Notice2022-11205
Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Partial Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Partial Amendment No. 1, by The Options Clearing Corporation Concerning Settlement Timing
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 25, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 101 (Wednesday, May 25, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 101 (Wednesday, May 25, 2022)]
[Notices]
[Pages 31916-31920]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-11205]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94950; File No. SR-OCC-2022-004]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of Partial Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by Partial
Amendment No. 1, by The Options Clearing Corporation Concerning
Settlement Timing
May 19, 2022.
I. Introduction
On March 22, 2022, the Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change SR-OCC-2022-004 pursuant to Section 19(b) of the
Securities Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 3 \2\
thereunder. The proposed rule change would amend various provisions of
OCC's rules to revise the required settlement time from 9:00 a.m.
Central Time (``CT'') to 8:00 a.m. CT.\3\ The proposed rule change was
published for public comment in the Federal Register on April 7,
2022.\4\ On May 5, 2022, OCC filed Partial Amendment No. 1 to the
proposed rule change.\5\ The Commission has received two comments
regarding the proposed rule change.\6\ The Commission is publishing
this notice to solicit comments on Partial Amendment No. 1 from
interested persons, and is approving the proposed rule change, as
modified by Partial Amendment No. 1, on an accelerated basis.\7\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Notice of Filing infra note 4, 87 FR 20485.
\4\ Securities Exchange Act Release No. 94587 (Apr. 1, 2022), 87
FR 20485 (Apr. 7, 2022) (File No. SR-OCC-2022-004) (``Notice of
Filing'').
\5\ In Partial Amendment No. 1, OCC proposed conforming changes
to its Liquidity Risk Management Framework, and appended new
Exhibits 4 and 5D to File No. SR-OCC-2022-004 to reflect the
proposed changes to the Liquidity Risk Management Framework.
\6\ The Commission received two comment letters that addressed
market conduct generally; however, additional discussion is
unnecessary because the comment letters do not bear on the purpose
or legal basis of the proposed rule change, as modified by Partial
Amendment No. 1. The comments on the proposed rule change are
available at <a href="https://www.sec.gov/comments/sr-occ-2022-004/srocc2022004.htm">https://www.sec.gov/comments/sr-occ-2022-004/srocc2022004.htm</a>.
\7\ References to the proposed rule change from this point
forward refer to the proposed rule change as modified by Partial
Amendment No. 1.
---------------------------------------------------------------------------
II. Background <SUP>8</SUP>
---------------------------------------------------------------------------
\8\ Capitalized terms used but not defined herein have the
meanings specified in OCC's Rules and By-Laws, available at <a href="https://www.theocc.com/about/publications/bylaws.jsp">https://www.theocc.com/about/publications/bylaws.jsp</a>.
---------------------------------------------------------------------------
OCC collects margin deposits and Clearing Fund deposits from
Clearing Members in order to collateralize Clearing Members'
obligations, and thus supports OCC's abilities to act as a guarantor in
the event a Clearing Member is unable to fulfill its obligations with
OCC. OCC's Rules currently describe various times, many of which are
set to 9:00 a.m. CT, for Clearing Members to make various daily
payments for satisfying their margin and Clearing Fund obligations,
following a specified amount of notice that OCC provides to Clearing
Members. Such daily payments are required for Clearing Members to cover
margin and Clearing Fund deficits, as well as increases in the Clearing
Fund cash requirement (``Settlement Funds'').
As described in more detail below, OCC is proposing to revise its
By-Laws and Rules \9\ to make the following three changes to its
settlement processes:
---------------------------------------------------------------------------
\9\ OCC is also proposing to make conforming changes to its
Clearing Fund Methodology Policy and Liquidity Risk Management
Framework to reflect the proposed changes to its By-Laws and Rules.
(1) Aligning daily payment processes under a uniform start-of-
day settlement time to reduce operational complexity;
(2) reducing the period of time a Clearing Member has to fund
obligations arising out of OCC's routine processes for setting the
size of its Clearing Fund to simplify OCC's financial resources
monitoring processes; and
(3) increasing the period of time a Clearing Member has to fund
obligations arising out of a change to OCC's rules that affects the
member's Clearing Fund requirement, to provide members with more
time to consider terminating membership in response to such a rule
change.
