[Federal Register Volume 91, Number 149 (Wednesday, August 5, 2026)]
[Notices]
[Pages 50579-50584]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-15828]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106018; File No. SR-OCC-2026-007]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of Proposed Rule Change by The Options Clearing
Corporation Concerning the Payment of Interest on Margin Cash
July 31, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on July 24, 2026, 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).
\2\ 17 CFR 240.19b-4.
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
This proposed rule change would (1) revise the Rules of The Options
Clearing Corporation (``OCC'') to provide for the payment of interest
by OCC to Clearing Members on margin cash (other than cash held in
accounts that are cross-margined (``X-M'') between OCC and CME) and
Clearing Fund cash; (2) enact changes to OCC's Cash and Investment
Management Policy to accommodate interest payments to Clearing Members;
(3) enact changes to OCC's Schedule of Fees that reflect a 10-basis-
point cash management fee charged on interest paid by OCC to Clearing
Members on applicable margin cash and Clearing Fund cash; and (4) make
certain conforming changes to OCC's Rules and Capital Management Policy
to effect the aforementioned changes, including changes to provide OCC
with the ability to safekeep margin cash deposited with respect to
securities customer positions
[[Page 50580]]
in a Federal Reserve Bank master account.
The proposed revisions to OCC's Rules, Cash and Investment
Management Policy, Schedule of Fees, and Capital Management Policy are
included [sic] as Exhibits 5A-5D, respectively. Material proposed to be
added to OCC's Rules, Cash and Investment Management Policy, Schedule
of Fees, and Capital Management Policy as currently in effect is marked
by underlining and material proposed to be deleted is marked by
strikethrough text.
All terms with initial capitalization not defined here have the
same meaning set forth in OCC's By-Laws and Rules.\3\
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\3\ OCC's By-Laws and Rules can be found on OCC's public
website: https://www.theocc.com/company-information/documents-and-archives/by-laws-and-rules.
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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
OCC is the sole clearing agency for standardized equity options
listed on national securities exchanges registered with the Securities
and Exchange Commission (``SEC'' or ``Commission''). In this capacity,
OCC is exposed to certain risks, including credit risk arising from its
relationships with the Clearing Members. In order to manage
counterparty credit risk, OCC requires Clearing Members to contribute
assets as margin. Clearing Members are permitted, but not required, to
contribute cash to satisfy their margin obligations. OCC further
requires Clearing Members to contribute cash to a Clearing Fund that is
available to be utilized under certain conditions, such as in the event
that Clearing Members default and do not satisfy their end-of-day
trades. Presently, OCC passes through the interest (less a 5-basis-
point cash management fee) it receives on the subset of Clearing Fund
cash held in OCC's Federal Reserve Bank account, but OCC does not pay
or pass through interest on cash held as margin. OCC proposes to pay
interest to Clearing Members who deposit margin cash at a rate based on
the Federal Reserve's Interest on Reserve Balances (``IORB'') less a
10-basis-point cash management fee, which would replace the current
cash management fee.
OCC proposes to pay interest on cash margin in order to incentivize
Clearing Members to hold margin in the form of cash, thereby
reinforcing OCC's liquidity through increased cash deposits. Over the
past year, Clearing Members have deposited, on average, about $2.5
billion in margin cash. This amount is small compared to the total
amount of margined assets, of which valued securities and government
securities make up by far the largest categories. OCC has observed that
since it began paying interest on Clearing Fund cash, some Clearing
Members deposit more Clearing Fund cash than is required under OCC's
Rules. OCC anticipates that paying interest on margin cash will
incentivize Clearing Members to increase their cash margin deposits,
given that Clearing Members already voluntarily contribute
substantially more cash (in excess of minimum requirements) for the
Clearing Fund, where interest is paid, but they do not do so for
margin, where no interest is currently paid. The expected increase in
cash deposits is also supported by OCC's experience receiving
substantially more Clearing Fund cash after beginning to pay interest
and by OCC's discussions with Clearing Members regarding this proposal.
