Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change To Amend OCC's By-Laws and Rules To Terminate OCC's Pledge Program, 52082 [2012-21106]

Download as PDF 52082 Federal Register / Vol. 77, No. 167 / Tuesday, August 28, 2012 / Notices SECURITIES AND EXCHANGE COMMISSION Program and Rule 614 in its Rules and in its By-Laws. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67706; File No. SR–OCC– 2012–10] III. Discussion [Release No. 34–67707; File No. SR–DTC– 2012–06] Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change To Amend OCC’s By-Laws and Rules To Terminate OCC’s Pledge Program August 22, 2012. I. Introduction On June 28, 2012, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change SR–OCC–2012–10 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b-4 thereunder.2 The proposed rule change was published for comment in the Federal Register on July 16, 2012.3 The Commission received no comment letters. For the reasons discussed below, the Commission is granting approval of the proposed rule change. srobinson on DSK4SPTVN1PROD with NOTICES II. Description The proposed rule change would terminate OCC’s pledge program (the ‘‘Program’’). Since implementation of the Program, only a limited number of clearing members participated and those that did participate did so on a sporadic basis. OCC is eliminating the Program in its entirety. The Program was adopted by OCC in the early 1980s to facilitate the ability of an OCC clearing member to finance positions by permitting the clearing member to pledge unsegregated long positions in cleared securities (other than securities futures) for a loan of cash. The Program was initially designed for, and used by, firms clearing market maker business; however, use of the Program diminished as market making operations were acquired by larger wire houses. While OCC occasionally receives an inquiry regarding the Program, it has been essentially dormant for some time. OCC recently reviewed the Program and determined that any potential benefits that OCC may gain through updating the Program are greatly offset by the resources required for such modernization. Accordingly, OCC is terminating the Program in its entirety. OCC is eliminating Rule 614 in its entirety as well as references to the 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Securities Exchange Act Release No. 34–67392 (July 10, 2012), 77 FR 41835 (July 16, 2012). 2 17 VerDate Mar<15>2010 16:39 Aug 27, 2012 Jkt 226001 Section 19(b)(2)(C) of the Act 4 directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to such organization. Section 17A(b)(3)(F) of the Act 5 requires, among other things, that the rules of a clearing agency are designed to remove impediments to and perfect the mechanism of a national system for the prompt and accurate clearance and settlement of securities transactions. The changes to OCC’s Rules and ByLaws are designed to allow OCC to remove a rarely used operational function and focus its resources on core clearing operations. Moreover, the elimination of the Program will not materially affect clearing members given its limited and infrequent use. The rule change is not inconsistent with any rules of OCC, including any proposed to be amended. As a result, the rule change is consistent with the requirements of Section 17A(b)(3)(F) of the Act. IV. Conclusion On the basis of the foregoing, the Commission finds that the proposal is consistent with the requirements of the Act and in particular with the requirements of Section 17A of the Act 6 and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Act 7, that the proposed rule change (File No. SR– OCC–2012–10) be, and hereby is, approved.8 For the Commission by the Division of Trading and Markets, pursuant to delegated authority.9 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–21106 Filed 8–27–12; 8:45 am] BILLING CODE 8011–01–P 4 15 U.S.C. 78s(b)(2)(C). U.S.C. 78q–1(b)(3)(F). 6 15 U.S.C. 78q–1. 7 15 U.S.C. 78s(b)(2). 8 In approving the proposed rule change, the Commission considered the proposal’s impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). 9 17 CFR 200.30–3(a)(12). 5 15 PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make Updates to Its Custody Service August 22, 2012. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder 2 notice is hereby given that on August 13, 2012, The Depository Trust Company (‘‘DTC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared primarily by DTC. DTC filed the proposed rule change pursuant to Section 19(b)(3)(A) 3 of the Act and Rule 19b–4(f)(4)(i) 4 thereunder, so that the proposed rule change was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. I. Self-Regulatory Organization’s Statement of Terms of Substance of the Proposed Rule Change The purpose of the proposed rule change is to update the DTC Custody Guide with respect to which assets are eligible to be held for Custody Safekeeping and to make other administrative changes and clarifications. II. Self-Regulatory Organization’s Statement of Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, DTC included statements concerning the purpose 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. DTC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of Purpose of, and Statutory Basis for, the Proposed Rule Change The Custody Service enables Participants that hold securities which are not presently eligible for book-entry 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(4)(i). 2 17 E:\FR\FM\28AUN1.SGM 28AUN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 77, Number 167 (Tuesday, August 28, 2012)]
[Notices]
[Page 52082]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-21106]



[[Page 52082]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67706; File No. SR-OCC-2012-10]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Order Approving Proposed Rule Change To Amend OCC's By-Laws and Rules 
To Terminate OCC's Pledge Program

August 22, 2012.

I. Introduction

    On June 28, 2012, The Options Clearing Corporation (``OCC'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change SR-OCC-2012-10 pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder.\2\ The proposed rule change was published for comment in 
the Federal Register on July 16, 2012.\3\ The Commission received no 
comment letters. For the reasons discussed below, the Commission is 
granting approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-67392 (July 10, 
2012), 77 FR 41835 (July 16, 2012).
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II. Description

    The proposed rule change would terminate OCC's pledge program (the 
``Program''). Since implementation of the Program, only a limited 
number of clearing members participated and those that did participate 
did so on a sporadic basis. OCC is eliminating the Program in its 
entirety.
    The Program was adopted by OCC in the early 1980s to facilitate the 
ability of an OCC clearing member to finance positions by permitting 
the clearing member to pledge unsegregated long positions in cleared 
securities (other than securities futures) for a loan of cash. The 
Program was initially designed for, and used by, firms clearing market 
maker business; however, use of the Program diminished as market making 
operations were acquired by larger wire houses. While OCC occasionally 
receives an inquiry regarding the Program, it has been essentially 
dormant for some time. OCC recently reviewed the Program and determined 
that any potential benefits that OCC may gain through updating the 
Program are greatly offset by the resources required for such 
modernization. Accordingly, OCC is terminating the Program in its 
entirety.
    OCC is eliminating Rule 614 in its entirety as well as references 
to the Program and Rule 614 in its Rules and in its By-Laws.

 III. Discussion

    Section 19(b)(2)(C) of the Act \4\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if it 
finds that such proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to such organization. Section 17A(b)(3)(F) of the Act \5\ 
requires, among other things, that the rules of a clearing agency are 
designed to remove impediments to and perfect the mechanism of a 
national system for the prompt and accurate clearance and settlement of 
securities transactions.
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    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    The changes to OCC's Rules and By-Laws are designed to allow OCC to 
remove a rarely used operational function and focus its resources on 
core clearing operations. Moreover, the elimination of the Program will 
not materially affect clearing members given its limited and infrequent 
use. The rule change is not inconsistent with any rules of OCC, 
including any proposed to be amended. As a result, the rule change is 
consistent with the requirements of Section 17A(b)(3)(F) of the Act.

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \6\ and the 
rules and regulations thereunder.
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    \6\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\7\, that the proposed rule change (File No. SR-OCC-2012-10) be, and 
hereby is, approved.\8\
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ In approving the proposed rule change, the Commission 
considered the proposal's impact 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.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-21106 Filed 8-27-12; 8:45 am]
BILLING CODE 8011-01-P

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