83 FR 31237 - Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Advance Notice of and No Objection to The Options Clearing Corporation's Proposal To Enter Into a New Credit Facility Agreement
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 128 (July 3, 2018)
Federal Register Volume 83, Issue 128 (July 3, 2018)
| Page Range | 31237-31241 | |
| FR Document | 2018-14233 |
[Federal Register Volume 83, Number 128 (Tuesday, July 3, 2018)] [Notices] [Pages 31237-31241] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-14233] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83529; File No. SR-OCC-2018-802] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Advance Notice of and No Objection to The Options Clearing Corporation's Proposal To Enter Into a New Credit Facility Agreement June 27, 2018. 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) \2\ under the Securities Exchange Act of 1934 (``Act''),\3\ notice is hereby given that on May 25, 2018, The Options Clearing Corporation (``OCC'') filed with the Securities and Exchange Commission (``Commission'') an advance notice as described in Items I, II and III below, which Items have been prepared by OCC. On June 26, 2018, OCC filed Amendment No. 1 to the advance notice.\4\ The Commission is publishing this notice to solicit comments on the advance notice from interested persons, and to provide notice that the Commission does not object to the changes set forth in the advance notice. --------------------------------------------------------------------------- \1\ 12 U.S.C. 5465(e)(1). \2\ 17 CFR 240.19b-4(n)(1)(i). \3\ 15 U.S.C. 78a et seq. \4\ Amendment No. 1 replaced and superseded the Initial Filing in its entirety. The only substantive change in Amendment No. 1 was to remove OCC's proposal to establish certain ``evergreen'' provisions for future renewals of its revolving credit facility. Amendment No. 1 did not change the purpose, basis, or terms of the proposed renewal. --------------------------------------------------------------------------- I. Clearing Agency's Statement of the Terms of Substance of the Advance Notice This advance notice is filed in connection with a proposed change to its operations in the form of the replacement of a revolving credit facility that OCC maintains for a 364-day term and that it may use (i) in anticipation of a potential default by or suspension of a Clearing Member, (ii) to meet obligations arising out of the default or suspension of a Clearing Member, (iii) to meet reasonably anticipated liquidity needs for same-day settlement as a result of the failure of any bank or securities or commodities clearing organization to achieve daily settlement, or (iv) to meet obligations arising out of the failure of a bank or securities or commodities clearing organization to perform its obligations due to its bankruptcy, insolvency, receivership or suspension of operations. All terms with initial capitalization not defined herein have the same meaning as set forth in OCC's By-Laws and Rules.\5\ --------------------------------------------------------------------------- \5\ OCC's By-Laws and Rules can be found on OCC's public website: 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 Written comments were not and are not intended to be solicited with respect to the proposed rule change and none have been received. OCC will notify the Commission of any written comments received by OCC. (B) Advance Notices Filed Pursuant to Section 806(e) of the Payment, Clearing, and Settlement Supervision Act Description of the Proposed Change Background This advance notice is being filed in connection with a proposed change in the form of the replacement of a revolving credit facility that OCC maintains for a 364-day term and that it may use (i) in anticipation of a potential default by or suspension of a Clearing Member, (ii) to meet obligations arising out of the default or suspension of a Clearing Member, (iii) to meet reasonably anticipated liquidity needs for same-day settlement as a result of the failure of any bank or securities or commodities clearing organization to achieve daily settlement, or (iv) to meet obligations arising out of the failure of a bank or securities or commodities clearing organization to perform its obligations due to its bankruptcy, insolvency, receivership or suspension of operations (``Permitted Use Circumstances''). In any such Permitted Use Circumstance, OCC has certain conditional authority under its By-Laws and Rules to borrow or otherwise obtain funds from third parties using Clearing Member margin deposits and/or Clearing Fund contributions.\6\ --------------------------------------------------------------------------- \6\ See generally Article VIII, Sections 5(a), (b) and (e) of OCC's By-Laws; Interpretation and Policy .06 to Article VIII, Section 5; OCC Rules 1102 and 1104(b). --------------------------------------------------------------------------- OCC's existing credit facility (``Existing Facility'') was implemented as of June 30, 2017, through the execution of a credit agreement among OCC, the administrative agent, collateral agent and the lenders that are parties to the agreement from time to time. The Existing Facility provides short-term secured borrowings in an aggregate principal amount of $2 billion but may be increased to $3 billion if OCC so requests and sufficient commitments [[Page 31238]] from lenders are received and accepted. To obtain a loan under the Existing Facility, OCC must pledge as collateral U.S. dollars, securities issued or guaranteed by the U.S. Government or the Government of Canada, Standard & Poor's 500 Market Index equities, Exchange-Traded Funds (``ETFs''), American Depositary Receipts (``ADRs'') or certain government-sponsored enterprise debt securities. Certain mandatory prepayments or deposits of additional collateral are required depending on changes in the collateral's market value. In connection with OCC's past implementation of the Existing Facility, OCC filed an advance notice with the Commission on May 4, 2017, and the Commission published a Notice of No-Objection on June 30, 2017.\7\ --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release No. 81058 (June 30, 2017), 82 FR 31370 (July 6, 2017) (SR-OCC-2017-803). --------------------------------------------------------------------------- Description of the Proposal Renewal. The Existing Facility is set to expire on June 29, 2018. OCC is currently negotiating the terms of a new credit facility (``New Facility'') on substantially similar terms as the Existing Facility, and the definitive documentation concerning the New Facility is expected to be substantially similar to the definitive documentation concerning the Existing Facility. The proposed terms and conditions that are expected to be applicable to the New Facility, subject to agreement by the lenders, are set forth in the Summary of Terms and Conditions, which is not a public document.