Notice2026-19726
Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change by the Options Clearing Corporation Concerning Amendments to Its Rules To Establish a Procedures-Based Approach for Determining Product Eligibility During Overnight or Extended Trading Sessions Utilizing Its Current ETH Risk Management Framework
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
September 28, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 186 (Monday, September 28, 2026)</title>
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[Federal Register Volume 91, Number 186 (Monday, September 28, 2026)]
[Notices]
[Pages 61257-61260]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-19726]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106469; File No. SR-OCC-2026-008]
Self-Regulatory Organizations; The Options Clearing Corporation;
Order Approving Proposed Rule Change by the Options Clearing
Corporation Concerning Amendments to Its Rules To Establish a
Procedures-Based Approach for Determining Product Eligibility During
Overnight or Extended Trading Sessions Utilizing Its Current ETH Risk
Management Framework
September 23, 2026.
I. Introduction
On July 30, 2026, The Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') pursuant
to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Exchange
Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
establish a procedures-based approach for determining product
eligibility during overnight or extended trading sessions (hereinafter,
the ``Proposed Rule Change'').\3\ The Proposed Rule Change was
published for public comment in the Federal Register on August 17,
2026.\4\ The Commission has not received public comment regarding. For
the reasons discussed below, the Commission is approving the Proposed
Rule Change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Notice infra note 4, 91 FR 53294.
\4\ See Exchange Act Release No. 106080 (Aug. 12, 2026), 91 FR
53294 (Aug. 17, 2026) (File No. SR-OCC-2026-008) (``Notice'').
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II. Background
OCC is a central counterparty (``CCP''), which means that, as part
of its function as a clearing agency, it interposes itself as the buyer
to every seller and the seller to every buyer for financial
transactions. As the CCP for the listed options markets in the United
States,\5\ as well as for certain futures and stock loans, OCC is
exposed to various risks arising from providing clearance and
settlement services to its Clearing Members.\6\ OCC's risk management
framework is designed to accommodate the specific products and trading
hours its participant exchanges support. Expanded trading into new
extended or overnight sessions would rely on OCC's core clearing and
risk management functions. This proposed rule change would establish a
procedures-based framework enabling OCC to determine whether products
proposed for trading outside of regular trading hours can be
appropriately risk-managed under its existing Extended Trading Hours
framework for managing risk outside of regular trading hours
(``Extended Trading Hours'' or ``ETH'').
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\5\ OCC describes itself as ``the sole clearing agency for
standardized equity options listed on a national securities exchange
registered with the Commission (`listed options').'' See Securities
Exchange Act Release No. 96533 (Dec. 19, 2022), 87 FR 79015 (Dec.
23, 2022) (File No. SR-OCC-2022-012).
\6\ Capitalized terms used but not defined herein have the
meanings specified in OCC's Rules and By-Laws, available at <a href="https://www.theocc.com/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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Currently, the only products that OCC clears during Extended
Trading Hours are index options listed by Cboe Global Markets, Inc.
(``Cboe'') and index futures listed by Cboe Futures Exchange, LLC
(``CFE'').\7\ OCC first established its ETH risk management framework
in 2015 in connection with the clearance of these products.\8\ OCC has
received requests from Exchanges to expand the scope of products and
trading sessions supported under its ETH framework.\9\
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\7\ See Exchange Act Release No. 74241 (Feb. 10, 2015), 80 FR
8383 (Feb. 17, 2015) (File No. SR-OCC-2014-812) (Notice of No
Objection to Advance Notice concerning Extended and Overnight
Trading Sessions).
\8\ See Exchange Act Release No. 74268 (Feb. 12, 2015), 80 FR
8917 (Feb. 19, 2015) (File No. SR-OCC-2014-24) (Order approving
Proposed Rule Change concerning Extended and Overnight Trading
Sessions, establishing the framework now being expanded).
\9\ See Notice, 91 FR 53295.