Clearing Member responses to this proposed change are expected to vary,
with some increasing cash balances immediately and others adjusting
more gradually, if at all. Any increase in aggregate cash balances is
expected to occur over time, rather than immediately, and will continue
to be monitored as part of OCC's ongoing liquidity management
processes.
OCC also seeks to make this change in order to align its practices
with those of other central counterparties (``CCPs''), including CME
Group (``CME''),\4\ National Securities Clearing Corporation,\5\ Fixed
Income Clearing Corporation,\6\ and ICE Clearing,\7\ that compensate
members for cash balances held as margin. These CCPs typically pass
through a portion of investment earnings based on a policy rate (e.g.,
IORB minus a spread) or their own net investment yield minus a spread.
Paying interest on margin cash recognizes the opportunity cost Clearing
Members incur when posting cash and promotes equitable treatment across
collateral types.
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\4\ See CME Clearing Advisory Notice: Cash Interest Pass-Through
& Collateral Fees, Jan. 2, 2015 (``CME will also begin passing
through interest on US dollar cash posted as collateral''),
available at https://www.cmegroup.com/tools-information/lookups/advisories/clearing/Chadv14-393.html; Cash Interest Rates and Non-
Cash Collateral Fees (describing interest rates on cash), available
at https://www.cmegroup.com/solutions/clearing/financial-and-collateral-management/cash-interest-rates-and-non-cash-collateral-fees.html.
\5\ National Securities Clearing Corporation Rule 4 Sec. 2
(``Each Member shall be entitled to any interest earned or paid on
Clearing Fund cash deposits.''), available at https://www.dtcc.com/
~/media/Files/Downloads/legal/rules/nscc_rules.pdf; Addendum A Sec.
V.F (describing the Clearing Fund Maintenance Fee).
\6\ Fixed Income Clearing Corporation Rule 4 Sec. 3a (``Each
Netting Member shall be entitled to any interest earned or paid on
Clearing Fund cash deposits. Any interest earned on Segregated
Customer Margin or Cross-Margining Customer Margin consisting of
cash shall be paid to the Netting Member for the benefit of, and as
agent for, its Segregated Indirect Participants or Cross-Margining
Customers, respectively.''), available at https://www.dtcc.com/~/
media/Files/Downloads/legal/rules/ficc_gov_rules.pdf; FICC Fee
Schedule (describing Clearing Fund Maintenance Fee), available at
https://www.dtcc.com/-/media/Files/Downloads/Clearing-Services/FICC/GOV/FICC-GOVfeeschedule.pdf.
\7\ ICE Clear Credit Rule 401(g)(``ICE Clear Credit shall . . .
pay or charge interest on any cash Margin (other than Mark-to-Market
Margin) in such Participant's Margin Accounts''), available at
https://www.ice.com/publicdocs/clear_credit/ICE_Clear_Credit_Rules.pdf; ICE Clear Credit Fee Schedule
(describing portion of interest retained by ICE Clear Credit) at 5,
available at https://www.ice.com/publicdocs/clear_credit/ICE_Clear_Credit_Collateral_Management.pdf.
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To facilitate this payment of interest, OCC further proposes to
amend its rules to allow it to safekeep margin cash, including margin
cash deposited in respect of securities customer accounts, in a Federal
Reserve Bank account, where it will earn interest at the IORB rate.
Currently, OCC's use of the Federal Reserve Bank account is limited to
the safekeeping of Clearing Members' Clearing Fund deposits and non-
customer margin, pursuant to current Rule 604B. Over the past year OCC
has held, on average, about $700 million in non-customer margin cash in
the Federal Reserve Bank account. OCC has held the remainder of margin
cash deposits at commercial banks (about $800 million) and in reverse
repo investments (about $1 billion). This proposed rule change would
expand the use of the Federal Reserve Bank account to include the
safekeeping of securities customer margin cash, which would allow OCC
to pay interest on such funds.\8\ If the change is approved, OCC
[[Page 50581]]
anticipates that it would be able to deposit much of the remaining $1.8
billion in margin cash to the Federal Reserve Bank account, and that
over time Clearing Members would choose to post more cash as margin, in
lieu of government securities and/or valued securities. As such, OCC's
proposal is designed to improve capital efficiency of its Clearing
Members while enhancing OCC's custody and liquidity risk management
through the use of Federal Reserve Bank services.