A. Setting a Uniform Start-of-Day Settlement Time
OCC proposes to harmonize various daily payment processes by
setting a uniform start-of-day settlement time (``Settlement Time''),
as OCC believes that a uniform start-of-day settlement time would
reduce operational complexities.\10\ In addition to setting a single
Settlement Time, OCC proposes to consolidate various settlement
obligations that are due at the same time into a single obligation to
further streamline OCC's processes.
---------------------------------------------------------------------------
\10\ See Notice of Filing, supra note 4, at 20485.
---------------------------------------------------------------------------
Further, OCC intends to set the Settlement Time one hour earlier
than the current start-of-day settlement time that applies to many of
OCC's daily payment processes, as OCC believes that the earlier hour
would provide OCC with additional time to address a default event and
implement protective actions.\11\ The proposed changes would change the
Settlement Time for various daily payment processes (described below)
from 9 a.m. Central Time (``CT'') to 8:00 a.m. CT. The proposed rule
change would also grant OCC discretion to extend funding deadlines when
warranted by the circumstances, such as operational or system
difficulties that may arise.
---------------------------------------------------------------------------
\11\ Id.
---------------------------------------------------------------------------
(1) ``Settlement Time'' Definitions
Currently, two different definitions in OCC's By-Laws (Article I,
Definitions; Article XV, Foreign Currency Options, Definitions) define
the term ``settlement time'' as 9:00 a.m. CT (10:00 a.m. Eastern Time
(``ET'')). OCC proposes to move the Article I definition to Chapter I,
Rule 101 of OCC's Rules because the defined term does not appear
elsewhere in the By-Laws, but appears routinely in OCC's Rules. OCC
proposes to update both definitions to make the Settlement Time 8:00
a.m. CT (9:00 a.m. ET). OCC further proposes to clarify in the
relocated Rule 101 definition that the Settlement Time does not include
settlements related to any cross-margin program with a Participating
Carrying Clearing Organization (``CCO'').\12\
---------------------------------------------------------------------------
\12\ Current OCC Rule 706(b) allows OCC to specify the time for
settling obligations related to cross-margin accounts with
Participating CCOs. As of March 22, 2022, OCC maintained cross-
margin accounts with only one Participating CCO, the Chicago
Mercantile Exchange (``CME''). See Notice of Filing, 87 FR 20485, n.
4. OCC's Operations Manual specifies that the settlement time for
OCC/CME cross-margin debits is 7:30 a.m. CT. See id. OCC did not
propose changing the start-of-day settlement time for OCC/CME cross-
margin debits, which is currently 8:00 a.m. CT under Article VI,
Section 25 of OCC's By-Laws.
---------------------------------------------------------------------------
(2) Daily Margin Report
OCC's margin-related rules define a specific time by which margin
payments must be specified. OCC proposes to replace the time specified
in the margin-related rules with a reference to the defined term
``Settlement Time,'' rather than specify settlement times at multiple
locations within OCC's rules. Rule 605 currently requires Clearing
Members to satisfy margin deficits by 9:00 a.m. CT (10:00 a.m. ET). OCC
[[Page 31917]]
proposes to update Rule 605 to reference the defined term ``Settlement
Time,'' so that Clearing Members must now satisfy margin deficits by
8:00 a.m. CT (9:00 a.m. ET). Additionally, OCC Rule 605 currently
states that prior to 9:00 a.m. CT (10:00 a.m. ET), OCC shall make
available to each Clearing Member a Daily Margin Report for each
account maintained by the Clearing Member. OCC proposes to update the
Rule to require that the Daily Margin Report be made available prior to
8:00 a.m. CT (9:00 a.m. ET).
