[Federal Register Volume 75, Number 145 (Thursday, July 29, 2010)]
[Notices]
[Pages 44833-44835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-18607]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62566; File No. SR-OCC-2010-10]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend OCC's By-Laws and Rules To Change Its Method of Holding Certain
Securities Pledged by Members To Satisfy Margin and Clearing Fund
Obligations
July 23, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934,\1\ notice is hereby given that on July 1, 2010, The Options
Clearing Corporation (``OCC'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared
substantially by OCC. OCC filed the proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act \2\ and Rule 19b-4(f)(4) \3\
thereunder so that the proposal was effective upon filing with the
Commission. The Commission is publishing this notice to solicit
[[Page 44834]]
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78s(b)(3)(A)(iii).
\3\ 17 CFR 240.19b-4(f)(4).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The proposed rule change would amend OCC's By-Laws and Rules to
change its method of holding certain securities pledged by Members to
satisfy margin and clearing fund obligations.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, OCC included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. 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),
(B), and (C) below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The proposed rule change would amend OCC's By-Laws and Rules to
change OCC's method of holding certain securities pledged by Members to
satisfy margin and clearing fund obligations. Securities issued by the
United States or Canadian governments and securities issued by U.S.
government-sponsored enterprises (``Government Securities'') are among
the securities OCC's Members may deposit to satisfy margin and clearing
fund obligations. OCC currently permits Members to satisfy such
obligations by means of a paper pledge agreement or an electronic
pledge system of a depository approved by OCC.
Instead of continuing to use these types of Government Securities
pledges, OCC proposes taking direct control of Government Securities
that Members pledge to satisfy margin and clearing fund obligations.
OCC would require that such pledged securities be held in an account in
the name of OCC and The EDP Pledge System would be retained during a
transition period designated by OCC.
OCC believes this proposed change to how margin and clearing fund
deposits are held would enhance OCC's control of such securities and
would allow OCC to access such securities more efficiently. OCC intends
for the proposed change to relate only to the mechanism through which
the securities would be held and not to affect the respective rights of
OCC or its Members in the deposited securities. The general lien
granted under new paragraph (b) of Article VIII, Section 1 of OCC's By-
Laws, would replace the security interests created through the pledge
mechanisms where securities are held directly in OCC's name. To
preserve flexibility for OCC to be able to respond to unanticipated
circumstances, the amendment would allow OCC to specify a different
method of accepting margin and clearing fund deposits if necessary.
The proposed change would also provide clarification regarding how
OCC would credit foreign currency toward clearing fund and margin
requirements. OCC does not presently accept foreign currency either as
clearing fund contributions or margin deposits. However, because
Canadian government securities are included in the definition of
Government Securities OCC could receive and could potentially hold
Canadian dollars it receives as interest on or as proceeds from those
securities. When determining the U.S. dollar value of such foreign
currency, OCC would conduct its valuations in the same way that it has
previously valued margin deposits of assets that are denominated in a
foreign currency. This involves using such exchange rates and
``haircuts'' as OCC deems appropriate. To reflect this policy, OCC is
proposing a minor amendment to Rule 604(e) as well as adding a similar
provision in Section 3 of Article VIII of the By-Laws.
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(iii) of the Act \4\ and Rule 19b-4(f)(4) \5\ thereunder
because it effects a change in an existing service of a registered
clearing agency that does not adversely affect the safeguarding of
securities or funds in the custody or control of the clearing agency or
for which it is responsible and does not significantly affect the
respective rights or obligations of the clearing agency or persons
using the service. At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate such rule
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.
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\4\ 15 U.S.C. 78s(b)(3)(A)(iii).
\5\ 17 CFR 240.19b-4(f)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
OCC does not believe that the proposed rule change would impose any
burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
OCC has not solicited or received written comments relating to the
proposed rule change. OCC will notify the Commission of any written
comments it receives.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(iii) of the Act \6\ and Rule 19b-4(f)(4) \7\ thereunder
because it effects a change in an existing service of a registered
clearing agency that does not adversely affect the safeguarding of
securities or funds in the custody or control of the clearing agency or
for which it is responsible and does not significantly affect the
respective rights or obligations of the clearing agency or persons
using the service. At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate such rule
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.
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\6\ 15 U.S.C. 78(b)(3)(A)(iii).
\7\ 17 CFR 240.19b4-(f)(4).
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IV. Solicitation of Comments
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:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-OCC-2010-10 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File No. SR-OCC-2010-10. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will
[[Page 44835]]
post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent
amendments, all written statements with respect to the 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 Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street, NE., Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of such
filing also will be available for inspection and copying at OCC's
principal office and on OCC's Web site at http://www.theocc.com/about/publications/bylaws.jsp. All comments received will be posted without
change; the Commission does not edit personal identifying information
from submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to File No. SR-
OCC-2010-10 and should be submitted on or before August 19, 2010.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-18607 Filed 7-28-10; 8:45 am]
BILLING CODE 8010-01-P