Notice2025-11299
Self-Regulatory Organizations; the Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Options Clearing Corporation Concerning the Adoption of a New Clearing Agreement That Would Permit OCC To Provide Clearing and Settlement Services to MIAX Subject to All Requisite Regulatory Approvals Being Received
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Published
June 20, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 117 (Friday, June 20, 2025)</title>
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[Federal Register Volume 90, Number 117 (Friday, June 20, 2025)]
[Notices]
[Pages 26377-26380]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-11299]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103271; File No. SR-OCC-2025-008]
Self-Regulatory Organizations; the Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change by
the Options Clearing Corporation Concerning the Adoption of a New
Clearing Agreement That Would Permit OCC To Provide Clearing and
Settlement Services to MIAX Subject to All Requisite Regulatory
Approvals Being Received
June 16, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on June 4, 2025, The Options Clearing Corporation
(``OCC'' or ``Corporation'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
primarily by OCC. OCC filed the proposed rule change pursuant to
Section 19(b)(3)(A) \3\ of the Act and paragraph (f)(4) or Rule 19b-4
\4\ thereunder, such that the proposed rule change was immediately
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
This proposed rule change would update an agreement for Clearing
and Settlement Services (``Clearing Agreement'') between OCC and MIAX
Futures Exchange, LLC (``MIAX'') in connection with MIAX's status as a
designated contract market (``DCM'') regulated by the Commodity Futures
Trading Commission (``CFTC''). There are no proposed changes to OCC's
By-Laws or Rules.
OCC filed as Exhibit 5 to File No. SR-OCC-2025-008 the text of the
proposed Clearing Agreement. All terms with initial capitalization that
are not otherwise defined herein have the same meaning as set forth in
the OCC By-Laws and Rules.\5\
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\5\ OCC's By-Laws and Rules can be found on OCC's public
website: <a href="https://www.theocc.com/Company-Information/Documents-and-Archives/By-Laws-and-Rules">https://www.theocc.com/Company-Information/Documents-and-Archives/By-Laws-and-Rules</a>.
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II. Clearing Agency'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 these
statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
(1) Purpose
This proposed rule is to adopt a new Clearing Agreement that would
permit OCC to provide clearing and settlement services to MIAX subject
to all requisite regulatory approvals being received. OCC proposes to
provide clearance and settlement services for commodity futures
(``Futures'') including commodity futures of an underlying interest
that are a broad-based security index (``Broad-Based Index Futures''),
together with options on Futures (``Futures Options''), collectively
referred to within the Clearing Agreement as (``Cleared Contracts''),
to MIAX pursuant to the terms set forth in the Clearing Agreement. MIAX
already has a DCM designation from the CFTC.\6\ The terms of the
proposed Clearing Agreement are based on the terms of the Agreement for
Clearing and Settlement Services executed with Small Exchange, Inc.
(``Small Agreement''), which was approved by the Commission.\7\ The
Clearing Agreement is similar to the Small Agreement with several
differences discussed in more detail below.
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\6\ See <a href="https://www.cftc.gov/sites/default/files/stellent/groups/public/@otherif/documents/ifdocs/mgexsubpartcelection.pdf">https://www.cftc.gov/sites/default/files/stellent/groups/public/@otherif/documents/ifdocs/mgexsubpartcelection.pdf</a>.
\7\ See Securities Exchange Act Release No. 87774 (December 17,
2019), 84 FR 70602 (December 23, 2019) (SR-OCC-2019-011).
