[Federal Register Volume 83, Number 127 (Monday, July 2, 2018)]
[Notices]
[Pages 30996-30997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14113]



[[Page 30996]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83519; File No. SR-OCC-2018-009]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Facilitate Reporting Under Commodity Futures Trading Commission 
Regulations Applicable to Derivatives Clearing Organizations

June 26, 2018
    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 June 15, 2018, 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 by OCC. OCC filed the proposed rule change pursuant 
to Section 19(b)(3)(A \3\ of the Act and Rule 19b-4(f)(6) \4\ 
thereunder 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change by OCC would amend OCC Rule 601(e)(2) 
regarding customer information in data provided to OCC identifying the 
positions of each futures customer of a Clearing Member for purposes of 
calculating the initial margin requirement for segregated futures 
accounts. The proposed rule change is intended to facilitate reporting 
under Commodity Futures Trading Commission (``CFTC'') regulations 
applicable to Derivatives Clearing Organizations (``DCOs'') such as 
OCC. All terms with initial capitalization that are not otherwise 
defined herein have the same meaning as set forth in the OCC By-Laws 
and Rules.\5\
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    \5\ OCC's By-Laws and Rules can be found on OCC's public 
website: http://optionsclearing.com/about/publications/bylaws.jsp.
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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 the proposed rule change is to amend the provisions 
of OCC Rule 601(e)(2) with respect to information regarding the 
identity of customers included in data provided to OCC identifying the 
positions of each futures customer of a Clearing Member for purposes of 
calculating the initial margin requirement for segregated futures 
accounts. The proposed rule change removes the provisions that require 
``a unique alphanumeric customer identifier for each such customer'' 
and that provide that information submitted to OCC pursuant to Rule 
601(e)(2) ``shall not include any indication of the identity of any 
customer or other personal information of a customer.'' As described 
below, the removal of these provisions will allow OCC to perform daily 
reporting consistent with applicable CFTC regulations and associated 
guidance.
    On November 8, 2011, the CFTC adopted reporting rules for DCOs in 
CFTC Regulation 39.19 that cover daily, quarterly, annual, and event-
specific reporting.\6\ The reporting requirements in Regulation 39.19 
had a compliance date of November 8, 2012.\7\ For daily reporting, 
paragraph (c)(1) of Regulation 39.19 requires DCOs to submit reports 
with certain initial margin, variation margin, cash flows, and end-of-
day positions for each Clearing Member, by house origin and by each 
customer origin. In adopting these daily reporting requirements, the 
CFTC stated that ``[t]he overall purpose of receiving the daily data is 
to enable [CFTC] staff to analyze the data on a regular basis so that 
it can detect certain trends or unusual activity on a timely basis.'' 
\8\
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    \6\ See 17 CFR 39.19(c); see also Derivatives Clearing 
Organization General Provisions and Core Principles, 76 FR 69334 
(Nov. 8, 2011). OCC is a DCO as that term is defined in applicable 
CFTC regulations. See 17 CFR 1.3.
    \7\ See 76 FR 69334.
    \8\ 76 FR 69334, at 69400.
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    CFTC Regulation 39.19 requires a DCO to report certain information 
in a format and manner specified by the CFTC.\9\ Since the regulation's 
adoption, the CFTC has published a ``Guidebook for Daily Reports'' 
(``Guidebook'') that provides guidance and specifications to DCOs for 
submitting their daily reports under Regulation 39.19. Generally, daily 
reports must include, for each Clearing Member, information related to 
initial margin, daily variation margin, daily cash flows related to 
clearing and settlement, and end-of-day positions, by house origin and 
by each customer origin, for all futures, options, and swaps positions, 
and all securities positions held in a segregated account or pursuant 
to a cross margining agreement. The most recent version of the 
Guidebook--Version 9.2--was published in December 2017; however, 
Version 9.1, which was published earlier in 2017, introduced new 
reporting specifications that can be met only if OCC amends Rule 
601(e)(2) as described below. Specifically, Section 2.1.2.2 of the 
Guidebook requires DCOs (other than exempt DCOs) to ``provide the 
clearing members' customer information that properly describes the 
margins reported'' by reporting customer names and legal entity 
identifiers (``LEIs'').
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    \9\ See 17 CFR 39.19(b).
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    The Guidebook acknowledges that, at the time of its publication, 
customer-level information may not be available for all DCOs. Indeed, 
following publication of Version 9.1 of the Guidebook, the CFTC 
provided informal guidance to DCOs in August 2017 noting that the CFTC 
was aware that DCOs may not have names and LEIs for all customer 
accounts that they clear and understood that DCOs and futures 
commission merchants would begin a project in the near future to obtain 
names and LEIs for their customers.
    OCC makes its daily reports to the CFTC in accordance with 
Regulation 39.19 based on information it receives from its Clearing 
Members. OCC Rule 601(e)(2) requires each Clearing Member to submit to 
OCC on each business day a data file that identifies the positions in 
segregated futures accounts of each futures customer of the Clearing 
Member using a unique alphanumeric customer identifier for each such 
customer. The rule, however, specifically requires Clearing Members to 
use a ``unique alphanumeric customer identifier for each customer'' and 
provides that ``such identifiers shall not include any indication of 
the identity of any customer or other personal information of a 
customer.'' For these segregated futures accounts, OCC prohibits 
Clearing Members from providing information such as customer name and 
LEI; thus, OCC does not currently have this information to include in 
its daily reports to the CFTC and is not able to provide customer-

