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Notice2025-19067

Self-Regulatory Organizations; the Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by The Options Clearing Corporation Concerning Amendments to Its Risk Management Framework (“RMF”), Third-Party Risk Management Framework (“TPRMF”), and Default Management Policy (“DMP”), (Collectively, the “OCC Policies”).

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Published

September 30, 2025

Issuing agencies

Securities and Exchange Commission

Full Text

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<title>Federal Register, Volume 90 Issue 187 (Tuesday, September 30, 2025)</title>
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[Federal Register Volume 90, Number 187 (Tuesday, September 30, 2025)]
[Notices]
[Pages 47105-47110]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-19067]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-104099; File No. SR-OCC-2025-015]

Self-Regulatory Organizations; the Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change by
The Options Clearing Corporation Concerning Amendments to Its Risk
Management Framework (``RMF''), Third-Party Risk Management Framework
(``TPRMF''), and Default Management Policy (``DMP''), (Collectively,
the ``OCC Policies'').

September 26, 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 September 19, 2025, the Options Clearing
Corporation (``OCC'' or ``Corporation'') filed with the Securities and
Exchange Commission (``Commission'' or ``SEC'') 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) 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

The proposed changes were identified during OCC's annual review
process and are designed to update the OCC Policies to better align the
descriptions therein with OCC's current practices and make other non-
substantive, clarifying, conforming, and administrative changes.
The proposed changes to the OCC Policies are contained in Exhibit
5A, Exhibit 5B and confidential Exhibit 5C to File No. SR-OCC-2025-015.
Material proposed to be added is marked by underlining and material
proposed to be deleted is marked with strikethrough text in the
exhibits to File No. SR-OCC-2025-015. 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

OCC is the sole clearing agency registered with the Commission for
standardized equity options listed on national securities exchanges.
OCC also clears and settles certain stock loan transactions and
transactions in futures and options on futures. In connection with its
clearance and settlement of transactions in securities, OCC is a
``covered clearing agency'' \6\ regulated by the Commission. OCC also
guarantees the performance of its Clearing Members for all transactions
cleared by OCC by becoming the buyer to every seller and the seller to
every buyer (or the lender to every borrower and the borrower to every
lender, in the case of stock loan transactions). In its role as a
covered clearing agency, OCC is exposed to various risks that may
potentially impact its clearing and settlement services. To address
these risks, OCC maintains policies, procedures or systems that are
designed to manage risks, and which are subject to periodic review and
annual approval by the Board, including the RMF, TPRMF, and DMP.
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\6\ The term ``covered clearing agency'' is defined in Exchange
Act Rule 17ad-22(a) to mean ``a registered clearing agency that
provides the services of a central counterparty or central
securities depository.'' 17 CFR 240.17ad-22(a).
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The RMF describes, in part, how OCC manages risk while providing
efficient and effective clearing and settlement services. The RMF
addresses OCC's ability to employ recovery tools and facilitate an
orderly wind-down. Additionally, the RMF describes OCC's three lines of
defense model, which assigns ownership and accountability and enhances
communication for expectations around risk management at OCC. The TPRMF
describes OCC's approach to the management of risks associated with
third parties. Specifically, the TPRMF outlines a framework for OCC to
identify, measure, monitor, and manage risks arising from third-party
relationships including relationships with Clearing Members, clearing
banks, custodians, liquidity providers, investment counterparties,
financial market utilities, exchanges, and vendors. Lastly, the DMP
summarizes the steps OCC may take in the event of a Clearing Member
suspension, settlement bank failure, or the failure of a financial
market utility with which OCC has a relationship to perform.
Consistent with regulatory obligations,\7\ OCC and its Board review
the OCC Policies at least annually. Through the annual review process,
OCC has identified proposed changes to the OCC Policies that, at a high
level, are intended to better align the descriptions in the OCC
Policies with OCC's current practices and make other non-substantive,
clarifying, conforming and administrative changes. These proposed
changes identified during OCC's annual review process are not expected
to have any impact on OCC's Clearing Members or other market
participants.
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\7\ See 17 CFR 240.17ad-22(e)(3)(i) (requiring, among other
things, that a covered clearing agency subject its risk management
policies, procedures and systems to review on a specified periodic
basis and approval by the board of directors annually).
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1. Purpose
The purpose of this proposed rule change is to modify the OCC
Policies to better reflect current practices at OCC and make other non-
substantive, clarifying and administrative changes to the text of these
policies.
1. Proposed Changes to OCC's RMF
OCC proposes to update the OCC Risk Universe section, which
outlines the risk categories that may potentially impact OCC's clearing
and settlement services. OCC's existing RMF states that OCC plans for
the possibility that events will occur and affect the delivery of its
critical services. To align with SEC Rule 17ad-25(i),\8\ which concerns
the governance of service providers for core services, OCC proposes to
replace the

