
[Federal Register Volume 78, Number 163 (Thursday, August 22, 2013)]
[Notices]
[Pages 52227-52228]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-20463]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70225; File No. SR-OCC-2013-13]


Self-Regulatory Organizations; the Options Clearing Corporation; 
Notice of Filing of Proposed Rule Change Relating to the Use of Manual 
Signatures, Reduction of Segregated Long Positions in Accounts With 
Aggregated Long Positions, Requirements To Be Physically Present, and 
Other Technical Changes to OCC's By-Laws and Rules to Better Reflect 
Current Operational Practices

August 16, 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 August 5, 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 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

    OCC proposes to make certain non-material ``housekeeping'' changes 
so that OCC's By-Laws and Rules (collectively, ``Rules'') better 
reflect current operational practices.

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
    The purpose of this proposed rule change is to make non-material 
``housekeeping'' changes to certain OCC's Rules so that OCC's Rules 
better reflect current operational practices. For example, Rule 201 
requires a representative of each clearing member to sign all 
instruments necessary to conduct business with OCC and applies to items 
such as trade data and banking instructions. Manual signatures on such 
instruments were a means by which OCC and its clearing members verified 
and validated information contained therein. However, since the 
adoption of Rule 205, which requires clearing members to electronically 
submit items to OCC, and Rule 212, which allows OCC to assign clearing 
members access codes for electronic data entry,\3\ the requirement for 
manual signatures has been virtually eliminated. OCC proposes to remove 
references to manual signatures within Rule 201 because OCC has adopted 
and implemented electronic processes and controls within its clearance 
and settlement systems to allow authorized individuals to 
electronically verify and validate information such as trade data and 
banking instructions. Such processes and controls are used by all OCC 
clearing members.
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    \3\ OCC Rule 212 also requires clearing members to take 
appropriate precautions to protect the security of their access 
codes and prevent unauthorized use thereof.
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    Rule 202 requires each clearing member to file with OCC a certified 
list of representatives who are authorized to conduct business with 
OCC, including individuals authorized to sign, ``certificates, checks, 
receipts, and orders.'' As with manual signatures on trade data and 
banking instructions, OCC's electronic systems, and its Rules related 
thereto, have made the need for manual signatures on certificates, 
checks, receipts and orders superfluous and OCC proposes that 
references to manual signatures on such documents be removed. Even 
though OCC proposes to remove certain references to manual signatures, 
as described above, OCC still needs to know the individuals authorized 
to act on behalf of each of its clearing members and OCC will continue 
to require clearing members to provide OCC with a list of individuals 
authorized to act on behalf of each such clearing member.\4\ In turn, 
OCC will provide such authorized individuals with the appropriate 
electronic access to its clearance and settlement systems. Moreover, 
the description in Rule 611(c) regarding how OCC reduces segregated and 
unsegregated long positions is not consistent with the current 
functionality in OCC's clearance and settlement systems. OCC proposes 
to amend Rule 611(c) so that it better reflects the current practice 
that, in the event of a closing transaction or exercise in an account 
with aggregate long positions, segregated long positions are reduced 
before unsegregated long positions, and that clearing members may not 
choose an alternative reduction method.
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    \4\ OCC also proposes to make conforming changes to its clearing 
member authorized representative form, which each clearing member 
must complete and submit to OCC so that OCC knows the persons 
authorized to act on behalf of such clearing member. Such changes 
are attached hereto as Exhibits 3A-3D. Moreover, in the event of 
unusual or unforeseen circumstances, manual signatures on documents 
serve as a backup way to authenticate instructions and documents 
submitted to OCC.
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    OCC also has provisions in several rules that were implemented 
before industry-wide adoption of technological advancements in remote 
access capability. For example, Rule 201 requires that an authorized 
representative of a clearing member be present in such clearing 
member's office during specific hours each day. Advancements in 
technology, such as remote computer access, have rendered the 
requirement to have a clearing member representative physically present 
in a clearing member's office overly burdensome and unnecessary. 
Moreover, regulatory requirements pertaining to business continuity 
planning and disaster recovery have required OCC and its clearing 
members to adopt decentralized operational structures and, as a result, 
remote access has become integrated into OCC's and its clearing 
members' daily operations. Therefore, OCC proposes to amend the 
``physically present'' requirement in Rule 201 to require an authorized 
representative of a clearing member be available during such times as 
OCC may specify from time to time as well as unify the requirements of 
Rule 201 so that both Non-U.S. Clearing Members and U.S. Clearing 
Members are subject to the same authorized representative availability 
standard. OCC also proposes to add clarifying language to Rule 204 so 
that in the event OCC processes transactions through it backup 
processing facility clearing members do not need to make a purely 
administrative designation of such backup facility as its primary 
clearing office.
    Finally, OCC proposes additional amendments to Rules 207, 208 and 
611(b) to reflect non-material changes: To the names of, information 
contained within and manner in which clearing members may amend various 
reports; to Rule 611(b) to clarify that clearing members may 
electronically submit instructions to OCC regarding their segregated 
long positions; to remove references to clearing international 
transactions and the International Clearing System, a dormant system, 
found in By-Laws Articles I and VI as well as Rule 801; to remove 
references

[[Page 52228]]

to XMI index options, which are no longer traded, found in By-Laws 
Article VI and Rule 801; to amend Rule 801 so that OCC, and not its 
Board of Directors, may choose exercise notices that are not eligible 
for late processing; and, to add language to Rule 211 so that OCC 
satisfies its Rule 211 requirement to provide notice to clearing 
members and other registered clearing agencies of rule changes by 
posting such filings on its public Web site.
(2) Statutory Basis
    OCC believes that the proposed rule change is consistent with 
Section 17A(b)(3)(F) \5\ of the Act \6\ because it facilitates the 
prompt and accurate clearance and settlement of securities 
transactions. The proposed changes will update OCC Rules to better 
reflect the current operational and technological environment of OCC 
and its clearing members by removing outdated requirements and 
references within OCC's Rules. The proposed rule change is not 
inconsistent with any rules of OCC, including those proposed to be 
amended.
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    \5\ 15 U.S.C. 78q-1(b)(3)(F).
    \6\ 15 U.S.C. 78a et seq.
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(B) Clearing Agency's Statement on Burden on Competition

    OCC does not believe that the proposed rule change would impact, or 
impose a burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed changes, which 
will apply to all clearing members, are administrative in nature and 
will better align OCC's Rules with both its own and its clearing 
members current operational practices. Accordingly, the proposed 
changes will reduce unnecessary administrative burdens on its clearing 
members, including any such burdens that may impact competition.

(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

    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.

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-2013-13 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.

All submissions should refer to File Number SR-OCC-2013-13. 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_13.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-2013-13 
and should be submitted on or before September 12, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-20463 Filed 8-21-13; 8:45 am]
BILLING CODE 8011-01-P