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\8\ OCC would establish a subaccount at the Federal Reserve Bank
under the master account to separately account for customer margin.
OCC already uses a similar subaccount for non-customer margin at the
Federal Reserve Bank. And at the commercial banks where OCC deposits
margin cash, OCC utilizes separate subaccounts within the same
primary account to hold customer and non-customer margin cash.
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1. Purpose
OCC proposes to (1) pay Clearing Members interest on cash held as
margin (other than cash held in X-M accounts) for the first time; (2)
pay Clearing Members interest on all cash deposited to the Clearing
Fund; and (3) adjust the cash management fee to 10 basis points on
applicable margin cash and Clearing Fund cash. Interest would be paid
at a rate equal to the IORB less the cash management fee, with interest
payments to be made on a monthly basis. OCC further proposes to amend
its rules to allow it to safekeep securities customer margin in a
Federal Reserve Bank master account.
Proposed Change
a. Changes to OCC Rules To Permit Payment of Interest on Clearing
Member Margin Cash and Clearing Fund Cash
OCC permits Clearing Members to deposit certain assets, including
cash, to satisfy Clearing Fund contribution requirements and margin
requirements. Under existing Rule 604(a), any interest received on
Clearing Member margin cash belongs to OCC and is not passed through to
Clearing Members. On the other hand, Clearing Members do currently
receive interest on their cash contributions to the Clearing Fund.
Under Rule 1002(c), the interest earned on the portion of Clearing Fund
cash deposits OCC holds at the Federal Reserve Bank, less a 5-basis-
point cash management fee to cover OCC's administrative costs, accrues
to the benefit of Clearing Members based on each Clearing Member's pro
rata share of Clearing Fund cash deposits. OCC does not currently pay
or pass through any interest earned on the portion of the Clearing Fund
cash deposits held outside of the Federal Reserve Bank.
OCC proposes to pay Clearing Members interest at the IORB rate,
less a 10-basis-point cash management fee described below, on all cash,
other than cash held in OCC/CME X-M accounts,\9\ contributed by
Clearing Members either as margin or to the Clearing Fund, calculated
daily.\10\ To implement this change, OCC proposes to add a new subpart
to the Rules, Rule 604B(g), to permit it to pay interest on margin
cash.\11\ OCC also proposes to revise Rule 1002(c) to delete the prior
practice of passing through interest on Clearing Fund cash held on
deposit at the Federal Reserve Bank, and to create new Rule 1002(d) to
permit it to pay interest at the IORB rate, less a cash management fee,
on Clearing Fund cash. Both revisions apply only when Clearing Members
have provided OCC with all tax documentation that OCC may from time to
time require in order to effectuate such payment.
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\9\ As defined in the OCC By-Laws, X-M accounts are Clearing
Member accounts in which positions subject to cross-margining
treatment are maintained. Margin cash held in X-M accounts must be
deposited in joint accounts at a depository in accordance with OCC's
Cross Margin Agreement with CME. Accordingly, such funds are not
available to be deposited in a Federal Reserve Bank account at which
they would earn interest at the IORB rate.
\10\ Under proposed Rule 1002(c)(2), OCC would reserve the right
to charge the Clearing Fund to cover any unpaid Federal Reserve Bank
service charges in the event that the administrative fee is
insufficient to cover service charges imposed on the Federal Reserve
Bank account. As discussed below, the only fee owed to the Federal
Reserve Bank is a monthly service charge, which is approximately
$3,000 per month. For further details, see the discussion in
subsection 1.e of Item II.(A), below.
\11\ Current Rule 604B(g), Investment of Margin Cash, would
hereafter be reclassified as 604B(h).
