83 FR 9562 - Self-Regulatory Organizations; The Options Clearing Corporation; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove the Proposed Rule Change To Revise The Options Clearing Corporation's Schedule of Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 44 (March 6, 2018)

Page Range		9562-9564
FR Document		2018-04484

Federal Register, Volume 83 Issue 44 (Tuesday, March 6, 2018)

[Federal Register Volume 83, Number 44 (Tuesday, March 6, 2018)]
[Notices]
[Pages 9562-9564]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-04484]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82793; File No. SR-OCC-2018-004]

Self-Regulatory Organizations; The Options Clearing Corporation;
Suspension of and Order Instituting Proceedings To Determine Whether To
Approve or Disapprove the Proposed Rule Change To Revise The Options
Clearing Corporation's Schedule of Fees

February 28, 2018.

I. Introduction

On January 19, 2018, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'') a
proposed rule change, File No. SR-OCC-2018-004, pursuant to Section
19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule
19b-4 thereunder.\2\ The proposed rule change was immediately effective
upon filing with the Commission pursuant to Section 19(b)(3)(A) of the
Act.\3\ The proposed rule change was published for comment in the
Federal Register on February 2, 2018.\4\ Under Section 19(b)(3)(C) of
the Act,\5\ the Commission is hereby: (i) Temporarily suspending File
No. SR-OCC-2018-004; and (ii) instituting proceedings to determine
whether to approve or disapprove File No. SR-OCC-2018-004.
---------------------------------------------------------------------------

\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ Securities Exchange Act Release No. 82596 (Jan. 30, 2018),
83 FR 4944 (Feb. 2, 2018) (SR-OCC-2018-004) (``Notice'').
\5\ 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

The proposed rule change by OCC would revise OCC's Schedule of Fees
effective March 1, 2018 to implement an increase in clearing fees in
accordance with OCC's Fee Policy,\6\ which was adopted as part of its
plan to raise additional capital (``Capital Plan'').\7\ As stated in
the Notice, OCC filed the proposed rule change to revise OCC's Schedule
of Fees in accordance with its Fee Policy and set fees at a level
designed to cover OCC's operating expenses and maintain a Business Risk
Buffer of 25%.\8\
---------------------------------------------------------------------------

\6\ See Notice at 4944-45. OCC also filed a proposed rule change
with the Commission to revise its Fee Policy to provide that
proposed fee changes are required to be implemented no sooner than
thirty (30) days from the date of filing of the proposed rule change
concerning such fee change (as opposed to sixty (60) days). See
Securities Exchange Act Release No. 82576 (Jan. 24, 2018), 83 FR
4324 (Jan. 30, 2018) (SR-OCC-2018-001). OCC submitted the proposed
changes to its Fee Policy to the Commodity Futures Trading
Commission (``CFTC'') under CFTC Regulation 40.6. OCC stated that
implementation of the proposed fee change on March 1, 2018 would
require either: (i) Commission approval of SR-OCC-2018-001 and
certification of the Fee Policy changes in SR-OCC-2018-001 under
CFTC Regulation 40.6 or (ii) an exception to the 60-day notice
period provision in the Fee Policy authorized by OCC's Board of
Directors and the holders of all of the outstanding Class B Common
Stock of OCC.
\7\ See Securities Exchange Act Release No. 77112 (February 11,
2016), 81 FR 8294 (February 18, 2016) (SR-OCC-2015-02) (``Approval
Order''). The Capital Plan was later subject to judicial review by
the U.S. Court of Appeals for the District of Columbia Circuit
(``D.C. Circuit''), which remanded the Approval Order to the
Commission to further analyze whether the Capital Plan is consistent
with the Act. Susquehanna Int'l Grp., LLP v. SEC, 866 F.3d 442 (D.C.
Cir. 2017). The Commission's review of the Plan on remand is
ongoing, and the Capital Plan remains in effect during this ongoing
review.
\8\ See Notice at 4944-45. The Business Risk Buffer is an amount
of fee revenue that OCC targets above its anticipated operating
expenses to allow for unexpected fluctuations in operating expenses,
business capital needs, and regulatory capital requirements.
---------------------------------------------------------------------------