Interpretation and Policy .01 to Rule 605 currently provides that
the Daily Margin Report will not include the amount of margin required
for variance futures, and requires OCC to advise Clearing Members of
margin requirements for variance futures by 9:00 a.m. CT (10:00 a.m.
ET). OCC proposes to delete Interpretation and Policy .01 to Rule 605
on the basis that margin requirements for variance futures, as for
other products, will be included in the Daily Margin Report.
(3) General Clearing Fund Deficits
OCC proposes to set the time for settlement of Clearing Fund-
related obligations related to general deficits \13\ by referring to
the defined term ``Settlement Time,'' and to consolidate Clearing
Member payment obligations due at the Settlement Time into a single
obligation. OCC Rule 1005(a) currently requires that Clearing Members
must satisfy general Clearing Fund deficits within one hour of being
notified of the deficit. As a practical matter, OCC generally collects
these deficits during the morning of each business day, but outside of
the start-of-day settlement cycle, resulting in two separate
collections, at similar times, from Clearing Members.
---------------------------------------------------------------------------
\13\ General deficits include deficits resulting from a decrease
in the value of a Clearing Member's contribution or by an adjusted
contribution pursuant to Rule 1004. OCC Rule 1004 describes how the
required Clearing Fund contribution of a Clearing Member may be
adjusted by the Corporation due to mergers, consolidations, position
transfers, business expansions, membership approval, or other
similar events in connection with the calculations made in respect
of a particular calendar month or at any other time.
---------------------------------------------------------------------------
OCC proposes to revise its Rules to align the general Clearing Fund
deficit collection time with the proposed Settlement Time. The proposed
rule change would revise Rule 1005(a) to state that OCC would collect a
general deficit arising under Rule 1005(a) at the Settlement Time,
provided that OCC notifies the Clearing Member of such deficit at least
one hour prior to the Settlement Time on the day the notice was
provided. OCC typically provides notice to Clearing Members of general
deficits under Rule 1005(a) through OCC's overnight reporting process,
but may also issue notices in response to market conditions or
adjustments arising from mergers, consolidations, position transfers,
business expansions, membership approval, or other similar events. OCC
believes that it would achieve operational efficiency by revising Rule
1005(a) to align the general Clearing Fund deficit collection time to
the Settlement Time.\14\ OCC intends to continue to provide Clearing
Members with one hour to satisfy a deficit if OCC does not provide
notice at least one hour before the Settlement Time on a particular
day.\15\ Additionally, OCC proposes to change Rule 1005(a) to provide
OCC with discretion to extend funding deadlines when warranted by the
circumstances (e.g., operational or system difficulties).
---------------------------------------------------------------------------
\14\ See Notice of Filing, supra note 4, at 20486.
\15\ Id.
---------------------------------------------------------------------------
(4) Clearing Fund Replenishments and Assessments
OCC also proposes to set the time for settlement of Clearing Fund-
related obligations related to replenishments and assessments by
referring to the defined term ``Settlement Time.'' Rule 1006(h)
currently requires that Clearing Members cover any charges to the
Clearing Fund, whether in the form of replenishments or assessments, by
9:00 a.m. CT (10:00 a.m. ET) on the following business day. OCC
proposes to amend Rule 1006(h) to align the replenishments and
assessments collection time with the proposed Settlement Time. OCC
believes that using the revised ``Settlement Time'' definition, rather
than stating a specific time in Rule 1006(h), would help to achieve
consistency and reduce operational complexity.\16\ OCC also believes
that a move to the earlier time of 8:00 a.m. CT would provide OCC with
more time to address a default event and implement necessary protective
actions, including securing funds from its liquidity providers.\17\ OCC
also proposes to make corresponding changes to Rule 1006(h)(B), which
reiterates that each Clearing Member shall have, and shall at all times
maintain, the ability to make good any deficiency described in Rule
1006(h) during a cooling-off period. OCC also proposes to amend Rule
1006(h)(A) and Rule 1006(h)(B) to allow OCC to specify a later time for
which Clearing Members must make good on any charges to the Clearing
Fund.
---------------------------------------------------------------------------
\16\ Id.
