Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change Concerning Charters for the Board of Directors, the Membership/Risk Committee, the Audit Committee and the Performance Committee, 75659-75660 [2013-29621]
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Federal Register / Vol. 78, No. 239 / Thursday, December 12, 2013 / Notices
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
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:
maindgalligan on DSK5TPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2013–146 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2013–146. 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 Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
VerDate Mar<15>2010
16:45 Dec 11, 2013
Jkt 232001
NASDAQ–2013–146 and should be
submitted on or before January 2, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–29607 Filed 12–11–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71022; File No. SR–OCC–
2013–17]
Self-Regulatory Organizations; The
Options Clearing Corporation; Order
Approving Proposed Rule Change
Concerning Charters for the Board of
Directors, the Membership/Risk
Committee, the Audit Committee and
the Performance Committee
December 6, 2013.
I. Introduction
On October 17, 2013, The Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–OCC–2013–17 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 October 30,
2013.3 The Commission received no
comments concerning the proposed rule
change. For the reasons set forth below,
the Commission is approving the
proposed rule change.
II. Description
The proposed rule change concerns
the charter of OCC’s Board of Directors
(‘‘Board’’), as well as the charters of the
Board’s Membership/Risk Committee
(‘‘MRC’’), Audit Committee (‘‘AC’’), and
Performance Committee (‘‘PC’’)
(collectively, ‘‘Committee Charters’’).4
Board of Directors Charter
The Board’s new charter (‘‘Board
Charter’’) does not impose any new
responsibilities on the Board, but rather
reflects the existing powers and duties
of the Board under OCC’s By-Laws and
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 70753
(October 24, 2013), 78 FR 65027 (October 30, 2013)
(SR–OCC–2013–17).
4 OCC’s Board adopted its charter on March 7,
2013. Although OCC has had charters for its MRC,
AC, and PC in place for a number of years, it has
not previously submitted those as proposed rule
changes pursuant to Section 19(b) of the Act.
1 15
PO 00000
Frm 00117
Fmt 4703
Sfmt 4703
75659
Rules, as well as the underlying
practices that have been developed to
aid the Board in meeting its obligations.
According to OCC, the Board adopted a
charter in an effort to provide outside
parties with greater transparency into
the Board’s oversight activities, to
promote accountability, and to align
OCC with current best practices in
corporate governance.
The Board Charter addresses the
organization, composition, authority,
functions, and responsibilities of the
Board. With respect to membership, the
Board Charter sets forth the size and
composition of the Board, the
qualifications for Board membership,
and the term, tenure, and age limits
applicable to each category of Board
member. The Board Charter also
addresses Board meetings, specifying
that the Board will meet at least five
times annually, that the Chairman of the
Board will establish the agenda for each
meeting in consultation with the
President and Secretary, and that
individual Directors must prepare for
and attend each Board meeting.
Additionally, the Board Charter
incorporates many provisions of OCC’s
existing By-Laws, including those
governing the election, resignation, and
disqualification of Directors,5 the
establishment of Board committees and
subcommittees, and the existence of a
quorum.
The Board Charter also defines the
scope of the Board’s authority,
providing, among other things, that the
Board may make any inquiries it deems
appropriate in executing its duties, and
that the Board may confer with OCC
management or employees as needed.6
The Board Charter reiterates the Board’s
authority under the By-Laws to elect
certain corporate officers annually, to
form such committees and
subcommittees as it deems appropriate,
and to delegate authority to committee
members.
The Board Charter describes the
Board’s cardinal duty as overseeing OCC
to ensure that it is managed and
operates in a manner that is consistent
with OCC’s regulatory responsibilities.
The Board is also tasked with
5 The Board Charter currently reflects that the
Board has one Management Director, who is both
the Chairman of the Board and Chief Executive
Officer of OCC. OCC intends to split the office of
the Chairman into two offices, Executive Chairman
and President, both of whom will be elected as
Management Directors. See Securities Exchange Act
Release No. 70076 (July 30, 2013), 78 FR 47449
(August 5, 2013) (SR–OCC–2013–09).
6 The Chairman is permitted to ask OCC
management or others to attend meetings and
provide pertinent information. The Board may also
hire specialists or rely on outside advisors or
specialists.
E:\FR\FM\12DEN1.SGM
12DEN1
75660
Federal Register / Vol. 78, No. 239 / Thursday, December 12, 2013 / Notices
stewarding OCC to ensure it has the
ability to achieve its objectives in a safe,
sound, and prudential manner. The
Board Charter reiterates many of the
Board’s responsibilities under OCC’s
By-Laws, including the obligations to
determine disqualifications from Board
service, to fill vacancies, to conduct
hearings in connection with a denial or
suspension of membership, and to
suspend clearing members when
appropriate. The Board Charter also lists
additional Board responsibilities that do
not appear in the By-Laws.7
The Board Charter also sets forth the
duties and responsibilities of individual
Directors, including the duty to act in
good faith in the best interests of OCC,
as well as with due regard for the
fiduciary responsibilities owed to OCC
as a systemically important financial
market utility.8 Directors are also
required to comply with the provisions
of the Code of Conduct for OCC
Directors, including the provisions
relating to conflicts of interest and
confidentiality.