[[Page 47106]]

term ``critical'' services with ``core'' services. Therefore, OCC's
proposed changes would provide that OCC plans for the possibility that
events will occur and affect the delivery of its core services. OCC
believes this proposed change will improve clarity and consistency with
SEC Rule 17ad-25(i).\9\
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\8\ 17 CFR 240.17ad-25(i).
\9\ Id.
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The Legal and Regulatory Risk category under the OCC Risk Universe
section describes the risk of loss that results from a lack of
awareness, misunderstanding or unexpected application of the laws and
regulations that apply to OCC's business, products, services, and
relationships or from a failure to comply with contractual obligations.
OCC's proposed changes would update this description to provide that
Legal and Regulatory Risk is the risk of loss that results from acts or
omissions by OCC that cause a failure to comply with the laws,
regulations, or other legal obligations applicable to OCC's business,
products, services, and relationships. OCC believes this proposed
change better reflects how OCC categorizes Legal and Regulatory Risk.
The purpose of this proposed change is to articulate a more accurate
and robust definition of OCC's Legal and Regulatory Risk. Furthermore,
the proposed change is intended to express, in a more straightforward
manner for ease of use and readability, what OCC believes its Legal and
Regulatory Risk are to be.
OCC proposes to revise the Governance section, which outlines OCC's
governance model related to the management of risks for OCC's Board and
Board Committees, Management Committee, working groups, and employees.
Under the Management Committee and Working Groups subsection, OCC's
proposed changes would add a provision that provides that the Chief
Compliance Officer and Chief Audit Executive are members of the
Management Committee and report to the Audit Committee of the Board
(``Audit Committee''). This proposed change is designed to conform the
RMF to OCC's existing governance structure.\10\
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\10\ See OCC's Board Audit Committee Charter (stating that the
``Chief Audit Executive shall report functionally to the [Audit]
Committee and administratively to a member of the Management
Committee designated by the [Audit] Committee'' and that the ``Chief
Compliance Officer shall report functionally to the [Audit]
Committee and administratively to a member of the Management
Committee designated by the [Audit] Committee), available at <a href="https://www.theocc.com/getmedia/0a3ccbce-4481-42c5-86b1-8f44b50c0727/audit_committee_charter.pdf">https://www.theocc.com/getmedia/0a3ccbce-4481-42c5-86b1-8f44b50c0727/audit_committee_charter.pdf</a>.
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OCC proposes to update the OCC Risk Management section, which
outlines its three lines of defense model. OCC's three lines of defense
model is currently comprised of: (i) the first line of defense,
including but not limited to, OCC's Financial Risk Management
(``FRM''), Business Operations, Information Technology, and corporate
functions such as Human Resources, Corporate Finance and Enterprise
Project Management; (ii) the second line of defense, including but not
limited to, OCC's Compliance, Corporate Risk Management, Security and
Business Continuity functions; and (iii) the third line of defense,
which consists of OCC's Internal Audit function. OCC's existing RMF
provides that the first line of defense maintains policies, procedures,
processes, and controls established for day-to-day risk management. To
align more closely with OCC's existing practices, OCC proposes to
include the term ``systems'' in the referenced list to clarify that the
first line of defense also maintains certain systems for day-to-day
risk management. In addition, OCC's proposed changes would update the
title of a referenced policy to reflect accurate and up-to-date
information. Specifically, OCC's proposed changes would remove the term
``Employee'' in the reference to ``OCC Employee Code of Conduct'' to
reflect the current title of the policy, which is the ``OCC Code of
Conduct.''
Under the First Line of Defense subsection, OCC proposes to
relocate the Margin category to earlier in the description of clearing
and settlement services outlined in the RMF. Specifically, OCC's
proposed changes would relocate the Margin category from section (d) to
section (c). The purpose of this proposed change is to align more
closely with OCC's existing order of operations used to execute risk
management related to the clearing and settlement services described in
the RMF. OCC's proposed changes would also relocate the Default
Management category from the First Line of Defense subsection into the
Second Line of Defense subsection. The purpose of this proposed change
is to reflect that ownership of Default Management will move from OCC's
Financial Risk Management (``FRM'') business unit to OCC's Corporate
Risk Management (``CRM'') function. OCC believes that Default
Management is not exclusively a FRM activity, rather, it touches many
areas across OCC. Therefore, OCC believes it is more appropriate for
ownership of Default Management to reside with OCC's CRM function,
which will coordinate default management activities across OCC in the
event OCC ever has to implement the procedures outlined in the DMP.
Because OCC's CRM function exists in OCC's second line of defense,
OCC's proposed changes relocate the Default Management category from
the First Line of Defense subsection to the Second Line of Defense
subsection.
Under the General Business category within the First Line of
Defense subsection, OCC's proposed changes would update the reference
of ``critical'' services to ``core'' services to align with SEC Rule
17ad-25(i).\11\ More specifically, OCC's proposed changes would
provide, in part, that Information Technology reviews OCC's ability to
maintain its ``core'' services under a range of scenarios, including
adverse market conditions.
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\11\ See supra, note 8.
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OCC's proposed changes would update the Legal category within the
First Line of Defense subsection to more accurately reflect how OCC
manages its legal risk. OCC's existing RMF provides, in part, that to
manage legal risk across OCC, employees are required to consult with
Legal on legal and regulatory matters. OCC's proposed revisions would
update this provision to remove the reference ``legal and regulatory
matters'' and revise the provision to state that in order to manage
legal risk across OCC, ``Legal provides counsel to OCC on laws,
regulations, [and] other legal obligations applicable to OCC.'' OCC's
proposed changes would also make conforming changes to this sentence by
removing the phase ``including but not limited to.'' The existing RMF
outlines specific matters in which employees are required to consult
Legal. OCC's proposed changes would revise this information to more
accurately reflect OCC's current business practices. OCC's current RMF
provides that employees are required to consult with Legal on
interpretation of laws and regulations applicable to OCC. OCC's
proposed changes would revise this sentence to add the provision
``matters that may involve application of or'' interpretation of laws
and regulations. OCC's proposed changes would remove the reference
``applicable to OCC.'' For the next matter described in which employees
are required to consult Legal, OCC's proposed changes would add the
clarifying language ``actual or potential'' before the phrase ``legal
claims against OCC.'' OCC's proposed changes would also include two new
provisions, the ``identification and protection of OCC intellectual
property'' and the ``recommended contractual protections for OCC
business activities'' as matters in which employees must consult Legal.

