82 FR 54448 - Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Advance Notice Concerning the Use of the Society of Worldwide Interbank Financial Telecommunication Messaging Network in OCC's Cash Settlement Process
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 221 (November 17, 2017)
Federal Register Volume 82, Issue 221 (November 17, 2017)
| Page Range | 54448-54453 | |
| FR Document | 2017-24919 |
[Federal Register Volume 82, Number 221 (Friday, November 17, 2017)] [Notices] [Pages 54448-54453] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-24919] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82055; File No. SR-OCC-2017-805] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Advance Notice Concerning the Use of the Society of Worldwide Interbank Financial Telecommunication Messaging Network in OCC's Cash Settlement Process November 13, 2017. Pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, entitled Payment, Clearing and Settlement Supervision Act of 2010 (``Clearing Supervision Act'') \1\ and Rule 19b-4(n)(1)(i) of the Securities Exchange Act of 1934 (``Act''),\2\ notice is hereby given that on October 10, 2017, The Options Clearing Corporation (``OCC'') filed with the Securities and Exchange Commission (``Commission'') an advance notice as well as a proposed cash settlement agreement procedures agreement (``CSPA'') template 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 advance notice from interested persons. --------------------------------------------------------------------------- \1\ 12 U.S.C. 5465(e)(1). \2\ 17 CFR 240.19b-4(n)(1)(i). --------------------------------------------------------------------------- I. Clearing Agency's Statement of the Terms of Substance of the Advance Notice In accordance with Section 806(e)(1) of the Clearing Supervision Act \3\ and Rule 19b-4(n)(1)(i) \4\ of the Act,\5\ this advance notice is filed by OCC in connection with proposed changes to improve OCC's cash settlement process by implementing Society of Worldwide Interbank Financial Telecommunication (``SWIFT'') messaging as the primary means of transmitting daily cash settlement instructions between OCC and its Clearing Banks.\6\ The proposed change is designed to: (1) Increase the efficiency, accuracy, and resiliency of OCC's cash settlement process, (2) eliminate certain risks associated with the current use of OCC's proprietary online cash settlement system within the ENCORE clearing system (``OCS''), and (3) adopt communication procedures and standards that are internationally accepted and therefore [[Page 54449]] are consistent with the requirements in Rule 17Ad-22(e)(22).\7\ --------------------------------------------------------------------------- \3\ 12 U.S.C. 5465(e)(1). \4\ 17 CFR 240.19b-4(n)(1)(i). \5\ 15 U.S.C. 78a et seq. \6\ See OCC Rule 101.C.(1) (defining the term ``Clearing Bank''). \7\ 17 CFR 240.17Ad-22(e)(22). --------------------------------------------------------------------------- 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.\8\ --------------------------------------------------------------------------- \8\ OCC's By-Laws and Rules can be found on OCC's public Web site: http://optionsclearing.com/about/publications/bylaws.jsp. --------------------------------------------------------------------------- II. Clearing Agency's Statement of the Purpose of, and Statutory Basis for, the Advance Notice In its filing with the Commission, OCC included statements concerning the purpose of and basis for the advance notice and discussed any comments it received on the advance notice. 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 and B below, of the most significant aspects of these statements. (A) Clearing Agency's Statement on Comments on the Advance Notice Received From Members, Participants or Others Communications With Clearing Banks There are currently eight banks or trust companies that act as OCC Clearing Banks.\9\ The Clearing Banks were first informed in early 2016 via phone communications regarding OCC's initiative to utilize SWIFT messaging and the SWIFT network for cash settlement processing. This initiative was positively received by existing Clearing Banks since they utilize SWIFT-based messaging in other areas of their businesses. Moreover, several Clearing Banks have informally expressed their desire to OCC in the past for OCC to integrate use of the SWIFT messaging network in the cash settlement process. --------------------------------------------------------------------------- \9\ OCC Rule 101.C.(1) defines the term ``Clearing Bank'' to mean ``a bank or trust company which has entered into an agreement with [OCC] in respect of settlement of confirmed trades on behalf of Clearing Members.'' --------------------------------------------------------------------------- Beginning in October 2016, OCC distributed a draft template cash settlement procedures agreement to all Clearing Banks that would implement SWIFT messaging as the primary means of transmitting daily cash settlement instructions between OCC and the Clearing Banks along with a request for feedback. In response, all of the existing Clearing Banks have expressed support for the transition to SWIFT. This is in part because the existing use of OCC's online cash settlement system is not integrated with the internal systems used by Clearing Banks for processing settlement instructions. Processing the settlement instructions therefore requires manual intervention by the Clearing Banks to enter the instructions into their own systems. According to comments from all Clearing Banks, this lack of integration elongates the timeframe to process and approve settlement instructions, which causes delays and increases the risk of errors in preparing, posting, transmitting, receiving, and executing timely settlement instructions. Following the receipt of questions and comments, OCC began negotiating the cash settlement procedures agreement with each Clearing Bank based on the standardized template. The definitive documentation between OCC and each Clearing Bank is expected to be consistent with the template agreement, however, areas of negotiation to date have generally included such matters as acceptable backup communication methods for transmitting settlement instructions (e.g., facsimile, email, or other means), standards of care associated with duties and potential liabilities under the agreement (e.g., negligence, gross negligence, or willful misconduct), certain defined terms (e.g., the meaning of a ``business day''), and allocations of responsibility regarding the detection of errors associated with settlement instructions. (B) Advance Notices Filed Pursuant to Section 806(e) of the Payment, Clearing, and Settlement Supervision Act Description of the Proposed Change Background The Existing Online Cash Settlement System In connection with OCC's performance of clearance and settlement services for cleared contracts \10\ and Stock Loans, OCC and Clearing Members are obligated under OCC's By-Laws and Rules to perform cash settlement of related obligations.\11\ This cash settlement process is facilitated by Clearing Banks, which are banks or trust companies that have entered agreements with OCC to settle on behalf of Clearing Members and at which OCC and Clearing Members each maintain accounts.\12\ Currently, there are eight Clearing Banks with which OCC effects cash settlements through OCS, which is a proprietary web-based system OCC developed in conjunction with the gradual phase-in of its ENCORE clearing system in the early- to-mid 2000's.\13\ OCS replaced OCC's previous cash settlement system, the Options Automated Settlement Instructions System, which required the use of dedicated terminals at each Clearing Bank. Because OCS is a web-based system, it provides greater flexibility to OCC and Clearing Banks because users are not limited to only using dedicated terminals to access the system. --------------------------------------------------------------------------- \10\ See Article I., Section 1.C.(11). \11\ See, e.g., Article I, Section 1.S.