maindgalligan on DSK5TPTVN1PROD with NOTICES
Committee Charters
OCC has long maintained Charters for
the MRC, AC, and PC (each, a
‘‘Committee,’’ and collectively, the
‘‘Committees’’). These Committee
Charters describe the purpose of each
Committee as assisting the Board in
fulfilling certain of its oversight
responsibilities. The Committee
Charters further specify the policies and
procedures governing the membership,9
organization, scope of authority,
7 These additional responsibilities include the
following: (i) To oversee OCC’s governance
processes; (ii) to approve and oversee OCC’s
business strategies; (iii) to monitor OCC’s
performance in delivering clearance and settlement
services; (iv) to oversee OCC’s processes and
framework for assessing, managing, and monitoring
strategic, financial, and operational risk; (v) to
oversee OCC’s financial reporting, auditing,
accounting, and compliance processes; (vi) to
oversee OCC’s system of internal controls; (vii) to
foster processes designed to ensure that OCC
complies with applicable laws and regulations, and
that OCC operates in an ethical manner; (viii) to
oversee OCC’s major capital expenditures and
approve the annual budget and corporate plan; (ix)
to oversee the development and design of employee
compensation, incentive, and benefit programs; (x)
to evaluate senior management performance
regularly and approve the compensation of the
Chairman and President; and (xi) to assure
management succession.
8 On July 18, 2012, the Financial Stability
Oversight Council (‘‘FSOC’’) designated OCC as a
systemically important financial market utility
under Title VIII of the Dodd-Frank Wall Street
Reform and Consumer Protection Act. Financial
Stability Oversight Council, 2012 Annual Report,
Appendix A, p.145, available at https://
www.treasury.gov/initiatives/fsoc/Documents/
2012%20Annual%20Report.pdf.
9 Each Committee Charter requires the inclusion
of at least one Public Director and empowers the
Board to remove or replace any Committee member
at any time.
VerDate Mar<15>2010
16:45 Dec 11, 2013
Jkt 232001
functions, and responsibilities of each
Committee.
With respect to meetings, each
Committee Charter establishes the
Committee’s meeting schedule, quorum
rules, minute-keeping, and reporting
requirements. Each Committee Charter
further provides that the meeting agenda
is established by the Committee’s
chairman, or his or her designee, in
consultation with the Secretary and
OCC’s management. A majority of the
Committee members constitutes a
quorum, and if the chairman is not
present at a meeting, the members who
are present must designate one of their
number to serve as acting chairman. All
Committees are permitted to call
executive sessions from which guests of
such Committee may be excluded, and
Committee members are permitted to
participate in all meetings by
teleconference or similar means.10
Each Committee’s charter describes
the scope of its authority, which
includes the power to act, subject to the
Board’s direction, with respect to any
matter necessary or appropriate to
accomplish the purpose and
responsibilities set forth in the
Committee’s Charter, as well as the
power to delegate this authority to any
subcommittee that the Committee may
form. Each Committee is also authorized
to make inquiries into any matter
related to its respective purpose and
responsibilities,11 and to confer with
OCC’s management and other
employees as it deems appropriate.
Additionally, the chair of each
Committee is authorized to act on behalf
of his or her Committee in the event
immediate action is required and it is
impractical to convene such
Committee.12
Each Committee Charter sets forth a
detailed list of the Committee’s
respective functions and
responsibilities, and also requires each
Committee to review its charter
annually and to submit any revised
charters to OCC’s Board for reapproval.
proposed rule change of a selfregulatory organization if it finds that
the 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 14 requires that
the rules of a registered clearing agency
be designed to, among other things,
promote the prompt and accurate
clearance and settlement of securities
transactions, as well as protect investors
and the public interest. The
Commission finds that the proposed
rule change is consistent with the Act’s
requirements because the new and
revised Board charters will clarify the
responsibilities and operations of OCC’s
Board and its committees. This clarity
will help ensure that OCC maintains a
robust and transparent governance
structure that should promote the
prompt and accurate clearance and
settlement of securities transactions,
and should further safeguard investors
and the public interest.
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposal is
consistent with the requirements of the
Act, particularly the requirements of
Section 17A of the Act 15 and the rules
and regulations thereunder applicable to
OCC.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,16 that
proposed rule change SR–OCC–2013–17
be and hereby is approved.17
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.18
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013–29621 Filed 12–11–13; 8:45 am]
BILLING CODE 8011–01–P
III. Discussion
Section 19(b)(2)(C) of the Act 13
directs the Commission to approve a
10 Meeting minutes must be kept and shared with
the Board.
11 The Committee Charters further permit each
Committee to hire specialists or rely on outside
advisors or specialists to assist in carrying out the
Committee’s activities, and further confirm the
Committees’ authority to approve any related terms
of retention and fees. The MRC and PC’s authority
under these provisions, however, is subject to Board
approval.