OCC stated that it recently reviewed its current Schedule of Fees
\9\ against projected revenues and expenses for 2018 in accordance with
its Fee Policy to determine whether the Schedule of Fees was sufficient
to cover OCC's anticipated operating expenses and achieve the Business
Risk Buffer. OCC stated that it analyzed: (i) Expenses budgeted for
2018; (ii) projected other revenue streams for 2018; (iii) projected
volume mix; and (iv) projected volume growth for 2018. After this
review, OCC determined that the current fee schedule is set at a level
that would be insufficient to ensure that OCC achieves its Business
Risk Buffer as required under the Fee Policy.\10\ OCC stated that it
arrived at the proposed fee schedule below by determining the figures
that provide the best opportunity for OCC to achieve coverage of its
anticipated operating expenses plus a Business Risk Buffer.
Accordingly, OCC proposed the Schedule of Fees set forth in the table
below:
---------------------------------------------------------------------------

\9\ OCC previously revised its Schedule of Fees effective
December 1, 2016, to implement a fee increase in accordance with the
Fee Policy. See Securities Exchange Act Release No. 79028 (October
3, 2016), 81 FR 69885 (October 7, 2016) (SR-OCC-2016-012).
\10\ OCC provided a summary of its analysis in a confidential
Exhibit 3 to the filing.

[[Page 9563]]

----------------------------------------------------------------------------------------------------------------
Current fee schedule Proposed fee schedule
----------------------------------------------------------------------------------------------------------------
Trades with
Trades with contracts of: Current fee contracts of: Proposed fee
----------------------------------------------------------------------------------------------------------------
1-1,100............................. $0.050/contract........ 1-1,018 $0.054/contract.
>1,100.............................. $55/trade.............. >1,018 $55/trade.
----------------------------------------------------------------------------------------------------------------

OCC proposed to modify its Schedule of Fees to: (i) Increase its
per contract clearing fee from $0.050 to $0.054 per contract; and (ii)
adjust the quantity of contracts at which the fixed, per trade clearing
fee begins from greater than 1,100 contracts per trade to greater than
1,018 contracts per trade. OCC stated that the proposed changes are
designed to target a level of revenues sufficient to cover OCC's
operating expenses plus the Business Risk Buffer while continuing to
maintain its existing fixed, per trade, fee at $55 per trade.
OCC stated that in accordance with its Fee Policy, OCC will
continue to monitor cleared contract volume and operating expenses to
determine if further revisions to OCC's Schedule of Fees are required
so that monies received from clearing fees cover its operating expenses
plus the Business Risk Buffer.\11\
---------------------------------------------------------------------------

\11\ Any subsequent changes to OCC's Schedule of Fees would be
the subject of a subsequent proposed rule change filed with the
Commission.
---------------------------------------------------------------------------

III. Summary of Comment Received

On February 22, 2018, the Commission received a comment letter on
the proposed rule change from Susquehanna International Group, LLP
(``SIG'').\12\ In the comment letter, SIG expressed concern regarding
whether the information provided by OCC in the Notice was sufficient to
allow for meaningful public comment on the proposal.\13\ Specifically,
SIG asserted that OCC's Shareholder Exchanges are incented to
overestimate OCC's expenses, because such overestimation would lead to
increased dividends.\14\ SIG asserted further that, without access to
the expense projections filed as a confidential exhibit to the proposed
rule change, the public has no basis to believe that the proposed fee
increase is reasonable and no ability to comment critically on OCC's
supporting analysis.\15\ In addition, SIG characterized OCC's proposal
to increase fees as a negative consequence of the Capital Plan.\16\
---------------------------------------------------------------------------

\12\ See letter from Richard J. McDonald, SIG, dated February
14, 2018, to Brent J. Fields, Secretary, Commission (``SIG
Letter''). See comments on the proposed rule change (SR-OCC-2018-
004), https://www.sec.gov/comments/sr-occ-2018-004/occ2018004.htm.
\13\ SIG Letter at 2.
\14\ SIG Letter at 3. OCC is owned by Chicago Board Options
Exchange, Incorporated (``CBOE''); International Securities
Exchange, LLC; NASDAQ OMX PHLX, LLC; NYSE American LLC; and NYSE
Arca, Inc. See Approval Order at 8294.
\15\ SIG Letter at 2.
\16\ Id. at 1. OCC's Board of Directors decided that OCC was
significantly undercapitalized, and, therefore, proposed an
expedited plan to substantially increase OCC's capitalization. See
Approval Order at 8294. Subsequent to the Approval Order, parties,
including SIG, filed a petition for review of the Approval Order in
the DC Circuit, challenging the Commission's Approval Order. The DC
Circuit ultimately remanded the case to the Commission for further
proceedings without reaching the merits of the Capital Plan.
Susquehanna, 866 F.3d at 443. The court did not vacate the Approval
Order prior to remand, instead leaving the Capital Plan in place and
remanding to give the Commission an opportunity to reevaluate the
Capital Plan. Id. at 451. As noted above, the Commission's
reconsideration of the Capital Plan is ongoing.
---------------------------------------------------------------------------