\17\ Id.
---------------------------------------------------------------------------
(5) Clearing Fund Deficits Due to Rule Amendments
Additionally, OCC proposes to set the time for settlement of
Clearing Fund-related obligations related to changes to OCC's rules by
referring to the defined term ``Settlement Time.'' Under current Rule
1002(e), if a Clearing Member's Clearing Fund contribution increases
due to an amendment of OCC's Rules, the increase shall not become
effective until the Clearing Member is given at least two business days
prior written notice of the amendment. Clearing Members that do not
notify OCC that they intend to terminate their clearing membership must
satisfy the increased contribution by 9:00 a.m. CT (10:00 a.m. ET) on
the second business day following notification of the amendment.
OCC proposes to revise Rule 1002(e) to align with the proposed
Settlement Time, so that Clearing Members must satisfy the increased
contribution by the earlier time of 8:00 a.m. CT (9:00 a.m. ET). As
with the other proposed Settlement Time alignments, this change is
intended to reduce operational complexity by creating a more uniform
settlement time for Clearing Fund deficits, including those described
in Rule 1002(e).\18\
---------------------------------------------------------------------------
\18\ See Notice of Filing, supra note 4, at 20487.
---------------------------------------------------------------------------
(6) Temporary Increase in Clearing Fund Cash Requirement
Finally, OCC proposes to set the time for settlement of Clearing
Fund-related obligations related to increases in the Clearing Fund Cash
Requirement by reference to the defined term ``Settlement Time.'' Under
current Interpretation and Policy .03 to Rule 1002, Clearing Members
must satisfy any Clearing Fund Cash Requirement-related increase in
their required cash contributions no later than the second business day
following notification of the increase. OCC proposes to revise Rule
1002 Interpretation and Policy .03 to require that Clearing Members
satisfy a required cash contribution increase by the first Settlement
Time following notification of the increase. OCC believes that this
proposed change would reduce operational complexity by creating a more
uniform settlement time that aligns with the current collection period
for other obligations to OCC.\19\
---------------------------------------------------------------------------
\19\ Id.
---------------------------------------------------------------------------
[[Page 31918]]
B. Shortening Collection Period Following Clearing Fund Resizing
In addition to harmonizing the time by which settlement occurs on a
given day, OCC proposes to shorten the number of days a Clearing Member
has to meet certain routine funding obligations related to the Clearing
Fund. Currently, OCC allows members two business days to meet routine
funding obligations. As described below, OCC is proposing changes
designed to require funding by the next Settlement Time, effectively
requiring funding by the business day following notice of an
obligation. OCC stated that shortening the collection period would
reduce operational complexity related to the monitoring of OCC's
prefunded credit and liquidity resources by providing transparency and
certainty to OCC around OCC's available liquidity resources during the
resizing process.\20\
---------------------------------------------------------------------------
\20\ See Notice of Filing, supra note 4, at 20486.
---------------------------------------------------------------------------
(1) Deficits From Monthly and Intra-Month Clearing Fund Resizing
OCC Rule 1005(b) currently requires that for any deficits resulting
from a monthly or intra-month Clearing Fund resizing, Clearing Members
must satisfy them by 9:00 a.m. CT (10:00 a.m. ET) on the second
business day following notification of the resizing. According to OCC,
the two-day collection period was intended to provide Clearing Members
with sufficient notice of any changes to their Clearing Fund
contribution requirements. However, OCC notes that this two-day
collection period complicates the monitoring of OCC's prefunded credit
and liquidity resources.\21\
---------------------------------------------------------------------------
\21\ Id.