\8\ --------------------------------------------------------------------------- \8\ OCC has separately submitted a request for confidential treatment to the Commission regarding the Summary of Terms and Conditions, which is included in this filing as Exhibit 3. --------------------------------------------------------------------------- Certain administrative changes are presently expected in connection with the New Facility that include representations, warranties and covenants related to applicable regulations and the provision of information by OCC in certain circumstances to the lenders and administrative agent in connection with regulatory requirements, such as ``know your customer'' and anti-money-laundering regulations. The conditions regarding the availability of the New Facility, which OCC anticipates will be satisfied on or about June 28, 2018, include the execution and delivery of (i) a credit agreement between OCC and the administrative agent, collateral agent and various lenders under the New Facility, (ii) a pledge agreement between OCC and the administrative agent or collateral agent, and (iii) such other documents as may be required by the parties. The definitive documentation concerning the New Facility is expected to be consistent with the Summary of Terms and Conditions that is provided as Exhibit 3, although it may include certain changes to business terms as may be necessary to obtain the agreement of lenders with sufficient funding commitments and certain changes as may be necessary regarding administrative and operational terms being finalized between the parties. Anticipated Effect on and Management of Risk Completing timely settlement is a key aspect of OCC's role as a clearing agency performing central counterparty services. Overall, the New Facility would continue to promote the reduction of risks to OCC, its Clearing Members and the options market in general because it would allow OCC to obtain short-term funds in the Permitted Use Circumstances. The existence of the New Facility would therefore help OCC minimize losses in the event of a Permitted Use Circumstance by allowing it to obtain funds on extremely short notice to ensure clearance and settlement of transactions in options and other contracts without interruption. OCC believes that the reduced settlement risk presented by OCC resulting from the New Facility would correspondingly reduce systemic risk and promote the safety and soundness of the clearing system. By drawing on the New Facility, OCC would also be able to avoid liquidating margin deposits or Clearing Fund contributions in what would likely be volatile market conditions, which would preserve funds available to cover any losses resulting from the failure of a Clearing Member, bank or other clearing organization. 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.\9\ Section 805(a)(2) of the Clearing Supervision Act \10\ 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 \11\ states that the objectives and principles for risk management standards prescribed under Section 805(a) shall be to: --------------------------------------------------------------------------- \9\ 12 U.S.C. 5461(b). \10\ 12 U.S.C. 5464(a)(2). \11\ 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.\12\ Rule 17Ad-22 requires registered clearing agencies, like OCC, to establish, implement, maintain, and enforce written policies and procedures that are reasonably designed to meet certain minimum requirements for their operations and risk management practices on an ongoing basis.\13\ Therefore, the Commission has stated \14\ that it believes it is appropriate to review changes proposed in advance notices against Rule 17Ad-22 and the objectives and principles of these risk management standards as described in Section 805(b) of the Clearing Supervision Act.\15\ --------------------------------------------------------------------------- \12\ 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''). \13\ 17 CFR 240.17Ad-22. \14\ See supra note 6. \15\ 12 U.S.C. 5464(b). --------------------------------------------------------------------------- OCC believes that the proposed changes are consistent with Section 805(b)(1) of the Clearing Supervision Act \16\ because the New Facility would provide OCC with continued access to a stable and reliable source of committed liquidity that can be accessed in a timely manner to meet its settlement obligations, contain losses and liquidity pressures and mitigate OCC's liquidity risk. Accordingly, OCC believes the proposed changes are designed to (i) promote robust risk management; (ii) promote safety and soundness; and (iii) reduce systemic risks and promote the stability of the broader financial system. --------------------------------------------------------------------------- \16\ 12 U.S.C. 5464(b)(1). --------------------------------------------------------------------------- OCC believes that New Facility also is consistent with the requirements of Rule 17Ad-22(e)(7) under the Act.\17\ Rule 17Ad- 22(e)(7) requires OCC to establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively measure, monitor, and manage liquidity risk that arises in or is borne by OCC, including measuring, monitoring, and managing its settlement and funding [[Page 31239]] flows on an ongoing and timely basis, and its use of intraday liquidity, as specified in the rule.\18\ --------------------------------------------------------------------------- \17\ 17 CFR 240.17Ad-22(e)(7). \18\ Id. --------------------------------------------------------------------------- In particular, Rule 17Ad-22(e)(7)(i) under the Act \19\ directs that OCC meet this obligation by, among other things, ``[m]aintaining sufficient liquid resources at the minimum in all relevant currencies to effect same-day . . . settlement of payment obligations with a high degree of confidence under a wide range of foreseeable stress scenarios that includes, but is not limited to, the default of the participant family that would generate the largest aggregate payment of obligation for [OCC] in extreme but plausible market conditions.'' --------------------------------------------------------------------------- \19\ 17 CFR 240.17Ad-22(e)(7)(i). --------------------------------------------------------------------------- As described above, the New Facility would provide OCC with a readily available liquidity resource that would enable it to, among other things, continue to meet its obligations in a timely fashion in a Permitted Use Circumstance and as an alternative to selling Clearing Member collateral under what may be stressed and volatile market conditions. For these reasons, OCC believes that the proposal is consistent with Rule 17Ad-22(e)(7)(i).\20\ --------------------------------------------------------------------------- \20\ Id. --------------------------------------------------------------------------- Rule 17Ad-22(e)(7)(ii) under the Act requires OCC to establish, implement, maintain and enforce written policies and procedures reasonably designed to hold qualifying liquid resources sufficient to satisfy payment obligations owed to Clearing Members.\21\ Rule 17Ad- 22(a)(14) of the Act defines ``qualifying liquid resources'' to include, among other things, lines of credit without material adverse change provisions, that are readily available and convertible into cash.\22\ As with the Existing Facility, the New Facility would not be subject to any material adverse change provision and would continue to be designed to permit OCC to, among other things, help ensure that OCC has sufficient, readily-available qualifying liquid resources to meet the cash settlement obligations of its largest Clearing Member Group. Therefore, OCC believes that the proposal is consistent with Rule 17Ad- 22(e)(7)(ii).