IV. Suspension of File No. SR-OCC-2018-004

Pursuant to Section 19(b)(3)(C) of the Act,\17\ at any time within
60 days of the date of filing of a proposed rule change pursuant to
Section 19(b)(1) of the Act,\18\ the Commission summarily may
temporarily suspend the change in the rules of a self-regulatory
organization if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act. As
discussed further below, the Commission believes a temporary suspension
of the proposed rule change is warranted here to allow for additional
analysis of the proposed rule change's consistency with the Act and the
rules thereunder. In particular, the Commission finds that it is
appropriate in the public interest, for the protection of investors,
and otherwise in furtherance of the purposes of the Act, to temporarily
suspend the proposed rule change to consider whether the proposed rule
change satisfies the standards under the Act and the rules thereunder
requiring, among other things, that clearing agency rules provide for
the equitable allocation of reasonable dues, fees and other charges
among its participants.
---------------------------------------------------------------------------

\17\ 15 U.S.C. 78s(b)(3)(C).
\18\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

V. Proceedings To Determine Whether To Approve or Disapprove File No.
SR-OCC-2018-004

The Commission is instituting proceedings pursuant to Sections
19(b)(3)(C) \19\ and 19(b)(2)(B) of the Act \20\ to determine whether
the proposed rule change should be approved or disapproved.
---------------------------------------------------------------------------

\19\ 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily
suspends a proposed rule change, Section 19(b)(3)(C) of the Act
requires that the Commission institute proceedings under Section
19(b)(2)(B) to determine whether a proposed rule change should be
approved or disapproved.
\20\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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 to inform the
Commission's analysis of whether to disapprove the proposed rule
change.
Pursuant to Section 19(b)(2)(B) of the Act,\21\ the Commission is
providing notice of the grounds for disapproval under consideration. As
noted above, the Fee Policy to which the proposed rule change relates
was adopted as part of OCC's Capital Plan, and the Capital Plan remains
subject to Commission review.\22\ The commenter asserts that the fee
increase contradicts previous statements by OCC regarding ``OCC's
assurances of low fees in its Capital Plan submissions,'' calls into
question the consistency of the Capital Plan with the Act, and is
otherwise without basis.\23\ The Commission believes it is appropriate
to institute proceedings to assess whether the considerations currently
before the Commission in connection with its review of the Capital Plan
on remand are implicated by the issues raised by the proposed fee
change.\24\ Moreover, the commenter

[[Page 9564]]

argues that, without access to the information provided by OCC on a
confidential basis, the public cannot ``meaningfully comment on the
propriety of the proposed fee increase.'' \25\ The Commission is also
instituting proceedings to allow for additional consideration and
comment on this and other issues raised by the commenter. Finally, the
Commission believes that OCC's proposed rule change raises questions as
to whether it is consistent with Section 17A(b)(3)(D) of the Act,\26\
which requires clearing agency rules to provide for the equitable
allocation of reasonable dues, fees and other charges among its
participants.
---------------------------------------------------------------------------

\21\ 15 U.S.C. 78s(b)(2)(B).
\22\ See supra note 7.
\23\ SIG Letter at 2.
\24\ The Commission notes that one of the issues before us in
considering the Capital Plan is the contention by some of those
commenting on the Plan that the Plan will lead to an increase in
fees. In responding to these comments in our initial approval of the
Plan, we observed that ``[t]he Exchange Act rule filing requirements
for fee changes provide an opportunity for public comment and an
opportunity for the Commission to review the change, summarily
suspend it and institute proceedings to ultimately approve or
disapprove the change, as applicable, to ensure an SRO's rules meet
regulatory requirements.'' See Approval Order at 8303.
\25\ SIG Letter at 3.
\26\ 17 CFR 240.17Ad-22(d)(7).
---------------------------------------------------------------------------

VI. Request for Written Comments

The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
proposed fee change. In particular, the Commission invites the written
views of interested persons concerning whether the proposed fee change
is consistent with Section 17A(b)(3)(D) of the Act \27\ or any other
provision of the Act, rules, and regulations thereunder. Interested
persons are invited to submit written data, views and arguments
concerning the foregoing, including whether the proposed rule change is
consistent with the Act. Comments may be submitted by any of the
following methods:
---------------------------------------------------------------------------

\27\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

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-2018-004 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-2018-004. 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-2018-004 and should
be submitted on or before March 27, 2018. Any person who wishes to file
a rebuttal to any other person's submission must file that rebuttal on
or before April 10, 2018.

