Notice2025-14027
Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by The Options Clearing Corporation Concerning Changes To Codify in OCC's By-Laws That a Clearing Member May Submit Adjustments to Its Positions With OCC for Any Purpose Permissable Under Exchange Rules
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
July 25, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 141 (Friday, July 25, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 141 (Friday, July 25, 2025)]
[Notices]
[Pages 35322-35324]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-14027]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103521; File No. SR-OCC-2025-010]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change by
The Options Clearing Corporation Concerning Changes To Codify in OCC's
By-Laws That a Clearing Member May Submit Adjustments to Its Positions
With OCC for Any Purpose Permissable Under Exchange Rules
July 22, 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 July 15, 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)(6) of 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.
---------------------------------------------------------------------------
\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)(6).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
This proposed rule change would amend OCC's By-Laws to codify in
OCC's By-Laws that a Clearing Member may submit adjustments to its
positions with OCC for any purpose permissible under Exchange \5\
rules, thus ensuring that OCC's By-Laws would remain current and would
align with Exchange rules, as amended from time to time, as they apply
to off-floor adjustments \6\ of option contracts. OCC also proposes to
delete a duplicative term, ``futures market'', from OCC's By-Laws.
---------------------------------------------------------------------------
\5\ The term ``Exchange'' is defined in Article I of OCC's By-
Laws to mean a Securities Exchange, a futures market, a security
futures market or an international market. See OCC's By-Laws 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>.
\6\ Adjustments may include, among other things, off-floor
transfers of options.
---------------------------------------------------------------------------
OCC filed as Exhibit 5 [sic] to File No. SR-OCC-2025-010 the text
of the proposed changes to Article VI of OCC's By-Laws, Section 1,
Interpretation and Policy .01(a). Material proposed to be added is
marked by underlining and material proposed to be deleted is marked
with strikethrough text. 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.\7\
---------------------------------------------------------------------------
\7\ 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>.
---------------------------------------------------------------------------
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
OCC is the clearing agency for all standardized equity options
listed on national securities exchanges (``Exchanges'') registered with
the Commission. One distinguishing feature of the listed-options market
is that functionally, options transactions must occur on an
Exchange,\8\ except when otherwise permitted by Exchange rules. Such
exceptions include, among others, an adjustment or transfer in
connection with the correction of a bona fide error; the transfer of
positions from one account to another account where no change in
ownership is involved; the dissolution of a corporation or partnership
in which a former nominee of the corporation or partnership assumes the
positions; and the donation of positions to a not-for-profit
corporation.\9\ As the clearing agency for such options positions, OCC
supports ``off-floor'' transfers (i.e., off of the Exchange) through
the adjustment of its Clearing Member's options positions in accordance
with Interpretation and Policy .01(a) to Section 1 of Article VI of
OCC's By-Laws, which was last amended in 2012.\10\ More recently,\11\
Exchanges have adopted exceptions in their rules permitting off-floor
transfers of options positions in connection with the creation and
redemption process for exchange traded funds or unit investment trusts
(``ETFs'').\12\ Such ``in-kind'' exchanges of options positions support
options-based ETFs (i.e., ETFs that hold options contracts).\13\
---------------------------------------------------------------------------
\8\ See, e.g., Cboe Rule 5.12 (Transactions Off the Exchange),
NYSE Arca Rule 6.78-O (Transactions Off the Exchange).
\9\ See, e.g., Cboe Rule 6.7 (Off-Floor Transfer of Positions),
NYSE Arca Rule 6.78A-O (Off-Floor Transfer of Positions).
\10\ See Exchange Act Release No. 68434 (Dec. 14, 2012), 77 FR
75243 (Dec. 19, 2012) (SR-OCC-2012-14) (amending Interpretation and
Policy .01 to By-Law Article VI, Section 1 to provide clarity
regarding adjustment of positions for over-the-counter (OTC) index
options).
\11\ See, e.g., Exchange Act Release No. 90552 (Dec. 2, 2020),
85 FR 79049 (Dec. 8, 2020) (SR-NYSEArca-2020-102); Exchange Act
Release No. 87340 (Oct. 17, 2019), 84 FR 56877 (Oct. 23, 2019) (SR-
CBOE-2019-048).