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Clearing Agreement Proposal
OCC proposes to provide the clearance and settlement services as
described in the Clearing Agreement that includes new provisions
designed to protect OCC and the holders of outstanding contracts listed
on MIAX. These provisions would enable OCC to effectively manage the
risks borne from a clearing relationship with a DCM such as the one OCC
proposes to establish with MIAX. More specifically, the following
provisions would be added:
[[Page 26378]]
<bullet> A new recital paragraph within the preamble, which
acknowledges a separate ``Data Agreement'' related to the use and
distribution of data and other information that would be entered into
concurrently with the Clearing Agreement. This recital reflects the
parties' intent that the provision of clearing services would be
subject to the terms of both agreements in addition to OCC's By-Laws
and Rules and any applicable regulatory requirements. Accordingly, both
Section 6, ``Clearance of Transaction in Cleared Contracts,'' and
Section 7, ``Acceptance and Rejection of Transactions in Cleared
Contracts'', would also be revised to include statements to that
effect.
<bullet> Section 16 ``Information Technology and Security,'' would
require OCC and MIAX to share their respective contact information, and
setup mutual notification requirements for cybersecurity incidents to
assist with the resolution of information technology and security
matters. This section would also mandate that MIAX maintain a
comprehensive cybersecurity program as well as a written business
continuity and disaster recovery program and meet certain connectivity
requirements set by OCC, which may include connectivity through point
to point and redundant connections. This term would align with standard
practices and guidelines generally accepted in the industry to detail
each party's obligations as a separate section within the Clearing
Agreement.
<bullet> Section 17 ``Access to Books and Records of the
Corporation,'' would provide MIAX with a limited right subject to
certain security and confidentiality requirements to review OCC's books
and records, as related to the provision of services envisioned by the
Clearing Agreement. The substance of this term was moved from Schedule
B to memorialize MIAX's right as a separate term within the Clearing
Agreement, which aligns with current best practices.
<bullet> Section 18 ``Confidentiality,'' would introduce provisions
that establish certain obligations between both OCC and MIAX in
relation to certain information sharing and intellectual property
rights, designed to align the Clearing Agreement in line with current
best practices. More specifically, Section 18(a), would provide for the
definition of ``Confidential Information'' that would include the type
and scope of information considered material to each of the parties and
over which the rights and obligations described in the remaining
paragraphs of Section 18 would apply.
<bullet> Section 28 ``Marks,'' would provide that both MIAX and OCC
would grant each other non-exclusive, royalty free license to use their
name, tradename, logos and trademarks in connection with OCC's
clearance services and MIAX's listing activities to align the Clearing
Agreement in line with current best practices in relation to
intellectual property rights.
In addition to the above, the Clearing Agreement would include
several other differences from the Small Agreement. Within Section 3
``Selection of Underlying Interests; Classes and Series of Cleared
Contracts,'' the changes would enhance the management of new product
risks, introduce defined terms, and make conforming or clarifying
changes that include:
<bullet> Paragraph 3(a)(i) with respect to Underlying Interests for
Commodity Futures would be revised to reflect that in addition to
existing conditions, OCC's prior written approval would be required for
any underlying interest or Cleared Contract that would materially
impact OCC's established risk profile or that would introduce new or
unique financial risk, risk model or third-party risks (each a ``New
Products Risk'').\8\ This Paragraph would also define the ``types'' of
underlying interests as those interests in respect of Futures including
broad-based security indices.
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\8\ The term ``New Product Risk'' refers to the risk that arises
from products that introduce novel or unique financial, risk model,
or third-party risks.
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<bullet> Paragraph 3(a)(ii) with respect to Underlying Interests
for Futures Options would be revised to reflect that in addition to
existing conditions, OCC's prior written approval would be required for
any Futures Options or underlying Futures contracts that present New
Product Risk, and would also require that the underlying Futures
contract be open for trading for a reasonable period of time specified
by OCC prior to the date and time that the underlying Futures Options
is opened for trading.
<bullet> Paragraph 3(a)(iii) would be added that specifies any
extra steps that OCC would carry out under circumstances when OCC may
refuse to clear and settle Cleared Contracts that present New Product
Risk to OCC, including notifications to MIAX, undertaking commercially
reasonable efforts, including in consultation with MIAX, to address the
New Product Risk, and notification to MIAX when the issues have been
satisfactorily addressed so that OC may approve the new Cleared
Contract.
