
[Federal Register Volume 78, Number 115 (Friday, June 14, 2013)]
[Notices]
[Pages 36005-36006]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-14111]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69722; File No. SR-OCC-2013-07]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Short-Form License Agreement That Must Be Signed by OCC 
Clearing Members Seeking To Clear Over-the-Counter Index Options on 
Underlying Indices Published by Standard & Poor's Financial Services 
LLC

June 10, 2013.
    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 May 31, 2013, The Options Clearing Corporation (``OCC'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
prepared by the clearing agency. OCC filed the proposed rule change 
pursuant to Section 19(b)(3)(A)(i) of the Act \3\ and Rule 19b(4)(f)(1) 
thereunder \4\ so that the proposal was effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

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

I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    OCC proposes to amend the short-form license agreement that must be 
signed by OCC clearing members seeking to clear over-the-counter 
(``OTC'') index options on underlying indices published by Standard & 
Poor's Financial Services LLC (``S&P[supreg]'').

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

    The purpose of this proposed rule change is to amend the S&P short-
form license agreement that clearing members must execute if they plan 
to participate in OCC's initiative to clear and settle index options 
that are negotiated bi-laterally in the OTC market and submitted to OCC 
for clearing (the ``S&P Agreement''). On August 30, 2012, OCC filed 
with the Securities and Exchange Commission (``Commission'') proposed 
rule change SR-OCC-2012-14 pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \5\ and Rule 19b-4 thereunder 
\6\ (``Proposed Rule Change'') and as an Advance Notice (AN-OCC-2012-
01) pursuant to Section 806(e) of Title VIII of the Dodd-Frank Act 
(``Title VIII'' or ``Clearing Supervision Act'').\7\ The Proposed Rule 
Change and Advance Notice were published for comment in the Federal 
Register on September 18, 2012 \8\ and September 27, 2012,\9\ 
respectively. On November 30, 2012, OCC filed Amendment No. 1 to the 
Proposal.\10\ An Order was issued by the Commission approving the 
Proposed Rule Change and providing notice that there was no objection 
to the Advance Notice (the ``Approved Rule Change'').\11\
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(1).
    \6\ 17 CFR 240.19b-4.
    \7\ 12 U.S.C. 5465(e).
    \8\ Securities Exchange Act Release No. 67835 (September 12, 
2012), 77 FR 57602 (September 18, 2012).
    \9\ Securities Exchange Act Release No. 67906 (September 21, 
2012), 77 FR 59431 (September 27, 2012).
    \10\ In Amendment No. 1, OCC proposed to amend Article XVII of 
its By-laws to clarify that Section 6 of that Article, pertaining to 
OTC Index Options, are inoperative until further notice by OCC, as 
well as to amend Item 3 of the proposed rule change to clarify that 
the clearing of OTC Options will not occur until certain 
enhancements related to longer-tenor options have been approved and 
implemented.
    \11\ Securities Exchange Act Release No. 34-68434 (December 14, 
2012), 77 FR 75243 (December 19, 2012).
---------------------------------------------------------------------------

    As part of the Approved Rule Change, OCC added a new Interpretation 
and Policy .11 to Section 1 of Article V of the By-Laws, providing that 
clearing members that desire to be designated as an OTC Index Option 
Clearing Member must execute and maintain in effect such other 
documents as OCC may prescribe. Among those documents necessary to 
clear OTC index options on underlying indices published by S&P is the 
S&P Agreement in such form as specified from time-to-time by S&P, and 
the form of agreement was attached to the Proposed Rule Change as 
Exhibit 3.
    The proposed changes to the S&P Agreement are generally clarifying 
and housekeeping in nature. For example, certain typographical errors 
have been corrected, extraneous words have been deleted, and certain 
terms have been defined (e.g., ``S&P 500 Index''). Contacts in the S&P 
Agreement for notice purposes have been updated and the limitation of 
liability and indemnification provisions have been expanded. As 
required by OCC By-Laws Article 1, Section V, Interpretation and Policy 
.11(ii), clearing members that plan to clear OTC index options would be 
required to execute the new S&P Agreement because it is a prerequisite 
to being an OTC Index Option Clearing Member that participates in OCC's 
initiative to clear and settle OTC index options. The S&P Agreement 
will be made available for review on OCC's Web site.
    OCC believes that the proposed rule change is consistent with 
Section 17A(b)(3)(F) of the Securities Exchange Act of 1934, as amended 
(the ``Act''),\12\

[[Page 36006]]

and the rules and regulations thereunder, including Rules 17Ad-22(d)(1) 
and (2) because by improving the precision and clarity of the rights 
and obligations specified in the S&P Agreement, which is prerequisite 
for a clearing member to act as an OTC Index Option Clearing Member, 
the proposed modifications would help remove impediments to and perfect 
the mechanism of a national system for the prompt and accurate 
clearance and settlement of securities transactions,\13\ ensure that 
OCC's rules are reasonably designed to have participation requirements 
that are objective and publicly disclosed and permit fair and open 
access,\14\ and provide for a well-founded, transparent, and 
enforceable legal framework.\15\ The proposed rule change is not 
inconsistent with any rules of OCC, including any other rules proposed 
to be amended.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78q-1(b)(3)(F).
    \13\ 15 U.S.C. 78q-1(b)(3)(F).
    \14\ 17 CFR 240.17Ad-22(d)(2).
    \15\ 17 CFR 240.17Ad-22(d)(1).
---------------------------------------------------------------------------

(B) Clearing Agency's Statement on Burden on Competition

    OCC does not believe that the proposed rule change would impact, or 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.\16\ With respect to any 
burden on competition among clearing agencies, OCC is the only 
registered clearing agency that performs central counterparty services 
to the options markets.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

    Changes to the rules of a clearing agency may have an impact on the 
participants in a clearing agency and the markets that the clearing 
agency serves. This proposed rule change affects all of OCC's clearing 
members desiring to be an OTC Index Option Clearing Member, and OCC 
believes that the proposed modifications to the S&P Agreement would not 
unfairly inhibit access to OCC's services or disadvantage or favor any 
particular user in relationship to another user because the proposed 
modifications are clarifying and housekeeping in nature and would not 
impose any additional substantive burden. Any clearing member that 
seeks to become an OTC Index Options Clearing Member would be required 
to execute the new version of the S&P Agreement.
    For the foregoing reasons, OCC believes that the proposed rule 
change is in the public interest, would be consistent with the 
requirements of the Act applicable to clearing agencies, and would not 
impose a burden on competition that is unnecessary or inappropriate in 
furtherance of the purposes of the Act because the changes would 
clarify the meaning of the S&P Agreement in ways that help to promote 
the purposes of the Act and Rule 17Ad-22 thereunder as described above.

(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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(i) of the Act \17\ and paragraph (f)(i) of Rule 19b-4 
thereunder \18\ because it constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule. OCC states that it will delay the 
implementation of the rule change until it is deemed certified under 
CFTC Regulation Sec.  40.6.\19\ At any time within 60 days of the 
filing of the proposed 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.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A)(i).
    \18\ 17 CFR 240.19b-4(f)(1).
    \19\ 17 CFR 40.6.
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include 
File Number SR-OCC-2013-07 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-2013-07. 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 Room, 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 the filing also will be available 
for inspection and copying at the principal office of OCC and on OCC's 
Web site: http://www.theocc.com/components/docs/legal/rules_and_bylaws/sr_occ_13_07.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-2013-07 
and should be submitted on or before July 5, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-14111 Filed 6-13-13; 8:45 am]
BILLING CODE 8011-01-P