\12\ See, e.g., Cboe Rule 6.9 (In-Kind Exchange of Options
Positions and ETF Shares and UIT Units), NYSE Arca Rule 6.78C-O (In-
Kind Exchange of Options Positions and ETF Shares and UIT Units).
\13\ See Exchange Act Release No. 87340, supra note 9, 84 FR at
56877-78 (discussing certain tax advantages and cost savings for
such ETFs by allowing for in-kind creations and redemptions).
---------------------------------------------------------------------------
The purpose of the proposed rule change is to revise Interpretation
and Policy .01(a) to Section 1 of Article VI of OCC's By-Laws to codify
that in addition to the existing purposes for which a Clearing Member
currently may submit adjustments to its options positions, a Clearing
Member also may submit adjustments to its options positions for any
purpose permissible under Exchange rules.\14\ The proposed change was
identified after a recent review of OCC's By-Laws on this topic and is
intended to align OCC's By-laws with Exchange rules related to position
[[Page 35323]]
transfers, including off-floor transfers of options positions. The
proposed rule change would provide Clearing Members with additional
certainty regarding the circumstances under which they may submit
adjustments to their positions with OCC by aligning OCC's By-Laws with
Exchange rules regarding off-floor transfers of options positions.
Accordingly, the proposed rule change would remove any uncertainty
about whether adjustment of options positions at OCC is permissible to
support ETF creation and redemption, which is not one of the
circumstances currently listed under OCC's By-Laws. Such changes are
thus designed to meet the needs of OCC's Clearing Members and the
markets OCC serves. OCC also is proposing to delete one reference to
``futures market'' from Interpretation and Policy .01 to Section 1 of
Article VI of OCC's By-Laws because it is duplicative and should only
be referenced once in that section of the OCC By-Laws.
---------------------------------------------------------------------------
\14\ OCC had previously released an Information Memorandum on
the mechanics for transferring options related to in-kind exchange
traded fund (``ETF'') creations and redemptions. More specifically,
in 2020, certain Exchanges submitted rule filings that would allow
their members to effect options transfers in connection with the
creation and redemption of options-based ETFs. OCC subsequently
notified market participants by way of an Information Memorandum the
method by which off floor transfers permitted under Exchange rules
should be submitted to OCC. Available at <a href="https://www.theocc.com/search?query=46854">https://www.theocc.com/search?query=46854</a>. OCC made no changes to its By-Laws at that time
to align the OCC By-Laws with this Exchange permitted purpose for
off floor transfers.
---------------------------------------------------------------------------
1. Purpose
OCC has rules in place regarding adjustments of Clearing Member
options positions other than through opening or closing purchase or
sale transactions on an Exchange. In particular, Article VI, Section 1,
of the By-Laws states that Confirmed Trades, including transactions in
exchange-listed options,\15\ will be cleared through OCC.
Interpretation and Policy .01(a) to this provision further specifies
that it is OCC's policy to permit a Clearing Member to submit
adjustments to its positions with OCC for certain purposes. Such
purposes include to: (1) effect a transfer of accounts between Clearing
Members; (2) effect a Return; \16\ (3) effect a CMTA Retransfer; \17\
(4) correct a bona fide error or omission regarding a confirmed trade
previously submitted to OCC; (5) grant a request for offset pursuant to
Rule 1306; \18\ and (6) effect a retender in connection with the
settlement of a physically-settled commodity future pursuant to Rule
1307.\19\ The intent of specifying these grounds was to set forth OCC's
then-existing policies concerning certain adjustments.\20\
---------------------------------------------------------------------------
\15\ The term ``Confirmed Trade'' is defined in Article I of
OCC's By-Laws as a transaction for the purchase, writing, or sale of
a cleared contract, or for the closing out of a long or short
position in a cleared contract, that is (i) effected on or through
the facilities of an Exchange and submitted to OCC for clearance or
(ii) affirmed through the facilities of an OTC Trade Source and
submitted to OCC for clearance.
\16\ The term ``Return'' is defined in Article I of OCC's By-
Laws as the process by which a Carrying Clearing Member transfers
back to an Executing Clearing Member, for one or more reasons
specified in the CMTA Agreement between the Clearing Members, a
position resulting from a confirmed trade transferred by the
Executing Clearing Member to an account of the Carrying Clearing
Member.