<bullet> Paragraph 3(a)(iv) would be added to detail any extra
steps MIAX would carry out under circumstances when OCC may request
additional supporting documentation. This Paragraph would also provide
OCC with the discretion to defer the trading of new Cleared Contracts
and specify the circumstances under which it may not be able to clear
such contracts.
<bullet> Paragraph 3(b) ``Nomenclature,'' would be removed and the
remaining paragraphs renumbered. Renumbered Paragraph 3(b) ``Procedures
for Selection of Underlying Interests,'' would be modified to clarify
that any new product proposal by MIAX would also be subject to the
requirement of Paragraph 3(a).
Within Section 5 ``Comparison of Transactions in Cleared Contracts;
Settlement Prices,'' changes would include the following:
<bullet> Paragraph 5(b) would be revised to include reference to
the Data Agreement between OCC and MIAX, and an explicit statement on
MIAX's obligation to cooperate at the request of OCC on determining
settlement prices.
<bullet> Paragraph 5(d) would be added to specify certain
information sharing obligations between OCC and MIAX further detailed
in Schedule B of the Clearing Agreement.
The parties would also revise Section 10 of the Clearing Agreement
in relation to margin obligations of Clearing Members for Cleared
trades in the same account, to include an additional step for risk
management review before the provision of any reductions in margin.
This additional step provides OCC with another layer of risk management
review of the exposure presented by a Clearing Member before the
application of any reductions in margin obligation, thus enhancing
OCC's ability to manage its risk and margin resources appropriately. In
addition, Section 12 would be renamed to ``Reporting Obligations by
Market,'' and substantially revised and expanded to organize and
memorialize MIAX's reporting obligations within the Clearing Agreement
to include:
<bullet> Paragraph 12(a) would be added to provide for ongoing
information sharing by MIAX to OCC, including providing annual and
quarterly financials, and the reporting of any losses. The paragraph
would also establish the right for OCC to examine MIAX's books and
records and request other information when needed.
<bullet> Paragraph 12(b) would be added to specify additional
reporting obligations of certain material events by MIAX, such as
changes in good standing in the jurisdiction of incorporation, any
delisting of Cleared Contracts, any
[[Page 26379]]
material changes to risk controls, or any regulatory or other material
changes.
In addition, Section 13 ``Fees,'' of the Clearing Agreement, would
be reorganized to clarify that fee structures for the services OCC
performs would be established by OCC's By-Laws and Rules, as well as
filings with the SEC or CFTC, and obligate MIAX to pay fees consistent
with such established provisions. In addition, Section 15
``Indemnification,'' would be reorganized by renumbering Paragraph
15(c) to 15(b)(iii). Paragraph 15(b)(iii) would then be revised to
expand the intellectual property indemnity to include allegations in
circumstances when MIAX would have no right to use, reference, or
distribute the underlying interest. The remaining paragraphs 15(d) to
15(e) would then be renumbered chronologically in alphabetical order as
15(c) to 15(d). Other changes to the Clearing Agreement include the
renumbering of Section 16 ``Notices,'' to Section 29 and Section 17
``Miscellaneous,'' to Section 27. Section 29 would remain substantially
unchanged, while Section 27 would be substantially reorganized and
enhanced to add new standard terms and provisions used in other OCC
agreements to conform with best practices.\9\ The added provisions
would in general clarify how the Clearing Agreement should be
interpreted such as, for example, paragraph (a) that specifies that the
Clearing Agreement should be construed in accordance with the governing
laws of Illinois, or paragraphs (c) that describes the rights and
obligations of the parties as related to the assignment of the Clearing
Agreement, or paragraph (e) that makes it clear that the headings
contained within the Clearing Agreement are for the purposes of
reference only and are not meant to affect the meaning of the sections,
among others.
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\9\ OCC is committed to updating the interpretative provisions
of its agreements generally to bring them in line with current best
market practices.
