83 FR 13171 - Self-Regulatory Organizations; The Options Clearing Corporation; Order Instituting Proceedings To Determine Whether To Approve or Disapprove the Proposed Rule Concerning Enhanced and New Tools for Recovery Scenarios

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 59 (March 27, 2018)

Page Range		13171-13173
FR Document		2018-06105

Federal Register, Volume 83 Issue 59 (Tuesday, March 27, 2018)

[Federal Register Volume 83, Number 59 (Tuesday, March 27, 2018)]
[Notices]
[Pages 13171-13173]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-06105]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82926; File No. SR-OCC-2017-020]

Self-Regulatory Organizations; The Options Clearing Corporation;
Order Instituting Proceedings To Determine Whether To Approve or
Disapprove the Proposed Rule Concerning Enhanced and New Tools for
Recovery Scenarios

March 22, 2018.

I. Introduction

On December 18, 2017, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change SR-OCC-2017-020 (``Proposed Rule Change''),
pursuant to Section 19(b) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder.\2\ The Proposed Rule Change
was published for comment in the Federal Register on December 26,
2017.\3\ On January 25, 2018, the Comission designated a longer period
within which to approve the Proposed Rule Change, disapprove the
Proposed Rule Change, or institute proceedings to determine whether to
approve or disapprove the Proposed Rule Change.\4\ To date,\5\ the
Commission has received one comment letter to the Proposed Rule
Change.\6\ The Commission is publishing this order pursuant to Section
19(b)(2)(B) of the Act \7\ to institute proceedings to determine
whether to approve or disapprove the Proposed Rule Change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 82351 (Dec. 19, 2017),
82 FR 61107 (Dec. 26, 2017) (SR-OCC-2017-020) (``Notice''). On
December 8, 2017, OCC also filed a related advance notice (SR-OCC-
2017-809) with the Commission pursuant to Section 806(e)(1) of Title
VIII of the Dodd-Frank Wall Street Reform and Consumer Protection
Act, entitled the Payment, Clearing, and Settlement Supervision Act
of 2010 and Rule 19b-4(n)(1)(i) under the Act (``Advance Notice'').
12 U.S.C. 5465(e)(1) and 17 CFR 240.19b-4(n)(1)(i), respectively.
The Advance Notice was published in the Federal Register on January
23, 2018. Securities Exchange Act Release No. 82513 (Jan. 17, 2018),
83 FR 3244 (Jan. 23, 2018) (SR-OCC-2017-809).
The Financial Stability Oversight Council designated OCC a
systemically important financial market utility on July 18, 2012.
See Financial Stability Oversight Council 2012 Annual Report,
Appendix A, available at http://www.treasury.gov/initiatives/fsoc/Documents/2012%20Annual%20Report.pdf. Therefore, OCC is required to
comply with the Payment, Clearing and Settlement Supervision Act and
file advance notices with the Commission. See 12 U.S.C. 5465(e).
\4\ Securities Exchange Act Release No. 82585 (Jan. 25, 2018),
83 FR 4526 (Jan. 31, 2018) (File No. SR-OCC-2017-020).
\5\ The comment period closed on January 16, 2018. See Notice,
supra note 3, 28 FR at 61116.
\6\ See letter from Jacqueline H. Mesa, Senior Vice President of
Global Policy, Futures Industry Association, dated January 16, 2018,
to Brent J. Fields, Secretary, Commission (``FIA Letter''),
available at https://www.sec.gov/comments/sr-occ-2017-020/occ2017020.htm.
\7\ 15 U.S.C. 78s(b)(2)(B).
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Institution of proceedings does not indicate that the Commission
has reached any conclusions with respect to the Proposed Rule Change,
nor does it mean that the Commission will ultimately disapprove the
Proposed Rule Change. Rather, as discussed below, the Commission seeks
additional input on the Proposed Rule Change and issues presented by
the proposal.