\17\ The term ``CMTA Retransfer'' is defined in Article I of
OCC's By-Laws as the process by which an Executing Clearing Member,
upon receiving the Return of a position because of the
misidentification of the Carrying Clearing Member, transfers the
position to the correct Carrying Clearing Member.
\18\ See OCC Rule 1306 (Request for Offset of Futures
Contracts).
\19\ See OCC Rule 1307 (Retendering).
\20\ See, e.g., Exchange Act Release No. 198003 (May 23, 1983),
48 FR 24505, 24505-06 (June 1, 1983) (SR-OCC-83-11).
---------------------------------------------------------------------------
The list in Interpretation and Policy .01(a) to Article VI, Section
1, of the By-Laws was not intended to prohibit or preclude other
adjustments permitted by Exchange rules. For example, Interpretation
and Policy .01(c) to Article VI, Section 1, of the By-Laws,
contemplates other post-trade transactions not expressly listed in
paragraph (a).\21\ To remove any uncertainty, including any uncertainty
about whether Clearing Members may submit adjustments for in-kind
transactions to support ETF creation and redemption as permitted by
Exchange rules, OCC proposes to clarify in Interpretation and Policy
.01(a) that a Clearing Member may submit adjustments to its positions
with OCC for any purpose permissible under Exchange rules. OCC also
proposes a typographical correction to remove duplicative language in
Interpretation and Policy .01(a). The proposed rule change would not
make any substantive changes to OCC policies or practices. The proposed
rule change would further align OCC's By-Laws with Exchange rules
related to position transfers and provide market participants with
additional certainty regarding the circumstances under which Clearing
Members may submit adjustments to their positions with OCC. Such
changes would thus remove any uncertainty about whether OCC's rules
permit a position adjustment for a reason permitted under the
Exchanges' rules. The proposed rule change would further allow OCC to
more effectively meet the needs of OCC's Clearing Members and the
markets it serves by removing any uncertainty about whether OCC's rules
permit position adjustments to support ETF creation and redemption.
---------------------------------------------------------------------------
\21\ See Interpretation and Policy .01(c) to Article VI, Section
1, of the By-Laws (``[OCC] shall have the right to reject
adjustments to Clearing Members' positions and accounts contemplated
by paragraphs (a) and (b), as well as any other post-trade
transactions permitted by [OCC's] By-Laws and Rules . . .'').
---------------------------------------------------------------------------
2. Statutory Basis
OCC believes the proposed rule change is consistent with Section
17A of the Exchange Act \22\ and the rules and regulations thereunder
applicable to OCC, including Rule 17ad-22(e)(1) \23\ and Rule 17ad-
22(e)(21) thereunder.\24\ Section 17A(b)(3)(F) of the Act \25\
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 and, to the extent applicable derivatives
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. As described above, the proposed rule change would provide
market participants with certainty regarding the circumstances under
which Clearing Members may submit adjustments to their positions with
OCC by clearly aligning OCC's By-Laws with Exchange rules related to
position transfers, including off-floor transfers of options positions
to support ETF creation and redemption. Harmonizing OCC's By-Laws with
Exchange rules would remove impediments to and support prompt and
accurate clearance and settlement by, for example, ensuring that
provisions in the By-Laws related to the submission of position
adjustments are consistent with the rules concerning off-floor
transfers that are maintained by the exchanges for which OCC clears and
settles transactions. Reducing uncertainty would remove impediments to
and support prompt and accurate clearance and settlement, including
with respect to options positions transferred as part of ETF creation
and redemption. OCC believes that aligning its By-Laws with Exchange
rules would also protect investors and the public interest by ensuring
that OCC provides clearance and settlement services in a manner that
supports applicable rules and regulations. For these reasons, OCC
believes the proposed changes are designed to promote the prompt and
accurate clearance and settlement of securities transactions, and,
thereby, to protect investors and the public interest in accordance
with Section 17A(b)(3)(F) of the Exchange Act.\26\
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78q-1.
\23\ 17 CFR 240.17ad-22(e)(1).
\24\ 17 CFR 240.17ad-22(e)(21).
\25\ 15 U.S.C. 78q-1(b)(3)(F).