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Rather than filing a separate proposed rule change with the
Commission each time an Exchange seeks to expand ETH products or
trading sessions, OCC proposes to amend its Rules and its Extended
Trading Hours Set-Up and Monitoring Procedure (the ``ETH Procedure'')
to establish a procedures-based framework governing OCC's determination
of product eligibility for trading outside of regular trading hours. As
discussed below, OCC believes its existing ETH risk management
framework is sufficient to accommodate the currently proposed
expansion,\10\ and OCC believes the procedures-based framework will
similarly permit it to evaluate future Exchange requests without the
need for a rule filing addressed to each individual product or
session.\11\
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\10\ See Notice, 91 FR 53294.
\11\ See Notice, 91 FR 53302.
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A. Proposed Rule 402
OCC proposes to amend its Rule 402, which is currently reserved, to
establish OCC's authority over the treatment of products traded outside
of regular trading hours. As proposed, Rule 402 would provide that
products executed on an Exchange outside of regular trading hours, as
determined by OCC, will be subject to OCC's established ETH risk
management procedures.\12\ Under Proposed Rule 402 OCC determines
whether a given trading session constitutes ``regular trading hours''
or ``extended trading hours'' for purposes of OCC's operations and risk
management.\13\ OCC states that this determination is necessary because
Exchange classifications of trading sessions are not always
determinative of the operational and risk management considerations
relevant to OCC.\14\
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\12\ See Notice, 91 FR 53299.
\13\ Id.
\14\ See Notice, 91 FR 53300.
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Proposed Rule 402 further provides that OCC will determine whether
the risk presented by a product that an Exchange proposes to trade
during extended trading hours may be managed under OCC's existing ETH
procedures.\15\ Finally, proposed Rule 402 provides that, to the extent
OCC determines that an Exchange's proposal would require changes to
OCC's existing ETH procedures, any such changes will be made in a
manner consistent with (i) OCC's regulatory obligations, including its
obligation to file proposed rule changes with the Commission pursuant
to Section 19(b) of the Exchange Act and Rule 19b-4 thereunder, and
(ii) OCC's agreements with the Exchanges, including the Participant
Exchange Agreement or any comparable agreement entered into with a
futures market pursuant to Article XII, Section 1 of OCC's By-Laws.
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\15\ Id.
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B. Proposed Amendment to Rule 307B
OCC also proposes to amend Rule 307B, which sets forth the
restrictions that may be imposed on a Clearing Member's transactions,
positions, and activities in circumstances warranting protective
measures. As amended, Rule 307B(a) would add a new paragraph 5
expressly authorizing the Chief Executive Officer, Chief Operating
Officer, or a Designated Officer of OCC to revoke a Clearing Member's
authorization to participate in extended trading hours where such
officer deems it necessary or appropriate under the circumstances. OCC
believes that adding an express reference to the revocation of ETH
authorization will eliminate interpretive ambiguity regarding the scope
of OCC's authority in this context. Any revocation of ETH authorization
under new Rule 307B(a)(5) would remain subject to the existing
procedural protections set forth
[[Page 61258]]
in Rule 307B(b) and (c), including the affected Clearing Member's right
to request review by OCC's Risk Committee, to receive advance notice of
any hearing, to be heard and present evidence, and to be represented by
counsel.
C. Proposed Changes to the ETH Procedure
OCC also proposes to revise its internal ETH Procedure and to adopt
the procedure as a rule governing OCC's management of trading outside
of regular trading hours.\16\ With regard to monitoring outside of
regular trading hours, OCC proposes revising the ETH Procedure to
clarify that ETH credit risk monitoring and Clearing Member eligibility
validation will occur throughout the same monitoring window. Such
monitoring would occur over the full duration of any ETH session,
continuing without interruption until the start of regular trading
hours at 8:30 a.m. Central Time. OCC states that this revision is
intended to make OCC's monitoring extend to cover the proposed early
morning ETH session, from 6:30 a.m. to 8:25 a.m. Central Time.\17\
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\16\ OCC established the ETH Procedure in its current form in
2015. As described herein, OCC proposes several substantive and
organizational changes to the ETH Procedure.