II. Description of the Proposed Rule Change \8\
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\8\ The description of the Proposed Rule Change is substantially
excerpted from the Notice. See Notice, supra note 3, 82 FR at 61107-
61109.
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The Proposed Rule Change would make certain revisions to OCC's
Rules and By-Laws \9\ to enhance OCC's existing tools to address the
risks of liquidity shortfalls and credit losses and to establish new
tools by which OCC could re-establish a matched book following a
default.\10\ Each of the proposed tools is contemplated to be deployed
by OCC in an extreme stress event that has placed OCC into a recovery
or orderly wind-down scenario.\11\
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\9\ OCC's By-Laws and Rules can be found on OCC's public
website: http://optionsclearing.com/about/publications/bylaws.jsp.
\10\ Notice, supra note 3, 82 FR at 61107.
\11\ Id.
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OCC proposed to make four revisions to its Rules and By-Laws.
First, OCC proposed to revise the existing assessment powers in Section
6 of Article VIII of OCC's By-Laws, specifically to:
(a) Establish a rolling cooling-off period that would be triggered
by the payment of a proportionate charge against the Clearing Fund
(i.e., a triggering proportionate charge), during which period the
aggregate liability of a Clearing Member to replenish the Clearing Fund
(inclusive of assessments) would be 200 percent of the Clearing
Member's required contribution as of the time immediately preceding the
triggering proportionate charge; \12\
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\12\ Id. at 61108, 61109.
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(b) Clarify that a Clearing Member that chooses to terminate its
membership status during a cooling-off period will not be liable for
replenishment of the Clearing Fund immediately following the expiration
of such cooling-off period, provided that the withdrawing Clearing
Member satisfies enumerated criteria, including providing notice of
such termination by no later than the end of the cooling-off period and
by closing-out or transferring all its open positions with OCC by no
later than the last day of the cooling-off period; \13\ and
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\13\ Id. at 61108, 61109-10.
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(c) Delineate between the obligation of a Clearing Member to
replenish its contributions to the Clearing Fund and its obligations to
meet additional assessments that may be levied following a
proportionate charge to the Clearing Fund.\14\
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\14\ Id. at 61109, 6110.
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Second, OCC proposed to adopt a new rule that would provide OCC
with discretionary authority to call for voluntary payments from non-
defaulting Clearing Members in a circumstance where one or more
Clearing Members has already defaulted and OCC has determined that it
may not have sufficient resources to satisfy its obligations and
liabilities resulting from such default (``Rule 1009'').\15\ Rule 1009
also would establish that OCC would prioritize compensation of Clearing
Members that made voluntary payments from any amounts recovered from
the defaulted Clearing Members.\16\
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\15\ Id.
\16\ Id.
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Third, OCC proposed to adopt a new rule that would provide the
following authority (``Rule 1111''):

[[Page 13172]]

(a) Allow OCC to call for voluntary tear-ups (``Voluntary Tear-
Up'') \17\ of non-defaulting Clearing Member and/or customer positions
at any time following the suspension or default of a Clearing Member,
with the scope of any such Voluntary Tear-Ups being determined by the
Risk Committee of OCC's Board (``Risk Committee''); \18\
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\17\ See id. at 61110 (defining Voluntary Tear-Up).
\18\ Id. at 61109, 61110-11.
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(b) Allow OCC's Board to vote to tear-up the Remaining Open
Positions \19\ of a defaulted Clearing Member, as well as any Related
Open Positions \20\ in a circumstance where OCC has attempted one or
more auctions of such defaulted Clearing Member's remaining open
positions and OCC has determined that it may not have sufficient
resources to satisfy its obligations and liabilities resulting from
such default, with the scope of any such tear-up (``Partial Tear-Up'')
\21\ being determined by the Risk Committee; \22\ and
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\19\ See id. at 61111 (defining Remaining Open Positions).
\20\ See id. (defining Related Open Positions).
\21\ See id. at 61109 (defining Partial Tear-Up).
\22\ Id. at 61109, 61111-12.
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(c) Allow OCC's Board to vote to re-allocate losses, costs and fees
imposed upon holders of positions extinguished in a Partial Tear-Up
through a special charge levied against remaining non-defaulting
Clearing Members.\23\
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\23\ Id. at 61109, 61112.
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Fourth and finally, OCC proposed to revise the descriptions and
authorizations in Article VIII of OCC's By-Laws concerning the use of
the Clearing Fund to reflect its discretion to use remaining Clearing
Fund contributions to re-allocate losses imposed on non-defaulting
Clearing Members and customers from a Voluntary Tear-Up or a Partial
Tear-Up.\24\
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\24\ Id.
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III. Summary of Comment Received