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As described above, due to the addition of new sections and other
modifications Sections 18 to 25 would be renumbered as Sections 19 to
26 respectively. The Clearing Agreement would then be further amended
and include such changes as:
<bullet> Section 19, titled ``Breach of Agreement--Termination,''
would be retitled as ``Suspension; Breach of Agreement; Termination.''
In addition, Paragraph 19(a) ``Suspension,'' would be added to protect
OCC and provides it with the right to suspend any of its obligations to
MIAX in order to comply with any waiver or suspension of OCC's By-Laws,
Rules policies and procedures, or any other rules issued by OCC, or in
case of a material breach of the Clearing Agreement by MIAX, or under
circumstance where OCC believes that provision of services would result
in a violation of the Commodity Exchange Act. The remaining paragraphs
in this section would be renumbered chronologically in alphabetical
order.
<bullet> Section 20, ``Survival of Obligations,'' would introduce a
change that preserves the parties' mutual obligations of
confidentiality upon the termination of the Clearing Agreement.
<bullet> Section 21, ``Dispute Resolution,'' would be modified to
replace all references to ``Chief Executive Officer'' with ``senior
management'' to provide both parties' with the ability to leverage
other senior management personnel under such circumstances to quickly
resolve disputes.
<bullet> Section 23, ``System Redundancy, Disaster Recovery,''
would add a new term to the Clearing Agreement that memorializes OCC's
existing obligation to maintain a written business continuity and
disaster recovery program with annual testing for recovery point
objectives and real-time objectives.
<bullet> Section 26, ``Nonexclusive Agreement,'' would be revised
to clearly assert that OCC services would be provided on a non-
exclusive basis and that the Clearing Agreement would not prevent OCC
from providing its services to any other parties both during and after
termination.
With respect to Schedule B of the Clearing Agreement, certain terms
of the schedule would be modified to include the following changes:
<bullet> Paragraph (1)(A) related to the sharing of ``Information
provided each trading day,'' from OCC to MIAX, would be revised to
include a limitation on the use of the Data Distribution Service
(``DDS'') for Authorized Purposes only and a prohibition on the
redistribution of DDS data to any third party, absent OCC's prior
written consent.
<bullet> Paragraph (1)(B) related to the sharing of ``Information
provided on an occurrence basis,'' from OCC to MIAX, would be revised
to simplify OCC's notification obligations to MIAX to only include the
default of any Clearing Member, or the suspension, termination, ceasing
to act for, or liquidation of any Clearing Member by OCC if also a
member of MIAX.
<bullet> Paragraph (2)(A) related to the sharing of ``Information
regarding Clearing Members,'' from MIAX to OCC, would be revised to
remove the obligation to determine whether to report a Clearing Member
that is not in compliance with OCC's financial responsibility
standards, since that obligation would naturally rest with OCC.
In addition to the foregoing, various other minor and
administrative changes have been made throughout the document
including, but not limited to, updated references to the names of the
parties, clean-up of outdated terms and typographical errors, and other
clarifying or conforming revisions.
(2) Statutory Basis
OCC believes the proposed rule change is consistent with Section
17A of the Exchange Act \10\ and Rule 17Ad-22(e)(20) \11\ thereunder.
Section 17A(b)(3)(F) of the Act \12\ requires, among other things, that
the rules of a clearing agency be designed to promote the prompt and
accurate clearance and settlement of securities transactions, to assure
the safeguarding of securities and funds which are in the custody or
control of the clearing agency or for which it is responsible, and, in
general, to protect investors and the public interest. The proposed
rule change is designed to promote the prompt and accurate clearance
and settlement of derivatives contracts traded on MIAX by providing
that such Cleared Contracts will be cleared through OCC's existing
clearance and settlement processes for cleared contracts, which have
functioned efficiently for many years with regard to other markets for
which OCC provides clearance and settlement services. Similarly, OCC
believes that the proposed rule change is designed to assure the
safeguarding of securities and funds which are in the custody or
control of the clearing agency by bringing Cleared Contracts traded on
MIAX and funds associated with those contracts within the scope of
OCC's existing custody and control arrangements, which have effectively
served OCC's Clearing Members and their customers for many years.
