
[Federal Register Volume 82, Number 182 (Thursday, September 21, 2017)]
[Notices]
[Pages 44238-44239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-20080]


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SECURITIES AND EXCHANGE COMMISSION

[File No. SR-OCC-2015-02; Release No. 81628]


Before the Securities and Exchange Commission; Securities 
Exchange Act of 1934; In the Matter of the Options Clearing 
Corporation; Corrected Order Denying Motion for Stay

September 14, 2017.
    On February 11, 2016, the Commission issued an order (``Approval 
Order'') approving the Options Clearing Corporation's (``OCC'') plan 
for raising additional capital (``Capital Plan'' or ``Plan'') to 
support its function as a systemically important financial market 
utility.\1\ BOX Options Exchange LLC, KCG Holdings, Inc. (``KCG''), 
Miami International Securities Exchange, LLC, and Susquehanna 
International Group, LLP (collectively ``petitioners'') \2\ filed a 
petition for review of the Approval Order in the U.S. Court of Appeals 
for the District of Columbia Circuit (``D.C. Circuit''), challenging 
the Commission's Approval Order as inconsistent with the Exchange Act 
and lacking in the reasoned decisionmaking required by the 
Administrative Procedure Act.
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    \1\ Exchange Act Release No. 77112 (Feb. 11, 2016), File No. SR-
OCC-2015-02.
    \2\ BATS Global Markets, Inc. (``BATS'') was initially a 
petitioner, but later withdrew.
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    After filing their petition for review, petitioners filed a motion 
for a stay in the D.C. Circuit asking the court to stay the 
Commission's Approval Order pending the court's review. The D.C. 
Circuit denied petitioners' request for a stay.\3\
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    \3\ The petitioners had also opposed OCC's motion to lift the 
automatic stay in place pending the Commission's review of the 
Capital Plan. The Commission found, however, that it was ``in the 
public interest to the lift the stay during the pendency of the 
Commission's review.'' Exchange Act Release No. 75886 at 2 (Sept. 
10, 2015), File No. SR-OCC-2015-02. The Commission noted that it 
``believes that the concerns raised by Petitioners regarding 
potential monetary and competitive harm do not currently justify 
maintaining the stay during the pendency of the Commission's 
review.'' Id.
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    In ruling on the petition for review, the D.C. Circuit concluded 
that the Approval Order did not ``represent the kind of reasoned 
decisionmaking required by either the Exchange Act or the 
Administrative Procedure Act,'' and therefore remanded the case to the 
Commission for further proceedings.\4\ In so ruling, the court did not 
reach any of petitioners' arguments that the Plan was inconsistent with 
the substantive requirements of the Exchange Act, finding instead that 
the Commission's failure to make the required findings under the Act 
required a remand.\5\
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    \4\ Susquehanna Int'l Grp., LLP v. SEC, 866 F.3d 442, 443 (D.C. 
Cir. 2017).
    \5\ Id. at 446.
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    The court also considered whether to vacate the Approval Order 
prior to remand, and decided not to vacate. As the court explained, 
``the SEC may be able to approve the Plan once again, after conducting 
a proper analysis on remand.'' \6\ Because both parties had assured the 
court that it would be possible to unwind the Capital Plan at a later 
time, and ``no party contends that the task would be materially more 
difficult if done then rather than now,'' the court declined to vacate 
the Capital Plan and instead remanded the case ``to give the SEC an 
opportunity to properly evaluate the Plan.'' \7\ The D.C. Circuit's 
mandate, which issued on August 18, 2017, returned the matter to the 
Commission for further proceedings.\8\
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    \6\ Id. at 451.
    \7\ Id.
    \8\ By separate order of today's date, we are issuing a 
scheduling order governing the proceedings on remand.
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    Petitioners \9\ now seek a partial stay of the Capital Plan--
specifically, a stay of the dividend payments to be made to the 
shareholder exchanges under the Plan--while the Commission considers 
the Plan as directed by the D.C. Circuit. OCC opposes the motion.
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    \9\ Petitioner KCG has not joined the instant motion.
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    In determining whether to grant a stay motion, the Commission 
typically considers whether (i) there is a strong likelihood that the 
moving party will succeed on the merits of its appeal; (ii) the moving 
party will suffer irreparable harm without a stay; (iii) any person 
will suffer substantial harm as a result of a stay; and (iv) a stay is 
likely to serve

[[Page 44239]]