\17\ See Notice, 91 FR 53301.
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OCC proposes to publish the ETH Procedure, together with a list of
ETH-eligible products and their associated clearing sessions, on OCC's
public website, and to issue an Information Memorandum whenever the ETH
Procedure is amended or the list of eligible products is revised.\18\
OCC also proposes to remove certain header information from the ETH
Procedure identifying the procedure owner, version number, and revision
history, on the basis that such information does not constitute a rule
and will continue to be maintained in OCC's internal policy governance
system.
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\18\ See Notice, 91 FR 53301.
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OCC proposes revising the process by which Clearing Members are
approved to participate in ETH sessions. Under the proposed procedure a
Clearing Member's participation must be approved by an Executive
Director or above within Financial Risk Management (``FRM''). Market
Risk will assess a Clearing Member's suitability for ETH participation
based on the Clearing Member's financial condition, operational
readiness, and risk profile, and will present its recommendation to the
FRM officer, whose approval or denial will be documented via email.\19\
OCC proposes to clarify that, when an Exchange proposes a new product
or trading session for ETH clearing, the proposal will be evaluated
pursuant to OCC's existing New Product Procedure, taking into account
operational, financial risk, regulatory, and trading-session-
designation factors applicable to new products generally.
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\19\ See Notice, 91 FR 53301.
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OCC proposes adding provisions to the ETH Procedure clarifying that
not all credit risk monitoring alerts generated during ETH sessions
reflect losses attributable to ETH trading activity. Under the revised
procedure, Core Clearing or Market Operations will review trade logs to
confirm whether a given exceedance resulted from actual ETH trade
activity, as distinguished from non-trade-related causes such as
position transfers, erroneous file submissions, or price smoothing
calculations. Exceedances confirmed to result from non-trade activity
will be documented in the ETH Turnover Log as false positives and will
not require further escalation.
OCC also proposes certain non-substantive, conforming, and
administrative changes to the ETH Procedure, including updated
departmental references and organizational titles, and grammatical
corrections.
III. Discussion and Commission Findings
Section 19(b)(2)(C) of the Exchange Act requires the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that the proposed rule change is consistent with the requirements
of the Exchange Act and the rules and regulations thereunder applicable
to the organization.\20\ Under the Commission's Rules of Practice, the
``burden to demonstrate that a proposed rule change is consistent with
the Exchange Act and the rules and regulations issued thereunder . . .
is on the self-regulatory organization [`SRO'] that proposed the rule
change.'' \21\ The description of a proposed rule change, its purpose
and operation, its effect, and a legal analysis of its consistency with
applicable requirements must all be sufficiently detailed and specific
to support an affirmative Commission finding,\22\ and any failure of an
SRO to provide this information may result in the Commission not having
a sufficient basis to make an affirmative finding that a proposed rule
change is consistent with the Exchange Act and the applicable rules and
regulations.\23\ Moreover, ``unquestioning reliance'' on an SRO's
representations in a proposed rule change is not sufficient to justify
Commission approval of a proposed rule change.\24\
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\20\ 15 U.S.C. 78s(b)(2)(C).
\21\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR
201.700(b)(3).
\22\ Id.
\23\ Id.
\24\ Susquehanna Int'l Group, LLP v. Securities and Exchange
Commission, 866 F.3d 442, 447 (D.C. Cir. 2017).
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After carefully considering the Proposed Rule Change, the
Commission finds that the Proposed Rule Change is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder applicable to OCC. More specifically, the Commission finds
that the Proposed Rule Change is consistent with Section 17A(b)(3)(F)
of the Exchange Act \25\ and Rules 17ad-22(e)(1) and (21) thereunder,
as described in detail below.\26\
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\25\ 15 U.S.C. 78q-1(b)(3)(F).
\26\ 17 CFR 240.17ad-22(e)(1) and (21)(ii) and (iii).