\26\ 15 U.S.C. 78q-1
---------------------------------------------------------------------------
OCC believes the proposed changes are also consistent with the
requirements in Rule 17ad-22(e)(1)
[[Page 35324]]
under the Act.\27\ Rule 17ad-22(e)(1) requires that each covered
clearing agency establish, implement, maintain and enforce written
policies and procedures reasonably designed to provide for a well-
founded, clear, transparent, and enforceable legal basis for each
aspect of its activities in all relevant jurisdictions.\28\ The
proposed rule change would allow OCC to maintain provisions and
practices that are clear and consistent with Exchange rules and
applicable regulations, which would help ensure that OCC's By-Laws
remain well-founded, clear, transparent, and enforceable. The clean-up
change to remove duplicative language would further ensure that OCC's
By-Laws remain clear, accurate, and up-to-date. Therefore, OCC believes
that the proposed changes promote compliance and consistency with the
requirements in Rule 17ad-22(e)(1) to establish, implement, maintain
and enforce written policies and procedures reasonably designed to
provide for a well-founded, clear, transparent and enforceable legal
basis.
---------------------------------------------------------------------------
\27\ 17 CFR 240.17ad-22(e)(1).
\28\ Id.
---------------------------------------------------------------------------
OCC also believes that the proposed changes are consistent with the
requirements in Rule 17ad-22(e)(21).\29\ Rule 17ad-22(e)(21) requires
that each covered clearing agency establish, implement, maintain and
enforce written policies and procedures reasonably designed to be
efficient and effective in meeting the requirements of its participants
and the markets it serves.\30\ By clearly aligning OCC's By-Laws with
Exchange rules, the proposed rule change would provide market
participants with certainty regarding the circumstances under which
Clearing Members may submit adjustments to their positions with OCC,
which would prevent any potential confusion associated with the
reconciliation of OCC and Exchange rules by market participants. Such
changes would make OCC more effective and efficient in meeting the
requirements of its Clearing Members, including by reflecting
permissible transfers pursuant to Exchange rules, and are thus designed
to meet the needs of OCC's Clearing Members and the markets OCC serves.
Accordingly, OCC believes that the proposal is consistent with Rule
17ad-22(e)(21).\31\
---------------------------------------------------------------------------
\29\ 17 CFR 240.17ad-22(e)(21).
\30\ Id.
\31\ Id.
---------------------------------------------------------------------------
(B) Clearing Agency's Statement on Burden on Competition
Section 17A(b)(3)(I) of the Act \32\ 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. The proposed
changes to Article VI of OCC's By-Laws, Section 1, Interpretation and
Policy .01(a) would not impose any burden on competition because the
proposed changes consist of clarifications that would promote
consistency with Exchange rules and reflect permissible options
transfers pursuant to those Exchange rules. The proposed changes would
not inhibit access to OCC's services in any way, would apply to all
Clearing Members uniformly, and do not disadvantage or favor any
particular user in relationship to another user. Accordingly, OCC does
not believe that the proposed clarifications to its By-Laws have any
impact or impose a burden on competition.
---------------------------------------------------------------------------
\32\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
(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 change and none have been received. OCC will
notify the Commission of any written comments received by OCC.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not:
(i) significantly affect the protection of investors or the public
interest;
(ii) impose any significant burden on competition; and
(iii) become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \33\ and
Rule 19b-4(f)(6) \34\ thereunder.
---------------------------------------------------------------------------
\33\ 15 U.S.C. 78s(b)(3)(A).
\34\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
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.
The proposal shall not take effect until all regulatory actions
required with respect to the proposal are completed.\35\
---------------------------------------------------------------------------
\35\ Notwithstanding its immediate effectiveness, implementation
of this rule change will be delayed until this change is deemed
certified under CFTC Regulation 40.6.
---------------------------------------------------------------------------
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="http://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking">http://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking</a>);
or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#b6c4c3dad39bd5d9dbdbd3d8c2c5f6c5d3d598d1d9c0"><span class="__cf_email__" data-cfemail="c5b7b0a9a0e8a6aaa8a8a0abb1b685b6a0a6eba2aab3">[email protected]</span></a>. Please include
file number SR-OCC-2025-010 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-2025-010. 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-regulations/self-regulatory-organization-rulemaking">https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking</a>). Copies of such
filing 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-2025-010 and
should be submitted on or before August 15, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
---------------------------------------------------------------------------
\36\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-14027 Filed 7-24-25; 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 July 25, 2025.
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.