[[Page 47107]]

Furthermore, OCC's proposed changes would add clarifying language to
update the phrase ``contractual obligations of third parties to OCC''
to ``interpretation of contractual obligations between third parties
and OCC.''
OCC proposes general revisions throughout the RMF, including
formatting and grammatical changes, such as capitalizing defined terms,
deleting unnecessary or redundant language and updating section
numbering.
2. Proposed Changes to OCC's TPRMF
OCC's proposed changes to the TPRMF would update the definition of
Third-Party as it relates to OCC's relationship with liquidity
providers. Under the Definitions section, Third-Party is defined as a
Clearing Member, clearing bank, custodian, liquidity provider,
investment counterparty, financial market utility, Exchange, or vendor,
which also has: (1) a relationship with OCC where products and/or
services are exchanged; (ii) other ongoing business relationships with
OCC; or (iii) responsibility for OCC associated records. OCC's proposed
changes would update the reference from ``liquidity provider'' to
``liquidity provider under OCC's committed facilities.'' OCC believes
the addition of the language ``under OCC's committed facilities'' would
help limit ambiguity as to what OCC constitutes a ``liquidity
provider'' for this purpose. To promote consistency throughout the
TPRMF, OCC's proposed changes would add ``under OCC's committed
facilities'' where ``liquidity provider'' is mentioned in the Executive
Summary section and in subsection B of the Third-Party Relationship
Management section. Specifically, the Executive Summary section
outlines OCC's approach to identify, measure, monitor, and manage risk
arising from Third-Party relationships, including relationships with
Clearing Members, clearing banks, custodians, liquidity providers,
investment counterparties, financial market utilities, exchange
relationships and vendors. OCC's proposed changes update the reference
from ``liquidity providers'' to ``liquidity providers under OCC's
committed facilities'' to align with the proposed changes described
above. In addition, OCC's proposed changes would revise subsection B of
the Third-Party Relationship Management section to include the
terminology ``under OCC's committed facilities'' when referencing
liquidity providers. OCC's TPRMF currently provides that OCC maintains
relationships with Financial Institutions that facilitate clearance and
settlement activities, manage collateral, provide liquidity, and serve
as investment counterparties. OCC's proposed changes would add the
phrase ``under OCC's committed facilities'' to align with the proposed
changes described above.
OCC's proposed changes to the TPRMF would also remove an outdated
refence to Article V of OCC's By-Laws, which is currently ``reserved,''
and replace it with reference to existing provisions throughout the OCC
Rules. OCC recently reorganized such provisions in a prior rule
filing.\12\ Specifically, OCC's proposed changes would replace the
reference ``Article V, Section 2 of OCC's By-Laws'' with ``OCC Rule
203(a),'' as outlined in subsection A of the Third-Party Relationship
Management section.
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\12\ See Order Granding Approval of Proposed Rule Change by the
Options Clearing Corporation Concerning the Amendment of its
Clearing Membership Standards, Exchange Act Release No. 97439 (May
5, 2023), 88 FR 30373 (May 11, 2023) (SR-OCC-2023-002) (``Clearing
Membership Standards'').
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3. Proposed Changes to OCC's DMP
OCC's proposed changes to the DMP update the Purpose section to
streamline language and remove reference to unnecessary detail. The
Purpose section of the DMP provides, in part, that the DMP outlines the
steps that OCC may take in the event of Clearing Member suspension,