(16) of OCC's By-Laws (defining the term ``settlement time''); Article VI, Sections 4 and 6 of OCC's By-Laws (addressing obligations of Purchasing Clearing Members and obligations of OCC as a central counterparty); and Chapter V of OCC's Rules (regarding daily cash settlement). \12\ See OCC Rule 101.C.(1) (defining the term ``Clearing Bank''). \13\ See generally OCC Completes Second Major Installation of EncoreTM Clearing System(November 25, 2002), available at https://www.theocc.com/about/newsroom/releases/2002/11_25.jsp. --------------------------------------------------------------------------- On a daily basis, OCC generates settlement instructions associated with Cleared Contracts and Stock Loans of Clearing Members by running specific predefined settlement profiles \14\ throughout the day. The resulting settlement instructions are generally transmitted by OCC to Clearing Banks by way of OCS, at which point the Clearing Banks are able to view batches of settlement instructions within OCS.\15\ Clearing Bank staff review the settlement instructions by logging into OCS and opening the settlement batch. Thereafter, the Clearing Bank either approves or rejects the settlement instructions in OCS. One of the Clearing Banks, however, currently does not utilize OCS as its primary means of effecting cash settlement. Instead, the Clearing Bank primarily receives settlement instructions from OCC via facsimile, reviews the settlement instructions, approves or rejects them, and then returns a facsimile confirmation to OCC. After receipt of the confirmation, OCC staff manually enters the approvals or rejections into OCS. --------------------------------------------------------------------------- \14\ Predefined settlement profiles are programmed to track various types of obligations to pay or collect cash in connection with Cleared Contracts and Stock Loans that are in turn used to generate settlement instructions. \15\ A settlement batch is a set of individual debit or credit settlement instructions that may either instruct a Clearing Bank to move funds to or from an OCC settlement account or to or from a Clearing Member's account at the same Clearing Bank. --------------------------------------------------------------------------- Cash settlement instructions that OCC transmits to Clearing Banks are generally categorized in two groups: Start-of-day and intra-day. Start-of-day settlement instructions are generated through OCC's nightly processing cycle and relate to cash settlement obligations that arise from Cleared Contracts and Stock Loans of Clearing Members, including, but not limited to, premium payments, margin requirements, mark-to-market activity, and cash settlement amounts for exercised options that are cash settled. Intra-day settlement [[Page 54450]] instructions represent any settlement instruction other than a start- of-day instruction and may be transmitted by OCC to a Clearing Bank throughout the day. For example, intra-day settlement instructions may be generated to credit excess cash to a Clearing Member in connection with its margin requirement,\16\ to complete a cash substitution regarding a Clearing Member's margin deposit or to effect an intra-day margin call that OCC may issue to a Clearing Member pursuant to its authority under Rule 609.\17\ The settlement timeline for processing intra-day settlement instructions depends on the time at which the Clearing Bank receives the instructions, as discussed below. --------------------------------------------------------------------------- \16\ See OCC Rule 608 (Withdrawals of Margin). \17\ See OCC Rule 609 (Intra-Day Margin). --------------------------------------------------------------------------- Existing Cash Settlement Procedures Agreements Each Clearing Bank entered into a CSPA with OCC that details the substantive rights and responsibilities of the parties and specifies operational procedures for which they are responsible regarding start- of-day and intra-day settlement instructions. This includes prescribed communication methods and settlement procedures and generally contemplates the use of OCS as the primary means to facilitate the cash settlement process, with the exception of the one instance described above in which the primary means of communication between OCC and the Clearing Bank is facsimile. For start-of-day settlement instructions, the CSPA requires the Clearing Bank on the morning of each business day and by a standard time to access OCS and act upon the settlement instructions transmitted by OCC. Once the Clearing Bank reviews the settlement instructions, it either accepts or rejects each instruction through OCS.\18\ If an instruction is to be rejected, the Clearing Bank must immediately notify OCC in advance by telephone that it intends to reject the instruction and provide the reason. OCC then has an opportunity to submit a revised settlement instruction by telephone or other mutually agreed upon means. All settlement instructions must be acted upon by the Clearing Bank before a defined settlement time, which differs for credit instructions (i.e., transfers of funds from an OCC account to a Clearing Member account) and debit instructions (i.e., transfers of funds from a Clearing Member account to an OCC account). If a Clearing Bank does not expressly accept or reject a settlement instruction by the specified settlement time, the bank is deemed to have accepted the instruction. --------------------------------------------------------------------------- \18\ In the event OCS is unavailable, the CSPA specifies backup procedures, which may include transmission by telephone or facsimile. --------------------------------------------------------------------------- For intra-day settlement instructions, OCC transmits the instructions through OCS for the Clearing Bank to review and then notifies the Clearing Bank by telephone or other agreed upon means. With respect to Clearing Banks with access to OCS, the Clearing Bank must then use commercially reasonable efforts to access OCS immediately and act upon the settlement instruction by the earlier of either: (a) Thirty (30) minutes following the time the bank first views the settlement instruction in OCS or (b) sixty (60) minutes after OCC notifies the Clearing Bank that is has submitted settlement instructions via OCS. The same provisions related to backup procedures, acceptance, rejection, and implied acceptance for morning settlement also apply to such intra-day settlement instructions. Proposed Changes Under the Proposed CSPA, OCC and all Clearing Banks would use the SWIFT network as the primary means of transmitting settlement instructions to each other, and Clearing Bank staff would no longer log in to OCS and accept or reject settlement instructions. OCC would, however, continue using OCS for more limited purposes to manage its settlement instruction processing, including with respect to the initiation, processing, and tracking of settlement instructions. Under the new process in which SWIFT would be the primary means of transmitting settlement instructions, OCC would integrate OCS with the SWIFT network, and SWIFT would be used to communicate settlement instructions to Clearing Banks and allow Clearing Banks to approve settlement instructions. OCC would also implement a new monitoring screen to complement OCS that would allow OCC to track the lifecycle of all SWIFT messages sent or received by OCC in connection with its cash settlement activities. SWIFT would not be a new communication channel for OCC even though the proposed change would increase the extent to which OCC utilizes the SWIFT messaging network in connection with its clearance and settlement activities. This is because Clearing Members may currently deposit letters of credit denominated in U.S. dollars issued by banks or trust companies approved by OCC as margin assets \19\ and the issuer of any such letter of credit submits amendments to OCC using the SWIFT network. OCC manages this process through a SWIFT system that interfaces with OCC's ENCORE clearing system so that OCC is able to track and process the amendment messages. Under the proposed change, OCC would also use the same SWIFT system to support cash settlement processing. Based upon settlement profiles created by OCC, settlement instructions in the form of SWIFT messages would be automatically transmitted to Clearing Banks over the SWIFT network. In response, OCC would then receive acceptances from Clearing Banks via the SWIFT network. If an acceptance is not provided, OCC would have discretion to treat a settlement instruction as rejected, and in any case would promptly contact the Clearing Bank to determine the reason and coordinate with the Clearing Bank to ensure that appropriate action is taken with respect to the instruction. --------------------------------------------------------------------------- \19\ See OCC Rule 604(c). --------------------------------------------------------------------------- OCC believes the proposed change would significantly increase the resiliency of OCC's cash settlement process by reducing manual processing steps that are more prone to error. For example, upon a Clearing Bank's acceptance of a settlement instruction sent by OCC using SWIFT, debits or credits, as appropriate, would be automatically made as between OCC's account at the Clearing Bank and the Clearing Member's account at the Clearing Bank. This means that Clearing Banks would no longer need to view settlement instructions in OCS and manually enter them into their systems to effect them as they do today. Moreover, use of the SWIFT network would eliminate facsimile, telephone, and email communications as primary communication methods for settlement processing. If SWIFT is unavailable, OCC and Clearing Banks would communicate by using contingency methods as specified in the applicable CSPA. The Proposed CSPA would also introduce significant efficiencies to OCC's cash settlement process by reducing manual processing steps that elongate the time frame for processing and approving settlement instructions. Notably, OCC expects significantly faster response times from Clearing Banks because the banks would be able to communicate with OCC using the same SWIFT transmission method that they already typically use to process funds transfer instructions. OCC believes that efficiencies and time savings would also be experienced by [[Page 54451]] significantly reducing manual steps associated with the processing of settlement instructions, such as manual data entry by Clearing Banks to enter settlement instruction information into their own systems based on computer printouts of instructions contained in OCS or instructions that are received by facsimile. In addition, the proposed change would allow Clearing Banks to forward SWIFT messages from OCC to internal staff at the Clearing Bank who have responsibility for the cash settlement process. The Proposed CSPA would also harmonize the primary process by which OCC performs cash settlement with Clearing Banks by having all Clearing Banks use the SWIFT messaging system. In addition to the efficiency and risk mitigation benefits described above, the Proposed CSPA would directly respond to the Clearing Bank requests for OCC to implement an enhanced process to mitigate the manual processing challenges that are associated with the existing cash settlement process. Finally, OCC believes that the Proposed CSPA would also promote compliance with Rule 17Ad-22(e)(22),\20\ which requires OCC as a covered clearing agency to establish, implement, maintain, and enforce written policies and procedures reasonably designed to ``use, or at a minimum accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, and settlement.'' In adopting this requirement, the Commission stated that ``[r]elevant internationally accepted communication procedures and standards could include messaging standards such as SWIFT, FIX and FpML.'' [emphasis added].\21\ Accordingly, use of the SWIFT messaging network as the primary process to support daily cash settlement is consistent with Rule 17Ad- 22(e)(22). --------------------------------------------------------------------------- \20\ 17 CFR 240.17Ad-22(e)(22). \21\ Securities Exchange Act Release No. 78961 (September 28, 2016), 81 FR 70786, 70842 (October 13, 2016). --------------------------------------------------------------------------- New Cash Settlement Procedures Agreement As part of the transition to SWIFT, Clearing Banks would enter into the Proposed CSPA with OCC. The Proposed CSPA is based on a standardized template developed by OCC in collaboration with its Clearing Banks. The Proposed CSPA template agreement is not a public document, and OCC has separately submitted a request for confidential treatment regarding the Proposed CSPA template agreement, which is included in this filing as Exhibit 3. The definitive Proposed CSPA between OCC and each Clearing Bank is expected to be consistent with the template agreement, however, OCC and each Clearing Bank may negotiate certain modifications. As is the case today, the Proposed CSPA would continue to be the principal form of agreement that governs the rights and responsibilities of OCC and each Clearing Bank, details operational procedures (including backup procedures) and security protocols, and identifies individuals at OCC and at the Clearing Bank who are authorized to act on behalf of each party with respect to cash settlement instructions. Under the Proposed CSPA, the timelines for OCC and Clearing Banks to perform the actions needed to effect settlement would be bifurcated as they are under the current agreement into start-of-day settlement instructions and intra-day settlement instructions. Also as with the current CSPA, there would be defined deadlines by which OCC must submit settlement instructions and by which the Clearing Bank must accept and execute the settlement instructions. In the event the SWIFT network is unavailable during a time at which settlement instructions are to be communicated, each Proposed CSPA would detail backup procedures with corresponding security protocols by which OCC and the Clearing Bank could effect settlement. For example, such alternative communication methods may include secure email messages, telephone instructions with the use of personal identification codes, facsimile instructions, the Clearing Bank's proprietary online account system, or other methods agreed upon by OCC and the Clearing Bank. Under the Proposed CSPA, however, Clearing Banks would not be deemed to have accepted settlement instructions in the event the Clearing bank does not explicitly communicate acceptance or rejection to OCC. Instead, any acceptance would be required to be made by affirmative SWIFT confirmation message, and if a Clearing Bank did not respond OCC would have discretion to treat the failure to respond as a rejection and OCC would communicate with the Clearing Bank to understand the reason(s) why no response to the settlement instruction was provided and appropriate action is taken. These measures are intended to ensure that potentially erroneous instructions are identified and acted upon in a timely manner and to evidence settlement finality. The CSPAs currently in effect between OCC and its Clearing Banks were implemented incrementally over a number of years as OCC's operations expanded and it became appropriate to maintain service agreements with a range of Clearing Banks, and in many cases they have not been renegotiated in a significant amount of time. For these reasons, there is variation between the terms and conditions of the relevant CSPA and the corresponding practices with the Clearing Banks. In some cases the differences are relatively substantial, such as in the one case described above where the primary means of communication between the Clearing Bank and OCC to support the cash settlement process is facsimile. The Proposed CSPA would address these issues by increasing consistency in the respective rights and responsibilities of OCC and the Clearing Banks and in turn promoting harmonization across OCC's daily cash settlement process. Negotiation of the Proposed CSPA to adopt the SWIFT messaging network as the primary process to support daily cash settlement would also update the agreements to rely on current industry communication procedures and standards that the Commission has recognized as consistent with the requirements of Rule 17Ad-22(e)(22).\22\ --------------------------------------------------------------------------- \22\ 17 CFR 240.17Ad-22(e)(22). --------------------------------------------------------------------------- Testing and Implementation Prior to implementation of the Proposed CSPA, the existing CSPA and current processes regarding daily cash settlement would continue in effect while OCC completes the development of the new SWIFT interface. OCC would also complete roundtrip certification testing of the proposed SWIFT network messaging operations. Upon execution of the Proposed CSPA by a Clearing Bank, an implementation date would be coordinated between OCC and the Clearing Bank and OCC would provide advance notice of the implementation to Clearing Members through an Information Memo. OCC generally expects a total timeframe of approximately 90 days would be necessary to migrate a Clearing Bank to SWIFT messaging-based cash settlement. Though OCC would be able to begin migration to SWIFT messaged-based cash settlement with each Clearing Bank on an individual basis, it would expect to complete the migration with all of its Clearing Banks by the end of Q1 2018. [[Page 54452]] Anticipated Effect on and Management of Risk OCC anticipates that the Proposed CSPA would reduce the nature and level of risk presented by OCC because, as described above, it would enhance the resiliency, efficiency and consistency of the cash settlement process and thereby reduce risks that are associated with the existing cash settlement process. Specifically, the Proposed CSPA would increase the resiliency of the cash settlement process by reducing manual processing steps that are more prone to risk of delay or error. Due to implementation of the SWIFT messaging network as the primary means of transmitting settlement instructions, a Clearing Bank's acceptance of settlement instructions would automatically result in debits or credits, as appropriate, and Clearing Banks would no longer manually enter settlement instructions in their own systems. OCC also anticipates the Proposed CSPA would enhance the efficiency of the cash settlement process by reducing manual processing steps that elongate the timeframe for processing and approving settlement instructions. In this regard, using SWIFT as the primary means of transmitting settlement instructions would reduce the risk of uncertainty in the cash settlement process by allowing OCC and the Clearing Banks to communicate using the same transmission method that is already typically used by the Clearing Banks to process funds transfer instructions with other institutions. OCC expects that this would lead to significantly faster response times from Clearing Banks to accept or reject instructions, which, in turn, would better manage the risk of untimely settlement by providing greater certainty concerning prompt settlement. In addition, the Proposed CSPA would enhance consistency in the agreements between OCC and the Clearing Banks and harmonize the use of SWIFT as the primary process used to conduct cash settlement. OCC anticipates that this greater consistency would reduce the risk of delay or error in the settlement process that might result from OCC's management of the greater inconsistency across practices with the Clearing Banks that exists today. Finally, OCC anticipates the Proposed CSPA would reduce regulatory risk to OCC by helping to ensure that the primary means of communicating settlement instructions uses relevant internationally accepted communications procedures and standards to facilitate efficient payment, clearing and settlement in a manner that is consistent with the requirements of Rule 17Ad-22(e)(22).\23\ --------------------------------------------------------------------------- \23\ 17 CFR 240.17Ad-22(e)(22). --------------------------------------------------------------------------- For all of these reasons, OCC anticipates that the Proposed CSPA would reduce the nature and level of risk presented by OCC. Consistency With the Payment, Clearing and Settlement Supervision Act The stated purpose of the Clearing Supervision Act is to mitigate systemic risk in the financial system and promote financial stability by, among other things, promoting uniform risk management standards for systemically important financial market utilities and strengthening the liquidity of systemically important financial market utilities.\24\ Section 805(a)(2) of the Clearing Supervision Act \25\ also authorizes the Commission to prescribe risk management standards for the payment, clearing and settlement activities of designated clearing entities, like OCC, for which the Commission is the supervisory agency. Section 805(b) of the Clearing Supervision Act \26\ states that the objectives and principles for risk management standards prescribed under Section 805(a) shall be to: --------------------------------------------------------------------------- \24\ 12 U.S.C. 5461(b). \25\ 12 U.S.C. 5464(a)(2). \26\ 12 U.S.C. 5464(b). ---------------------------------------------------------------------------Promote robust risk management; promote safety and soundness; reduce systemic risks; and support the stability of the broader financial system. The Commission has adopted risk management standards under Section 805(a)(2) of the Clearing Supervision Act and the Act in furtherance of these objectives and principles.\27\ In particular, Rule 17Ad-22(e)(22) \28\ requires that a covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to ``use, or at a minimum accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, and settlement.'' --------------------------------------------------------------------------- \27\ 17 CFR 240. 17Ad-22. See Securities Exchange Act Release Nos. 68080 (October 22, 2012), 77 FR 66220 (November 2, 2012) (S7- 08-11) (``Clearing Agency Standards''); 78961 (September 28, 2016), 81 FR 70786 (October 13, 2016) (S7-03-14) (``Standards for Covered Clearing Agencies''). The Standards for Covered Clearing Agencies became effective on December 12, 2016. As a ``covered clearing agency'' under Rule 17Ad-22(a)(5), OCC became obligated to comply with new section (e) of Rule 17Ad-22 as of the Commission's compliance date of April 11, 2017. \28\ 17 CFR 240.17Ad-22(e)(22). --------------------------------------------------------------------------- OCC believes that the proposed change concerning cash settlement described above is consistent with Section 805(b)(2) of the Clearing Supervision Act \29\ because it would promote safety and soundness in OCC's daily cash settlement process by mitigating risks that arise in the existing process due to manual processing steps and inconsistent practices across OCC's Clearing Banks and thereby enhancing the resiliency, efficiency and consistency of the process. As described in detail above, the proposed change would promote safety and soundness by implementing the SWIFT messaging network as the primary means of transmitting daily cash settlement instructions between OCC and each Clearing Bank that performs cash settlement on behalf of Clearing Members. This represents the use of a primary communication procedure that would be integrated with the systems that are already typically used by the Clearing Banks to process funds transfer instructions with other institutions and that would cause the acceptance of settlement instructions by Clearing Banks to automatically result in debits or credits, as appropriate, in the accounts of OCC and Clearing Members at the Clearing Banks. OCC believes that these changes promote the safety and soundness of the cash settlement process by, among other things, reducing manual processing steps that are more prone to risk of delay or error and by facilitating faster response times regarding the acceptance or rejection of settlement instructions by Clearing Banks, which, in turn, would provide greater certainty regarding prompt settlement. --------------------------------------------------------------------------- \29\ 12 U.S.C. 5464(b)(2). --------------------------------------------------------------------------- OCC also believes that the proposed change to enhance the consistency of the CSPA between OCC and each Clearing Bank would promote safety and soundness by reducing the risk of settlement delay or error that may arise due to the existing degree of variability in the practices between Clearing Banks, including but not limited to the current use by one Clearing Bank of facsimile as a primary method for transmitting settlement instructions. OCC further believes that the proposed change would promote compliance with Rule 17Ad-22(e)(22),\30\ which requires OCC as a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ``use, or at a minimum accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, and settlement.'' In [[Page 54453]] adopting this requirement, the Commission stated that ``[r]elevant internationally accepted communication procedures and standards could include messaging standards such as SWIFT, FIX and FpML.'' [emphasis added].\31\ Accordingly, use of the SWIFT messaging network as the primary process to support daily cash settlement is consistent with Rule 17Ad-22(e)(22). --------------------------------------------------------------------------- \30\ 17 CFR 240.17Ad-22(e)(22). \31\ Securities Exchange Act Release No. 78961 (September 28, 2016), 81 FR 70786, 70842 (October 13, 2016). --------------------------------------------------------------------------- In these ways, OCC believes the proposed changes are consistent with Section 805(b)(2) of the Clearing Supervision Act \32\ and Rule 17Ad-22(e)(22).\33\ --------------------------------------------------------------------------- \32\ 12 U.S.C. 5464(b)(2). \33\ 17 CFR 240.17Ad-22(e)(22). --------------------------------------------------------------------------- III. Date of Effectiveness of the Advance Notice and Timing for Commission Action The proposed change may be implemented if the Commission does not object to the proposed change within 60 days of the later of: (i) The date the proposed change was filed with the Commission or (ii) the date any additional information requested by the Commission is received. OCC shall not implement the proposed change if the Commission has any objection to the proposed change. The Commission may extend the period for review by an additional 60 days if the proposed change raises novel or complex issues, subject to the Commission providing the clearing agency with prompt written notice of the extension. A proposed change may be implemented in less than 60 days from the date the advance notice is filed, or the date further information requested by the Commission is received, if the Commission notifies the clearing agency in writing that it does not object to the proposed change and authorizes the clearing agency to implement the proposed change on an earlier date, subject to any conditions imposed by the Commission. OCC shall post notice on its Web site of proposed changes that are implemented. The proposal shall not take effect until all regulatory actions required with respect to the proposal are completed. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the advance notice is consistent with the Clearing Supervision Act and 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-2017-805 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549. All submissions should refer to File Number SR-OCC-2017-805. 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 advance notice that are filed with the Commission, and all written communications relating to the advance notice 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 at http://www.theocc.com/components/docs/legal/rules_and_bylaws/sr_occ_17_805.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-2017-805 and should be submitted on or before December 8, 2017. By the Commission. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-24919 Filed 11-16-17; 8:45 am] BILLING CODE 8011-01-P
![54448 Federal Register / Vol. 82, No. 221 / Friday, November 17, 2017 / Notices
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deem fee levels at a particular venue to subject line if email is used. To help the (‘‘Clearing Supervision Act’’) 1 and Rule
be excessive. Commission process and review your 19b–4(n)(1)(i) of the Securities Exchange
As noted above, while the Exchange comments more efficiently, please use Act of 1934 (‘‘Act’’),2 notice is hereby
has proposed to establish different fee only one method. The Commission will given that on October 10, 2017, The
codes for Market Maker complex orders post all comments on the Commission’s Options Clearing Corporation (‘‘OCC’’)
that interact with Customer orders on Internet Web site (http://www.sec.gov/ filed with the Securities and Exchange
the COB and other non-Customer rules/sro.shtml). Copies of the Commission (‘‘Commission’’) an
complex orders that interact with submission, all subsequent advance notice as well as a proposed
Customer orders on the COB, the amendments, all written statements cash settlement agreement procedures
Exchange has not proposed to with respect to the proposed rule agreement (‘‘CSPA’’) template as
differentiate the pricing applicable to change that are filed with the described in Items I and II below, which
these fee codes at this time. Commission, and all written Items have been prepared by OCC. The
C. Self-Regulatory Organization’s communications relating to the Commission is publishing this notice to
Statement on Comments on the proposed rule change between the solicit comments on the advance notice
Proposed Rule Change Received From Commission and any person, other than from interested persons.
Members, Participants, or Others those that may be withheld from the I. Clearing Agency’s Statement of the
The Exchange has not solicited, and public in accordance with the Terms of Substance of the Advance
does not intend to solicit, comments on provisions of 5 U.S.C. 552, will be Notice
this proposed rule change. The available for Web site viewing and
printing in the Commission’s Public In accordance with Section 806(e)(1)
Exchange has not received any written of the Clearing Supervision Act 3 and
comments from members or other Reference Room, 100 F Street NE.,
Washington, DC 20549 on official Rule 19b–4(n)(1)(i) 4 of the Act,5 this
interested parties. advance notice is filed by OCC in
business days between the hours of
III. Date of Effectiveness of the 10:00 a.m. and 3:00 p.m. Copies of such connection with proposed changes to
Proposed Rule Change and Timing for filing also will be available for improve OCC’s cash settlement process
Commission Action inspection and copying at the principal by implementing Society of Worldwide
office of the Exchange. All comments Interbank Financial Telecommunication
The foregoing rule change has become
received will be posted without change. (‘‘SWIFT’’) messaging as the primary
effective pursuant to Section 19(b)(3)(A)
Persons submitting comments are means of transmitting daily cash
of the Act 30 and paragraph (f) of Rule
cautioned that we do not redact or edit settlement instructions between OCC
19b–4 thereunder.31 At any time within
personal identifying information from and its Clearing Banks.6 The proposed
60 days of the filing of the proposed rule
comment submissions. You should change is designed to: (1) Increase the
change, the Commission summarily may
submit only information that you wish efficiency, accuracy, and resiliency of
temporarily suspend such rule change if
to make available publicly. All OCC’s cash settlement process, (2)
it appears to the Commission that such
submissions should refer to File eliminate certain risks associated with
action is necessary or appropriate in the
Number SR–BatsEDGX–2017–48, and the current use of OCC’s proprietary
public interest, for the protection of
should be submitted on or before online cash settlement system within
investors, or otherwise in furtherance of
December 8, 2017. the ENCORE clearing system (‘‘OCS’’),
the purposes of the Act.
and (3) adopt communication
IV. Solicitation of Comments For the Commission, by the Division of procedures and standards that are
Trading and Markets, pursuant to delegated internationally accepted and therefore
sradovich on DSK3GMQ082PROD with NOTICES
Interested persons are invited to authority.32
submit written data, views, and Eduardo A. Aleman, 1 12 U.S.C. 5465(e)(1).
arguments concerning the foregoing,
Assistant Secretary. 2 17 CFR 240.19b–4(n)(1)(i).
including whether the proposed rule 3 12 U.S.C. 5465(e)(1).
[FR Doc. 2017–24929 Filed 11–16–17; 8:45 am]
change is consistent with the Act. 4 17 CFR 240.19b–4(n)(1)(i).
BILLING CODE 8011–01–P 5 15 U.S.C. 78a et seq.
30 15 U.S.C. 78s(b)(3)(A). 6 See OCC Rule 101.C.(1) (defining the term
31 17 CFR 240.19b–4(f). 32 17 CFR 200.30–3(a)(12). ‘‘Clearing Bank’’).
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![Federal Register / Vol. 82, No. 221 / Friday, November 17, 2017 / Notices 54449
are consistent with the requirements in requires manual intervention by the developed in conjunction with the
Rule 17Ad–22(e)(22).7 Clearing Banks to enter the instructions gradual phase-in of its ENCORE clearing
All terms with initial capitalization into their own systems. According to system in the early- to-mid 2000’s.13
that are not otherwise defined herein comments from all Clearing Banks, this OCS replaced OCC’s previous cash
have the same meaning as set forth in lack of integration elongates the settlement system, the Options
the OCC By-Laws and Rules.8 timeframe to process and approve Automated Settlement Instructions
II. Clearing Agency’s Statement of the settlement instructions, which causes System, which required the use of
Purpose of, and Statutory Basis for, the delays and increases the risk of errors in dedicated terminals at each Clearing
Advance Notice preparing, posting, transmitting, Bank. Because OCS is a web-based
receiving, and executing timely system, it provides greater flexibility to
In its filing with the Commission, settlement instructions. OCC and Clearing Banks because users
OCC included statements concerning Following the receipt of questions and are not limited to only using dedicated
the purpose of and basis for the advance comments, OCC began negotiating the terminals to access the system.
notice and discussed any comments it cash settlement procedures agreement On a daily basis, OCC generates
received on the advance notice. The text with each Clearing Bank based on the settlement instructions associated with
of these statements may be examined at standardized template. The definitive Cleared Contracts and Stock Loans of
the places specified in Item IV below. documentation between OCC and each Clearing Members by running specific
OCC has prepared summaries, set forth Clearing Bank is expected to be predefined settlement profiles 14
in sections A and B below, of the most consistent with the template agreement, throughout the day. The resulting
significant aspects of these statements. however, areas of negotiation to date settlement instructions are generally
(A) Clearing Agency’s Statement on have generally included such matters as transmitted by OCC to Clearing Banks
Comments on the Advance Notice acceptable backup communication by way of OCS, at which point the
Received From Members, Participants or methods for transmitting settlement Clearing Banks are able to view batches
Others instructions (e.g., facsimile, email, or of settlement instructions within OCS.15
other means), standards of care Clearing Bank staff review the
Communications With Clearing Banks associated with duties and potential settlement instructions by logging into
There are currently eight banks or liabilities under the agreement (e.g., OCS and opening the settlement batch.
trust companies that act as OCC negligence, gross negligence, or willful Thereafter, the Clearing Bank either
Clearing Banks.9 The Clearing Banks misconduct), certain defined terms (e.g., approves or rejects the settlement
were first informed in early 2016 via the meaning of a ‘‘business day’’), and instructions in OCS. One of the Clearing
phone communications regarding OCC’s allocations of responsibility regarding Banks, however, currently does not
initiative to utilize SWIFT messaging the detection of errors associated with utilize OCS as its primary means of
and the SWIFT network for cash settlement instructions. effecting cash settlement. Instead, the
settlement processing. This initiative Clearing Bank primarily receives
(B) Advance Notices Filed Pursuant to settlement instructions from OCC via
was positively received by existing
Clearing Banks since they utilize Section 806(e) of the Payment, Clearing, facsimile, reviews the settlement
SWIFT-based messaging in other areas and Settlement Supervision Act instructions, approves or rejects them,
of their businesses. Moreover, several Description of the Proposed Change and then returns a facsimile
Clearing Banks have informally Background confirmation to OCC. After receipt of
expressed their desire to OCC in the the confirmation, OCC staff manually
past for OCC to integrate use of the The Existing Online Cash Settlement enters the approvals or rejections into
SWIFT messaging network in the cash System OCS.
settlement process. In connection with OCC’s Cash settlement instructions that OCC
Beginning in October 2016, OCC performance of clearance and settlement transmits to Clearing Banks are
distributed a draft template cash services for cleared contracts 10 and generally categorized in two groups:
settlement procedures agreement to all Stock Loans, OCC and Clearing Start-of-day and intra-day. Start-of-day
Clearing Banks that would implement Members are obligated under OCC’s By- settlement instructions are generated
SWIFT messaging as the primary means Laws and Rules to perform cash through OCC’s nightly processing cycle
of transmitting daily cash settlement settlement of related obligations.11 This and relate to cash settlement obligations
instructions between OCC and the cash settlement process is facilitated by that arise from Cleared Contracts and
Clearing Banks along with a request for Clearing Banks, which are banks or trust Stock Loans of Clearing Members,
feedback. In response, all of the existing companies that have entered agreements including, but not limited to, premium
Clearing Banks have expressed support with OCC to settle on behalf of Clearing payments, margin requirements, mark-
for the transition to SWIFT. This is in Members and at which OCC and to-market activity, and cash settlement
part because the existing use of OCC’s Clearing Members each maintain amounts for exercised options that are
online cash settlement system is not accounts.12 Currently, there are eight cash settled. Intra-day settlement
integrated with the internal systems Clearing Banks with which OCC effects
used by Clearing Banks for processing cash settlements through OCS, which is 13 See generally OCC Completes Second Major
settlement instructions. Processing the Installation of EncoreTM Clearing System(November
a proprietary web-based system OCC 25, 2002), available at https://www.theocc.com/
settlement instructions therefore about/newsroom/releases/2002/11_25.jsp.
10 See Article I., Section 1.C.(11). 14 Predefined settlement profiles are programmed
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7 17 CFR 240.17Ad–22(e)(22). 11 See, e.g., Article I, Section 1.S.(16) of OCC’s By- to track various types of obligations to pay or collect
8 OCC’s By-Laws and Rules can be found on Laws (defining the term ‘‘settlement time’’); Article cash in connection with Cleared Contracts and
OCC’s public Web site: http://optionsclearing.com/ VI, Sections 4 and 6 of OCC’s By-Laws (addressing Stock Loans that are in turn used to generate
about/publications/bylaws.jsp. obligations of Purchasing Clearing Members and settlement instructions.