[[Page 30997]]

level information with respect to these accounts in accordance with the 
Guidebook specifications. Consequently, OCC is proposing to delete the 
customer identifier provisions from Rule 601(e)(2) so that Clearing 
Members can provide customer names and LEIs to OCC so that it can, in 
turn, provide this information on daily reports to the CFTC consistent 
with the CFTC staff guidance on daily reporting requirements under 
Regulation 39.19.
(2) Statutory Basis
    Section 17A(b)(3)(F) of the Act requires, among other things, that 
the rules of a clearing agency be designed, in general, to protect 
investors and the public interest.\10\ OCC believes that the proposed 
rule change is consistent with Section 17A(b)(3)(F) of the Act.\11\ As 
noted above, OCC Rule 601(e)(2) requires each Clearing Member to submit 
to OCC on each business day a data file that identifies the positions 
in segregated futures accounts of each futures customer of the Clearing 
Member using a unique alphanumeric customer identifier for each such 
customer. The proposed rule change would remove this provision and the 
requirement that ``such identifiers shall not include any indication of 
the identity of any customer or other personal information of a 
customer.'' Once these provisions are removed, Clearing Members can 
provide this information to OCC, who can then provide it to the CFTC in 
accordance with the Guidebook specifications. This will enhance the 
CFTC staff's ability to perform its oversight function with the 
information it deems necessary, which promotes the protection of 
investors and the public interest.
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    \10\ 15 U.S.C. 78q-1(b)(3)(F).
    \11\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

    Section 17A(b)(3)(I) of the Act requires that the rules of a 
clearing agency not impose any burden on competition not necessary or 
appropriate in furtherance of the Act.\12\ OCC does not believe that 
the proposed rule change would impose any burden on competition. 
Rather, the proposed rule change removes an existing restriction on the 
data provided to OCC by its Clearing Members regarding customers with 
segregated futures accounts. As discussed above, this will then allow 
OCC to provide this information to the CFTC, consistent with the CFTC 
staff guidance on daily reporting requirements under Regulation 39.19, 
who uses the information in performing its statutory mandate.
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    \12\ 15 U.S.C. 78q-1(b)(3)(I).
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(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

    Pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6)\14\ thereunder, the proposed rule change is filed for immediate 
effectiveness because it does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate.\15\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ OCC provided the Commission with written notice of its 
intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule 
change or such shorter time as designated by the Commission.
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    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.\16\
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    \16\ Notwithstanding its immediate effectiveness, implementation 
of this rule change will be delayed until this change is deemed 
certified under CFTC Rule 40.6.
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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 [email protected]. Please include 
File Number SR-OCC-2018-009 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-OCC-2018-009. 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 website (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 website 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 such filing also will be available for inspection 
and copying at the principal office of OCC and on OCC's website at 
https://www.theocc.com/components/docs/legal/rules_and_bylaws/sr_occ_18_009.pdf.
    All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly.
    All submissions should refer to File Number SR-OCC-2018-009 and 
should be submitted on or before July 23, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14113 Filed 6-29-18; 8:45 am]
 BILLING CODE 8011-01-P