settlement bank failure, or the failure of a financial market utility
(``FMU'') to perform. The DMP provides examples of FMUs, including DTC,
NSCC or CME. OCC's proposed changes eliminate the specific reference to
DTC, NSCC, and CME. OCC believes these specific details regarding FMUs
are better suited to OCC's policies and procedures specific to
FMUs.\13\
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\13\ For example, OCC's Linked FMU Disruption Procedure
addresses risk to OCC arising from a disruption to the functioning
of a linked FMU, including specific details related to the
disruption of DTC, NSCC and CME.
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OCC's proposed changes also update footnote one in the Purpose
section related to Clearing Member default and Clearing Member
suspension. OCC's proposed changes streamline the descriptions in
footnote one to more closely align with OCC's Rules and By-Laws. The
current language in footnote one states that in accordance with the By-
Laws and Rules, OCC may liquidate the Clearing Member's margin and
Clearing Fund contribution and may take any other applicable actions as
set for in the By-Laws and Rules. However, liquidating the Clearing
Member's margin and Clearing Fund contribution is not the only action
that OCC can take in the event of a Clearing Member default or Clearing
Member suspension. OCC's proposed changes would instead clarify that in
either situation, OCC may take any applicable actions as set forth in
the By-Laws and Rules that it deems necessary for the protection of the
Corporation, other Clearing Members, or the general public. OCC
believes this description more closely aligns with OCC's Rules and By-
Laws. Conforming changes are also proposed in footnote one to
streamline language and eliminate unnecessary terms.
In the Applicability and Scope section, OCC proposes to remove
duplicative information related to the list of high-level activities
that may occur in the event of a Clearing Member default, settlement
bank failure, or failure of an FMU to perform. Each high-level activity
referenced is its own subsection header throughout the document. OCC
believes it is unnecessary and duplicative to maintain such information
in multiple places, so OCC proposes to eliminate the list.
OCC proposes amendments to the Continued Performance of Settlement
Obligations section. OCC proposes to specify that the abbreviation for
``FRM'' is ``Financial Risk Management.'' The current language in this
section provides, in part, that FRM prepares for the Management
Committee and/or its delegates an exposure summary report that contains
certain information regarding a suspended Clearing Member. OCC proposes
to delete the outdated reference that the exposure summary report is
prepared ``for Management Committee and/or its delegates'' because such
report is currently prepared for and distributed to OCC's Default
Management group and the Office of the Chief Executive Officer, in
accordance with OCC's existing Default Management Procedure. The
current language in this section also provides, in part, that FRM must
recommend to the Management Committee and/or its delegates whether it
believes OCC needs to draw on OCC's available liquidity resources to
satisfy the settlement obligations of the suspended Clearing Member.
For the same reason described above, OCC also proposes to delete the
outdated reference ``for Management Committee and/or its delegates.''
In the Extension of Settlements section, OCC's proposed changes
clarify OCC's settlement obligation to non-defaulting Clearing Members.
The current language in this section provides that OCC's settlement
obligation is to fund credits (i.e., payment obligations owed by OCC to
its Clearing Members) by 1:00 p.m. CT. OCC proposes to specify that the