\23\ --------------------------------------------------------------------------- \21\ 17 CFR 240.17Ad-22(e)(7)(ii). \22\ 17 CFR 240.17Ad-22(a)(14). \23\ 17 CFR 240.17Ad-22(e)(7)(ii). --------------------------------------------------------------------------- For the foregoing reasons, OCC believes that the proposed changes are consistent with Section 805(b)(1) of the Clearing Supervision Act \24\ and Rule 17Ad-22(e)(7) \25\ under the Act. --------------------------------------------------------------------------- \24\ 12 U.S.C. 5464(b)(1). \25\ 17 CFR 240.17Ad-22(e)(7). --------------------------------------------------------------------------- Accelerated Commission Action Requested Pursuant to Section 806(e)(1)(I) of the Clearing Supervision Act,\26\ OCC requests that the Commission notify OCC that it has no objection to the New Facility not later than Tuesday, June 26, 2018, which is two business days prior to the expected June 28, 2018, availability of the New Facility. OCC requests Commission action by this date to ensure that there is no period that OCC operates without this essential liquidity resource, given its importance to OCC's borrowing capacity in connection with its management of liquidity and settlement risk and timely completion of clearance and settlement. --------------------------------------------------------------------------- \26\ 12 U.S.C. 5465(e)(1)(I). --------------------------------------------------------------------------- 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 website 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. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-OCC-2018-802 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-2018-802. 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 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 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 the 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 Number SR-OCC-2018-802 and should be submitted on or before July 24, 2018. V. Commission Findings and Notice of No Objection Although the Clearing Supervision Act does not specify a standard of review for an advance notice, its stated purpose is instructive: 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 [[Page 31240]] of systemically important financial market utilities.\27\ Section 805(a)(2) of the Clearing Supervision Act authorizes the Commission to prescribe risk management standards for the payment, clearing, and settlement activities of designated clearing entities and financial institutions engaged in designated activities for which it is the supervisory agency or the appropriate financial regulator.\28\ Section 805(b) of the Clearing Supervision Act \29\ states that the objectives and principles for the risk management standards prescribed under Section 805(a) shall be to: --------------------------------------------------------------------------- \27\ 12 U.S.C. 5461(b). \28\ 12 U.S.C. 5464(a)(2). \29\ 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.\30\ --------------------------------------------------------------------------- \30\ Id. --------------------------------------------------------------------------- The Commission has adopted risk management standards under Section 805(a)(2) of the Clearing Supervision Act \31\ and Section 17A of the Act (``Rule 17Ad-22'').\32\ Rule 17Ad-22 requires registered clearing agencies to establish, implement, maintain, and enforce written policies and procedures that are reasonably designed to meet certain minimum requirements for their operations and risk management practices on an ongoing basis.\33\ Therefore, it is appropriate for the Commission to review changes proposed in advance notices against Rule 17Ad-22 and the objectives and principles of the risk management standards described in Section 805(b) of the Clearing Supervision Act.\34\ As discussed below, the Commission believes that the proposal in this advance notice is consistent with the objectives and principles described in Section 805(b) of the Clearing Supervision Act,\35\ and in Rule 17Ad-22 under the Act, particularly Rule 17Ad-22(e)(7).\36\ --------------------------------------------------------------------------- \31\ 12 U.S.C. 5464(a)(2). \32\ See 17 CFR 240.17Ad-22. \33\ Id. \34\ 12 U.S.C. 5464(b). \35\ Id. \36\ See 17 CFR 240.17Ad-22(e)(7). --------------------------------------------------------------------------- A. Consistency With Section 805(b) of the Clearing Supervision Act The Commission believes that the changes proposed in the advance notice are consistent with Section 805(b) of the Clearing Supervision Act because they: (i) Promote robust risk management; (ii) are consistent with promoting safety and soundness; and (iii) are consistent with reducing systemic risks and promoting the stability of the broader financial system. The Commission believes that the changes proposed in the advance notice are consistent with promoting robust risk management, in particular management of liquidity risk presented to OCC. Renewing and maintaining a credit facility for this purpose and in the manner proposed by OCC would diversify the liquidity resources that OCC may use to resolve a Member default. As such, the Commission believes that the proposal would promote robust risk management practices at OCC, consistent with Section 805(b) of the Clearing Supervision Act.\37\ --------------------------------------------------------------------------- \37\ 12 U.S.C. 5464(b). --------------------------------------------------------------------------- The Commission also believes that the changes proposed in the advance notice are consistent with promoting safety and soundness. As described above, the currently proposed credit facility would provide OCC with an additional liquidity resource in the event of a Member default. This liquidity would promote safety and soundness for Members because it would provide OCC with a readily available liquidity resource that would enable OCC to continue to meet its respective obligations in a timely fashion in the event of a Member default, thereby helping to contain losses and liquidity pressures from that default. As such, the Commission believes it is consistent with promoting safety and soundness as contemplated in Section 805(b) of the Clearing Supervision Act.\38\ --------------------------------------------------------------------------- \38\ Id. --------------------------------------------------------------------------- In addition, the Commission believes that the proposal contained in the advance notice is consistent with reducing systemic risks and promoting the stability of the broader financial system. As mentioned above, allowing OCC to enter into the currently proposed credit facility would enable OCC, which has been designated a systemically important FMU,\39\ to maintain an additional liquidity resource that OCC may access to help manage a Member default and avoid a gap in availability of this liquidity resource. Accordingly, the Commission believes that the proposal would help to reduce the systemic risk of OCC, which in turn would help to support the stability of the broader financial system, consistent with Section 805(b) of the Clearing Supervision Act.