Finally, OCC believes the proposed rule change is designed to protect
investors and the public interest. By providing that Cleared Contracts
traded on MIAX and cleared by OCC are risk managed under OCC's risk
management framework, which is designed to offer protection to
customers and other market participants in the event of a Clearing
Member default, OCC believes the proposed rule change contributes to
the protection of investors and the public interest. For these reasons,
the proposed changes to OCC's rules are reasonably designed to
[[Page 26380]]
promote the prompt and accurate clearance and settlement of securities
transactions, to assure the safeguarding of securities and funds which
are in the custody or control of the clearing agency or for which it is
responsible, and, in general, to protect investors and the public
interest in accordance with Section 17A(b)(3)(F) of the Act.\13\
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\10\ 15 U.S.C. 78q-1.
\11\ 17 CFR 240.17Ad-22(e)(20).
\12\ 15 U.S.C. 78q-1(b)(3)(F).
\13\ Id.
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Rule 17Ad-22(e)(20) \14\ requires that a covered clearing agency
establish, implement, maintain and enforce written policies and
procedures reasonably designed to identify, monitor, and manage risks
related to any link the covered clearing agency establishes with one or
more other clearing agencies, financial market utilities, or trading
markets.\15\ OCC believes that the proposed rule change is consistent
with Rule 17Ad-22(e)(20) \16\ because the proposed Clearing Agreement
is designed to help OCC identify, monitor, and manage the risks
associated with providing clearance and settlement services for MIAX,
which is a trading market registered as a DCO with the CFTC. The
Clearing Agreement would set certain rights and obligations on MIAX,
and for example would require MIAX, to report financial information to
OCC, which would enable OCC to monitor for changes in MIAX's financial
condition. It also would require MIAX to maintain sufficient financial
resources or arrangements with another DCM to mitigate the impact to
the marketplace should MIAX become unavailable as a trading venue for
its Cleared Contracts.
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\14\ 17 CFR 240.17Ad-22(e)(20).
\15\ Id.
\16\ Id.
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(B) Clearing Agency's Statement on Burden on Competition
Section 17A(b)(3)(I) of the Act \17\ requires that the rules of a
clearing agency not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act. OCC does not
believe that the proposed rule change would impose any burden on
competition. The purpose of the proposed rule change is to adopt a
Clearing Agreement between OCC and MIAX. The adoption of such an
agreement would not affect Clearing Members' access to OCC's services,
nor would it disadvantage or favor any particular user with respect to
another user. As such, OCC believes that the proposed rule change would
not impose any burden on competition.
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\17\ 15 U.S.C. 78q-1(b)(3)(I).
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(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
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.
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) of the Act \18\ and paragraph (f) of Rule 19b-4 \19\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change 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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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f).
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The proposal shall not take effect until all regulatory actions
required with respect to the proposal are completed.\20\
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\20\ Notwithstanding its immediate effectiveness, implementation
of this rule change will be delayed until this change is deemed
certified under CFTC Regulation 40.6.
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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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f082859c95dd939f9d9d959e8483b0839593de979f86"><span class="__cf_email__" data-cfemail="cbb9bea7aee6a8a4a6a6aea5bfb88bb8aea8e5aca4bd">[email protected]</span></a>. Please include
file number SR-OCC-2025-008 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-2025-008. 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="https://www.sec.gov/rules/sro.shtml">https://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 10
a.m. and 3 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 <a href="https://www.theocc.com/Company-Information/Documents-and-Archives/By-Laws-and-Rules">https://www.theocc.com/Company-Information/Documents-and-Archives/By-Laws-and-Rules</a>. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection.
All submissions should refer to file number SR-OCC-2025-008 and should
be submitted on or before July 11, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-11299 Filed 6-18-25; 8:45 am]
BILLING CODE 8011-01-P
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