VII. Conclusion

It is therefore ordered, pursuant to Section 19(b)(3)(C) of the
Act,\28\ that File No. SR-OCC-2018-004, be and hereby is, temporarily
suspended. In addition, the Commission is instituting proceedings to
determine whether the proposed rule changes should be approved or
disapproved.
---------------------------------------------------------------------------

\28\ 15 U.S.C. 78s(b)(3)(C).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
---------------------------------------------------------------------------

\29\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-04484 Filed 3-5-18; 8:45 am]
BILLING CODE 8011-01-P

9562 Federal Register / Vol. 83, No. 44 / Tuesday, March 6, 2018 / Notices

change, as modified by Amendment No. SECURITIES AND EXCHANGE adopted as part of its plan to raise
1 (‘‘Approval Order’’).10 COMMISSION additional capital (‘‘Capital Plan’’).7 As
On January 31, 2018, pursuant to stated in the Notice, OCC filed the
[Release No. 34–82793; File No. SR–OCC– proposed rule change to revise OCC’s
Commission Rule of Practice 430,11 2018–004]
Schedule of Fees in accordance with its
NYSE Group, Inc. (‘‘NYSE’’) and The
Self-Regulatory Organizations; The Fee Policy and set fees at a level
Nasdaq Stock Market LLC (‘‘Nasdaq’’)
Options Clearing Corporation; designed to cover OCC’s operating
each filed petitions for review of the expenses and maintain a Business Risk
Approval Order. Pursuant to Suspension of and Order Instituting
Proceedings To Determine Whether To Buffer of 25%.8
Commission Rule of Practice 431(e), the
Approval Order is stayed by the filing Approve or Disapprove the Proposed OCC stated that it recently reviewed
with the Commission of a notice of Rule Change To Revise The Options its current Schedule of Fees 9 against
Clearing Corporation’s Schedule of projected revenues and expenses for
intention to petition for review.12
Fees 2018 in accordance with its Fee Policy
Pursuant to Rule 431 of the Rules of
to determine whether the Schedule of
Practice,13 the petitions for review of the February 28, 2018.
Fees was sufficient to cover OCC’s
Approval Order of NYSE and Nasdaq
I. Introduction anticipated operating expenses and
are granted.14 Further, the Commission achieve the Business Risk Buffer. OCC
hereby establishes that any party to the On January 19, 2018, The Options
Clearing Corporation (‘‘OCC’’) filed with stated that it analyzed: (i) Expenses
action or other person may file a written budgeted for 2018; (ii) projected other
statement in support of or in opposition the Securities and Exchange
Commission (‘‘Commission’’) a revenue streams for 2018; (iii) projected
to the Approval Order on or before volume mix; and (iv) projected volume
March 22, 2018. proposed rule change, File No. SR–
OCC–2018–004, pursuant to Section growth for 2018. After this review, OCC
For the reasons stated above, it is 19(b)(1) of the Securities Exchange Act determined that the current fee schedule
hereby: of 1934 (‘‘Act’’),1 and Rule 19b–4 is set at a level that would be
thereunder.2 The proposed rule change insufficient to ensure that OCC achieves
Ordered that the petitions of NYSE its Business Risk Buffer as required
and Nasdaq for review of the Division’s was immediately effective upon filing
with the Commission pursuant to under the Fee Policy.10 OCC stated that
action to approve the proposed rule it arrived at the proposed fee schedule
change by delegated authority be Section 19(b)(3)(A) of the Act.3 The
proposed rule change was published for below by determining the figures that
granted; and provide the best opportunity for OCC to
comment in the Federal Register on
It is further ordered that any party or February 2, 2018.4 Under Section achieve coverage of its anticipated
other person may file a statement in 19(b)(3)(C) of the Act,5 the Commission operating expenses plus a Business Risk
support of or in opposition to the action is hereby: (i) Temporarily suspending Buffer. Accordingly, OCC proposed the
made pursuant to delegated authority on File No. SR–OCC–2018–004; and (ii) Schedule of Fees set forth in the table
or before March 22, 2018. instituting proceedings to determine below:
It is further ordered that the January whether to approve or disapprove File
No. SR–OCC–2018–004. approval of SR–OCC–2018–001 and certification of
17, 2018 order approving the proposed the Fee Policy changes in SR–OCC–2018–001 under
rule change, as modified by Amendment II. Description of the Proposed Rule CFTC Regulation 40.6 or (ii) an exception to the 60-
No. 1 (File No. SR–BatsBZX–2017–34), Change day notice period provision in the Fee Policy
authorized by OCC’s Board of Directors and the
shall remain stayed pending further The proposed rule change by OCC holders of all of the outstanding Class B Common
order by the Commission. would revise OCC’s Schedule of Fees Stock of OCC.
By the Commission. effective March 1, 2018 to implement an 7 See Securities Exchange Act Release No. 77112