\40\ --------------------------------------------------------------------------- \39\ 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, http://www.treasury.gov/initiatives/fsoc/Documents/2012%20Annual%20Report.pdf. \40\ Id. --------------------------------------------------------------------------- B. Consistency With Rule 17Ad-22(e)(7) The Commission believes that the proposed changes associated with the New Facility are consistent with the requirements of Rule 17Ad- 22(e)(7) under the Act.\41\ This rule requires that a covered clearing agency establish, implement, maintain, and enforce written policies and procedures reasonably designed to ``effectively measure, monitor, and manage the liquidity risk that arises in or is borne by [it], including measuring, monitoring, and managing its settlement and funding flows on an ongoing and timely basis, and its use of intraday liquidity.'' \42\ --------------------------------------------------------------------------- \41\ 17 CFR 240.17Ad-22(e)(7). \42\ Id. --------------------------------------------------------------------------- In particular, Rule 17Ad-22(e)(7)(i) directs that a covered clearing agency meet this obligation by, among other things, ``[m]aintaining sufficient liquid resources at the minimum in all relevant currencies to effect same-day . . . settlement of payment obligations with a high degree of confidence under a wide range of foreseeable stress scenarios that includes, but is not limited to, the default of the participant family that would generate the largest aggregate payment obligation for the covered clearing agency in extreme but plausible conditions.'' \43\ --------------------------------------------------------------------------- \43\ 17 CFR 240.17Ad-22(e)(7)(i). --------------------------------------------------------------------------- The Commission believes that the changes proposed by the advance notice are consistent with the requirements of Rules 17Ad-22(e)(7) under the Act.\44\ Rule 17Ad-22(e)(7) requires OCC to establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively measure, monitor, and manage liquidity risk that arises in or is borne by OCC, including measuring, monitoring, and managing its settlement and funding flows on an ongoing and timely basis, and its use of intraday liquidity, as specified in the rule.\45\ --------------------------------------------------------------------------- \44\ 17 CFR 240.17Ad-22(e)(7). \45\ Id. --------------------------------------------------------------------------- In particular, Rule 17Ad-22(e)(7)(i) under the Act \46\ requires that registered clearing agencies establish, implement, maintain and enforce written policies and procedures reasonably designed to ``effectively measure, monitor, and manage the liquidity risk that arises in or is borne by [it], including measuring, monitoring, and managing its settlement and funding flows on an ongoing and timely basis, and its use of intraday liquidity by . . . [m]aintaining sufficient liquid resources at the minimum in all relevant currencies to effect same-day . . . settlement of [[Page 31241]] payment obligations with a high degree of confidence under a wide range of foreseeable stress scenarios that includes, but is not limited to, the default of the participant family that would generate the largest aggregate payment of obligation for the covered clearing agency in extreme but plausible conditions.'' --------------------------------------------------------------------------- \46\ 17 CFR 240.17Ad-22(e)(7)(i). --------------------------------------------------------------------------- As described above, the currently proposed credit facility would provide OCC with a readily available liquidity resource that would enable OCC to continue to meet its respective obligations in a timely fashion in the event of a Member default, thereby helping to contain losses and liquidity pressures from that default. Additionally, the currently proposed credit facility would allow OCC to avoid a gap in liquidity coverage and better allow OCC to continually maintain sufficient liquidity resources. Therefore, the Commission believes that the proposal is consistent with Rule 17Ad-22(e)(7)(i). Rule 17Ad-22(e)(7)(ii) under the Act requires OCC to establish, implement, maintain and enforce written policies and procedures reasonably designed to hold qualifying liquid resources sufficient to satisfy payment obligations owed to clearing members.\47\ Rule 17Ad- 22(a)(14) of the Act defines ``qualifying liquid resources'' to include, among other things, lines of credit without material adverse change provisions, that are readily available and convertible into cash.\48\ As described above, the currently proposed credit facility would permit OCC to enter into a single credit facility designed to help ensure that OCC has sufficient, readily-available qualifying liquid resources to meet the cash settlement obligations of its largest family of affiliated members. Therefore, the Commission believes that the proposal is consistent with Rule 17Ad-22(e)(7)(ii). --------------------------------------------------------------------------- \47\ 17 CFR 240.17Ad-22(e)(7)(ii). \48\ 17 CFR 240.17Ad-22(a)(14). --------------------------------------------------------------------------- VI. Conclusion It is therefore noticed, pursuant to Section 806(e)(1)(I) of the Clearing Supervision Act, that the Commission does not object to the advance notice SR-OCC-2018-802 and OCC can and hereby is authorized to implement the change as of the date of this notice. By the Commission. Brent J. Fields, Secretary. [FR Doc. 2018-14233 Filed 7-2-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31237
the operation of the Program through Reform and Consumer Protection Act, notice and discussed any comments it
the same date.6 In its request to extend entitled Payment, Clearing and received on the advance notice. The text
the exemption, the Exchange notes that Settlement Supervision Act of 2010 of these statements may be examined at
the participation in the Program has (‘‘Clearing Supervision Act’’) 1 and Rule the places specified in Item IV below.
increased more recently with additional 19b–4(n)(1)(i) 2 under the Securities OCC has prepared summaries, set forth
Retail Liquidity Providers. Accordingly, Exchange Act of 1934 (‘‘Act’’),3 notice is in sections A and B below, of the most
the Exchange has asked for additional hereby given that on May 25, 2018, The significant aspects of these statements.
time to both allow for additional Options Clearing Corporation (‘‘OCC’’)
(A) Clearing Agency’s Statement on
opportunities for greater participation in filed with the Securities and Exchange
Comments on the Advance Notice
the Program and allow for further Commission (‘‘Commission’’) an
Received From Members, Participants or
assessment of the results of such advance notice as described in Items I,
Others
participation. For this reason and the II and III below, which Items have been
reasons stated in the Order originally prepared by OCC. On June 26, 2018, Written comments were not and are
granting the limited exemptions, the OCC filed Amendment No. 1 to the not intended to be solicited with respect
Commission finds that extending the advance notice.4 The Commission is to the proposed rule change and none
exemption, pursuant to its authority publishing this notice to solicit have been received. OCC will notify the
under Rule 612(c) of Regulation NMS, is comments on the advance notice from Commission of any written comments
appropriate in the public interest and interested persons, and to provide received by OCC.