the public interest.\10\ The party seeking a stay has the burden of 
establishing that relief is warranted.\11\ These factors weigh against 
granting petitioners' stay request.
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    \10\ Bernerd E. Young, Exchange Act Release No. 78440, 2016 WL 
4060106, at *1 (July 29, 2016); see also Order Preliminarily 
Considering Whether to Issue Stay Sua Sponte and Establishing 
Guidelines for Seeking Stay Applications, Exchange Act Release No. 
33870, 1994 WL 17920, at *1 (Apr. 7, 1994).
    \11\ Young, Exchange Act Release No. 78440, 2016 WL 4060106, at 
*1.
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    First, with respect to likelihood of success on the merits, we note 
that the court did not address petitioners' arguments that the Plan was 
inconsistent with the Exchange Act. Rather, it remanded for the 
Commission to ``properly evaluate the Plan.'' \12\ By repeating their 
same arguments regarding consistency with the Act in support of a stay, 
petitioners are asking the Commission to opine on their likelihood of 
success before engaging in the further analysis directed by the court. 
We are not yet in a position to do so. Unlike the more typical 
situation in which the Commission addresses stay motions, here there is 
neither a full record nor a final decision on which to base such an 
analysis. Thus, we do not view this factor as weighing in favor of the 
partial stay request.
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    \12\ 866 F.3d at 451.
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    Second, petitioners fail to establish that they will be irreparably 
harmed in the absence of a stay. To demonstrate irreparable harm, 
petitioners ``must show an injury that is `both certain and great' and 
`actual and not theoretical.' '' \13\ ``A stay `will not be granted 
[based on] something merely feared as liable to occur at some 
indefinite time.' '' \14\ That ``an applicant may suffer financial 
detriment does not rise to the level of irreparable injury warranting 
issuance of a stay.'' \15\ Petitioners acknowledge that the monetary 
aspects of the Plan ``are readily reversible'' \16\ and that the court 
concluded that ``the task of unwinding the Plan would be no more 
difficult if done after remand rather than immediately.'' \17\ They 
nonetheless argue that ``[a] stay of the dividend is needed to prevent 
distortion of the competitive landscape from continuing to harm 
competition.'' \18\ But petitioners provide no evidence that 
competitors will be ``driven from the marketplace'' or that investors 
have ``lost liquidity,'' as petitioners claim.\19\ Thus, petitioners' 
argument--which presumes they are correct on the merits regarding the 
Plan's effect on competition--is too speculative at this stage to be 
the basis for relief. We also note that petitioners made these same 
arguments regarding competitive harm before the D.C. Circuit, yet the 
court did not stay or vacate the Plan.
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    \13\ Kenny A. Akindemowo, Exchange Act Release No. 78352, 2016 
WL 3877888, at *2 (July 18, 2016) (quoting Donald L. Koch, Exchange 
Act Release No. 72443, 2014 WL 2800778, at *2 (June 20, 2014)); 
accord Wis. Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985).
    \14\ Akindemowo, 2016 WL 3877888, at *2 (quoting Koch, 2014 WL 
2800778, at *2); accord Wis. Gas Co., 758 F.2d at 674.
    \15\ Robert J. Prager, Exchange Act Release No. 50634, 2004 WL 
2480717, at *1 (Nov. 4, 2004); see also William Timpinaro, Exchange 
Act Release No. 29927, 1991 WL 288326, at *3 (Nov. 12, 1991) 
(recognizing that ``[m]ere injuries, however substantial, in terms 
of money, time, and energy necessarily expended in the absence of a 
stay, are not enough'' to constitute irreparable harm) (quoting Va. 
Petroleum Jobbers Ass'n v. FPC, 259 F.2d 921, 925 (D.C. Cir. 1958)).
    \16\ Mot. at 1.
    \17\ Mot. at 16.
    \18\ Id.
    \19\ Id. Petitioners cite the acquisition of BATS by CBOE 
Holdings, Inc.--which, we note, closed on February 28, 2017--in 
support of their argument, stating that there has been consolidation 
in the exchange marketplace while the Capital Plan has been in 
effect. But they supply no evidence of a causal relationship between 
that acquisition and the Capital Plan or the dividends at issue.
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    Finally, petitioners have not demonstrated that the balance of harm 
to others in the absence of a stay and the public interest favors a 
stay. Petitioners argue that ``a stay would injur[e] nobody,'' \20\ 
because they are asking only to stay the dividend component of the 
Plan. But even setting aside the impact on shareholder exchanges that 
are due the dividends under the Plan, petitioners' claim that the 
dividend component of the plan can be isolated is overly simplistic. 
Under the Plan, ``OCC would not be able to pay a refund on a particular 
date unless dividends were paid on the same date.'' \21\ A stay of the 
dividends to the shareholders would thus have the effect of also 
staying the payment of refunds to OCC's members.
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    \20\ Mot. at 16.
    \21\ Exchange Act Release No. 74136 (Notice of Proposed Rule 
Change) at 15, File No. SR-OCC-2015-02.
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    Moreover, as discussed above, the court squarely considered whether 
to vacate the Plan or leave it in effect during the Commission's 
reconsideration, and decided to leave the Plan, including the 
provisions with respect to dividends, in place. Petitioners' request to 
stay that part of the Plan therefore, in fact, seeks a change in the 
status quo that we believe is unsupported at this time. Granting 
petitioners' request would require piecemeal suspension of portions of 
the Plan, while leaving others in place, despite at least the 
possibility of having to reinstitute those provisions at a later date 
if the Commission, after conducting the required analysis on remand, 
should determine to approve the Plan. Indeed, the court implicitly 
rejected this type of partial stay when petitioners proposed it in a 
pre-decision letter to the court \22\ and the court remanded without 
entering such a stay. We believe, as the court did, that the better 
course is to leave the status quo in place while we conduct a further 
review of the entirety of the Plan.
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    \22\ See Fed. R. App. P. 28(j) letter from petitioners, dated 
April 17, 2017 (asking the court ``at a minimum, to stay operation 
of the dividend component of the Plan during a remand'').
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    Accordingly, we decline to impose the partial stay requested.
    For the reasons stated above, it is hereby:
    Ordered that movants' request for a partial stay of the Capital 
Plan while the Commission considers the Plan pursuant to the direction 
of the D.C. Circuit is Denied.

    By the Commission.

Brent J. Fields,
Secretary.
[FR Doc. 2017-20080 Filed 9-20-17; 8:45 am]
 BILLING CODE 8011-01-P