increase in clearing fees in accordance (February 11, 2016), 81 FR 8294 (February 18, 2016)
Eduardo A. Aleman, (SR–OCC–2015–02) (‘‘Approval Order’’). The
with OCC’s Fee Policy,6 which was Capital Plan was later subject to judicial review by
Assistant Secretary.
the U.S. Court of Appeals for the District of
[FR Doc. 2018–04512 Filed 3–5–18; 8:45 am] 1 15 U.S.C. 78s(b)(1). Columbia Circuit (‘‘D.C. Circuit’’), which remanded
2 17 CFR 240.19b–4. the Approval Order to the Commission to further
BILLING CODE 8011–01–P
3 15 U.S.C. 78s(b)(3)(A). analyze whether the Capital Plan is consistent with
4 Securities Exchange Act Release No. 82596 (Jan. the Act. Susquehanna Int’l Grp., LLP v. SEC, 866
30, 2018), 83 FR 4944 (Feb. 2, 2018) (SR–OCC– F.3d 442 (D.C. Cir. 2017). The Commission’s review
2018–004) (‘‘Notice’’). of the Plan on remand is ongoing, and the Capital
5 15 U.S.C. 78s(b)(3)(C). Plan remains in effect during this ongoing review.
6 See Notice at 4944–45. OCC also filed a 8 See Notice at 4944–45. The Business Risk Buffer

proposed rule change with the Commission to is an amount of fee revenue that OCC targets above
revise its Fee Policy to provide that proposed fee its anticipated operating expenses to allow for
changes are required to be implemented no sooner unexpected fluctuations in operating expenses,
10 See Exchange Act Release No. 82522, 83 FR business capital needs, and regulatory capital
than thirty (30) days from the date of filing of the
3205 (Jan. 23, 2018). proposed rule change concerning such fee change requirements.
9 OCC previously revised its Schedule of Fees
11 17 CFR 201.430. (as opposed to sixty (60) days). See Securities
12 17 CFR 201.431(e). Exchange Act Release No. 82576 (Jan. 24, 2018), 83 effective December 1, 2016, to implement a fee
sradovich on DSK3GMQ082PROD with NOTICES

13 17 CFR 201.431.
FR 4324 (Jan. 30, 2018) (SR–OCC–2018–001). OCC increase in accordance with the Fee Policy. See
submitted the proposed changes to its Fee Policy to Securities Exchange Act Release No. 79028 (October
14 On February 2, 2018, NYSE filed a corrected
the Commodity Futures Trading Commission 3, 2016), 81 FR 69885 (October 7, 2016) (SR–OCC–
petition for review that the Commission will (‘‘CFTC’’) under CFTC Regulation 40.6. OCC stated 2016–012).
consider in lieu of the version filed on January 31, that implementation of the proposed fee change on 10 OCC provided a summary of its analysis in a

2018. March 1, 2018 would require either: (i) Commission confidential Exhibit 3 to the filing.

VerDate Sep<11>2014 22:59 Mar 05, 2018 Jkt 244001 PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 E:\FR\FM\06MRN1.SGM 06MRN1

Federal Register / Vol. 83, No. 44 / Tuesday, March 6, 2018 / Notices 9563

Current fee schedule Proposed fee schedule

Trades with con-
Trades with contracts of: Current fee Proposed fee
tracts of:

1–1,100 ................................................................... $0.050/contract ...................................................... 1–1,018 $0.054/contract.
>1,100 ..................................................................... $55/trade ................................................................ >1,018 $55/trade.