consistent with the protection of notice that the Commission does not (B) Advance Notices Filed Pursuant to
investors. object to the changes set forth in the Section 806(e) of the Payment, Clearing,
Therefore, it is hereby ordered that, advance notice. and Settlement Supervision Act
pursuant to Rule 612(c) of Regulation
NMS, the Exchange is granted a limited I. Clearing Agency’s Statement of the Description of the Proposed Change
exemption from Rule 612 of Regulation Terms of Substance of the Advance
Notice Background
NMS that allows it to accept and rank
orders priced equal to or greater than This advance notice is filed in This advance notice is being filed in
$1.00 per share in increments of $0.001, connection with a proposed change to connection with a proposed change in
in connection with the operation of its its operations in the form of the the form of the replacement of a
Retail Liquidity Program, until replacement of a revolving credit facility revolving credit facility that OCC
December 31, 2018. that OCC maintains for a 364-day term maintains for a 364-day term and that it
The limited and temporary exemption and that it may use (i) in anticipation of may use (i) in anticipation of a potential
extended by this Order is subject to a potential default by or suspension of default by or suspension of a Clearing
modification or revocation if at any time a Clearing Member, (ii) to meet Member, (ii) to meet obligations arising
the Commission determines that such obligations arising out of the default or out of the default or suspension of a
action is necessary or appropriate in suspension of a Clearing Member, (iii) to Clearing Member, (iii) to meet
furtherance of the purposes of the meet reasonably anticipated liquidity reasonably anticipated liquidity needs
Securities Exchange Act of 1934. needs for same-day settlement as a for same-day settlement as a result of
Responsibility for compliance with any result of the failure of any bank or the failure of any bank or securities or
applicable provisions of the Federal securities or commodities clearing commodities clearing organization to
securities laws must rest with the organization to achieve daily settlement, achieve daily settlement, or (iv) to meet
persons relying on the exemptions that or (iv) to meet obligations arising out of obligations arising out of the failure of
are the subject of this Order. the failure of a bank or securities or a bank or securities or commodities
commodities clearing organization to clearing organization to perform its
For the Commission, by the Division of obligations due to its bankruptcy,
Trading and Markets, pursuant to delegated perform its obligations due to its
authority.7 bankruptcy, insolvency, receivership or insolvency, receivership or suspension
suspension of operations. of operations (‘‘Permitted Use
Eduardo A. Aleman,
All terms with initial capitalization Circumstances’’). In any such Permitted
Assistant Secretary.
not defined herein have the same Use Circumstance, OCC has certain
[FR Doc. 2018–14283 Filed 7–2–18; 8:45 am] conditional authority under its By-Laws
meaning as set forth in OCC’s By-Laws
BILLING CODE 8011–01–P
and Rules.5 and Rules to borrow or otherwise obtain
funds from third parties using Clearing
II. Clearing Agency’s Statement of the Member margin deposits and/or
SECURITIES AND EXCHANGE Purpose of, and Statutory Basis for, the Clearing Fund contributions.6
COMMISSION Advance Notice OCC’s existing credit facility
[Release No. 34–83529; File No. SR–OCC– In its filing with the Commission, (‘‘Existing Facility’’) was implemented
2018–802] OCC included statements concerning as of June 30, 2017, through the
the purpose of and basis for the advance execution of a credit agreement among
Self-Regulatory Organizations; The OCC, the administrative agent, collateral
Options Clearing Corporation; Notice 1 12
U.S.C. 5465(e)(1). agent and the lenders that are parties to
of Filing of Advance Notice of and No 2 17
CFR 240.19b–4(n)(1)(i). the agreement from time to time. The
Objection to The Options Clearing 3 15 U.S.C. 78a et seq. Existing Facility provides short-term
Corporation’s Proposal To Enter Into a 4 Amendment No. 1 replaced and superseded the secured borrowings in an aggregate
sradovich on DSK3GMQ082PROD with NOTICES
New Credit Facility Agreement Initial Filing in its entirety. The only substantive principal amount of $2 billion but may
change in Amendment No. 1 was to remove OCC’s
be increased to $3 billion if OCC so
June 27, 2018. proposal to establish certain ‘‘evergreen’’ provisions
for future renewals of its revolving credit facility. requests and sufficient commitments
Pursuant to Section 806(e)(1) of Title
Amendment No. 1 did not change the purpose,
VIII of the Dodd-Frank Wall Street basis, or terms of the proposed renewal. 6 See generally Article VIII, Sections 5(a), (b) and
5 OCC’s By-Laws and Rules can be found on (e) of OCC’s By-Laws; Interpretation and Policy .06
6 See SR–NYSEArca–2018–46. OCC’s public website: http://optionsclearing.com/ to Article VIII, Section 5; OCC Rules 1102 and
7 17 CFR 200.30–3(a)(83). about/publications/bylaws.jsp. 1104(b).
VerDate Sep<11>2014 17:07 Jul 02, 2018 Jkt 244001 PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 E:\FR\FM\03JYN1.SGM 03JYN1](https://thefederalregister.org/doc/83_FR_31365/page/1.svg)
![Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31239
flows on an ongoing and timely basis, Accelerated Commission Action Electronic Comments
and its use of intraday liquidity, as Requested • Use the Commission’s internet
specified in the rule.18 Pursuant to Section 806(e)(1)(I) of the comment form (http://www.sec.gov/
In particular, Rule 17Ad–22(e)(7)(i) Clearing Supervision Act,26 OCC rules/sro.shtml); or
under the Act 19 directs that OCC meet requests that the Commission notify • Send an email to rule-comments@
this obligation by, among other things, OCC that it has no objection to the New sec.gov. Please include File Number SR–
‘‘[m]aintaining sufficient liquid Facility not later than Tuesday, June 26, OCC–2018–802 on the subject line.
resources at the minimum in all relevant 2018, which is two business days prior
currencies to effect same-day . . . to the expected June 28, 2018, Paper Comments
settlement of payment obligations with availability of the New Facility. OCC • Send paper comments in triplicate
a high degree of confidence under a requests Commission action by this date to Secretary, Securities and Exchange
wide range of foreseeable stress to ensure that there is no period that Commission, 100 F Street NE,
scenarios that includes, but is not OCC operates without this essential Washington, DC 20549.