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A. Consistency With 17A(b)(3)(F) of the Exchange Act
Under Section 17A(b)(3)(F) of the Exchange Act, OCC's rules, among
other things, must be designed to promote the prompt and accurate
clearance and settlement of securities transactions and, to the extent
applicable, derivatives agreements, contracts, and transactions.\27\
Based on a review of the record, and for the reasons discussed below,
the Proposed Rule Change is consistent with Section 17A(b)(3)(F).
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\27\ 15 U.S.C. 78q-1(b)(3)(F).
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As discussed above, the Proposed Rule Change would establish a
procedures-based framework governing OCC's evaluation of products and
trading sessions proposed by Exchanges for clearance outside of regular
trading hours. This framework is designed to promote the prompt and
accurate clearance and settlement of securities transactions and
derivatives contracts by ensuring that OCC's risk management framework
remains appropriately calibrated as ETH clearing activity expands.
Proposed Rule 402 would establish OCC's authority to determine
``regular trading hours'' and ''extended trading hours,''. This
authority promotes the prompt and accurate clearance and settlement of
transactions because it enables OCC to apply consistent operational and
risk management standards based on the actual characteristics of a
trading session rather than relying on an Exchange's own
classification, which could vary by Exchange for cross-listed products.
The proposed amendment to Rule 307B authorizes OCC to revoke a
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Clearing Member's ETH participation authorization where OCC's Chief
Executive Officer, Chief Operating Officer, or a Designated Officer
deems it necessary or appropriate. This change promotes the prompt and
accurate clearance and settlement of transactions by ensuring that OCC
retains a clear and unambiguous mechanism to limit or terminate a
Clearing Member's participation in ETH sessions where circumstances
warrant protective action. This authority is subject to the procedural
protections including the affected Clearing Member's right to request
review by OCC's Risk Committee, advance notice of any hearing, the
opportunity to be heard and present evidence, and the right to be
represented by counsel. These protections appropriately balance OCC's
need to act promptly to address risks arising from ETH participation
against the interests of affected Clearing Members.
With respect to the proposed changes to the ETH Procedure, the
proposed extension of continuous credit risk monitoring and Clearing
Member eligibility validation through the start of regular trading is
designed to promote the prompt and accurate clearance and settlement of
transactions by ensuring that OCC's risk monitoring capabilities extend
to cover the full duration of ETH trading activity without
interruption. Further, the proposed approval process for Clearing
Member ETH participation, under which Market Risk assesses a Clearing
Member's financial condition, operational readiness, and risk profile
and presents a recommendation to an Executive Director or above within
Financial Risk Management, is reasonably designed to ensure that only
Clearing Members with adequate risk management and operational
capabilities participate in ETH sessions, thereby supporting the prompt
and accurate clearance and settlement of transactions executed during
such sessions.
The proposed provisions clarifying the treatment of new products or
trading sessions proposed by Exchanges for ETH clearing are designed to
promote the prompt and accurate clearance and settlement of
transactions by ensuring that OCC applies a consistent and
comprehensive risk evaluation process to new ETH products, comparable
to the process OCC applies to new products generally.
Finally, the proposed provisions addressing the review and
documentation of credit risk monitoring alerts generated during ETH
sessions are designed to promote the prompt and accurate clearance and
settlement of transactions. By enabling OCC to distinguish alerts
attributable to actual ETH trading activity from those resulting from
other causes, this provision should allow OCC to focus its risk
management resources on responding to genuine indicia of risk arising
from ETH trading, thereby supporting the prompt and accurate clearance
and settlement of transactions cleared during ETH sessions.
Accordingly, and for the reasons stated above, the Proposed Rule Change
promotes the prompt and accurate clearance and settlement of securities
transactions.
B. Consistency With Rule 17ad-22(e)(1)
Rule 17ad-22(e)(1) under the Exchange Act requires, in part, that
OCC establish, implement, maintain, and enforce written policies and
procedures reasonably designed to, as applicable, provide for a well-
founded, clear, transparent, and enforceable legal basis for each
aspect of its activities in all relevant jurisdictions.\28\
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\28\ 17 CFR 240.17ad-22(e)(1).