---------------------------------------------------------------------------
The proposed rule change would amend Rule 1005(b) to require that
deficits resulting from the standard monthly Clearing Fund resizing
must be satisfied by the Settlement Time on the first business day of
each month. OCC believes that the proposed change would reduce the time
to collect Clearing Fund deficits required to meet the new Clearing
Fund size, and would reduce operational complexity of the monitoring of
OCC's prefunded credit and liquidity resources by providing certainty
to OCC on the available liquidity resources during the resizing
process.\22\ The proposed rule change would also shorten the collection
period for intra-month resizing to the next Settlement Time following
notification of the re-sizing, which would align it with the monthly
resizing period and other Clearing Fund deficit collection times. OCC
also proposes to modify Rule 1005(b) so that OCC has the discretion to
extend funding deadlines when warranted by the circumstances (e.g.,
operational or system difficulties).
---------------------------------------------------------------------------
\22\ Id.
---------------------------------------------------------------------------
(2) Adjustment to Clearing Fund Contributions
Rule 1004 provides that any deficiency arising from an adjustment
due to a Clearing Member merger, consolidation, position transfer,
business expansion, membership approval or other similar event shall be
satisfied in accordance with Rule 1005(a). Rule 1004 currently provides
an exception that allows a Clearing Member to satisfy an obligation,
typically due on the first business day of a calendar month, on the
second business day if the deficit coincides with a regular monthly
sizing collection. The proposed rule change would remove this exception
because under the proposed revision of Rule 1005, regular monthly
sizing deficits would no longer be collected two business days after
notification.
C. Increasing Notification Period For Clearing Fund Deficits Due to
Rule Amendments
In contrast to the reduction of time for funding routine
obligations, OCC proposes increasing the number of days a Clearing
Member has to meet Clearing Fund obligations related to changes in
OCC's rules. Currently, OCC allows members two business days to meet
funding obligations arising out of rule changes. As described below,
OCC is proposing to give Clearing Members five business days notice of
such obligations to allow Clearing Members additional time to determine
whether to terminate clearing membership as a result of any such rule
change.\23\
---------------------------------------------------------------------------
\23\ See Notice of Filing, supra note 4, at 20487.
---------------------------------------------------------------------------
As previously noted, under current Rule 1002(e), if a Clearing
Member's Clearing Fund contribution increases due to an amendment of
OCC's Rules, the increase shall not become effective until the Clearing
Member is given at least two business days prior written notice of the
amendment. This notification period provides Clearing Members with the
time to notify OCC in writing that it wishes to terminate its clearing
membership if desired, and close out or transfer its open positions
before the effective date of the amendment. Clearing Members that do
not notify OCC of such termination must satisfy the increased
contribution by 9:00 a.m. CT (10:00 a.m. ET) on the second business day
following notification of the amendment.
The proposed rule change would increase the notification period
from two business days to five business days, to provide Clearing
Members with additional time to determine whether or not to terminate
their clearing memberships and close out or transfer all open positions
before the effective date of the amendment.\24\
---------------------------------------------------------------------------
\24\ According to OCC, the purpose of this update to Rule
1002(e) would be to better reflect OCC's current practice, where
Clearing Members are generally afforded more than five business
days' notice of any change in Clearing Fund requirements that result
from an amendment of OCC's Rules. Id. As this change codifies an
existing practice, OCC does not believe it will modify Clearing
Member behavior or otherwise have an adverse impact on OCC. Id.
---------------------------------------------------------------------------
D. Conforming Changes to Policies
The proposed rule change would also make conforming changes to the
Clearing Fund Methodology Policy and Liquidity Risk Management
Framework. These changes would amend the Clearing Fund Methodology
Policy to reflect the revised timing for satisfying Clearing Fund Cash
Requirement-related increases, and eliminating the policy language
describing the exception set forth in Rule 1004 as described above.
These changes are intended to conform the Clearing Fund Methodology
Policy with the proposed changes to OCC's Rules and support the reduced
operational complexity that OCC expects to achieve by creating a more
uniform settlement time.\25\ The proposed changes to the Liquidity Risk
Management Framework would note that Clearing Members will have until
no later than the first start-of-day settlement time following the day
on which notice is provided by OCC, or an alternative time established
by an OCC officer to meet their minimum Clearing Fund cash
contribution.
---------------------------------------------------------------------------
\25\ Id.