limited to, the default of the participant liquidity resource, given its importance All submissions should refer to File
family that would generate the largest to OCC’s borrowing capacity in Number SR–OCC–2018–802. This file
aggregate payment of obligation for connection with its management of number should be included on the
[OCC] in extreme but plausible market liquidity and settlement risk and timely subject line if email is used. To help the
conditions.’’ completion of clearance and settlement. Commission process and review your
As described above, the New Facility comments more efficiently, please use
would provide OCC with a readily III. Date of Effectiveness of the Advance
Notice and Timing for Commission only one method. The Commission will
available liquidity resource that would post all comments on the Commission’s
enable it to, among other things, Action
internet website (http://www.sec.gov/
continue to meet its obligations in a The proposed change may be rules/sro.shtml). Copies of the
timely fashion in a Permitted Use implemented if the Commission does submission, all subsequent
Circumstance and as an alternative to not object to the proposed change
amendments, all written statements
selling Clearing Member collateral within 60 days of the later of (i) the date
with respect to the advance notice that
under what may be stressed and volatile the proposed change was filed with the
are filed with the Commission, and all
market conditions. For these reasons, Commission or (ii) the date any
written communications relating to the
OCC believes that the proposal is additional information requested by the
advance notice between the
consistent with Rule 17Ad–22(e)(7)(i).20 Commission is received. OCC shall not
Commission and any person, other than
Rule 17Ad–22(e)(7)(ii) under the Act implement the proposed change if the
those that may be withheld from the
requires OCC to establish, implement, Commission has any objection to the
public in accordance with the
maintain and enforce written policies proposed change.
The Commission may extend the provisions of 5 U.S.C. 552, will be
and procedures reasonably designed to available for website viewing and
hold qualifying liquid resources period for review by an additional 60
days if the proposed change raises novel printing in the Commission’s Public
sufficient to satisfy payment obligations Reference Room, 100 F Street NE,
owed to Clearing Members.21 Rule or complex issues, subject to the
Commission providing the clearing Washington, DC 20549 on official
17Ad–22(a)(14) of the Act defines business days between the hours of
‘‘qualifying liquid resources’’ to include, agency with prompt written notice of
the extension. A proposed change may 10:00 a.m. and 3:00 p.m. Copies of the
among other things, lines of credit filing also will be available for
without material adverse change be implemented in less than 60 days
from the date the advance notice is inspection and copying at the principal
provisions, that are readily available office of OCC and on OCC’s website at
and convertible into cash.22 As with the filed, or the date further information
requested by the Commission is https://www.theocc.com/about/
Existing Facility, the New Facility publications/bylaws.jsp.
would not be subject to any material received, if the Commission notifies the
clearing agency in writing that it does All comments received will be posted
adverse change provision and would without change. Persons submitting
continue to be designed to permit OCC not object to the proposed change and
authorizes the clearing agency to comments are cautioned that we do not
to, among other things, help ensure that redact or edit personal identifying
OCC has sufficient, readily-available implement the proposed change on an
earlier date, subject to any conditions information from comment submissions.
qualifying liquid resources to meet the You should submit only information
cash settlement obligations of its largest imposed by the Commission.
OCC shall post notice on its website that you wish to make available
Clearing Member Group. Therefore, publicly.
of proposed changes that are
OCC believes that the proposal is All submissions should refer to File
implemented. The proposal shall not
consistent with Rule 17Ad– Number SR–OCC–2018–802 and should
take effect until all regulatory actions
22(e)(7)(ii).23 be submitted on or before July 24, 2018.
required with respect to the proposal are
For the foregoing reasons, OCC
completed. V. Commission Findings and Notice of
believes that the proposed changes are
consistent with Section 805(b)(1) of the IV. Solicitation of Comments No Objection
Clearing Supervision Act 24 and Rule Interested persons are invited to Although the Clearing Supervision
17Ad–22(e)(7) 25 under the Act. submit written data, views and Act does not specify a standard of
review for an advance notice, its stated
sradovich on DSK3GMQ082PROD with NOTICES
arguments concerning the foregoing,
18 Id.
19 17
including whether the advance notice is purpose is instructive: To mitigate
CFR 240.17Ad–22(e)(7)(i).
20 Id.
consistent with the Clearing systemic risk in the financial system
21 17 CFR 240.17Ad–22(e)(7)(ii). Supervision Act. Comments may be and promote financial stability by,
22 17 CFR 240.17Ad–22(a)(14). submitted by any of the following among other things, promoting uniform
23 17 CFR 240.17Ad–22(e)(7)(ii). methods: risk management standards for
24 12 U.S.C. 5464(b)(1). systemically important financial market
25 17 CFR 240.17Ad–22(e)(7). 26 12 U.S.C. 5465(e)(1)(I). utilities and strengthening the liquidity
VerDate Sep<11>2014 17:07 Jul 02, 2018 Jkt 244001 PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 E:\FR\FM\03JYN1.SGM 03JYN1](https://thefederalregister.org/doc/83_FR_31365/page/3.svg)
![31240 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices
of systemically important financial promoting the stability of the broader B. Consistency With Rule 17Ad–22(e)(7)
market utilities.27 Section 805(a)(2) of financial system. The Commission believes that the
the Clearing Supervision Act authorizes The Commission believes that the proposed changes associated with the
the Commission to prescribe risk changes proposed in the advance notice New Facility are consistent with the
management standards for the payment, are consistent with promoting robust requirements of Rule 17Ad–22(e)(7)
clearing, and settlement activities of risk management, in particular under the Act.41 This rule requires that
designated clearing entities and management of liquidity risk presented a covered clearing agency establish,
financial institutions engaged in to OCC. Renewing and maintaining a implement, maintain, and enforce
designated activities for which it is the credit facility for this purpose and in the written policies and procedures
supervisory agency or the appropriate manner proposed by OCC would reasonably designed to ‘‘effectively
financial regulator.28 Section 805(b) of diversify the liquidity resources that measure, monitor, and manage the
the Clearing Supervision Act 29 states OCC may use to resolve a Member liquidity risk that arises in or is borne
that the objectives and principles for the default. As such, the Commission by [it], including measuring,
risk management standards prescribed believes that the proposal would monitoring, and managing its settlement
under Section 805(a) shall be to: promote robust risk management and funding flows on an ongoing and
• Promote robust risk management; practices at OCC, consistent with timely basis, and its use of intraday
• promote safety and soundness; Section 805(b) of the Clearing liquidity.’’ 42
• reduce systemic risks; and Supervision Act.37 In particular, Rule 17Ad–22(e)(7)(i)
• support the stability of the broader The Commission also believes that the directs that a covered clearing agency
financial system.30 changes proposed in the advance notice meet this obligation by, among other
The Commission has adopted risk are consistent with promoting safety things, ‘‘[m]aintaining sufficient liquid
management standards under Section and soundness. As described above, the resources at the minimum in all relevant
805(a)(2) of the Clearing Supervision currently proposed credit facility would currencies to effect same-day . . .