[[Page 47108]]

payment obligation is owed by OCC to its ``non-defaulting'' Clearing
Members. OCC also proposes to update language within this section to
align more closely with existing Rule 505 \14\ as it relates to
reporting the determination to extend settlement. Specifically, the
existing language in the DMP provides, in part, that such determination
[to extend settlement] and the reasons thereof will be promptly
reported to the SEC and the CFTC by the General Counsel or delegate in
Legal. In addition to the SEC and CFTC, OCC proposes to include that
the determination will be reported to ``any other regulatory or
supervisory agencies having jurisdiction over OCC.'' The purpose of
this proposed change is to accurately reflect and conform to existing
Rule 505.\15\
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\14\ See supra, note 5 at Rule 505.
\15\ Id.
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OCC proposes a clarifying change in the Sources and Uses of
Financial Resources (``Waterfall'') section, which outlines the
resources that OCC can utilize to meet financial resource obligations
as a result of Clearing Member suspension. Under item six, ``Clearing
Fund assessments,'' OCC proposes to specify the reference to a ``non-
defaulting'' Clearing Member. Currently under ``Clearing Fund
assessments,'' the language states that each Clearing Member may be
assessed additional amounts, subject to a cap. For clarity and
consistency throughout the document, OCC's proposed changes provide
that the Clearing Member that may be assessed additional amounts is a
``non-defaulting'' Clearing Member. OCC also proposes to update the
Sources and Uses of Financial Resources (``Waterfall'') section to
specify that the abbreviation for ``EDCP'' is ``Executive Deferred
Compensation Plan.''
OCC proposes additional revisions in the Close-Out of Positions
section. The current footnote eight in the DMP provides that in the
event the CFRO is unavailable, the Close-out Action plan can be
presented to the CRO for approval. To align with the provision in
footnote eight, OCC proposes to clarify that the CRO, in addition to
the CFRO, may also determine the manner in which positions and
collateral will be closed out. In addition, OCC proposes to update the
name of the referenced OCC department from the ``Market Risk and
Default Management Department (``MRDM'')'' to the ``Market Risk
Department'' to reflect the current title of the department. Therefore,
OCC's proposed revisions would provide that the CFRO ``or CRO'' may
determine, based upon the recommendations of the ``Market Risk
Department (``Market Risk'')'' but subject to the rules concerning
reporting requirements, to take any one or any combination of actions
in closing out the option position of a suspended Clearing Member.
OCC's proposed changes update the reference from ``MRDM'' to ``Market
Risk'' throughout the remainder of the DMP. Further, under the ``Market
Transactions'' bullet point, OCC proposes minor clarifying changes to
update the referenced term from ``Liquidation Agent'' to ``liquidation
agent(s)'' because this is not a defined term by OCC and therefore does
not need to be capitalized. Under the ``Private Portfolio Auction''
bullet point, OCC proposes to eliminate the provision that states
``Certain non-defaulting members may be required to participate in
auctions for OTC or other products as required under Rule 1106(e)(2),''
because OCC does not intend to offer OTC options going forward.\16\ In
the last paragraph under the Close-Out Positions section, OCC proposes
conforming changes to align with the concept in footnote eight related
to the ability for the CRO to approve the Close-Out Action Plan
(``CAP''). The current language in the last paragraph of the Close-Out
Positions section provides that upon approval of the CAP by the CFRO,