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b. Changes to the Cash and Investment Management Policy To Accommodate
Interest Payments to Clearing Members
In order to accommodate the payment of interest income, OCC would
also amend its Cash and Investment Management Policy to state that OCC
shall pay interest, less a cash management fee, to Clearing Members on
all margin and Clearing Fund cash deposits other than cash held in OCC/
CME X-M accounts. The Cash and Investment Management Policy would also
be amended to make clear that interest earned from outside parties,
e.g., the Federal Reserve Bank, on margin and Clearing Fund cash
investments belongs to OCC. OCC intends to utilize these funds to pay
interest to Clearing Members, but OCC would pay Clearing Members
interest on their margin and Clearing Fund cash at the IORB rate less
the 10-basis-point cash management fee even if OCC were to earn less in
interest from outside parties.
c. Changes to the Schedule of Fees To Reflect the New Cash Management
Fee
OCC also proposes to amend the Schedule of Fees to reflect the 10-
basis-point cash management fee charged on Clearing Members' cash
balance held as margin or in the Clearing Fund. The amended Schedule of
Fees reflects a 10-basis-point fee on each Clearing Member's average
daily cash balance held in the Clearing Fund or held as margin (other
than cash held in OCC/CME X-M accounts). This fee change reflects the
proposal that OCC pay interest on all Clearing Member margin and
Clearing Fund cash, rather than only the portion of the cash held in
the Federal Reserve Bank account.
d. Changes to OCC Rules To Allow OCC To Safekeep Cash Margin at a
Federal Reserve Bank
In order to pay interest on margin cash deposits, other than cash
held in an OCC/CME X-M account, at the IORB rate less a cash management
fee, OCC would need to be able to deposit cash margin in a Federal
Reserve Bank account. The only Federal Reserve Bank account for which
OCC is approved to deposit margin funds, other than futures customer
margin funds required to be segregated under CFTC regulations, is
currently limited by OCC Rule 604B to holding non-customer margin and
Clearing Fund deposits. OCC proposes to amend Rule 604B and
Interpretation & Policy .04 to Rule 1002 so OCC may also safekeep
securities customer margin funds in this Federal Reserve Bank account.
Specifically, OCC proposes to amend Rule 604B(b)(2), which provides
requirements with respect to OCC's approval of accounts at commercial
banks for the holding and the titling of such accounts, to exclude all
margin assets held at a Federal Reserve Bank, as opposed to only non-
customer margin assets as Rule 604B(b)(2)(B)(iii) currently provides.
Federal Reserve Bank accounts are exempt from titling requirements
under OCC's Rules because OCC's Federal Reserve Bank account is not
specifically titled as a margin account, like OCC's accounts at
commercial banks are. The exemption of Federal Reserve Bank accounts is
also consistent with exemptions granted by the CFTC to certain
requirements of Regulation 1.20 with respect to Federal Reserve Bank
accounts that hold futures customer funds.\12\ While Federal Reserve
Bank accounts are exempt from OCC's account title requirements, OCC has
communicated to the Federal Reserve Bank that the accounts hold
[[Page 50582]]
margin funds. That margin funds may be and are held in the account is
reflected in the account authorization from the Federal Reserve Board
of Governors, which authorizes OCC to maintain margin funds in such
accounts, as well as in the titling of the existing subaccount that OCC
has established to hold non-customer margin.
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\12\ 17 CFR 1.20(g)(4)(i) (derivatives clearing organizations
need not obtain a written acknowledgement from the Federal Reserve
Bank specifying that the account will hold customer funds); 81 FR
53266 (Aug. 12, 2016) (final rule exempting accounts at the Federal
Reserve Bank from providing written acknowledgement).
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OCC would also amend Interpretation & Policy .04 to OCC Rule 1002,
which provides a similar exception to the general requirement that
Clearing Fund cash contributions be deposited by OCC in separate
accounts at an approved depository for Clearing Fund contributions. The
current exception is limited to maintaining Clearing Fund cash
requirements with non-customer margin. That exception would be expanded
to allow OCC to deposit Clearing Fund cash in an account at the Federal
Reserve Bank along with margin assets other than cash derived from
margin deposited in respect of segregated futures accounts, which must
be segregated in accordance with CFTC Regulation 1.20.\13\
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\13\ 17 CFR 1.20(a).