On January 16, 2018, the Commission received a comment letter from
the Futures Industry Association (``FIA'').\25\ In the comment letter,
FIA stated that it had identified a number of areas where it did not
support the approach that OCC proposed in the Proposed Rule Change, and
it separated its response into two sections.\26\
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\25\ See FIA Letter, supra note 4.
\26\ FIA Letter at 1.
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First, with respect to replenishment of the Clearing Fund, the FIA
stated that OCC ``should provide an explanation as to how the cap level
of 200% [regarding assessments in a cooling-off period] was determined
and why [OCC] considers 200% appropriate, rather than a lower cap
level.'' \27\ Second, with respect to Partial Tear-Up, the FIA
generally supported its use as a position rebalancing tool.\28\ The FIA
stated, however, that its belief that ``it is [not] reasonable nor
analytically sound for tear-ups to result in incremental costs of
undefined amounts being distributed through assessments, as it
effectively enables the Board of OCC to engage in unlimited
assessments.'' \29\ Additionally, the FIA stated that ``where a cleared
trade is selected by the Board of OCC for Partial Tear-Up, the price of
the trade should be determined objectively (either by marking to market
or an objective best-estimate of market price), not on a discretionary
basis.'' \30\ The FIA also stated that ``OCC should ensure that the
design and application of Partial Tear-Ups do not dis-incentivize
bidding in default management auctions.'' \31\
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\27\ Id. at 2.
\28\ Id.
\29\ Id.
\30\ Id.
\31\ Id.
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IV. Proceedings To Determine Whether To Approve or Disapprove File No.
SR-OCC-2017-020 and Grounds for Disapproval Under Consideration

The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act to determine whether the Proposed Rule Change
should be approved or disapproved.\32\ Institution of proceedings is
appropriate at this time in view of the legal and policy issues raised
by the Proposed Rule Change. As noted above, institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, the Commission seeks and
encourages interested persons to provide additional comment on the
Proposed Rule Change and provide arguments to support the Commission's
analysis as to whether to approve or disapprove the Proposed Rule
Change.
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\32\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\33\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis, and input from, commenters with respect to the Proposed Rule
Change's consistency with the Act and the rules thereunder, including
the following:
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\33\ Id.
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Section 17A(b)(3)(F) of the Act,\34\ which requires, in
part, that the rules of a clearing agency be designed to promote the
prompt and accurate clearnance and settlement of securities
transactions, assure the safeguarding of securities and funds which are
in the custody or control of the clearing agency or for which it is
responsible, and, in general, to protect investors and the public
interest; and
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\34\ 15 U.S.C. 78q-1(b)(3)(F).
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Rule 17Ad-22(e)(3)(ii) of the Act,\35\ which requires a
covered clearing agency to establish, implement, maintain and enforce
written policies and procedures reasonably designed to plan for the
recovery and orderly wind-down of the covered clearing agency
necessitated by credit losses, liquidity shortfalls, losses from
general business risk, or any other losses.
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\35\ 17 CFR 17Ad-22(e)(3)(ii).
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V. Request for Written Comments

The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
Proposed Rule Change with respect to the issues identified above, as
well as any other concerns they may have with the Proposed Rule Change.
In particular, the Commission invites the written views of interested
persons concerning whether the Proposed Rule Change is consistent with
Section 17A(b)(3)(F) and Rule 17Ad-22(e)(3)(ii) under the Act, cited
above, or any other provision of the Act, rules, and regulations
thereunder.
Although there do not appear to be any issues relevant to approval
or disapproval that would be facilitated by an oral presentation of
views, data, and arguments, the Commission will consider, pursuant to
Rule 19b-4, any request for an opportunity to make an oral
presentation.\36\
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\36\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29, 89 Stat. 97 (1975),
grants the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Acts Amendments of
1975, Report of the Senate Committee on Banking, Housing and Urban
Affairs to Accompany S. 249, S. Rep. No. 75, 94th Cong., 1st Sess.
30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the Proposed Rule Change should be approved
or disapproved by April 17, 2018. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
May 1, 2018.
Comments may be submitted by any of the following methods:

[[Page 13173]]