provide OCC with an additional settlement of payment obligations with
Act 31 and Section 17A of the Act (‘‘Rule
liquidity resource in the event of a a high degree of confidence under a
17Ad–22’’).32 Rule 17Ad–22 requires
Member default. This liquidity would wide range of foreseeable stress
registered clearing agencies to establish,
promote safety and soundness for scenarios that includes, but is not
implement, maintain, and enforce
Members because it would provide OCC limited to, the default of the participant
written policies and procedures that are
with a readily available liquidity family that would generate the largest
reasonably designed to meet certain
resource that would enable OCC to aggregate payment obligation for the
minimum requirements for their
continue to meet its respective covered clearing agency in extreme but
operations and risk management
obligations in a timely fashion in the plausible conditions.’’ 43
practices on an ongoing basis.33
event of a Member default, thereby The Commission believes that the
Therefore, it is appropriate for the
helping to contain losses and liquidity changes proposed by the advance notice
Commission to review changes
pressures from that default. As such, the are consistent with the requirements of
proposed in advance notices against
Commission believes it is consistent Rules 17Ad–22(e)(7) under the Act.44
Rule 17Ad–22 and the objectives and
with promoting safety and soundness as Rule 17Ad–22(e)(7) requires OCC to
principles of the risk management
contemplated in Section 805(b) of the establish, implement, maintain and
standards described in Section 805(b) of
Clearing Supervision Act.38 enforce written policies and procedures
the Clearing Supervision Act.34 As
In addition, the Commission believes reasonably designed to effectively
discussed below, the Commission
that the proposal contained in the measure, monitor, and manage liquidity
believes that the proposal in this
advance notice is consistent with risk that arises in or is borne by OCC,
advance notice is consistent with the
reducing systemic risks and promoting including measuring, monitoring, and
objectives and principles described in
the stability of the broader financial managing its settlement and funding
Section 805(b) of the Clearing
system. As mentioned above, allowing flows on an ongoing and timely basis,
Supervision Act,35 and in Rule 17Ad–22
OCC to enter into the currently and its use of intraday liquidity, as
under the Act, particularly Rule 17Ad–
proposed credit facility would enable specified in the rule.45
22(e)(7).36
OCC, which has been designated a In particular, Rule 17Ad–22(e)(7)(i)
A. Consistency With Section 805(b) of systemically important FMU,39 to under the Act 46 requires that registered
the Clearing Supervision Act maintain an additional liquidity clearing agencies establish, implement,
resource that OCC may access to help maintain and enforce written policies
The Commission believes that the
manage a Member default and avoid a and procedures reasonably designed to
changes proposed in the advance notice
gap in availability of this liquidity ‘‘effectively measure, monitor, and
are consistent with Section 805(b) of the
resource. Accordingly, the Commission manage the liquidity risk that arises in
Clearing Supervision Act because they:
believes that the proposal would help to or is borne by [it], including measuring,
(i) Promote robust risk management; (ii)
reduce the systemic risk of OCC, which monitoring, and managing its settlement
are consistent with promoting safety
in turn would help to support the and funding flows on an ongoing and
and soundness; and (iii) are consistent
stability of the broader financial system, timely basis, and its use of intraday
with reducing systemic risks and
consistent with Section 805(b) of the liquidity by . . . [m]aintaining
27 12
Clearing Supervision Act.40 sufficient liquid resources at the
U.S.C. 5461(b).
28 12 U.S.C. 5464(a)(2). minimum in all relevant currencies to
sradovich on DSK3GMQ082PROD with NOTICES
37 12 U.S.C. 5464(b).
29 12 U.S.C. 5464(b). effect same-day . . . settlement of
38 Id.
30 Id.
39 The Financial Stability Oversight Council
31 12 U.S.C. 5464(a)(2). 41 17 CFR 240.17Ad–22(e)(7).
32 See 17 CFR 240.17Ad–22.
designated OCC a systemically important financial 42 Id.
market utility on July 18, 2012. See Financial
33 Id. 43 17 CFR 240.17Ad–22(e)(7)(i).
Stability Oversight Council 2012 Annual Report,
34 12 U.S.C. 5464(b). 44 17 CFR 240.17Ad–22(e)(7).
Appendix A, http://www.treasury.gov/initiatives/
35 Id. fsoc/Documents/2012%20Annual%20Report.pdf. 45 Id.
36 See 17 CFR 240.17Ad–22(e)(7). 40 Id. 46 17 CFR 240.17Ad–22(e)(7)(i).
VerDate Sep<11>2014 17:07 Jul 02, 2018 Jkt 244001 PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 E:\FR\FM\03JYN1.SGM 03JYN1](https://thefederalregister.org/doc/83_FR_31365/page/4.svg)
![Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31241
payment obligations with a high degree SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
of confidence under a wide range of COMMISSION Statement of the Purpose of, and
foreseeable stress scenarios that Statutory Basis for, the Proposed Rule
includes, but is not limited to, the [Release No. 34–83535; File No. SR–BX– Change
default of the participant family that 2018–024]
1. Purpose
would generate the largest aggregate
payment of obligation for the covered Self-Regulatory Organizations; Nasdaq The Exchange proposes to relocate its
clearing agency in extreme but plausible BX, Inc.; Notice of Filing and rules governing co-location and direct
conditions.’’ Immediate Effectiveness of Proposed connectivity services, which presently
Rule Change To Relocate the comprise Rules 7034 and 7051,
As described above, the currently
Exchange’s Rules Pertaining to Co- respectively. The Exchange proposes to
proposed credit facility would provide
Location and Direct Connectivity establish, within its new rulebook
OCC with a readily available liquidity
resource that would enable OCC to shell,3 a new General 8 heading, entitled
June 28, 2018.