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e. Changes to OCC Rules and Capital Management Policy To Ensure Payment
of Federal Reserve Bank Access Fees
OCC also proposes to amend its Rules and the Capital Management
Policy to help ensure that margin funds deposited at the Federal
Reserve Bank would never be subject to a Federal Reserve Bank lien. The
account agreement for the Federal Reserve Bank account in which OCC
would deposit margin assets provides the Federal Reserve Bank with a
lien on OCC's ``right, title and interest in property'' \14\ in the
account to the extent of any unpaid fees. OCC understands that this
provision is not unique to the account agreement with OCC, and is
consistent with the Federal Reserve Bank's form account agreements used
for commercial banks, its standard operating procedure,\15\ and
Regulation J of the Federal Reserve Board of Governors.\16\ In OCC's
case, the only fee owed to the Federal Reserve Bank is a monthly
service charge, which is approximately $3,000 per month.\17\
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\14\ OCC maintains a lien, not an ownership interest, in the
property that would be deposited in the Federal Reserve Bank
account. See OCC By-Law Article VI, Section 3 (granting OCC a
general lien on margin held in firm accounts and restricted lien on
margin held in certain other accounts, including a customers'
account). Accordingly, OCC does not believe this provision would
give the Federal Reserve any greater right in the property than
OCC's right, which is a lien to secure obligations under OCC's By-
Laws and Rules, not for use to cover general business obligations of
OCC.
\15\ See Operating Circular 1 (Account Relationships), Section
5.3 (effective Sept. 1, 2023), available at https://www.frbservices.org/binaries/content/assets/crsocms/resources/rules-regulations/090123-operating-circular-1.pdf.
\16\ See 12 CFR 210.28(b)(3) (``To secure any overdraft, as well
as any other obligation due or to become due to its Federal Reserve
Bank, each sender, by sending a payment order to a Federal Reserve
Bank that is accepted by the Federal Reserve Bank, grants to the
Federal Reserve Bank a security interest in all of the sender's
assets in the possession or control of, or held for the account of,
the Federal Reserve Bank. The security interest attaches when an
overdraft, or any other obligation to the Federal Reserve Bank,
becomes due and payable.'').
\17\ OCC cannot incur overdraft fees on the account because it
does not have borrowing privileges at the Federal Reserve and OCC's
Treasury unit maintains controls to ensure that OCC does not
overdraft the account.
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OCC does not believe there is a plausible scenario in which access
to or return of margin assets would be interrupted by an unpaid service
charge. Pursuant to OCC's Capital Management Policy, approved by the
Commission as an OCC rule,\18\ OCC maintains liquid net assets funded
by equity of $555.2 million (as of December 31, 2025), and retains the
ability to charge its Clearing Members an Operational Loss Fee of up to
$219 million if capital drops below OCC's Target Capital Requirement,
currently $286 million. OCC also maintains funds exclusively to cover
credit losses or liquidity shortfalls, called the Minimum Corporate
Contribution. For 2026 the Minimum Corporate Contribution is $67
million, and OCC proposes that the definition of Minimum Corporate
Contribution in its Rules be amended to make clear that these funds may
be used to cover unpaid Federal Reserve Bank service charges. Further,
even if OCC's working capital were effectively zero, the 10-basis-point
cash management fee OCC proposes on cash held in the Federal Reserve
Bank account would be more than sufficient to cover the service charge.
Assuming OCC was operating at the $3 billion Clearing Fund Cash
Requirement under OCC Rule 1002(a)(i), the 0.10% monthly cash
management fee due to OCC on Clearing Fund cash alone in the Federal
Reserve Bank account would be $250,000, more than 83 times the amount
needed to cover the monthly service charge.
