
[Federal Register Volume 77, Number 182 (Wednesday, September 19, 2012)]
[Notices]
[Pages 58194-58195]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-23039]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67851; File No. SR-OCC-2012-15]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of Proposed Rule Change Relating to Financial 
Reporting by Canadian Clearing Members

September 13, 2012.
    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 September 5, 2012, 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. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule would make technical ``housekeeping'' changes to 
OCC's By-Laws and Rules relating to financial reporting by Canadian 
clearing members to reflect the Investment Industry Regulatory 
Organization of Canada's (``IIROC'') adoption of the International 
Financial Reporting Standards.

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

    In its filing with the Commission, the self-regulatory organization 
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. The self-regulatory organization 
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 purpose of this proposed rule change is to make technical 
``housekeeping'' changes to OCC's By-Laws and Rules relating to 
financial reporting by Canadian clearing members to reflect the 
Investment Industry Regulatory Organization of Canada's (``IIROC'') 
adoption of the International Financial Reporting Standards.
    OCC Rule 310, through cross-references to interpretive provisions 
of OCC Rule 306--Financial Reports and OCC Rule 308-Audits, allows 
Canadian clearing members to elect to file their Joint Regulatory 
Financial Questionnaire and Reports (``JRFQR'') with OCC, instead of 
filing SEC Form X-17A-5, to discharge their financial reporting 
requirements to OCC. In addition, other provisions of OCC's rules 
(Rules 301, 302, 303, 304, 306 and 308) reference information Canadian 
clearing members report on their JRFQR. IIROC, the primary regulator of 
Canada's securities industry, replaced the JRFQR with ``Form 1'' of the 
International Financial Reporting Standards. OCC proposes to replace 
references to the JRFQR within its By-Laws and Rules with references to 
``Form 1.'' \3\ OCC also proposes to add an Interpretation and Policy 
to Rule 304 in response to a change in how IIROC requires regulated 
entities to report capital withdrawals.
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    \3\ OCC does not propose to amend Rule 310 since it does not 
specifically use the term, ``Joint Regulatory Financial 
Questionnaire and Reports.''
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    OCC, as part of its financial surveillance program, requires 
Canadian clearing members to submit their JRFQR, a financial report 
similar to SEC Form X-17A-5, to OCC at the end of each month. OCC also 
monitors the financial health of such clearing members using the 
capital levels reported on their JRFQRs. In 2011, IIROC replaced the 
JRFQR with Form 1. Among other things, Form 1 aligns the reporting of 
certain financial liabilities to U.S. Generally Accepted Accounting 
Principles. Canadian clearing members that use Form 1 report the same, 
and in some cases more conservative, amounts of regulatory capital to 
OCC as they had using the JRFQR. Moreover, OCC believes that the change 
does not impair OCC's ability to conduct diligent financial 
surveillance of Canadian clearing members. Accordingly, OCC proposes to 
replace references to the ``JRFQR'' within its By-Laws and Rules with 
references to ``Form 1.''
    The IIROC also altered how its regulated entities report capital 
withdrawals. IIROC previously required capital withdrawals to be 
reported on monthly financial reports; however, IIROC amended its 
standards and now requires firms to obtain approval for withdrawals of 
capital following notice thereof. OCC had, when applicable, adjusted 
Canadian clearing member's reported capital levels in light of 
withdrawals reflected in financial reports in order to determine if the 
firm's capital falls within OCC's standards. With the change 
implemented by IIROC, that information is no longer available to OCC 
via monthly financial reports submitted by Canadian clearing members. 
To ensure it is aware of such capital withdrawals, OCC proposes to add 
an Interpretation and Policy to Rule 304 which would require Canadian 
clearing members to submit capital withdrawal notifications to OCC when 
such requests are submitted to IIROC.
    OCC believes that the proposed rule change is consistent with 
Section 17A of the Securities Exchange Act of 1934, as amended (the 
``Act''), because it promotes the prompt and accurate clearance and 
settlement of securities transactions, and protects investors and the 
public interest by allowing OCC to efficiently monitor the financial 
health of its clearing members. The change is intended to facilitate 
Canadian clearing members' compliance with OCC's By-Laws and Rules by 
aligning OCC's financial reporting requirements, as they pertain to 
Canadian clearing members, with those of the IIROC. It is also intended 
to ensure OCC has appropriate information about Canadian clearing 
members' capital withdrawals, which will no longer be reported to OCC 
on a monthly basis. The proposed rule change is not inconsistent with 
any 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 not necessary or appropriate in furtherance of 
the purposes of the Act.

(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

[[Page 58195]]

to the proposed rule change and none have been received.

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 the proposed rule change or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 Commissions Internet comment form (http://www.sec.gov/rules/sro.shtml) or Send an email to rule-comments@sec.gov. 
Please include File Number SR-OCC-2012-15 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 Number SR-OCC-2012-15. 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 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 filings will also be 
available for inspection and copying at the principal office of OCC and 
on OCC's Web site at http://www.optionsclearing.com/components/docs/legal/rules_and_bylaws/sr_occ_12_15.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-2012-15 
and should be submitted on or before October 10, 2012.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-23039 Filed 9-18-12; 8:45 am]
BILLING CODE 8011-01-P