FRM and other designated business officers/departments must be
responsible for its execution. OCC proposes to delete the phrase ``by
the CFRO'' because the CRO, in the event the CFRO is unavailable, also
can approve the CAP, as stated in footnote eight of the DMP.
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\16\ See Securities Exchange Act Release No. 101621 (Nov. 14,
2024), 89 FR 91825 (Nov. 20, 2024) (File No. SR-OCC-2024-013)
(approving changes including OCC's proposal to ``delete rule
provisions related to [OTC] option products.'').
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OCC proposes additional minor and clarifying revisions to the
Demand and Transfer of Collateral section. The current text in this
section states that all pledged valued margin collateral shall be moved
by the Collateral Services Department into an OCC account and may be
transferred to an auction recipient, delivered to a liquidating agent
or delivered to a liquidating settlement account. OCC proposes to
clarify the valued margin collateral is valued ``securities'' margin
collateral. OCC also proposes to clarify that the valued securities
margin collateral moved by the Collateral Services Department into an
OCC account is into an OCC account ``at DTC.'' This proposed change is
intended to articulate OCC's existing practice; it does not introduce a
new concept. Lastly, OCC's proposed changes would replace ``liquidating
agent'' with ``liquidation agent'' to promote consistency across the
referenced terms in the document.
Under the Clearing Fund Replenishment section, OCC's proposed
changes provide additional details on the authority to approve a
proportionate charge against the Clearing Fund. Specifically, the
existing language provides, in part, that during or upon the completion
of the close-out of open obligations, the Chairman, CEO or COO must
determine whether a proportionate charge needs to be made against the
Clearing Fund in connection with the liquidation. OCC proposes to
eliminate the phrase ``shall determine whether'' and replace that with
``has the authority to approve.'' OCC's proposed changes also include
specific details that the Chairman, CEO, or COO has the authority to
approve a proportionate charge against the Clearing Fund ``upon
recommendation from the CFRO or CRO.'' The requirement of receiving a
recommendation from the CFRO or CRO is not a new concept, rather, it is
included as a proposed change to memorialize the information in writing
to promote clarity for use of the DMP. To streamline the language
provided, OCC also proposes to eliminate the phase ``in connection with
the liquidation'' at the end of the referenced sentence. Finally, OCC
proposes to add clarifying language by including the terms ``financial
resource'' before the term ``shortfall'' in the last paragraph of this
section. OCC believes this additional detail will help to clarify the
type of shortfall and eliminate ambiguity.
Within the Recovery Tools section, OCC proposes to more clearly
describe voluntary and mandatory tear-ups. OCC proposes to revise the
description from ``voluntary and mandatory tear-ups'' to ``voluntary
and mandatory tear-ups of open positions.'' OCC believes this
additional detail clarifies exactly what is being torn up in the event
OCC deploys this recovery tool.
OCC also proposes amendments to the Testing and Review section. The
current language in this section provides that the Default & Recovery
Working Group (``Working Group'') assists the Management Committee by
overseeing OCC's default management program. OCC proposes to include
additional detail to this provision by adding that the Default &
Recovery Working Group oversees the default management ``and recovery''
program. The Default & Recovery Working Group was recently renamed to
reflect the combination of two separate working groups: the