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\18\ See Securities Exchange Act Release No. 92038 (May 27,
2021); 86 FR 29861 (June 3, 2021) (SR-OCC-2021-003) (order approving
changes to the Capital Management Policy); 88029 (Jan. 24, 2020), 85
FR 5500 (Jan. 30, 2020) (SR-OCC-2019-007) (order approving the
Capital Management Policy).
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In order to further ensure that a lien would never attach to margin
assets due to unpaid service charges, OCC proposes certain amendments
to its rules to allow for the use of OCC's Minimum Corporate
Contribution and Clearing Fund assets to cover unpaid fees in the
extremely unlikely event that OCC did not have sufficient liquid net
assets funded by equity to cover a $3,000 service charge. Specifically,
OCC proposes to amend the definition of Minimum Corporate Contribution
in Rule 101 to state that these funds may be used to cover unpaid
Federal Reserve Bank service charges. OCC also proposes a similar
amendment to the definition of Minimum Corporate Contribution contained
in the Capital Management Policy.
f. Other Conforming Changes to OCC Rules
In addition, OCC would also make certain conforming changes to
other provisions of Rule 604B and Rule 1006. First, OCC proposes to
move paragraphs (i) and (j) of Rule 1006--which concern OCC's general
lien on Clearing Fund contributions and OCC's maintenance of Government
securities deposited to satisfy Clearing Fund requirements as a
securities intermediary--to paragraphs (k) and (l) of Rule 1002. Rule
1006 is principally concerned with OCC's uses of the Clearing Fund. OCC
believes that provisions related to OCC's interest in and the
maintenance of the Clearing Fund contributions are better located in
Rule 1002, which addresses the manner in which Clearing Fund
contributions are deposited with OCC.
Second, OCC proposes to delete Rule 604B(c)(2), which currently
provides OCC with authority to commingle non-customer margin funds with
cash Clearing Fund contributions. This provision is duplicative of
Interpretation & Policy .04 to OCC Rule 1002, as described above. In
addition, with respect to the general requirement that margin funds
must be held in accounts designated as margin accounts, Rule 604B(c)(2)
is unnecessary because Rule 604B(b)(2)(B)(iii) already exempts margin
funds held at a Federal Reserve Bank from that requirement.
Accordingly, OCC proposes to delete Rule 604B(c)(2) and the cross
references to that provision in OCC Rule 604(b)(2)(iii) and
Interpretation and Policy .04 to OCC Rule 1002. In conjunction with
that change, OCC also proposes to amend Rule 604B(c)(1) to make clear
that OCC will not commingle margin assets with or use margin assets as
its working capital. This revised language maintains OCC's ability to
safekeep margin cash in a Federal Reserve Bank account with proceeds
from OCC's Commercial Paper Program, which is not OCC's working capital
and is maintained exclusively to cover losses or liquidity shortfalls
in the same manner as Clearing Fund contributions.
[[Page 50583]]
2. Statutory Basis
OCC believes the proposed rule change is consistent with Section
17A of the Exchange Act \19\ and Rule 17ad-22(e)(7) \20\ thereunder.
Section 17A(b)(3)(F) of the Exchange Act \21\ requires, among other
things, that the rules of a clearing agency be designed to promote the
prompt and accurate clearance and settlement of securities transactions
and, in general, to protect investors and the public interest. The
proposed rule change is designed to improve the resiliency of OCC's
liquidity resources by incentivizing Clearing Members to deposit cash
to satisfy their margin requirements. The proposed rule change is also
designed to improve the position of OCC's Clearing Members by allowing
them to earn interest on the cash that they deposit as margin. The
proposed rule change also adjusts the amount of interest Clearing
Members will receive on cash contributed to the Clearing Fund. This
change is designed to provide certainty to Clearing Members that they
will earn interest on the full amount of cash they contribute to the
Clearing Fund, and to fully align the treatment of margin cash and
Clearing Fund cash in the interests of consistency and operational
efficiency. In this regard, OCC believes the proposed rule change is
designed to promote the prompt and accurate clearance and settlement of
securities transactions and to protect investors and the public
interest, in accordance with the requirements of Section 17A(b)(3)(F)
of the Act.\22\
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\19\ 15 U.S.C. 78q-1.
