82 FR 60253 - Submission for OMB Review; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 242 (December 19, 2017)

Page Range		60253-60254
FR Document		2017-27314

Federal Register, Volume 82 Issue 242 (Tuesday, December 19, 2017)

[Federal Register Volume 82, Number 242 (Tuesday, December 19, 2017)]
[Notices]
[Pages 60253-60254]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-27314]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-420, OMB Control No. 3235-0479]


Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736.

Extension:
    Rule 15c2-7

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange 
Commission

[[Page 60254]]

(``Commission'') has submitted to the Office of Management and Budget 
(``OMB'') a request for approval of extension of the previously 
approved collection of information provided for in Rule 15c2-7 (17 CFR 
240.15c2-7) under the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.).
    Rule 15c2-7 places disclosure requirements on broker-dealers who 
have correspondent relationships, or agreements identified in the rule, 
with other broker-dealers. Whenever any such broker-dealer enters a 
quotation for a security through an inter-dealer quotation system, Rule 
15c2-7 requires the broker-dealer to disclose these relationships and 
agreements in the manner required by the rule. The inter-dealer 
quotation system must also be able to make these disclosures public in 
association with the quotation the broker-dealer is making.
    When Rule 15c2-7 was adopted in 1964, the information it requires 
was necessary for execution of the Commission's mandate under the 
Securities Exchange Act of 1934 to prevent fraudulent, manipulative and 
deceptive acts by broker-dealers. In the absence of the information 
collection required under Rule 15c2-7, investors and broker-dealers 
would have been unable to accurately determine the market depth of, and 
demand for, securities in an inter-dealer quotation system.
    There are approximately 3,939 broker-dealers registered with the 
Commission. Any of these broker-dealers could be potential respondents 
for Rule 15c2-7, so the Commission is using that number as the number 
of respondents. Rule 15c2-7 applies only to quotations entered into an 
inter-dealer quotation system, such as the OTC Bulletin Board 
(``OTCBB'') or OTC Link (formerly ``Pink Sheets''), operated by OTC 
Markets Group Inc. (``OTC Link''). According to representatives of both 
OTC Link and the OTCBB, neither entity has recently received, or 
anticipates receiving any Rule 15c2-7 notices. However, because such 
notices could be made, the Commission estimates that one filing is made 
annually pursuant to Rule 15c2-7.
    Based on prior industry reports, the Commission estimates that the 
average time required to enter a disclosure pursuant to the rule is .75 
minutes, or 45 seconds. The Commission sees no reason to change this 
estimate. We estimate that impacted respondents spend a total of .0125 
hours per year to comply with the requirements of Rule 15c2-7 (1 notice 
(x) 45 seconds/notice).
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    The public may view background documentation for this information 
collection at the following website: www.reginfo.gov. Comments should 
be directed to: (i) Desk Officer for the Securities and Exchange 
Commission, Office of Information and Regulatory Affairs, Office of 
Management and Budget, Room 10102, New Executive Office Building, 
Washington, DC 20503, or by sending an email to: 
[email protected]; and (ii) Pamela Dyson, Director/Chief 
Information Officer, Securities and Exchange Commission, c/o Remi 
Pavlik-Simon, 100 F Street NE, Washington, DC 20549, or by sending an 
email to: [email protected]. Comments must be submitted to OMB within 
30 days of this notice.

    Dated: December 14, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-27314 Filed 12-18-17; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 82, No. 242 / Tuesday, December 19, 2017 / Notices 60253