Electronic Comments

Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File No. SR-OCC-2017-020 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-OCC-2017-020. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the Proposed Rule Change that are filed with
the Commission, and all written communications relating to the Proposed
Rule Change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of OCC and on OCC's website at
https://www.theocc.com/about/publications/bylaws.jsp.
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 No. SR-OCC-2017-020 and should
be submitted on or before April 17, 2018. If comments are received, any
rebuttal comments should be submitted on or before May 1, 2018.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
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\37\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-06105 Filed 3-26-18; 8:45 am]
BILLING CODE 8011-01-P

Federal Register / Vol. 83, No. 59 / Tuesday, March 27, 2018 / Notices 13171

information is necessary for the proper January 25, 2018, the Comission recovery or orderly wind-down
performance of the functions of the designated a longer period within which scenario.11
agency, including whether the to approve the Proposed Rule Change, OCC proposed to make four revisions
information will have practical utility; disapprove the Proposed Rule Change, to its Rules and By-Laws. First, OCC
(b) the accuracy of the agency’s estimate or institute proceedings to determine proposed to revise the existing
of the burden of the collection of whether to approve or disapprove the assessment powers in Section 6 of
information; (c) ways to enhance the Proposed Rule Change.4 To date,5 the Article VIII of OCC’s By-Laws,
quality, utility, and clarity of the Commission has received one comment specifically to:
information collected; and (d) ways to letter to the Proposed Rule Change.6 The (a) Establish a rolling cooling-off
minimize the burden of the collection of Commission is publishing this order period that would be triggered by the
information on respondents, including pursuant to Section 19(b)(2)(B) of the payment of a proportionate charge
through the use of automated collection Act 7 to institute proceedings to against the Clearing Fund (i.e., a
techniques or other forms of information determine whether to approve or triggering proportionate charge), during
technology. Consideration will be given disapprove the Proposed Rule Change. which period the aggregate liability of a
to comments and suggestions submitted Institution of proceedings does not Clearing Member to replenish the
in writing within 60 days of this indicate that the Commission has Clearing Fund (inclusive of
publication. reached any conclusions with respect to assessments) would be 200 percent of
Please direct your written comments the Proposed Rule Change, nor does it the Clearing Member’s required
to Pamela Dyson, Chief Information mean that the Commission will contribution as of the time immediately
Officer, Securities and Exchange ultimately disapprove the Proposed preceding the triggering proportionate
Commission, c/o Remi Pavlik-Simon, Rule Change. Rather, as discussed charge; 12
100 F Street NE, Washington, DC 20549 below, the Commission seeks additional (b) Clarify that a Clearing Member that
or send an email to: PRA_Mailbox@ input on the Proposed Rule Change and chooses to terminate its membership
sec.gov. issues presented by the proposal. status during a cooling-off period will
Dated: March 22, 2018. II. Description of the Proposed Rule not be liable for replenishment of the
Eduardo A. Aleman, Change 8 Clearing Fund immediately following
Assistant Secretary. the expiration of such cooling-off
The Proposed Rule Change would period, provided that the withdrawing
[FR Doc. 2018–06122 Filed 3–26–18; 8:45 am]
make certain revisions to OCC’s Rules Clearing Member satisfies enumerated
BILLING CODE 8011–01–P
and By-Laws 9 to enhance OCC’s criteria, including providing notice of
existing tools to address the risks of such termination by no later than the
SECURITIES AND EXCHANGE liquidity shortfalls and credit losses and end of the cooling-off period and by
COMMISSION to establish new tools by which OCC closing-out or transferring all its open
could re-establish a matched book positions with OCC by no later than the
[Release No. 34–82926; File No. SR–OCC– following a default.10 Each of the last day of the cooling-off period; 13 and
2017–020] proposed tools is contemplated to be (c) Delineate between the obligation of
deployed by OCC in an extreme stress a Clearing Member to replenish its
Self-Regulatory Organizations; The
event that has placed OCC into a contributions to the Clearing Fund and
Options Clearing Corporation; Order
Instituting Proceedings To Determine its obligations to meet additional
(‘‘Advance Notice’’). 12 U.S.C. 5465(e)(1) and 17 assessments that may be levied
Whether To Approve or Disapprove the CFR 240.19b–4(n)(1)(i), respectively. The Advance
Proposed Rule Concerning Enhanced Notice was published in the Federal Register on
following a proportionate charge to the
and New Tools for Recovery Scenarios January 23, 2018. Securities Exchange Act Release Clearing Fund.14
No. 82513 (Jan. 17, 2018), 83 FR 3244 (Jan. 23, Second, OCC proposed to adopt a new
March 22, 2018. 2018) (SR–OCC–2017–809). rule that would provide OCC with
The Financial Stability Oversight Council
I. Introduction designated OCC a systemically important financial
discretionary authority to call for
market utility on July 18, 2012. See Financial voluntary payments from non-defaulting
On December 18, 2017, The Options Stability Oversight Council 2012 Annual Report, Clearing Members in a circumstance
Clearing Corporation (‘‘OCC’’) filed with Appendix A, available at http://www.treasury.gov/ where one or more Clearing Members
the Securities and Exchange initiatives/fsoc/Documents/2012%20Annual%20
has already defaulted and OCC has
Commission (‘‘Commission’’) the Report.pdf. Therefore, OCC is required to comply
with the Payment, Clearing and Settlement determined that it may not have
proposed rule change SR–OCC–2017– Supervision Act and file advance notices with the sufficient resources to satisfy its
020 (‘‘Proposed Rule Change’’), Commission. See 12 U.S.C. 5465(e). obligations and liabilities resulting from
pursuant to Section 19(b) of the 4 Securities Exchange Act Release No. 82585 (Jan.
such default (‘‘Rule 1009’’).15 Rule 1009
Securities Exchange Act of 1934 25, 2018), 83 FR 4526 (Jan. 31, 2018) (File No. SR–
also would establish that OCC would
(‘‘Act’’),1 and Rule 19b–4 thereunder.2 OCC–2017–020).
5 The comment period closed on January 16, prioritize compensation of Clearing
The Proposed Rule Change was 2018. See Notice, supra note 3, 28 FR at 61116. Members that made voluntary payments
published for comment in the Federal 6 See letter from Jacqueline H. Mesa, Senior Vice
from any amounts recovered from the
Register on December 26, 2017.3 On President of Global Policy, Futures Industry defaulted Clearing Members.16
Association, dated January 16, 2018, to Brent J.
1 15 U.S.C. 78s(b)(1). Fields, Secretary, Commission (‘‘FIA Letter’’), Third, OCC proposed to adopt a new
2 17 CFR 240.19b–4. available at https://www.sec.gov/comments/sr-occ- rule that would provide the following
3 Securities Exchange Act Release No. 82351 (Dec. 2017-020/occ2017020.htm. authority (‘‘Rule 1111’’):
amozie on DSK30RV082PROD with NOTICES

7 15 U.S.C. 78s(b)(2)(B).
19, 2017), 82 FR 61107 (Dec. 26, 2017) (SR–OCC–
8 The description of the Proposed Rule Change is
2017–020) (‘‘Notice’’). On December 8, 2017, OCC 11 Id.
also filed a related advance notice (SR–OCC–2017– substantially excerpted from the Notice. See Notice,
12 Id. at 61108, 61109.
809) with the Commission pursuant to Section supra note 3, 82 FR at 61107–61109.
9 OCC’s By-Laws and Rules can be found on 13 Id. at 61108, 61109–10.
806(e)(1) of Title VIII of the Dodd-Frank Wall Street
14 Id. at 61109, 6110.
Reform and Consumer Protection Act, entitled the OCC’s public website: http://optionsclearing.com/
Payment, Clearing, and Settlement Supervision Act about/publications/bylaws.jsp. 15 Id.

of 2010 and Rule 19b–4(n)(1)(i) under the Act 10 Notice, supra note 3, 82 FR at 61107. 16 Id.

VerDate Sep<11>2014 18:47 Mar 26, 2018 Jkt 244001 PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 E:\FR\FM\27MRN1.SGM 27MRN1

13172 Federal Register / Vol. 83, No. 59 / Tuesday, March 27, 2018 / Notices

(a) Allow OCC to call for voluntary cap level.’’ 27 Second, with respect to promote the prompt and accurate
tear-ups (‘‘Voluntary Tear-Up’’) 17 of Partial Tear-Up, the FIA generally clearnance and settlement of securities
non-defaulting Clearing Member and/or supported its use as a position transactions, assure the safeguarding of
customer positions at any time rebalancing tool.28 The FIA stated, securities and funds which are in the
following the suspension or default of a however, that its belief that ‘‘it is [not] custody or control of the clearing agency
Clearing Member, with the scope of any reasonable nor analytically sound for or for which it is responsible, and, in
such Voluntary Tear-Ups being tear-ups to result in incremental costs of general, to protect investors and the
determined by the Risk Committee of undefined amounts being distributed public interest; and
OCC’s Board (‘‘Risk Committee’’); 18 through assessments, as it effectively
(b) Allow OCC’s Board to vote to tear- enables the Board of OCC to engage in • Rule 17Ad–22(e)(3)(ii) of the Act,35
up the Remaining Open Positions 19 of unlimited assessments.’’ 29 which requires a covered clearing
a defaulted Clearing Member, as well as Additionally, the FIA stated that ‘‘where agency to establish, implement,
any Related Open Positions 20 in a a cleared trade is selected by the Board maintain and enforce written policies
circumstance where OCC has attempted of OCC for Partial Tear-Up, the price of and procedures reasonably designed to
one or more auctions of such defaulted the trade should be determined plan for the recovery and orderly wind-
Clearing Member’s remaining open objectively (either by marking to market down of the covered clearing agency
positions and OCC has determined that or an objective best-estimate of market necessitated by credit losses, liquidity
it may not have sufficient resources to price), not on a discretionary basis.’’ 30 shortfalls, losses from general business
satisfy its obligations and liabilities The FIA also stated that ‘‘OCC should risk, or any other losses.
resulting from such default, with the ensure that the design and application
scope of any such tear-up (‘‘Partial Tear- of Partial Tear-Ups do not dis- V. Request for Written Comments
Up’’) 21 being determined by the Risk incentivize bidding in default
The Commission requests that
Committee; 22 and management auctions.’’ 31
(c) Allow OCC’s Board to vote to re- interested persons provide written
IV. Proceedings To Determine Whether submissions of their views, data, and
allocate losses, costs and fees imposed
To Approve or Disapprove File No. SR– arguments with respect to the Proposed
upon holders of positions extinguished
OCC–2017–020 and Grounds for Rule Change with respect to the issues
in a Partial Tear-Up through a special
Disapproval Under Consideration identified above, as well as any other
charge levied against remaining non-
defaulting Clearing Members.23 The Commission is instituting concerns they may have with the
Fourth and finally, OCC proposed to proceedings pursuant to Section Proposed Rule Change. In particular, the
revise the descriptions and 19(b)(2)(B) of the Act to determine Commission invites the written views of
authorizations in Article VIII of OCC’s whether the Proposed Rule Change interested persons concerning whether
By-Laws concerning the use of the should be approved or disapproved.32 the Proposed Rule Change is consistent
Clearing Fund to reflect its discretion to Institution of proceedings is appropriate with Section 17A(b)(3)(F) and Rule
use remaining Clearing Fund at this time in view of the legal and 17Ad–22(e)(3)(ii) under the Act, cited
contributions to re-allocate losses policy issues raised by the Proposed above, or any other provision of the Act,
imposed on non-defaulting Clearing Rule Change. As noted above, rules, and regulations thereunder.
Members and customers from a institution of proceedings does not
indicate that the Commission has Although there do not appear to be
Voluntary Tear-Up or a Partial Tear-
reached any conclusions with respect to any issues relevant to approval or
Up.24
any of the issues involved. Rather, the disapproval that would be facilitated by
III. Summary of Comment Received Commission seeks and encourages an oral presentation of views, data, and
On January 16, 2018, the Commission interested persons to provide additional arguments, the Commission will
received a comment letter from the comment on the Proposed Rule Change consider, pursuant to Rule 19b-4, any
Futures Industry Association (‘‘FIA’’).25 and provide arguments to support the request for an opportunity to make an
In the comment letter, FIA stated that it Commission’s analysis as to whether to oral presentation.36
had identified a number of areas where approve or disapprove the Proposed Interested persons are invited to
it did not support the approach that Rule Change. submit written data, views, and
OCC proposed in the Proposed Rule Pursuant to Section 19(b)(2)(B) of the arguments regarding whether the
Change, and it separated its response Act,33 the Commission is providing Proposed Rule Change should be
into two sections.26 notice of the grounds for disapproval
approved or disapproved by April 17,
First, with respect to replenishment of under consideration. The Commission is
2018. Any person who wishes to file a
the Clearing Fund, the FIA stated that instituting proceedings to allow for
additional analysis, and input from, rebuttal to any other person’s
OCC ‘‘should provide an explanation as
commenters with respect to the submission must file that rebuttal by
to how the cap level of 200% [regarding
Proposed Rule Change’s consistency May 1, 2018.
assessments in a cooling-off period] was
determined and why [OCC] considers with the Act and the rules thereunder, Comments may be submitted by any
200% appropriate, rather than a lower including the following: of the following methods:
• Section 17A(b)(3)(F) of the Act,34
17 See id. at 61110 (defining Voluntary Tear-Up). which requires, in part, that the rules of 35 17 CFR 17Ad–22(e)(3)(ii).
18 Id. at 61109, 61110–11. a clearing agency be designed to 36 Section 19(b)(2) of the Act, as amended by the
19 See id. at 61111 (defining Remaining Open Securities Acts Amendments of 1975, Public Law
94–29, 89 Stat. 97 (1975), grants the Commission
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Positions). 27 Id. at 2.
20 See id. (defining Related Open Positions). 28 Id. flexibility to determine what type of proceeding—
21 See id. at 61109 (defining Partial Tear-Up). 29 Id.
either oral or notice and opportunity for written
22 Id. at 61109, 61111–12. 30 Id.
comments—is appropriate for consideration of a
particular proposal by a self-regulatory
23 Id. at 61109, 61112. 31 Id.
organization. See Securities Acts Amendments of
24 Id. 32 15 U.S.C. 78s(b)(2)(B). 1975, Report of the Senate Committee on Banking,
25 See FIA Letter, supra note 4. 33 Id.
Housing and Urban Affairs to Accompany S. 249,
26 FIA Letter at 1. 34 15 U.S.C. 78q–1(b)(3)(F). S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).

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Federal Register / Vol. 83, No. 59 / Tuesday, March 27, 2018 / Notices 13173

Electronic Comments SECURITIES AND EXCHANGE hourly burden estimate of one hour for
• Use the Commission’s internet COMMISSION administrative purposes.
comment form (http://www.sec.gov/ The collection of information under
[SEC File No. 270–135, OMB Control No.
rules/sro.shtml); or 3235–0176]
rules 8b–1 to 8b–33 is mandatory. The
• Send an email to rule-comments@ information provided under rules 8b–1
sec.gov. Please include File No. SR– Submission for OMB Review; to 8b–33 is not kept confidential. An
OCC–2017–020 on the subject line. Comment Request agency may not conduct or sponsor, and
a person is not required to respond to,
Paper Comments Upon Written Request, Copies Available a collection of information unless it
• Send paper comments in triplicate From: Securities and Exchange displays a currently valid OMB control
to Brent J. Fields, Secretary, Securities Commission, Office of FOIA Services, number.
and Exchange Commission, 100 F Street 100 F Street NE, Washington, DC The public may view the background
NE, Washington, DC 20549–1090. 20549–2736 documentation for this information
All submissions should refer to File No. Extension: collection at the following website,
SR–OCC–2017–020. This file number Rules 8b–1 to 8b–33 www.reginfo.gov. Comments should be
should be included on the subject line Notice is hereby given that, pursuant directed to: (i) Desk Officer for the
if email is used. To help the to the Paperwork Reduction Act of 1995 Securities and Exchange Commission,
Commission process and review your (44 U.S.C. 3501 et seq.), the Securities Office of Information and Regulatory
comments more efficiently, please use and Exchange Commission (the Affairs, Office of Management and
only one method. The Commission will ‘‘Commission’’) has submitted to the Budget, Room 10102, New Executive
post all comments on the Commission’s Office of Management and Budget Office Building, Washington, DC 20503,
internet website (http://www.sec.gov/ (‘‘OMB’’) a request for extension of the or by sending an email to: Shagufta_
rules/sro.shtml). Copies of the previously approved collection of Ahmed@omb.eop.gov; and (ii) Pamela
submission, all subsequent information discussed below. Dyson, Director/Chief Information
amendments, all written statements Rules 8b–1 to 8b–33 (17 CFR 270.8b– Officer, Securities and Exchange
with respect to the Proposed Rule 1 to 8b–33) under the Investment Commission, c/o Remi Pavlik-Simon,
Change that are filed with the Company Act of 1940 (15 U.S.C. 80a–1 100 F Street NE, Washington, DC 20549
Commission, and all written et seq.) (‘‘Investment Company Act’’) set or send an email to: PRA_Mailbox@
communications relating to the forth the procedures for preparing and sec.gov. Comments must be submitted to
Proposed Rule Change between the filing a registration statement under the OMB within 30 days of this notice.
Commission and any person, other than Investment Company Act. These Dated: March 22, 2018.
those that may be withheld from the procedures are intended to facilitate the Eduardo A. Aleman,
public in accordance with the registration process. These rules Assistant Secretary.
provisions of 5 U.S.C. 552, will be generally do not require respondents to [FR Doc. 2018–06120 Filed 3–26–18; 8:45 am]
available for website viewing and report information.1 BILLING CODE 8011–01–P
printing in the Commission’s Public The Commission believes that it is
Reference Room, 100 F Street NE, appropriate to estimate the total
Washington, DC 20549, on official respondent burden associated with SECURITIES AND EXCHANGE
business days between the hours of preparing each registration statement COMMISSION
10:00 a.m. and 3:00 p.m. Copies of such form rather than attempt to isolate the
filing also will be available for impact of the procedural instructions
inspection and copying at the principal [Release No. 34–82920; File No. SR–ISE–
under Section 8(b) of the Investment 2018–20]
office of OCC and on OCC’s website at Company Act, which impose burdens
https://www.theocc.com/about/ only in the context of the preparation of Self-Regulatory Organizations; Nasdaq
publications/bylaws.jsp. the various registration statement forms. ISE, LLC; Notice of Filing and
All comments received will be posted
Accordingly, the Commission is not Immediate Effectiveness of Proposed
without change. Persons submitting
submitting a separate burden estimate Rule Change To Amend the Market
comments are cautioned that we do not
for rules 8b–1 through 8b–33, but Maker Plus Program in the Schedule of
redact or edit personal identifying
instead will include the burden for Fees
information from comment submissions.
these rules in its estimates of burden for
You should submit only information March 22, 2018.
each of the registration forms under the
that you wish to make available Pursuant to Section 19(b)(1) of the
Investment Company Act. The
publicly. Securities Exchange Act of 1934
All submissions should refer to File Commission is, however, submitting an
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
No. SR–OCC–2017–020 and should be 1 Although the rules under Section 8(b) of the notice is hereby given that on March 13,
submitted on or before April 17, 2018. Investment Company Act are generally procedural 2018, Nasdaq ISE, LLC (‘‘ISE’’ or
If comments are received, any rebuttal in nature, two of the rules require respondents to ‘‘Exchange’’) filed with the Securities
comments should be submitted on or disclose some limited information. Rule 8b–3 (17
and Exchange Commission
before May 1, 2018. CFR 270.8b–3) provides that whenever a
registration form requires the title of securities to (‘‘Commission’’) the proposed rule
For the Commission, by the Division of be stated, the registrant must indicate the type and change as described in Items I and II
Trading and Markets, pursuant to delegated general character of the securities to be issued. Rule below, which Items have been prepared
8b–22 (17 CFR 270.8b–22) provides that if the
amozie on DSK30RV082PROD with NOTICES

authority.37 by the Exchange. The Commission is
existence of control is open to reasonable doubt, the
Eduardo A. Aleman, publishing this notice to solicit
registrant may disclaim the existence of control, but
Assistant Secretary. it must state the material facts pertinent to the comments on the proposed rule change
[FR Doc. 2018–06105 Filed 3–26–18; 8:45 am] possible existence of control. The information from interested persons.
required by both of these rules is necessary to
BILLING CODE 8011–01–P
insure that investors have clear and complete
1 15 U.S.C. 78s(b)(1).
information upon which to base an investment
37 17 CFR 200.30–3(a)(12). decision. 2 17 CFR 240.19b–4.

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Document Created: 2018-03-27 01:26:51
Document Modified: 2018-03-27 01:26:51

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		83 FR 13171