OCC proposed to modify its Schedule analysis.15 In addition, SIG V. Proceedings To Determine Whether
of Fees to: (i) Increase its per contract characterized OCC’s proposal to To Approve or Disapprove File No. SR–
clearing fee from $0.050 to $0.054 per increase fees as a negative consequence OCC–2018–004
contract; and (ii) adjust the quantity of of the Capital Plan.16 The Commission is instituting
contracts at which the fixed, per trade proceedings pursuant to Sections
clearing fee begins from greater than IV. Suspension of File No. SR–OCC–
2018–004 19(b)(3)(C) 19 and 19(b)(2)(B) of the
1,100 contracts per trade to greater than Act 20 to determine whether the
1,018 contracts per trade. OCC stated proposed rule change should be
Pursuant to Section 19(b)(3)(C) of the
that the proposed changes are designed approved or disapproved.
Act,17 at any time within 60 days of the
to target a level of revenues sufficient to Institution of proceedings does not
date of filing of a proposed rule change
cover OCC’s operating expenses plus the indicate that the Commission has
Business Risk Buffer while continuing pursuant to Section 19(b)(1) of the
reached any conclusions with respect to
to maintain its existing fixed, per trade, Act,18 the Commission summarily may
any of the issues involved. Rather, the
fee at $55 per trade. temporarily suspend the change in the
Commission seeks and encourages
OCC stated that in accordance with its rules of a self-regulatory organization if
interested persons to provide additional
Fee Policy, OCC will continue to it appears to the Commission that such comment on the proposed rule change
monitor cleared contract volume and action is necessary or appropriate in the to inform the Commission’s analysis of
operating expenses to determine if public interest, for the protection of whether to disapprove the proposed
further revisions to OCC’s Schedule of investors, or otherwise in furtherance of rule change.
Fees are required so that monies the purposes of the Act. As discussed Pursuant to Section 19(b)(2)(B) of the
received from clearing fees cover its further below, the Commission believes Act,21 the Commission is providing
operating expenses plus the Business a temporary suspension of the proposed notice of the grounds for disapproval
Risk Buffer.11 rule change is warranted here to allow under consideration. As noted above,
for additional analysis of the proposed the Fee Policy to which the proposed
III. Summary of Comment Received
rule change’s consistency with the Act rule change relates was adopted as part
On February 22, 2018, the and the rules thereunder. In particular, of OCC’s Capital Plan, and the Capital
Commission received a comment letter the Commission finds that it is Plan remains subject to Commission
on the proposed rule change from appropriate in the public interest, for review.22 The commenter asserts that
Susquehanna International Group, LLP the protection of investors, and the fee increase contradicts previous
(‘‘SIG’’).12 In the comment letter, SIG otherwise in furtherance of the purposes statements by OCC regarding ‘‘OCC’s
expressed concern regarding whether of the Act, to temporarily suspend the assurances of low fees in its Capital Plan
the information provided by OCC in the proposed rule change to consider submissions,’’ calls into question the
Notice was sufficient to allow for whether the proposed rule change consistency of the Capital Plan with the
meaningful public comment on the satisfies the standards under the Act Act, and is otherwise without basis.23
proposal.13 Specifically, SIG asserted and the rules thereunder requiring, The Commission believes it is
that OCC’s Shareholder Exchanges are appropriate to institute proceedings to
among other things, that clearing agency
incented to overestimate OCC’s assess whether the considerations
rules provide for the equitable
expenses, because such overestimation currently before the Commission in
would lead to increased dividends.14 allocation of reasonable dues, fees and connection with its review of the
SIG asserted further that, without access other charges among its participants. Capital Plan on remand are implicated
to the expense projections filed as a by the issues raised by the proposed fee
15 SIG
Letter at 2.
confidential exhibit to the proposed rule change.24 Moreover, the commenter
16 Id.
at 1. OCC’s Board of Directors decided that
change, the public has no basis to
OCC was significantly undercapitalized, and,
believe that the proposed fee increase is therefore, proposed an expedited plan to
19 15 U.S.C. 78s(b)(3)(C). Once the Commission

reasonable and no ability to comment temporarily suspends a proposed rule change,
substantially increase OCC’s capitalization. See Section 19(b)(3)(C) of the Act requires that the
critically on OCC’s supporting Approval Order at 8294. Subsequent to the Commission institute proceedings under Section
Approval Order, parties, including SIG, filed a 19(b)(2)(B) to determine whether a proposed rule
11 Any subsequent changes to OCC’s Schedule of petition for review of the Approval Order in the DC change should be approved or disapproved.
Circuit, challenging the Commission’s Approval 20 15 U.S.C. 78s(b)(2)(B).
Fees would be the subject of a subsequent proposed
rule change filed with the Commission. Order. The DC Circuit ultimately remanded the case 21 15 U.S.C. 78s(b)(2)(B).
12 See letter from Richard J. McDonald, SIG, dated to the Commission for further proceedings without 22 See supra note 7.

