
[Federal Register: July 29, 2010 (Volume 75, Number 145)]
[Notices]               
[Page 44833-44835]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29jy10-94]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62566; File No. SR-OCC-2010-10]

 
Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend OCC's By-Laws and Rules To Change Its Method of Holding Certain 
Securities Pledged by Members To Satisfy Margin and Clearing Fund 
Obligations

July 23, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ notice is hereby given that on July 1, 2010, 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 
substantially by OCC. OCC filed the proposed rule change pursuant to 
Section 19(b)(3)(A)(iii) of the Act \2\ and Rule 19b-4(f)(4) \3\ 
thereunder so that the proposal was effective upon filing with the 
Commission. The Commission is publishing this notice to solicit

[[Page 44834]]

comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \3\ 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The proposed rule change would amend OCC's By-Laws and Rules to 
change its method of holding certain securities pledged by Members to 
satisfy margin and clearing fund obligations.

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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The proposed rule change would amend OCC's By-Laws and Rules to 
change OCC's method of holding certain securities pledged by Members to 
satisfy margin and clearing fund obligations. Securities issued by the 
United States or Canadian governments and securities issued by U.S. 
government-sponsored enterprises (``Government Securities'') are among 
the securities OCC's Members may deposit to satisfy margin and clearing 
fund obligations. OCC currently permits Members to satisfy such 
obligations by means of a paper pledge agreement or an electronic 
pledge system of a depository approved by OCC.
    Instead of continuing to use these types of Government Securities 
pledges, OCC proposes taking direct control of Government Securities 
that Members pledge to satisfy margin and clearing fund obligations. 
OCC would require that such pledged securities be held in an account in 
the name of OCC and The EDP Pledge System would be retained during a 
transition period designated by OCC.
    OCC believes this proposed change to how margin and clearing fund 
deposits are held would enhance OCC's control of such securities and 
would allow OCC to access such securities more efficiently. OCC intends 
for the proposed change to relate only to the mechanism through which 
the securities would be held and not to affect the respective rights of 
OCC or its Members in the deposited securities. The general lien 
granted under new paragraph (b) of Article VIII, Section 1 of OCC's By-
Laws, would replace the security interests created through the pledge 
mechanisms where securities are held directly in OCC's name. To 
preserve flexibility for OCC to be able to respond to unanticipated 
circumstances, the amendment would allow OCC to specify a different 
method of accepting margin and clearing fund deposits if necessary.
    The proposed change would also provide clarification regarding how 
OCC would credit foreign currency toward clearing fund and margin 
requirements. OCC does not presently accept foreign currency either as 
clearing fund contributions or margin deposits. However, because 
Canadian government securities are included in the definition of 
Government Securities OCC could receive and could potentially hold 
Canadian dollars it receives as interest on or as proceeds from those 
securities. When determining the U.S. dollar value of such foreign 
currency, OCC would conduct its valuations in the same way that it has 
previously valued margin deposits of assets that are denominated in a 
foreign currency. This involves using such exchange rates and 
``haircuts'' as OCC deems appropriate. To reflect this policy, OCC is 
proposing a minor amendment to Rule 604(e) as well as adding a similar 
provision in Section 3 of Article VIII of the By-Laws.
    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(iii) of the Act \4\ and Rule 19b-4(f)(4) \5\ thereunder 
because it effects a change in an existing service of a registered 
clearing agency that does not adversely affect the safeguarding of 
securities or funds in the custody or control of the clearing agency or 
for which it is responsible and does not significantly affect the 
respective rights or obligations of the clearing agency or persons 
using the service. At any time within 60 days of the filing of the 
proposed rule change, the Commission may summarily abrogate such rule 
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.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \5\ 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------

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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    OCC has not solicited or received written comments relating to the 
proposed rule change. OCC will notify the Commission of any written 
comments it receives.

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 \6\ and Rule 19b-4(f)(4) \7\ thereunder 
because it effects a change in an existing service of a registered 
clearing agency that does not adversely affect the safeguarding of 
securities or funds in the custody or control of the clearing agency or 
for which it is responsible and does not significantly affect the 
respective rights or obligations of the clearing agency or persons 
using the service. At any time within 60 days of the filing of the 
proposed rule change, the Commission may summarily abrogate such rule 
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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b4-(f)(4).
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include 
File Number SR-OCC-2010-10 on the subject line.
Paper Comments
     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File No. SR-OCC-2010-10. 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

[[Page 44835]]

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 Room, 100 F Street, NE., Washington, DC 20549, on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of such 
filing also will be available for inspection and copying at OCC's 
principal office and on OCC's Web site at http://www.theocc.com/about/
publications/bylaws.jsp. 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 No. SR-
OCC-2010-10 and should be submitted on or before August 19, 2010.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-18607 Filed 7-28-10; 8:45 am]
BILLING CODE 8010-01-P