\20\ 17 CFR 240.17ad-22(e)(7).
\21\ 15 U.S.C. 78q-1(b)(3)(F).
\22\ Id.
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The revisions to allow the payment of interest on margin cash are
consistent with Rule 17ad-22(e)(7),\23\ which requires OCC to establish
and enforce written policies and procedures reasonably designed to
effectively measure, monitor, and manage its liquidity risk by
maintaining sufficient liquid resources to effect settlement of payment
obligations with a high degree of confidence under a wide range of
foreseeable stress scenarios that includes Clearing Member default. The
payment of interest on margin cash is intended to incentivize Clearing
Members to deposit more cash to satisfy their margin requirements.
Increased margin cash deposits would improve OCC's ability to manage
its liquidity risk in the event of a Clearing Member default because
cash is the most liquid marginable asset. And OCC's use of the Federal
Reserve Bank account to achieve this objective is particularly
consistent with Rule 17ad-22(e)(7)(iii),\24\ which requires OCC to use
its access to accounts and services at the Federal Reserve Bank when
available to enhance its management of liquidity risk.
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\23\ 17 CFR 240.17ad-22(e)(7)(i).
\24\ 17 CFR 240.17ad-22(e)(7)(iii).
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The revisions to allow for customer margin cash to be deposited for
safekeeping in a Federal Reserve Bank account with non-customer margin
cash and Clearing Fund cash are also consistent with Rule 17ad-
22(e)(16),\25\ which requires OCC to establish and enforce written
policies and procedures reasonably designed to safeguard its own and
its participants' assets, minimize the risk of loss and delay in access
to those assets, and invest the assets in instruments with minimal
credit, market, and liquidity risks. An account at a Federal Reserve
Bank is likely the safest possible place to hold customer margin cash.
That the same account would also hold non-customer margin and Clearing
Fund cash should have no impact on the safety and accessibility of
customer margin cash. OCC would establish a subaccount at the Federal
Reserve Bank under the master account to separately account for the
customer margin. OCC already has a similar subaccount for non-customer
margin, and at commercial banks--where the customer margin is currently
held--OCC utilizes separate subaccounts within the same primary account
to hold customer and non-customer margin cash. And OCC proposes changes
to its Rules that would virtually eliminate any impact of a Federal
Reserve Bank lien, as described above.
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\25\ 17 CFR 240.17ad-22(e)(16).
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(B) Clearing Agency's Statement on Burden on Competition
Section 17A(b)(3)(I) of the Act \26\ requires that the rules of a
clearing agency not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act. OCC does not
believe the proposed rule change would have any impact or impose any
burden on competition. The proposed rule change is designed to revise
Rules 604B(g) and 1002(c) and (d) to enable OCC to pay interest on cash
held as Clearing Member margin or in the Clearing Fund. The proposed
rule change would apply equally to all Clearing Members and would not
affect Clearing Members' access to OCC's services or disadvantage or
favor any particular user in relationship to another user. As such, OCC
believes that the proposed changes would not have any impact or impose
any burden on competition.
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\26\ 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 were not and are not intended to be solicited with
respect to the proposed change and none have been received. OCC will
notify the Commission of any written comments received by OCC.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate 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 or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
The proposal shall not take effect until all regulatory actions
required with respect to the proposal are completed.
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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-OCC-2026-007 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-2026-007. 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. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/
[[Page 50584]]
rules/sro.shtml). Copies of such filing will be available for
inspection and copying at the principal office of OCC and on OCC's
website at https://www.theocc.com/Company-Information/Documents-and-
Archives/By-Laws-and-Rules.
Do not include personal identifiable information in submissions;
you should submit only information that you wish to make available
publicly. We may redact in part or withhold entirely from publication
submitted material that is obscene or subject to copyright protection.
All submissions should refer to File Number SR-OCC-2026-007 and
should be submitted on or before August 26, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-15828 Filed 8-4-26; 8:45 am]
BILLING CODE 8011-01-P