---------------------------------------------------------------------------
III. Discussion and Commission Findings
Section 19(b)(2)(C) of the Exchange Act directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder applicable to such organization.\26\ After carefully
considering the proposed rule change, the Commission finds that the
proposal is consistent with the requirements of the Exchange Act and
the rules and regulations thereunder applicable to OCC. More
specifically, the Commission finds that the proposal, is consistent
with Section 17A(b)(3)(F) of the
[[Page 31919]]
Exchange Act \27\ and Rule 17Ad-22(e)(8) under the Exchange Act \28\ as
described in detail below.
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78s(b)(2)(C).
\27\ 15 U.S.C. 78q-1(b)(3)(F).
\28\ 17 CFR 240.17Ad-22(e)(8).
---------------------------------------------------------------------------
A. Consistency With Section 17A(b)(3)(F) of the Exchange Act
Section 17A(b)(3)(F) of the Exchange Act requires, among other
things, that a clearing agency's rules are designed to promote the
prompt and accurate clearance and settlement of securities transactions
and, to the extent applicable, derivative agreements, contracts, and
transactions; and the rules are designed, in general, to protect
investors and the public interest.\29\ Based on its review of the
record, and for the reasons described below, the Commission believes
that the proposed changes are consistent with facilitating the prompt
and accurate clearance and settlement of securities transactions and
derivative agreements, contracts, and transactions for which OCC is
responsible, and protecting investors and the public interest.
---------------------------------------------------------------------------
\29\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
The Commission believes that OCC, in amending its By-Laws and Rules
to set a uniform time for satisfying start-of-day settlement at 8:00
a.m. CT (9:00 a.m. ET) and applying the updated Settlement Time to the
Daily Margin Report (Rule 605), general Clearing fund deficits (Rule
1005(a)), Clearing Fund replenishments and assessments (Rule 1006(h)),
Rule amendment-related Clearing Fund deficits (Rule 1002(e)), and
temporary increases in the Clearing Fund Cash Requirement (Rule
1002.03) will remove any potential confusion or ambiguity for Clearing
Members that could result from having different start-of-day settlement
times depending on the nature of the Settlement Fund collection type.
The alignment to a single Settlement Time would therefore facilitate
the prompt and accurate clearance and settlement of transactions for
which OCC is responsible.
Further, the Commission believes that OCC, in amending Rule 1005(b)
to shorten the collection period for deficits due to Clearing Fund
monthly and intra-month resizings, will ensure that such Clearing Fund
deficits are covered earlier than before. This would in turn reduce any
existing liquidity risk and provide greater certainty regarding OCC's
liquidity resources, thereby supporting OCC's ability to meet its
obligations. Strengthening OCC's ability to meet its payment
obligations would, in turn, promote its ability to ensure prompt
settlement of securities transactions for which OCC is responsible.
OCC also proposed changes to Rule 1002(e) to increase the
notification period for Clearing Member deficits due to Rule amendments
from two business days to five business days. The Commission believes
that this proposed change would benefit Clearing Members by giving them
additional time to consider canceling their clearing membership with
OCC in the event of a Clearing Fund contribution increase created by
amendments to OCC's Rules. Clearing Members could use the additional
time to consider their ability to cover such increases with greater
deliberation, which could allow members to unwind positions in an
orderly fashion rather than defaulting on obligations to OCC. The
promotion of an orderly unwinding of positions, as opposed to a
potentially more disruptive Clearing Member default scenario, would in
turn promote the protection of investors and the public interest.
OCC also proposed conforming changes to its Clearing Fund
Methodology Policy and its Liquidity Resource Management Framework to
ensure consistency of the policy and framework with the changes
described above. The Commission believes, therefore, that the
conforming changes are consistent with the requirements of Section
17A(b)(3)(F) for the reasons described above.