[[Page 47109]]

Recovery and Wind-Down Working Group and the Default Management Working
Group. To memorialize the responsibilities from both working groups in
the combined Working Group, OCC proposes to include the additional
information that the Working Group oversees the default management
``and recovery'' program. Furthermore, OCC's proposed changes to the
Testing and Review section update existing language to eliminate
redundancy. The current language provides, in part, that on at least an
annual basis, the Working Group must establish and present to the
Management Committee for information and consent an annual default
testing plan. OCC believes the term ``information'' is redundant in
nature, and therefore OCC proposes to eliminate the reference. Lastly,
OCC proposes to revise a reference in this section from an
``Information and Consent'' memorandum to a ``Consent'' memorandum to
reflect the current practices at OCC. OCC no longer utilizes an
``Information and Consent'' memo format and as such, OCC proposes to
delete reference to it.
OCC also proposes general revisions throughout the DMP, including
formatting and grammatical changes, such as updating the section header
of the document to align with current format, capitalizing the term
``Clearing Member,'' and deleting unnecessary or redundant language
2. Statutory Basis
OCC believes the proposed rule change is consistent with Section
17A of the Exchange Act \17\ and Rules 17ad-22(e)(1) through (3) \18\
thereunder. Section 17A(b)(3)(F) of the Act \19\ 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 assure the safeguarding of securities and funds
which are in the custody or control of the clearing agency or for which
it is responsible. OCC's proposed changes update the OCC Polices to
more closely align with current business practices at OCC. The proposed
changes also provide additional detail and clarifying information in
the OCC Policies to enhance accuracy, clarity, and consistency in the
documents. OCC believes that updating the OCC Policies to align with
existing practice and enhancing the clarity of the descriptions in the
OCC Policies, which are central to OCC's clearance and settlement
activities, would promote the accurate clearance and settlement of
securities transactions and the safeguarding of securities and funds.
For these reasons, OCC believes its proposed changes align with Section
17A(b)(3)(F) of the Act.
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\17\ 15 U.S.C. 78q-1.
\18\ 17 CFR 240.17ad-22(e)(1)-(3).
\19\ 15 U.S.C. 78q-1(b)(3)(F).
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Rule 17ad-22(e)(1) \20\ requires, in part, that OCC 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 OCC's activities in all
relevant jurisdictions.\21\ OCC's proposed changes update the OCC
Policies to make non-substantive, clarifying, conforming and
administrative changes, including revisions to (i) remove duplicative
information, (ii) add relevant detail, and (iii) update references to
align with relevant descriptions. OCC believes these proposed changes
will improve clarity and transparency in the OCC Policies and provide
for an enforceable legal basis, in accordance with Rule 17ad-
22(e)(1).\22\
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\20\ 17 CFR 240.17ad-22(e)(1).
\21\ Id.
\22\ See supra, note 20.
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Rule 17ad-22(e)(2) \23\ provides, in part, that OCC must establish,
implement and maintain policies and procedures for governance
arrangements that specify clear and direct lines of responsibility.
OCC's proposed changes update the OCC Policies to better align with
OCC's current business practices, including updates to descriptions of
processes and governance requirements. OCC's proposed changes also
clarify the responsibilities of OCC departments. More specifically,
OCC's proposed changes in DMP clarify the responsibility of the CRO as
it relates to the close-out of open positions of a suspended Clearing
Member. OCC believes these proposed changes would promote clarity in
OCC's governance arrangement and specify clear and direct lines of
responsibility. Accordingly, OCC believes its proposed changes are
consistent with Rule 17ad-22(e)(2).\24\
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\23\ 17 CFR 240.17ad-22(e)(2).
\24\ Id.
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Lastly, Rule 17ad-22(e)(3) requires, in part, that OCC maintain a
risk management framework that includes policies, procedures, and
systems designed to identify, measure, monitor, and manage the range of
risks that arise in or are borne by OCC, that are subject to review on
a specified periodic basis and approved by the board of directors
annually.\25\ OCC's proposed revisions in this rule filing incorporate
changes to the OCC Policies that were identified during OCC's annual
review process and approved by the Board. Therefore, OCC believes the
proposed rule changes would support its obligation to maintain a sound
risk management framework that is subject to periodic review and annual
approval by the Board, in accordance with Rule 17ad-22(e)(3)(i).\26\
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\25\ 17 CFR 240.17ad-22(e)(3)(i).
\26\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

Section 17A(b)(3)(I) of the Act \27\ 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 changes would have any impact or burden
on competition. The purpose of OCC's proposed rule change is to amend
the OCC Policies to better reflect current practices at OCC and make
other non-substantive, clarifying and administrative changes to the
text of these policies. More specifically, OCC's proposed changes also
(i) update terminology in the OCC Policies to align with recently
adopted Rules,\28\ (ii) remove outdated references to OCC's By-Laws,
(iii) update outdated titles of referenced OCC departments when
applicable, (iv) provide contextual revisions for precision, and (v)
promote more robust descriptions within the OCC Policies. The proposed
amendments to the OCC Policies would have no impact on Clearing Members
or other market participants. Accordingly, OCC believes that the
proposed rule changes would be consistent with the requirements of the
Act applicable to clearing agencies and would not impact or impose a
burden on competition.
---------------------------------------------------------------------------

\27\ 15 U.S.C. 78q-1(b)(3)(I).
\28\ See supra, note 8.
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Written comments were not and are not intended to be solicited with
respect to the proposed 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 \29\ and paragraph (f) of Rule 19b-4 \30\
thereunder. At any time within 60 days of the filing of the proposed
rule

[[Page 47110]]

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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\29\ 15 U.S.C. 78s(b)(3)(A).
\30\ 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.\31\
---------------------------------------------------------------------------

\31\ 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#1664637a733b75797b7b737862655665737538717960"><span class="__cf_email__" data-cfemail="0e7c7b626b236d6163636b607a7d4e7d6b6d20696178">[email&#160;protected]</span></a>. Please include
File Number SR-OCC-2025-015 on the subject line.

Paper Comments

<bullet> Send paper comments in triplicate to Vanessa Countryman,
Secretary, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-OCC-2025-015. 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 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-2025-015 and
should be submitted on or before October 21, 2025.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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\32\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-19067 Filed 9-29-25; 8:45 am]
BILLING CODE 8011-01-P

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