continue to meet its respective ‘‘Connectivity,’’ to renumber Rule 7034
Pursuant to Section 19(b)(1) of the as Section 1 thereunder, and to
obligations in a timely fashion in the Securities Exchange Act of 1934
event of a Member default, thereby renumber Rule 7051 as Section 2
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 thereunder. The Exchange furthermore
helping to contain losses and liquidity notice is hereby given that on June 13,
pressures from that default. proposes to amend Rules 7011, 7025,
2018, Nasdaq BX, Inc. (‘‘BX’’ or 7030, and Options Rules Chapter XV to
Additionally, the currently proposed ‘‘Exchange’’) filed with the Securities
credit facility would allow OCC to avoid update cross references therein to Rules
and Exchange Commission 7034 and 7051, as applicable. The
a gap in liquidity coverage and better (‘‘Commission’’) the proposed rule
allow OCC to continually maintain Exchange also proposes to update
change as described in Items I and II internal cross-references in the
sufficient liquidity resources. Therefore, below, which Items have been prepared
the Commission believes that the renumbered Rules.
by the Exchange. The Commission is The Exchange considers it appropriate
proposal is consistent with Rule 17Ad– publishing this notice to solicit to relocate these Rules to better organize
22(e)(7)(i). comments on the proposed rule change its Rulebook. The other Affiliated
Rule 17Ad–22(e)(7)(ii) under the Act from interested persons. Exchanges intend to propose similar
requires OCC to establish, implement, reorganizations of their co-location and
I. Self-Regulatory Organization’s
maintain and enforce written policies direct connectivity rules so that these
Statement of the Terms of Substance of
and procedures reasonably designed to rules will be harmonized among all of
the Proposed Rule Change
hold qualifying liquid resources the Affiliated Exchanges.
sufficient to satisfy payment obligations The Exchange proposes to relocate the The relocation of the co-location and
owed to clearing members.47 Rule Exchange’s rules pertaining to co- direct connectivity rules is part of the
17Ad–22(a)(14) of the Act defines location and direct connectivity, which Exchange’s continued effort to promote
‘‘qualifying liquid resources’’ to include, are presently at Rules 7034 and 7051, to efficiency and conformity of its
among other things, lines of credit Sections 1 and 2, respectively, under a processes with those of its Affiliated
without material adverse change new General 8 (‘‘Connectivity’’) heading Exchanges. The Exchange believes that
provisions, that are readily available within the Exchange’s new rulebook moving the co-location and direct
and convertible into cash.48 As shell, entitled ‘‘General Equity and connectivity rules to their new location
described above, the currently proposed Options Rules.’’ The Exchange also will facilitate the use of the Rulebook by
credit facility would permit OCC to proposes to correct an error in Rule Members of the Exchange who are
enter into a single credit facility 7051(b). members of other Affiliated Exchanges.
designed to help ensure that OCC has The text of the proposed rule change In addition to the above, the Exchange
sufficient, readily-available qualifying is available on the Exchange’s website at proposes to correct an error in Rule
liquid resources to meet the cash http://nasdaqbx.cchwallstreet.com/, at 7051(b), entitled ‘‘Direct Circuit
settlement obligations of its largest the principal office of the Exchange, and Connection to Third Party Services.’’
family of affiliated members. Therefore, at the Commission’s Public Reference The Exchange recently amended Rule
the Commission believes that the Room. 7051 in an attempt to harmonize it with
proposal is consistent with Rule 17Ad– II. Self-Regulatory Organization’s the corresponding rules of the other
22(e)(7)(ii). Statement of the Purpose of, and Affiliated Exchanges.4 However, the
VI. Conclusion Statutory Basis for, the Proposed Rule Exchange recently discovered one
Change remaining unintended discrepancy that
It is therefore noticed, pursuant to it now proposes to remedy. The other
Section 806(e)(1)(I) of the Clearing In its filing with the Commission, the Affiliated Exchanges waive installation
Supervision Act, that the Commission Exchange included statements and ongoing monthly fees for 10Gb
does not object to the advance notice concerning the purpose of and basis for Ultra and 1 GB Ultra direct circuit
SR–OCC–2018–802 and OCC can and the proposed rule change and discussed
hereby is authorized to implement the any comments it received on the 3 Recently, the Exchange added a shell structure
change as of the date of this notice. proposed rule change. The text of these to its Rulebook with the purpose of improving
statements may be examined at the efficiency and readability and to align its rules
By the Commission. places specified in Item IV below. The closer to those of its five sister exchanges: The
sradovich on DSK3GMQ082PROD with NOTICES
Brent J. Fields, Nasdaq Stock Market, LLC; Nasdaq PHLX LLC;
Exchange has prepared summaries, set Nasdaq ISE, LLC; Nasdaq GEMX, LLC; and Nasdaq
Secretary. forth in sections A, B, and C below, of MRX, LLC (together with BX, the ‘‘Affiliated
[FR Doc. 2018–14233 Filed 7–2–18; 8:45 am] the most significant aspects of such Exchanges’’). See Securities Exchange Act Release
BILLING CODE 8011–01–P statements. No. 82174 (November 29, 2017), 82 FR 57492
(December 5, 2017) (SR–BX–2017–054).
4 See Securities Exchange Act Release No. 34–
47 17 CFR 240.17Ad–22(e)(7)(ii). 1 15 U.S.C. 78s(b)(1). 82628 (Feb. 5, 2018). 83 FR 5818 (Feb. 9, 2018) (SR–
48 17 CFR 240.17Ad–22(a)(14). 2 17 CFR 240.19b–4. BX–2018–006).
VerDate Sep<11>2014 17:07 Jul 02, 2018 Jkt 244001 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 E:\FR\FM\03JYN1.SGM 03JYN1](https://thefederalregister.org/doc/83_FR_31365/page/5.svg)
Document Created: 2018-07-02 23:55:10
Document Modified: 2018-07-02 23:55:10
| 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 31237 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR