80 FR 62129 - Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Concerning the Requirement for Clearing Members To Participate in Operation Testing

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 199 (October 15, 2015)

Page Range		62129-62130
FR Document		2015-26154
Federal Register, Volume 80 Issue 199 (Thursday, October 15, 2015)
[Federal Register Volume 80, Number 199 (Thursday, October 15, 2015)]
[Notices]
[Pages 62129-62130]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-26154]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76108; File No. SR-OCC-2015-015]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Concerning the Requirement for Clearing Members To Participate in 
Operation Testing

October 8, 2015.
    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 October 2, 2015, 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. 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

    This proposed rule change by OCC codifies the requirement for 
clearing members to participate in operational testing, including 
testing of OCC's business continuity and disaster recovery plans (``BCP 
Testing'').

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
    This proposed rule change would codify OCC's current requirement 
for clearing members to participate in operational testing, including 
testing of OCC's BCP Testing. Article V of OCC's By-Laws sets forth 
OCC's initial membership requirements. Pursuant to Interpretation and 
Policy .02(b) of Article V, Section 1 of OCC's By-Laws, an applicant 
for clearing membership must demonstrate that it is operationally 
capable of: (i) Processing expected volumes and values of transactions 
cleared by the clearing member within required time frames, including 
at peak times and on peak days; (ii) fulfilling collateral, payment, 
and delivery obligations as required by OCC; and (iii) participating in 
applicable default management activities, as may be required by OCC and 
in accordance with applicable laws and regulations.\3\
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    \3\ See OCC's By-Laws, Article V, Section 1, Interpretation and 
Policy .02(b).
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    Once a firm becomes a member of OCC, Chapter II of OCC's Rules sets 
forth additional operational requirements. In particular, OCC Rule 
214(d) requires clearing members to maintain their operational 
capabilities as a continuing obligation of membership.\4\ In accordance 
with such requirements, OCC annually conducts BCP Testing with certain 
clearing members through coordinated testing. Recently, the Commission 
promulgated Regulation System Compliance and Integrity (``Reg. SCI''), 
which would require OCC to establish standards to designate members \5\ 
and require participation by such designated members in scheduled BCP 
Testing with OCC on an annual basis.\6\ OCC is proposing to adopt Rule 
218 so that OCC's Rules clearly articulate OCC's requirement with 
respect to BCP Testing.
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    \4\ See OCC Rule 214(d). OCC Rule 214(d) requires clearing 
members to maintain their ability to, among other things: (i) 
Process expected volumes and values of transactions cleared by the 
clearing member within required time frames, including at peak times 
and on peak days; (ii) fulfill collateral, payment, and delivery 
obligations as required by OCC; and (iii) participate in applicable 
default management activities, as may be required by OCC and in 
accordance with applicable laws and regulations.
    \5\ 17 CFR 242.1004(a). In adopting Reg. SCI, the Commission 
determined not to require covered entities to notify the Commission 
of its designations or the standards that will be used in 
designating its members, recognizing instead that each entity's 
standards, designations, and updates, if applicable, would be part 
of its records and, therefore, available to the Commission and its 
staff upon request. See 79 FR 72350.
    \6\ 17 CFR 242.1004(a) and (b).
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    Proposed Rule 218 would increase transparency regarding and ensure 
OCC's practice with respect to BCP Testing is consistent with Reg. SCI 
by articulating OCC's right to: (i) Designate clearing members required 
to participate in BCP Testing; (ii) determine the scope of such BCP 
Testing; and (iii) require clearing members to comply with the subject 
BCP Testing within specified timeframes. In connection therewith, OCC 
is planning to refine the criteria that it currently uses to designate 
firms for BCP Testing. For example, while OCC will continue to rely on 
volume thresholds to mandate participation in annual BCP Testing, OCC 
will also take into account additional factors when designating firms 
for BCP Testing, including but not limited to: (i) The nature of 
interconnectedness based on a firm's approved business activities; (ii) 
the existence of significant operational issues during the past twelve 
months, and (iii) past performance with respect to BCP Testing. 
Clearing members will be informed of the specific standards that will 
be used by OCC, along with

[[Page 62130]]

any updates or changes to these standards, through established methods 
of communication between OCC and its firms. Likewise, clearing members 
will be notified in advance that they've been designated to participate 
in BCP Testing for the upcoming year, and will be provided details 
concerning the nature of such testing as the particular test plans are 
determined.
    OCC believes the proposed rule would have no impact on OCC clearing 
members relative to what clearing members are currently required to do. 
As described above, OCC already requires certain clearing members to 
participate in BCP Testing on an annual basis. The proposed rule 
codifies OCC's practice and provides further clarity and transparency 
to OCC clearing members to ensure consistency with Reg. SCI.
2. Statutory Basis
    OCC believes that the proposed rule change is consistent with 
applicable provisions of the Securities and Exchange Act (``Act'') and 
regulations promulgated thereunder. OCC believes providing further 
transparency regarding the requirement for clearing members to take 
part in its BCP Testing annually will help avoid ambiguity regarding 
such requirements, and will further ensure that business continuity and 
disaster recovery plans between OCC and its clearing members function 
as intended during an emergency. As such, OCC believes the proposed 
rule change would facilitate the prompt and accurate clearance and 
settlement of securities transactions and protect investors and the 
public interest consistent with Section 17A(b)(3)(F) of the Act,\7\ and 
foster the objectives of the Commission under Reg. SCI by helping to 
ensure resilient and available markets.\8\
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    \7\ 15 U.S.C. 78q-1(b)(3)(F).
    \8\ 17 CFR 242.1004(a) and (b).
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    Codifying OCC's current practice of requiring clearing members to 
engage in BCP Testing annually is also consistent with Rule 17Ad-
22(d)(1), requiring that OCC provide for a well-founded, transparent, 
and enforceable legal framework for each aspect of its activities in 
all relevant jurisdictions, as it makes this obligation transparent.\9\ 
Finally, the proposed rule change is not inconsistent with any rules of 
OCC, including those proposed to be amended.
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    \9\ 17 CFR 240.17Ad-22(d)(1).
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(B) Clearing Agency's Statement on Burden on Competition

    OCC does not believe that the proposed rule change would impose any 
burden on competition.\10\ OCC believes the proposed rule change would 
not unfairly inhibit access to OCC's services or disadvantage or favor 
any particular user in relationship to another user because the 
proposed rule change would apply to all clearing members.
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    \10\ 15 U.S.C. 78-q1(b)(3)(I).
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    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.

(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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors and the public 
interest;
    (ii) Impose an 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, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 
19b-4(f)(6) thereunder.
    At any time within 60 days of the filing of this rule change, the 
Commission summarily may temporarily suspend the 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.

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 [email protected]. Please include 
File Number SR-OCC-2015-015 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-OCC-2015-015. 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 filing also will be 
available for inspection and copying at the principal office of OCC and 
on OCC's Web site at http://www.theocc.com/components/docs/legal/rules_and_bylaws/sr_occ_15_015.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-2015-015 and 
should be submitted on or before November 5, 2015.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated Authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-26154 Filed 10-14-15; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 80, No. 199 / Thursday, October 15, 2015 / Notices 62129

Commission, 100 F Street NE., (‘‘Act’’) 1 and Rule 19b–4 thereunder 2 Once a firm becomes a member of
Washington, DC 20549–1090. notice is hereby given that on October OCC, Chapter II of OCC’s Rules sets
All submissions should refer to File 2, 2015, The Options Clearing forth additional operational
Number SR–CBOE–2015–081. This file Corporation (‘‘OCC’’) filed with the requirements. In particular, OCC Rule
number should be included on the Securities and Exchange Commission 214(d) requires clearing members to
subject line if email is used. To help the (‘‘Commission’’) the proposed rule maintain their operational capabilities
Commission process and review your change as described in Items I, II and III as a continuing obligation of
comments more efficiently, please use below, which Items have been prepared membership.4 In accordance with such
only one method. The Commission will by OCC. The Commission is publishing requirements, OCC annually conducts
post all comments on the Commission’s this notice to solicit comments on the BCP Testing with certain clearing
Internet Web site (http://www.sec.gov/ proposed rule change from interested members through coordinated testing.
rules/sro.shtml.) Copies of the persons. Recently, the Commission promulgated
submission, all subsequent Regulation System Compliance and
I. Clearing Agency’s Statement of the
amendments, all written statements Integrity (‘‘Reg. SCI’’), which would
Terms of Substance of the Proposed
with respect to the proposed rule require OCC to establish standards to
Rule Change
change that are filed with the designate members 5 and require
This proposed rule change by OCC participation by such designated
Commission, and all written
codifies the requirement for clearing members in scheduled BCP Testing with
communications relating to the
members to participate in operational OCC on an annual basis.6 OCC is
proposed rule change between the
testing, including testing of OCC’s proposing to adopt Rule 218 so that
Commission and any person, other than
business continuity and disaster OCC’s Rules clearly articulate OCC’s
those that may be withheld from the
recovery plans (‘‘BCP Testing’’). requirement with respect to BCP
public in accordance with the
provisions of 5 U.S.C. 552, will be II. Clearing Agency’s Statement of the Testing.
available for Web site viewing and Purpose of, and Statutory Basis for, the Proposed Rule 218 would increase
printing in the Commission’s Public Proposed Rule Change transparency regarding and ensure
OCC’s practice with respect to BCP
Reference Room, 100 F Street NE., In its filing with the Commission, Testing is consistent with Reg. SCI by
Washington, DC 20549 on official OCC included statements concerning articulating OCC’s right to: (i) Designate
business days between the hours of the purpose of and basis for the clearing members required to participate
10:00 a.m. and 3:00 p.m. Copies of the proposed rule change and discussed any in BCP Testing; (ii) determine the scope
filing also will be available for comments it received on the proposed of such BCP Testing; and (iii) require
inspection and copying at the principal rule change. The text of these statements clearing members to comply with the
office of the Exchange. All comments may be examined at the places specified subject BCP Testing within specified
received will be posted without change; in Item IV below. OCC has prepared timeframes. In connection therewith,
the Commission does not edit personal summaries, set forth in sections (A), (B), OCC is planning to refine the criteria
identifying information from and (C) below, of the most significant that it currently uses to designate firms
submissions. You should submit only aspects of these statements. for BCP Testing. For example, while
information that you wish to make OCC will continue to rely on volume
available publicly. All submissions (A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the thresholds to mandate participation in
should refer to File Number SR–CBOE– annual BCP Testing, OCC will also take
2015–081 and should be submitted on Proposed Rule Change
into account additional factors when
or before November 5, 2015. 1. Purpose designating firms for BCP Testing,
For the Commission, by the Division of This proposed rule change would including but not limited to: (i) The
Trading and Markets, pursuant to delegated codify OCC’s current requirement for nature of interconnectedness based on a
authority.19 firm’s approved business activities; (ii)
clearing members to participate in
Robert W. Errett, operational testing, including testing of the existence of significant operational
Deputy Secretary. OCC’s BCP Testing. Article V of OCC’s issues during the past twelve months,
[FR Doc. 2015–26156 Filed 10–14–15; 8:45 am] By-Laws sets forth OCC’s initial and (iii) past performance with respect
BILLING CODE 8011–01–P membership requirements. Pursuant to to BCP Testing. Clearing members will
Interpretation and Policy .02(b) of be informed of the specific standards
Article V, Section 1 of OCC’s By-Laws, that will be used by OCC, along with
SECURITIES AND EXCHANGE an applicant for clearing membership
COMMISSION must demonstrate that it is operationally
4 See OCC Rule 214(d). OCC Rule 214(d) requires

clearing members to maintain their ability to,
[Release No. 34–76108; File No. SR–OCC– capable of: (i) Processing expected among other things: (i) Process expected volumes
2015–015] volumes and values of transactions and values of transactions cleared by the clearing
cleared by the clearing member within member within required time frames, including at
Self-Regulatory Organizations; The peak times and on peak days; (ii) fulfill collateral,
required time frames, including at peak payment, and delivery obligations as required by
Options Clearing Corporation; Notice times and on peak days; (ii) fulfilling OCC; and (iii) participate in applicable default
of Filing and Immediate Effectiveness collateral, payment, and delivery management activities, as may be required by OCC
of a Proposed Rule Change obligations as required by OCC; and (iii) and in accordance with applicable laws and
regulations.
Concerning the Requirement for participating in applicable default
mstockstill on DSK4VPTVN1PROD with NOTICES

5 17 CFR 242.1004(a). In adopting Reg. SCI, the
Clearing Members To Participate in management activities, as may be Commission determined not to require covered
Operation Testing required by OCC and in accordance entities to notify the Commission of its designations
with applicable laws and regulations.3 or the standards that will be used in designating its
October 8, 2015. members, recognizing instead that each entity’s
Pursuant to Section 19(b)(1) of the standards, designations, and updates, if applicable,
1 15 U.S.C. 78s(b)(1). would be part of its records and, therefore, available
Securities Exchange Act of 1934 2 17 CFR 240.19b–4. to the Commission and its staff upon request. See
3 See OCC’s By-Laws, Article V, Section 1, 79 FR 72350.
19 17 CFR 200.30–3(a)(12). Interpretation and Policy .02(b). 6 17 CFR 242.1004(a) and (b).

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62130 Federal Register / Vol. 80, No. 199 / Thursday, October 15, 2015 / Notices

any updates or changes to these burden on competition.10 OCC believes Paper Comments
standards, through established methods the proposed rule change would not
of communication between OCC and its unfairly inhibit access to OCC’s services • Send paper comments in triplicate
firms. Likewise, clearing members will or disadvantage or favor any particular to Secretary, Securities and Exchange
be notified in advance that they’ve been user in relationship to another user Commission, 100 F Street NE.,
designated to participate in BCP Testing because the proposed rule change Washington, DC 20549–1090.
for the upcoming year, and will be would apply to all clearing members. All submissions should refer to File
provided details concerning the nature For the foregoing reasons, OCC Number SR–OCC–2015–015. This file
of such testing as the particular test believes that the proposed rule change number should be included on the
plans are determined. is in the public interest, would be
OCC believes the proposed rule subject line if email is used. To help the
consistent with the requirements of the
would have no impact on OCC clearing Commission process and review your
Act applicable to clearing agencies, and
members relative to what clearing comments more efficiently, please use
would not impose a burden on
members are currently required to do. competition. only one method. The Commission will
As described above, OCC already post all comments on the Commission’s
requires certain clearing members to (C) Clearing Agency’s Statement on Internet Web site (http://www.sec.gov/
participate in BCP Testing on an annual Comments on the Proposed Rule rules/sro.shtml). Copies of the
basis. The proposed rule codifies OCC’s Change Received From Members, submission, all subsequent
practice and provides further clarity and Participants or Others amendments, all written statements
transparency to OCC clearing members Written comments on the proposed with respect to the proposed rule
to ensure consistency with Reg. SCI. rule change were not and are not change that are filed with the
intended to be solicited with respect to Commission, and all written
2. Statutory Basis
the proposed rule change and none have communications relating to the
OCC believes that the proposed rule been received. proposed rule change between the
change is consistent with applicable Commission and any person, other than
provisions of the Securities and III. Date of Effectiveness of the
Proposed Rule Change and Timing for those that may be withheld from the
Exchange Act (‘‘Act’’) and regulations public in accordance with the
promulgated thereunder. OCC believes Commission Action
provisions of 5 U.S.C. 552, will be
providing further transparency Because the foregoing proposed rule available for Web site viewing and
regarding the requirement for clearing change does not: printing in the Commission’s Public
members to take part in its BCP Testing (i) Significantly affect the protection
annually will help avoid ambiguity Reference Section, 100 F Street NE.,
of investors and the public interest; Washington, DC 20549, on official
regarding such requirements, and will (ii) Impose an significant burden on
further ensure that business continuity business days between the hours of
competition; and 10:00 a.m. and 3:00 p.m. Copies of such
and disaster recovery plans between (iii) Become operative for 30 days
OCC and its clearing members function filing also will be available for
from the date on which it was filed, or inspection and copying at the principal
as intended during an emergency. As such shorter time as the Commission
such, OCC believes the proposed rule office of OCC and on OCC’s Web site at
may designate, it has become effective
change would facilitate the prompt and http://www.theocc.com/components/
pursuant to Section 19(b)(3)(A) of the
accurate clearance and settlement of docs/legal/rules_and_bylaws/sr_occ_15_
Act and Rule 19b–4(f)(6) thereunder.
securities transactions and protect 015.pdf.
At any time within 60 days of the
investors and the public interest filing of this rule change, the All comments received will be posted
consistent with Section 17A(b)(3)(F) of Commission summarily may without change; the Commission does
the Act,7 and foster the objectives of the temporarily suspend the change if it not edit personal identifying
Commission under Reg. SCI by helping appears to the Commission that such
to ensure resilient and available information from submissions. You
action is necessary or appropriate in the should submit only information that
markets.8 public interest, for the protection of
Codifying OCC’s current practice of you wish to make available publicly.
investors or otherwise in furtherance of
requiring clearing members to engage in All submissions should refer to File
the purposes of the Act.
BCP Testing annually is also consistent Number SR–OCC–2015–015 and should
with Rule 17Ad–22(d)(1), requiring that IV. Solicitation of Comments be submitted on or before November 5,
OCC provide for a well-founded, 2015.
Interested persons are invited to
transparent, and enforceable legal
submit written data, views, and For the Commission by the Division of
framework for each aspect of its
arguments concerning the foregoing, Trading and Markets, pursuant to delegated
activities in all relevant jurisdictions, as
including whether the proposed rule Authority.11
it makes this obligation transparent.9
change is consistent with the Act. Robert W. Errett,
Finally, the proposed rule change is not
Comments may be submitted by any of Deputy Secretary.
inconsistent with any rules of OCC,
the following methods:
including those proposed to be [FR Doc. 2015–26154 Filed 10–14–15; 8:45 am]
amended. Electronic Comments BILLING CODE 8011–01–P

(B) Clearing Agency’s Statement on • Use the Commissions Internet
mstockstill on DSK4VPTVN1PROD with NOTICES

Burden on Competition comment form (http://www.sec.gov/
OCC does not believe that the rules/sro.shtml); or
proposed rule change would impose any • Send an email to rule-comments@
sec.gov. Please include File Number SR–
7 15 U.S.C. 78q–1(b)(3)(F). OCC–2015–015 on the subject line.
8 17 CFR 242.1004(a) and (b).
9 17 CFR 240.17Ad–22(d)(1). 10 15 U.S.C. 78–q1(b)(3)(I). 11 17 CFR 200.30–3(a)(12).

VerDate Sep<11>2014 17:19 Oct 14, 2015 Jkt 238001 PO 00000 Frm 00119 Fmt 4703 Sfmt 9990 E:\FR\FM\15OCN1.SGM 15OCN1
Document Created: 2018-02-27 08:52:20
Document Modified: 2018-02-27 08:52:20
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 62129