The Commission believes, therefore, that the proposal is consistent
with the requirements of Section 17A(b)(3)(F) of the Exchange Act.\30\
---------------------------------------------------------------------------
\30\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
B. Consistency With Rule 17Ad-22(e)(8) Under the Exchange Act
Rule 17Ad-22(e)(8) under the Exchange Act requires that a covered
clearing agency establish, implement, maintain, and enforce written
policies and procedures reasonably designed to define the point at
which settlement is final no later than the end of the day on which the
payment or obligation is due and, where necessary or appropriate,
intraday or in real time.\31\ Based on its review of the record, the
Commission believes that the proposed rule change is consistent with
this requirement.
---------------------------------------------------------------------------
\31\ 17 CFR 240.17Ad-22(e)(8).
---------------------------------------------------------------------------
OCC's proposal to modify its rules to change the definitions of
``settlement time'' from 9:00 a.m. CT to 8:00 a.m. CT would move the
start-of-day settlement time up by one hour, but would provide no less
clear a time by which settlement is due than OCC's current rules. As
proposed, settlement finality for cleared transactions would continue
to occur when a settlement bank either accepts or confirms the
settlement instruction. Similarly, OCC's proposed changes to reduce or
increase the number of days a Clearing Member has to meet certain
Clearing Fund obligations would provide no less certainty regarding the
time by which settlement must occur than is provided by OCC's current
rules.
The Commission believes, therefore, that the proposal is consistent
with the requirements of Rule 17Ad-22(e)(8) under the Exchange Act.\32\
---------------------------------------------------------------------------
\32\ 17 CFR 240.17Ad-22(e)(8).
---------------------------------------------------------------------------
IV. Solicitation of Comments on Partial Amendment No. 1 to the Proposed
Rule Change
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as modified by Partial Amendment No. 1, is consistent with the
Exchange Act. Comments may be submitted by any of the following
methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f486819891d9979b9999919a8087b4879197da939b82"><span class="__cf_email__" data-cfemail="89fbfce5eca4eae6e4e4ece7fdfac9faeceaa7eee6ff">[email protected]</span></a>. Please include
File Number SR-OCC-2022-004 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to: Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number SR-OCC-2022-004. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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
[[Page 31920]]
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 the Exchange. 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-2022-004 and should be
submitted on or before June 15, 2022.
V. Accelerated Approval of Proposed Rule Change, as Modified by Partial
Amendment No. 1
The Commission finds good cause, pursuant to Section 19(b)(2) of
the Exchange Act,\33\ to approve the proposed rule change prior to the
30th day after the date of publication of notice of the filing of
Partial Amendment No. 1 in the Federal Register. As discussed above,
Partial Amendment No. 1 modified the original proposed rule change by
making conforming changes to OCC's Liquidity Risk Management Framework
consistent with the initial filing. Partial Amendment No. 1 does not
change the purpose of or basis for the proposed changes.
---------------------------------------------------------------------------
\33\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
For similar reasons as discussed above, the Commission finds that
Partial Amendment No. 1 is consistent with the requirement that OCC's
rules be designed to promote the prompt and accurate clearance and
settlement of securities transactions under Section 17A(b)(3)(F) of the
Exchange Act.\34\ Accordingly, the Commission finds good cause,
pursuant to Section 19(b)(2) of the Exchange Act, to approve the
proposed rule change, as modified by Partial Amendment No. 1, on an
accelerated basis, pursuant to Section 19(b)(2) of the Exchange
Act.\35\
---------------------------------------------------------------------------
\34\ 15 U.S.C. 78q-1(b)(3)(F).
\35\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
VI. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change, as modified by Partial Amendment No. 1, is
consistent with the requirements of the Exchange Act, and in
particular, the requirements of Section 17A of the Exchange Act \36\
and the rules and regulations thereunder.
---------------------------------------------------------------------------
\36\ In approving this proposed rule change, the Commission has
considered the proposed rules' impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\37\ that the proposed rule change (SR-OCC-2022-004), as
modified by Partial Amendment No. 1, be, and hereby is, approved on an
accelerated basis.
---------------------------------------------------------------------------
\37\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
---------------------------------------------------------------------------
\38\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-11205 Filed 5-24-22; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on May 25, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.