February 14, 2018, to Brent J. Fields, Secretary, reaching the merits of the Capital Plan. 23 SIG Letter at 2.
Commission (‘‘SIG Letter’’). See comments on the Susquehanna, 866 F.3d at 443. The court did not 24 The Commission notes that one of the issues
sradovich on DSK3GMQ082PROD with NOTICES

proposed rule change (SR–OCC–2018–004), https:// vacate the Approval Order prior to remand, instead before us in considering the Capital Plan is the
www.sec.gov/comments/sr-occ-2018-004/ leaving the Capital Plan in place and remanding to contention by some of those commenting on the
occ2018004.htm. Plan that the Plan will lead to an increase in fees.
13 SIG Letter at 2.
give the Commission an opportunity to reevaluate
the Capital Plan. Id. at 451. As noted above, the In responding to these comments in our initial
14 SIG Letter at 3. OCC is owned by Chicago Board approval of the Plan, we observed that ‘‘[t]he
Commission’s reconsideration of the Capital Plan is
Options Exchange, Incorporated (‘‘CBOE’’); Exchange Act rule filing requirements for fee
ongoing.
International Securities Exchange, LLC; NASDAQ changes provide an opportunity for public comment
17 15 U.S.C. 78s(b)(3)(C).
OMX PHLX, LLC; NYSE American LLC; and NYSE and an opportunity for the Commission to review
Arca, Inc. See Approval Order at 8294. 18 15 U.S.C. 78s(b)(1). Continued

VerDate Sep<11>2014 21:39 Mar 05, 2018 Jkt 244001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 E:\FR\FM\06MRN1.SGM 06MRN1