9 OCC Rule 101.C.(1) defines the term ‘‘Clearing obligations of OCC as a central counterparty); and 15 A settlement batch is a set of individual debit
Bank’’ to mean ‘‘a bank or trust company which has Chapter V of OCC’s Rules (regarding daily cash or credit settlement instructions that may either
entered into an agreement with [OCC] in respect of settlement). instruct a Clearing Bank to move funds to or from
settlement of confirmed trades on behalf of Clearing 12 See OCC Rule 101.C.(1) (defining the term an OCC settlement account or to or from a Clearing
Members.’’ ‘‘Clearing Bank’’). Member’s account at the same Clearing Bank.
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![Federal Register / Vol. 82, No. 221 / Friday, November 17, 2017 / Notices 54451
significantly reducing manual steps agreement, which is included in this The CSPAs currently in effect
associated with the processing of filing as Exhibit 3. The definitive between OCC and its Clearing Banks
settlement instructions, such as manual Proposed CSPA between OCC and each were implemented incrementally over a
data entry by Clearing Banks to enter Clearing Bank is expected to be number of years as OCC’s operations
settlement instruction information into consistent with the template agreement, expanded and it became appropriate to
their own systems based on computer however, OCC and each Clearing Bank maintain service agreements with a
printouts of instructions contained in may negotiate certain modifications. range of Clearing Banks, and in many
OCS or instructions that are received by As is the case today, the Proposed cases they have not been renegotiated in
facsimile. In addition, the proposed CSPA would continue to be the a significant amount of time. For these
change would allow Clearing Banks to principal form of agreement that reasons, there is variation between the
forward SWIFT messages from OCC to governs the rights and responsibilities of terms and conditions of the relevant
internal staff at the Clearing Bank who OCC and each Clearing Bank, details CSPA and the corresponding practices
have responsibility for the cash operational procedures (including with the Clearing Banks. In some cases
settlement process. backup procedures) and security
The Proposed CSPA would also the differences are relatively substantial,
protocols, and identifies individuals at
harmonize the primary process by such as in the one case described above
OCC and at the Clearing Bank who are
which OCC performs cash settlement where the primary means of
authorized to act on behalf of each party
with Clearing Banks by having all with respect to cash settlement communication between the Clearing
Clearing Banks use the SWIFT instructions. Bank and OCC to support the cash
messaging system. In addition to the Under the Proposed CSPA, the settlement process is facsimile. The
efficiency and risk mitigation benefits timelines for OCC and Clearing Banks to Proposed CSPA would address these
described above, the Proposed CSPA perform the actions needed to effect issues by increasing consistency in the
would directly respond to the Clearing settlement would be bifurcated as they respective rights and responsibilities of
Bank requests for OCC to implement an are under the current agreement into OCC and the Clearing Banks and in turn
enhanced process to mitigate the start-of-day settlement instructions and promoting harmonization across OCC’s
manual processing challenges that are intra-day settlement instructions. Also daily cash settlement process.
associated with the existing cash as with the current CSPA, there would Negotiation of the Proposed CSPA to
settlement process. be defined deadlines by which OCC adopt the SWIFT messaging network as
Finally, OCC believes that the must submit settlement instructions and the primary process to support daily
Proposed CSPA would also promote by which the Clearing Bank must accept cash settlement would also update the
compliance with Rule 17Ad–22(e)(22),20 and execute the settlement instructions. agreements to rely on current industry
which requires OCC as a covered In the event the SWIFT network is communication procedures and
clearing agency to establish, implement, unavailable during a time at which standards that the Commission has
maintain, and enforce written policies settlement instructions are to be recognized as consistent with the
and procedures reasonably designed to communicated, each Proposed CSPA requirements of Rule 17Ad–22(e)(22).22
‘‘use, or at a minimum accommodate, would detail backup procedures with
relevant internationally accepted corresponding security protocols by Testing and Implementation
communication procedures and which OCC and the Clearing Bank could
standards in order to facilitate efficient Prior to implementation of the
effect settlement. For example, such
payment, clearing, and settlement.’’ In Proposed CSPA, the existing CSPA and
alternative communication methods
adopting this requirement, the may include secure email messages, current processes regarding daily cash
Commission stated that ‘‘[r]elevant telephone instructions with the use of settlement would continue in effect
internationally accepted communication personal identification codes, facsimile while OCC completes the development
procedures and standards could include instructions, the Clearing Bank’s of the new SWIFT interface. OCC would
messaging standards such as SWIFT, proprietary online account system, or also complete roundtrip certification
FIX and FpML.’’ [emphasis added].21 other methods agreed upon by OCC and testing of the proposed SWIFT network
Accordingly, use of the SWIFT the Clearing Bank. messaging operations. Upon execution
messaging network as the primary Under the Proposed CSPA, however, of the Proposed CSPA by a Clearing
process to support daily cash settlement Clearing Banks would not be deemed to Bank, an implementation date would be
is consistent with Rule 17Ad–22(e)(22). have accepted settlement instructions in coordinated between OCC and the
New Cash Settlement Procedures the event the Clearing bank does not Clearing Bank and OCC would provide
Agreement explicitly communicate acceptance or advance notice of the implementation to
rejection to OCC. Instead, any Clearing Members through an
As part of the transition to SWIFT, acceptance would be required to be Information Memo. OCC generally
Clearing Banks would enter into the made by affirmative SWIFT expects a total timeframe of
Proposed CSPA with OCC. The confirmation message, and if a Clearing
Proposed CSPA is based on a approximately 90 days would be
Bank did not respond OCC would have necessary to migrate a Clearing Bank to
standardized template developed by discretion to treat the failure to respond
OCC in collaboration with its Clearing SWIFT messaging-based cash
as a rejection and OCC would settlement. Though OCC would be able
Banks. The Proposed CSPA template communicate with the Clearing Bank to
agreement is not a public document, to begin migration to SWIFT messaged–
understand the reason(s) why no
sradovich on DSK3GMQ082PROD with NOTICES
and OCC has separately submitted a based cash settlement with each
response to the settlement instruction Clearing Bank on an individual basis, it
request for confidential treatment was provided and appropriate action is
regarding the Proposed CSPA template would expect to complete the migration
taken. These measures are intended to with all of its Clearing Banks by the end
ensure that potentially erroneous
20 17CFR 240.17Ad–22(e)(22). of Q1 2018.