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Proposed Rule 402 would provide OCC with express rule-based
authority to determine which trading sessions constitute ``regular
trading hours'' or ``extended trading hours'' for purposes of OCC's
clearance and risk management functions, and to determine whether the
risk presented by a product proposed for trading during extended
trading hours may be accommodated under OCC's existing ETH risk
management framework. By establishing this authority directly in OCC's
Rules, rather than relying on informal practice, the proposed rule
change would provide market participants with clear and transparent
notice of the legal basis for OCC's determinations regarding ETH-
eligible products and sessions.
Adopting the revised ETH Procedure as a rule enhances the
transparency and enforceability of the legal framework governing OCC's
ETH risk management activities. The revised ETH Procedure governs
material aspects of OCC's risk management of ETH clearing activity, and
any future amendments to the procedure will be subject to the
requirements of Section 19(b) of the Exchange Act \29\ and Rule 19b-4
thereunder.\30\ This change would provide Clearing Members and other
market participants with clear notice of such changes and further
support the legal basis for the scope of, and requirements applicable
to, OCC's ETH risk management framework. Accordingly, the proposed
changes are consistent with Rule 17ad-22(e)(2)(i).\31\
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\29\ 15 U.S.C. 78s(b)(1).
\30\ 17 CFR 240.19(b).
\31\ 17 CFR 240.17ad22(e)(1).
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C. Consistency With Rule 17ad-22(e)(21)
Rule 17ad-22(e)(21) requires that OCC 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, and have the covered
clearing agency's management regularly review the efficiency and
effectiveness of its operating structure, including risk management
policies, procedures, and systems and scope of products cleared or
settled.\32\
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\32\ 17 CFR 240.17ad-22(e)(21)(ii) and (iii).
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The proposed procedures-based framework would allow OCC to evaluate
future Exchange requests to expand ETH-eligible products and sessions
under its existing risk management infrastructure, without requiring a
separate rule filing for each request, thereby providing OCC with a
scalable process for managing its operating structure, including its
management of risks associated with anticipated growth in ETH trading
activity. This would also allow OCC to operate more efficiently and
review its product scope without having to file rule filing for each
request.
The proposed revisions to the ETH Procedure are also designed to
efficiently and effectively review the effectiveness of its risk-
management policies. The proposed extension of continuous credit risk
monitoring and Clearing Member eligibility validation through the start
of regular trading hours would ensure that OCC's monitoring controls
appropriately cover the proposed early morning ETH session. The
proposed process for reviewing credit risk monitoring exceedances would
help ensure that OCC's operational resources are directed toward
exceedances presenting genuine risk. Finally, the proposed
formalization of the Clearing Member ETH approval process, requiring
review by Market Risk and approval by an Executive Director or above
within Financial Risk Management, would support risk management
policies through consistent controls over Clearing Member eligibility
for ETH participation. Accordingly, the proposed changes are consistent
with Rule 17ad-22(e)(21) under the Exchange Act.\33\
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\33\ 17 CFR 240.17ad-22(e)(21)(ii) and (iii).
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IV. Conclusion
On the basis of the foregoing, the Commission finds that the
Proposed
[[Page 61260]]
Rule Change is consistent with the requirements of the Exchange Act,
and in particular, Section 17A(b)(3)(F) of the Exchange Act,\34\ and
Rules 17ad-22(e)(1) and (21), thereunder.\35\
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\34\ 15 U.S.C. 78q-1(b)(3)(F).
\35\ 17 CFR 240.17ad-22(e)(1) and (21)(ii) and (iii).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act, that the proposed rule change (SR-OCC-2026-008) be, and
hereby is, approved.\36\
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\36\ In approving the proposed rule change, the Commission
considered the proposal's impacts on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\37\
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\37\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-19726 Filed 9-25-26; 8:45 am]
BILLING CODE 8011-01-P
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