9564 Federal Register / Vol. 83, No. 44 / Tuesday, March 6, 2018 / Notices

argues that, without access to the amendments, all written statements ACTION: Notice.
information provided by OCC on a with respect to the proposed rule
confidential basis, the public cannot change that are filed with the Notice of application for an order
‘‘meaningfully comment on the Commission, and all written under sections 17(d) and 57(i) of the
propriety of the proposed fee communications relating to the Investment Company Act of 1940 (the
increase.’’ 25 The Commission is also proposed rule change between the ‘‘Act’’) and rule 17d–1 under the Act to
instituting proceedings to allow for Commission and any person, other than permit certain joint transactions
additional consideration and comment those that may be withheld from the otherwise prohibited by sections 17(d)
on this and other issues raised by the public in accordance with the and 57(a)(4) of the Act and rule 17d–1
commenter. Finally, the Commission provisions of 5 U.S.C. 552, will be under the Act.
believes that OCC’s proposed rule available for website viewing and SUMMARY OF APPLICATION: Applicants
change raises questions as to whether it printing in the Commission’s Public request an order to permit business
is consistent with Section 17A(b)(3)(D) Reference Room, 100 F Street NE, development companies (‘‘BDCs’’) and
of the Act,26 which requires clearing Washington, DC 20549, on official certain closed-end management
agency rules to provide for the equitable business days between the hours of investment companies to co-invest in
allocation of reasonable dues, fees and 10:00 a.m. and 3:00 p.m. Copies of such portfolio companies with each other and
other charges among its participants. filing also will be available for with affiliated investment funds.
inspection and copying at the principal APPLICANTS: Alcentra Capital
VI. Request for Written Comments
office of OCC and on OCC’s website at Corporation (the ‘‘Company’’); Alcentra
The Commission requests that https://www.theocc.com/about/ BDC Equity Holdings, LLC (the
interested persons provide written publications/bylaws.jsp. ‘‘Subsidiary’’); Alcentra Middle Market
submissions of their views, data, and All comments received will be posted Fund IV, L.P. (the ‘‘Existing Co-
arguments with respect to the proposed without change. Persons submitting Investment Affiliate’’); Alcentra NY,
fee change. In particular, the comments are cautioned that we do not LLC (‘‘Alcentra NY’’); The Dreyfus
Commission invites the written views of redact or edit personal identifying Corporation (‘‘Dreyfus’’); Dreyfus
interested persons concerning whether information from comment submissions. Alcentra Global Credit Income 2024
the proposed fee change is consistent You should submit only information Target Term Fund, Inc. (‘‘DCF’’); Stira
with Section 17A(b)(3)(D) of the Act 27 that you wish to make available Alcentra Global Credit Fund (‘‘Stira
or any other provision of the Act, rules, publicly. Alcentra,’’ and together with the
and regulations thereunder. Interested All submissions should refer to File Company and DCF, the ‘‘Existing
persons are invited to submit written No. SR–OCC–2018–004 and should be Regulated Funds’’); and Stira
data, views and arguments concerning submitted on or before March 27, 2018. Investment Adviser, LLC (‘‘Stira
the foregoing, including whether the Any person who wishes to file a rebuttal Adviser’’).
proposed rule change is consistent with to any other person’s submission must FILING DATES: The application was filed
the Act. Comments may be submitted by file that rebuttal on or before April 10, on April 10, 2017 and amended on
any of the following methods: 2018. August 21, 2017, October 27, 2017,
Electronic Comments January 26, 2018, and February 14,
VII. Conclusion
2018.
• Use the Commission’s internet It is therefore ordered, pursuant to HEARING OR NOTIFICATION OF HEARING:
comment form (http://www.sec.gov/ Section 19(b)(3)(C) of the Act,28 that File
rules/sro.shtml); or An order granting the requested relief
No. SR–OCC–2018–004, be and hereby will be issued unless the Commission
• Send an email to rule-comments@
is, temporarily suspended. In addition, orders a hearing. Interested persons may
sec.gov. Please include File No. SR–
the Commission is instituting request a hearing by writing to the
OCC–2018–004 on the subject line.
proceedings to determine whether the Commission’s Secretary and serving
Paper Comments proposed rule changes should be applicants with a copy of the request,
• Send paper comments in triplicate approved or disapproved. personally or by mail. Hearing requests
to Brent J. Fields, Secretary, Securities For the Commission, by the Division of should be received by the Commission
and Exchange Commission, 100 F Street Trading and Markets, pursuant to delegated by 5:30 p.m. on March 26, 2018, and
NE, Washington, DC 20549–1090. authority.29 should be accompanied by proof of
All submissions should refer to File No. Eduardo A. Aleman, service on applicants, in the form of an
SR–OCC–2018–004. This file number Assistant Secretary. affidavit or, for lawyers, a certificate of
should be included on the subject line [FR Doc. 2018–04484 Filed 3–5–18; 8:45 am] service. Pursuant to Rule 0–5 under the
if email is used. To help the BILLING CODE 8011–01–P
Act, hearing requests should state the
Commission process and review your nature of the writer’s interest, any facts
comments more efficiently, please use bearing upon the desirability of a
only one method. The Commission will SECURITIES AND EXCHANGE hearing on the matter, the reason for the
post all comments on the Commission’s COMMISSION request, and the issues contested.
internet website (http://www.sec.gov/ Persons who wish to be notified of a
[Investment Company Act Release No. hearing may request notification by
rules/sro.shtml). Copies of the 33038; File No. 812–14760]
submission, all subsequent writing to the Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
sradovich on DSK3GMQ082PROD with NOTICES

Alcentra Capital Corporation, et al.
the change, summarily suspend it and institute and Exchange Commission, 100 F St.
proceedings to ultimately approve or disapprove February 28, 2018. NE, Washington, DC 20549–1090.
the change, as applicable, to ensure an SRO’s rules AGENCY:Securities and Exchange Applicants: Alcentra Capital
meet regulatory requirements.’’ See Approval Order
at 8303. Commission (‘‘Commission’’). Corporation, Alcentra Middle Market
25 SIG Letter at 3. Fund IV, L.P, Alcentra NY, LLC,
26 17 CFR 240.17Ad–22(d)(7). 28 15 U.S.C. 78s(b)(3)(C). Alcentra BDC Equity Holdings, LLC,
27 15 U.S.C. 78q–1(b)(3)(D). 29 17 CFR 200.30–3(a)(12). The Dreyfus Corporation, and Dreyfus

VerDate Sep<11>2014 21:39 Mar 05, 2018 Jkt 244001 PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 E:\FR\FM\06MRN1.SGM 06MRN1

Document Created: 2018-11-01 08:49:28
Document Modified: 2018-11-01 08:49:28

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 9562