time the collateral is accepted by OCC services for the financial markets while First, the proposed CRM Policy requires
and that are monitored regularly to help also managing a default. The CRM that, in determining forms of collateral
ensure the haircuts remain adequate.12 Policy also describes how OCC haircuts as margin assets and Clearing Fund
Additionally, the CRM Policy such collateral, and requires review of contributions, OCC evaluates the
provides that OCC’s Credit and such haircuts at least annually. Ensuring market, credit, and liquidity risk of an
Liquidity Working Group must review that collateral haircuts are appropriately asset class. Second, the CRM Policy
the policy’s performance and adequacy set and reviewed on a regular basis provides for the maintenance of
on at least an annual basis, including increases the likelihood that OCC will redundant pricing information feeds
with respect to collateral eligibility, collect and hold collateral that can be from multiple sources to ensure the
concentration limits, collateral haircuts liquidated at a value at or above the availability of information that is critical
and monitoring processes.13 value attributed to it. This approach to OCC’s daily and intraday processes
III. Summary of Comment Received thereby increases the likelihood that for collateral valuation. The CRM Policy
OCC will be able to continue to meet its further describes OCC’s processes for
The Commission received one settlement obligations and manage the setting haircuts either via the use of
comment letter in response to the default of a clearing member by STANS or percentage-based haircuts.
proposed rule change.14 The commenter liquidating the defaulting clearing Third, the proposed CRM requires at
stated that the proposed rule change is member’s collateral in a timely and least annual review of concentration
consistent with the Act.15 effective manner. limits and collateral haircuts. The
IV. Discussion and Commission The timely liquidation of collateral at Commission finds, therefore, that the
Findings or above the expected value would, proposed rule change is consistent with
therefore, support OCC’s ability to Rule 17Ad–22(e)(5).21
Section 19(b)(2)(C) of the Act directs continue to meet settlement obligations
the Commission to approve a proposed on time, promoting the prompt and V. Conclusion
rule change of a self-regulatory accurate clearance and settlement of On the basis of the foregoing, the
organization if it finds that such securities transactions. In addition, Commission finds that the proposed
proposed rule change is consistent with being able to successfully liquidate change is consistent with the
the requirements of the Act and the collateral in a timely and effective requirements of the Act, and in
rules and regulations thereunder manner would reduce the likelihood of particular, with the requirements of
applicable to such organization.16 After OCC having to draw on mutualized Section 17A of the Act 22 and the rules
carefully considering the proposed rule resources, including Clearing Fund and regulations thereunder.
change and the comment letter, the contributions. As such, the Commission It is therefore ordered pursuant to
Commission finds that the proposed believes that the proposal would help Section 19(b)(2) of the Act that the
rule change is consistent with the proposed rule change (SR–OCC–2017–
assure the safeguarding of securities and
requirements of the Act and the rules
funds which are in the custody or 008) be, and hereby is, approved.
and regulations thereunder applicable to
control of OCC, or for which OCC is For the Commission by the Division of
OCC. More specifically, the Commission
responsible. As a result, the Trading and Markets, pursuant to delegated
finds that the proposal is consistent
Commission also finds that the authority.23
with Section 17A(b)(3)(F) of the Act and
proposed rule change, in general, Eduardo A. Aleman,
Rule 17Ad–22(e)(5) under the Act.
protects investors and the public Assistant Secretary.
A. Consistency With Section interest. Accordingly, the Commission [FR Doc. 2017–27230 Filed 12–18–17; 8:45 am]
17A(b)(3)(F) of the Act finds that the proposed rule change is BILLING CODE 8011–01–P
Section 17A(b)(3)(F) of the Act consistent with Section 17A of the
requires that the rules of a registered Act.18
clearing agency be designed to do, B. Consistency With Rule 17Ad–22(e)(3) SECURITIES AND EXCHANGE
among other things, the following: (1) of the Act COMMISSION
Promote the prompt and accurate [SEC File No. 270–420, OMB Control No.
clearance and settlement of securities Rule 17Ad–22(e)(5) requires that a
covered clearing agency establish, 3235–0479]
transactions; (2) assure the safeguarding
of securities and funds which are in the implement, maintain and enforce
Submission for OMB Review;
custody or control of the clearing agency written policies and procedures
Comment Request
or for which it is responsible; and (3) in reasonably designed to limit the assets
general protect investors and the public it accepts as collateral to those with low Upon Written Request, Copies Available
interest.17 credit, liquidity, and market risks; set From: Securities and Exchange
The CRM Policy describes OCC’s and enforce appropriately conservative Commission, Office of FOIA Services,
process for limiting the collateral that it haircuts and concentration limits if the 100 F Street NE, Washington, DC
accepts to assets with low credit, covered clearing agency requires 20549–2736.
liquidity, and market risk. The collateral to manage its or its Extension:
acceptance of only low-risk collateral participants’ credit exposure; and, Rule 15c2–7
increases the likelihood that such require a review of the sufficiency of its
Notice is hereby given that pursuant
collateral can be liquidated in a timely collateral haircuts and concentration
to the Paperwork Reduction Act of 1995
manner, thereby enhancing OCC’s limits to be performed not less than
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
sradovich on DSK3GMQ082PROD with NOTICES

