can extend the times that OCC is obligated to pay 
settlement amounts to clearing members.
    \9\ Supra note 5. The proposed changes to OCC By-Laws Article 
VIIA, Section 3 will correct an administrative oversight in filing 
SR-OCC-2013-09.
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(2) Statutory Basis
    OCC believes that the proposed rule change is consistent with 
Section 17A(b)(3)(F) of the Act \10\ because it will help ensure that 
OCC's governance structure is designed to protect investors and the 
public interest. The name ``Risk Committee'' more accurately reflects 
the role and function of the Membership/Risk Committee and the title 
``Executive Chairman'' more accurately reflects OCC's current 
governance structure. All other changes are made for comparable 
reasons. The proposed, administrative, rule change will promote, as 
required under Rule 17Ad-22(d)(8), a clear and transparent governance 
structure that will fulfill the public interests requirements in 
Section 17A of the Act, support the objectives of OCC's owners and 
participants, and promote the effectiveness of OCC's risk management 
procedures.\11\ The proposed rule change will also ensure that OCC's 
Rules, the RC Charter, the PC Charter and the Board Charter (including 
the Fitness Standards) remain accurate. The proposed rule change is not 
inconsistent with any rules of OCC, including those proposed to be 
amended.
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    \10\ 15 U.S.C. 78q-1(b)(3)(F).
    \11\ 17 CFR 240.17Ad-22(d)(8).
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(B) Clearing Agency's Statement on Burden on Competition

    OCC does not believe that the proposed rule change would impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.\12\ This proposed rule change 
will help ensure that OCC meets regulatory requirements that it has a 
clear and transparent governance structure by updating its Rules to 
reflect the adoption of a name for the Membership/Risk Committee that 
more accurately reflects its role and function at OCC as well as update 
OCC's Rules to reflect its current governance structure. To the extent 
OCC's clearing members are affected by the proposed rule change, OCC 
believes that, by adopting a more descriptive name for the Membership/
Risk Committee and updating OCC's Rules to reflect is current 
governance structure, all of its participants will have greater 
certainty concerning OCC's governance

[[Page 16416]]

arrangements and that such clarifications will facilitate the prompt 
and accurate settlement of securities transactions because OCC's Rules 
will be more accurate, transparent and readable. Accordingly, OCC does 
not believe that the proposed rule change will impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.
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    \12\ 15 U.S.C. 78q-1(b)(3)(I).
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(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants or Others

    Written comments on the proposed rule change 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

    Pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(3) \14\ thereunder, the proposed rule change is filed for 
immediate effectiveness as it solely concerns the administration of 
OCC. As described above, both the proposal to rename the Membership/
Risk Committee to ``Risk Committee'' as well as the proposal to update 
OCC's Rules to reflect the title of Executive Chairman and the number 
of Management Directors on its Board are administrative in nature. 
Notwithstanding the foregoing, implementation of this rule change will 
be delayed until this rule change is deemed certified under CFTC 
Regulation Sec.  40.6. At any time within 60 days of the filing of such 
rule change, the Commission summarily may temporarily suspend 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.\15\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(3).
    \15\ 15 U.S.C. 78s(b)(3)(C).
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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 email to [email protected]. Please include 
File Number SR-OCC-2014-04 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-OCC-2014-04. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method of submission. 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 Web site 
viewing and printing in the Commission's Public Reference Section, 100 
F Street NE., Washington, DC 20549, on official business days between 
the hours of 10:00 a.m. and 3:00 p.m. 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.theocc.com/components/docs/legal/rules_and_bylaws/sr_occ_14_04.pdf. 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-2014-04 and 
should be submitted on or before April 15, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-06464 Filed 3-24-14; 8:45 am]
BILLING CODE 8011-01-P