21 Securities
Exchange Act Release No. 78961
instructions are identified and acted
(September 28, 2016), 81 FR 70786, 70842 (October upon in a timely manner and to
13, 2016). evidence settlement finality. 22 17 CFR 240.17Ad–22(e)(22).
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adopting this requirement, the may be submitted by any of the SECURITIES AND EXCHANGE
Commission stated that ‘‘[r]elevant following methods: COMMISSION
internationally accepted communication
procedures and standards could include Electronic Comments [Release No. 34–82060; File No. SR–
BatsEDGX–2017–47]
messaging standards such as SWIFT, • Use the Commission’s Internet
FIX and FpML.’’ [emphasis added].31 comment form (http://www.sec.gov/ Self-Regulatory Organizations; Cboe
Accordingly, use of the SWIFT rules/sro.shtml); or EDGX Exchange, Inc.; Notice of Filing
messaging network as the primary and Immediate Effectiveness of a
process to support daily cash settlement • Send an email to rule-comments@
Proposed Rule Change To Modify Its
is consistent with Rule 17Ad–22(e)(22). sec.gov. Please include File Number SR- Fees for Physical Ports
In these ways, OCC believes the OCC–2017–805 on the subject line.
proposed changes are consistent with November 13, 2017.
Paper Comments Pursuant to Section 19(b)(1) of the
Section 805(b)(2) of the Clearing
Supervision Act 32 and Rule 17Ad– • Send paper comments in triplicate Securities Exchange Act of 1934 (the
22(e)(22).33 to Secretary, Securities and Exchange ‘‘Act’’),1 and Rule 19b–4 thereunder,2
Commission, 100 F Street NE., notice is hereby given that on November
III. Date of Effectiveness of the Advance 2, 2017, Cboe EDGX Exchange, Inc. (the
Notice and Timing for Commission Washington, DC 20549.
‘‘Exchange’’ or ‘‘EDGX’’) (formerly
Action All submissions should refer to File known as Bats EDGX Exchange, Inc.)
The proposed change may be Number SR–OCC–2017–805. This file filed with the Securities and Exchange
implemented if the Commission does number should be included on the Commission (‘‘Commission’’) the
not object to the proposed change subject line if email is used. To help the proposed rule change as described in
within 60 days of the later of: (i) The Commission process and review your Items I, II and III below, which Items
date the proposed change was filed with comments more efficiently, please use have been prepared by the Exchange.
the Commission or (ii) the date any only one method. The Commission will The Exchange has designated the
additional information requested by the post all comments on the Commission’s proposed rule change as one
Commission is received. OCC shall not Internet Web site (http://www.sec.gov/ establishing or changing a member due,
implement the proposed change if the rules/sro.shtml). Copies of the fee, or other charge imposed by the
Commission has any objection to the submission, all subsequent Exchange under Section 19(b)(3)(A)(ii)
proposed change. amendments, all written statements of the Act 3 and Rule 19b–4(f)(2)
The Commission may extend the with respect to the advance notice that thereunder,4 which renders the
period for review by an additional 60 are filed with the Commission, and all proposed rule change effective upon
days if the proposed change raises novel written communications relating to the filing with the Commission. The
or complex issues, subject to the advance notice between the Commission is publishing this notice to
Commission providing the clearing Commission and any person, other than solicit comments on the proposed rule
agency with prompt written notice of those that may be withheld from the change from interested persons.
the extension. A proposed change may public in accordance with the I. Self-Regulatory Organization’s
be implemented in less than 60 days provisions of 5 U.S.C. 552, will be Statement of the Terms of Substance of
from the date the advance notice is available for Web site viewing and the Proposed Rule Change
filed, or the date further information printing in the Commission’s Public
requested by the Commission is The Exchange filed a proposal to
Reference Room, 100 F Street NE., amend the fee schedule applicable to
received, if the Commission notifies the
Washington, DC 20549 on official Members 5 and non-Members of the
clearing agency in writing that it does
business days between the hours of Exchange pursuant to EDGX Rules
not object to the proposed change and
10:00 a.m. and 3:00 p.m. Copies of the 15.1(a) and (c).
authorizes the clearing agency to
filing also will be available for The text of the proposed rule change
implement the proposed change on an
earlier date, subject to any conditions inspection and copying at the principal is available at the Exchange’s Web site
imposed by the Commission. office of OCC and on OCC’s Web site at at www.markets.cboe.com, at the
OCC shall post notice on its Web site http://www.theocc.com/components/ principal office of the Exchange, and at
of proposed changes that are docs/legal/rules_and_bylaws/sr_occ_17_ the Commission’s Public Reference
implemented. 805.pdf. Room.
The proposal shall not take effect All comments received will be posted II. Self-Regulatory Organization’s
until all regulatory actions required without change. Persons submitting Statement of the Purpose of, and
with respect to the proposal are comments are cautioned that we do not Statutory Basis for, the Proposed Rule
completed. redact or edit personal identifying Change
IV. Solicitation of Comments information from comment submissions. In its filing with the Commission, the
You should submit only information Exchange included statements
Interested persons are invited to that you wish to make available concerning the purpose of and basis for
submit written data, views and publicly. All submissions should refer the proposed rule change and discussed
arguments concerning the foregoing, to File Number SR–OCC–2017–805 and any comments it received on the
including whether the advance notice is should be submitted on or before
sradovich on DSK3GMQ082PROD with NOTICES
consistent with the Clearing December 8, 2017. 1 15 U.S.C. 78s(b)(1).
Supervision Act and the Act. Comments 2 17 CFR 240.19b–4.
By the Commission. 3 15 U.S.C. 78s(b)(3)(A)(ii).
31 SecuritiesExchange Act Release No. 78961 Eduardo A. Aleman, 4 17 CFR 240.19b–4(f)(2).
(September 28, 2016), 81 FR 70786, 70842 (October Assistant Secretary. 5 The term ‘‘Member’’ is defined as ‘‘any
13, 2016). registered broker or dealer that has been admitted
32 12 U.S.C. 5464(b)(2). [FR Doc. 2017–24919 Filed 11–16–17; 8:45 am]
to membership in the Exchange.’’ See Exchange
33 17 CFR 240.17Ad–22(e)(22). BILLING CODE 8011–01–P Rule 1.5(n).
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Document Created: 2017-11-17 05:14:40
Document Modified: 2017-11-17 05:14:40
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 82 FR 54448 |
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