ability to continue to perform its critical annually.19
As discussed above, the proposed Securities and Exchange Commission
12 Notice, 82 FR at 52081. CRM Policy would address each 21 17 CFR 240.17Ad–22(e)(5).
13 Id. component of Rule 17Ad–22(e)(5).20 22 Inapproving this proposed rule change, the
14 See supra note 4. Commission has considered the proposed rule’s
15 Id. 18 15 U.S.C. 78q–1. impact on efficiency, competition, and capital
16 15 U.S.C. 78s(b)(2)(C). 19 17 CFR 240.17Ad–22(e)(5). formation. See 15 U.S.C. 78c(f).
17 15 U.S.C. 78q–1(b)(3)(F). 20 Id. 23 17 CFR 200.30–3(a)(12).

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60254 Federal Register / Vol. 82, No. 242 / Tuesday, December 19, 2017 / Notices

(‘‘Commission’’) has submitted to the respond to, a collection of information Register on November 7, 2017.3 The
Office of Management and Budget under the PRA unless it displays a Commission did not receive comments
(‘‘OMB’’) a request for approval of currently valid OMB control number. on the proposed rule change. For the
extension of the previously approved The public may view background reasons discussed below, the
collection of information provided for in documentation for this information Commission is approving the proposed
Rule 15c2–7 (17 CFR 240.15c2–7) under collection at the following website: rule change.
the Securities Exchange Act of 1934 (15 www.reginfo.gov. Comments should be II. Description of the Proposed Rule
U.S.C. 78a et seq.). directed to: (i) Desk Officer for the
Rule 15c2–7 places disclosure Change
Securities and Exchange Commission, ICE Clear Europe proposed to adopt a
requirements on broker-dealers who
Office of Information and Regulatory Procyclicality Framework that is
have correspondent relationships, or
Affairs, Office of Management and intended to set forth, generally, (1) the
agreements identified in the rule, with
Budget, Room 10102, New Executive aspects of ICE Clear Europe’s risk
other broker-dealers. Whenever any
Office Building, Washington, DC 20503, policies that may exhibit procyclicality;
such broker-dealer enters a quotation for
or by sending an email to: Shagufta_ (2) the manner in which ICE Clear
a security through an inter-dealer
Ahmed@omb.eop.gov; and (ii) Pamela Europe will assess procyclicality (using
quotation system, Rule 15c2–7 requires
Dyson, Director/Chief Information both qualitative and a quantitative
the broker-dealer to disclose these
relationships and agreements in the Officer, Securities and Exchange metrics); and (3) how ICE Clear Europe
manner required by the rule. The inter- Commission, c/o Remi Pavlik-Simon, will take procyclicality into account
dealer quotation system must also be 100 F Street NE, Washington, DC 20549, with respect to its consideration of and
able to make these disclosures public in or by sending an email to: PRA_ response to emerging risks. ICE Clear
association with the quotation the Mailbox@sec.gov. Comments must be Europe proposed to define
broker-dealer is making. submitted to OMB within 30 days of ‘‘procyclicality’’ as the extent to which
When Rule 15c2–7 was adopted in this notice. changes in market conditions can have
1964, the information it requires was Dated: December 14, 2017. an effect on a clearing member’s ability
necessary for execution of the Eduardo A. Aleman, to manage its liquidity to meet ICE Clear
Commission’s mandate under the Europe’s changing margin
Assistant Secretary.
Securities Exchange Act of 1934 to requirements.4
[FR Doc. 2017–27314 Filed 12–18–17; 8:45 am] ICE Clear Europe represented that
prevent fraudulent, manipulative and
deceptive acts by broker-dealers. In the BILLING CODE 8011–01–P although it has in place certain
absence of the information collection measures intended to mitigate
required under Rule 15c2–7, investors procyclicality, as required by the
and broker-dealers would have been SECURITIES AND EXCHANGE European Market Infrastructure
unable to accurately determine the COMMISSION Regulation,5 it proposed to implement
market depth of, and demand for, the Procyclicality Framework in order to
securities in an inter-dealer quotation [Release No. 34–82313; File No. SR–ICEEU– establish a more defined approach to
system. 2017–013] assessing procyclicality in its risk
There are approximately 3,939 broker- management policies and procedures.6
dealers registered with the Commission. Self-Regulatory Organizations; ICE In particular, ICE Clear Europe proposed
Any of these broker-dealers could be Clear Europe Limited; Order Approving to identify the risk management policies
potential respondents for Rule 15c2–7, Proposed Rule Change Relating to the that may introduce procyclical
so the Commission is using that number ICE Clear Europe Procyclicality concerns, which includes margin
as the number of respondents. Rule Framework models, stress testing, and collateral
15c2–7 applies only to quotations haircut policies. In addition, as part of
December 13, 2017.
entered into an inter-dealer quotation the Procyclicality Framework, ICE Clear
system, such as the OTC Bulletin Board I. Introduction Europe also proposed to reference
(‘‘OTCBB’’) or OTC Link (formerly existing methods for mitigating
‘‘Pink Sheets’’), operated by OTC On October 23, 2017, ICE Clear procyclicality in the above mentioned
Markets Group Inc. (‘‘OTC Link’’). Europe Limited (‘‘ICE Clear Europe’’) areas, as well as certain stress testing
According to representatives of both filed with the Securities and Exchange arrangements.7
OTC Link and the OTCBB, neither Commission (‘‘Commission’’), pursuant Furthermore, ICE Clear Europe
entity has recently received, or to Section 19(b)(1) of the Securities proposed to incorporate into the
anticipates receiving any Rule 15c2–7 Exchange Act of 1934 (‘‘Act’’),1 and Procyclicality Framework the measures
notices. However, because such notices Rule 19b–4 thereunder,2 a proposed rule by which it would assess the level of
could be made, the Commission change (SR–ICEEU–2017–013) to adopt procyclicality. Specifically, ICE Clear
estimates that one filing is made a new policy framework for addressing Europe proposed to assess procyclicality
annually pursuant to Rule 15c2–7. the procyclicality (‘‘Procyclicality by monitoring the 95th percentile
Based on prior industry reports, the Framework’’) associated with its risk expected shortfall of the 5-day
Commission estimates that the average management policies. Specifically, the
time required to enter a disclosure Procyclicality Framework would 3 Securities Exchange Act Release No. 34–81994

establish the risk appetite, monitoring (Nov. 1, 2017), 82 FR 51663 (Nov. 7, 2017) (SR–
pursuant to the rule is .75 minutes, or ICEEU–2017–013) (‘‘Notice’’).
and assessment, and management of
sradovich on DSK3GMQ082PROD with NOTICES

45 seconds. The Commission sees no 4 Notice, 82 FR at 51663.

reason to change this estimate. We procyclicality in the risk models used 5 Article 28 of the Commission Delegated

estimate that impacted respondents by ICE Clear Europe to manage default Regulation (EU) No 153/2013 of 19 December 2012
spend a total of .0125 hours per year to risk. The proposed rule change was supplementing Regulation (EU) No 648/2012 of the
European Parliament and of the Council with regard
comply with the requirements of Rule published for comment in the Federal to regulatory technical standards on requirements
15c2–7 (1 notice (×) 45 seconds/notice). for central counterparties.
An agency may not conduct or 1 15 U.S.C. 78s(b)(1). 6 Notice, 82 FR at 51663.

sponsor, and a person is not required to 2 17 CFR 240.19b–4. 7 Id.

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Document Created: 2017-12-19 01:31:19
Document Modified: 2017-12-19 01:31:19

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		82 FR 60253