12 In such instances, the committee chair must, as
soon as practicable, seek ratification from the full
committee for any actions the chair has taken
unilaterally.
13 15 U.S.C. 78s(b)(2)(C).
PO 00000
Frm 00118
Fmt 4703
Sfmt 9990
14 15
U.S.C. 78q–1(b)(3)(F).
U.S.C. 78q–1.
16 15 U.S.C. 78s(b)(2).
17 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).
18 17 CFR 200.30–3(a)(12).
15 15
E:\FR\FM\12DEN1.SGM
12DEN1
Agencies
[Federal Register Volume 78, Number 239 (Thursday, December 12, 2013)]
[Notices]
[Pages 75659-75660]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29621]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71022; File No. SR-OCC-2013-17]
Self-Regulatory Organizations; The Options Clearing Corporation;
Order Approving Proposed Rule Change Concerning Charters for the Board
of Directors, the Membership/Risk Committee, the Audit Committee and
the Performance Committee
December 6, 2013.
I. Introduction
On October 17, 2013, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'')
proposed rule change SR-OCC-2013-17 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 October 30, 2013.\3\ The Commission received no
comments concerning the proposed rule change. For the reasons set forth
below, the Commission is approving the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 70753 (October 24,
2013), 78 FR 65027 (October 30, 2013) (SR-OCC-2013-17).
---------------------------------------------------------------------------
II. Description
The proposed rule change concerns the charter of OCC's Board of
Directors (``Board''), as well as the charters of the Board's
Membership/Risk Committee (``MRC''), Audit Committee (``AC''), and
Performance Committee (``PC'') (collectively, ``Committee
Charters'').\4\
---------------------------------------------------------------------------
\4\ OCC's Board adopted its charter on March 7, 2013. Although
OCC has had charters for its MRC, AC, and PC in place for a number
of years, it has not previously submitted those as proposed rule
changes pursuant to Section 19(b) of the Act.
---------------------------------------------------------------------------
Board of Directors Charter
The Board's new charter (``Board Charter'') does not impose any new
responsibilities on the Board, but rather reflects the existing powers
and duties of the Board under OCC's By-Laws and Rules, as well as the
underlying practices that have been developed to aid the Board in
meeting its obligations. According to OCC, the Board adopted a charter
in an effort to provide outside parties with greater transparency into
the Board's oversight activities, to promote accountability, and to
align OCC with current best practices in corporate governance.
The Board Charter addresses the organization, composition,
authority, functions, and responsibilities of the Board. With respect
to membership, the Board Charter sets forth the size and composition of
the Board, the qualifications for Board membership, and the term,
tenure, and age limits applicable to each category of Board member. The
Board Charter also addresses Board meetings, specifying that the Board
will meet at least five times annually, that the Chairman of the Board
will establish the agenda for each meeting in consultation with the
President and Secretary, and that individual Directors must prepare for
and attend each Board meeting. Additionally, the Board Charter
incorporates many provisions of OCC's existing By-Laws, including those
governing the election, resignation, and disqualification of
Directors,\5\ the establishment of Board committees and subcommittees,
and the existence of a quorum.
---------------------------------------------------------------------------
\5\ The Board Charter currently reflects that the Board has one
Management Director, who is both the Chairman of the Board and Chief
Executive Officer of OCC. OCC intends to split the office of the
Chairman into two offices, Executive Chairman and President, both of
whom will be elected as Management Directors. See Securities
Exchange Act Release No. 70076 (July 30, 2013), 78 FR 47449 (August
5, 2013) (SR-OCC-2013-09).
---------------------------------------------------------------------------
The Board Charter also defines the scope of the Board's authority,
providing, among other things, that the Board may make any inquiries it
deems appropriate in executing its duties, and that the Board may
confer with OCC management or employees as needed.\6\ The Board Charter
reiterates the Board's authority under the By-Laws to elect certain
corporate officers annually, to form such committees and subcommittees
as it deems appropriate, and to delegate authority to committee
members.
---------------------------------------------------------------------------
\6\ The Chairman is permitted to ask OCC management or others to
attend meetings and provide pertinent information. The Board may
also hire specialists or rely on outside advisors or specialists.
---------------------------------------------------------------------------
The Board Charter describes the Board's cardinal duty as overseeing
OCC to ensure that it is managed and operates in a manner that is
consistent with OCC's regulatory responsibilities. The Board is also
tasked with
[[Page 75660]]
stewarding OCC to ensure it has the ability to achieve its objectives
in a safe, sound, and prudential manner. The Board Charter reiterates
many of the Board's responsibilities under OCC's By-Laws, including the
obligations to determine disqualifications from Board service, to fill
vacancies, to conduct hearings in connection with a denial or
suspension of membership, and to suspend clearing members when
appropriate. The Board Charter also lists additional Board
responsibilities that do not appear in the By-Laws.\7\
---------------------------------------------------------------------------
\7\ These additional responsibilities include the following: (i)
To oversee OCC's governance processes; (ii) to approve and oversee
OCC's business strategies; (iii) to monitor OCC's performance in
delivering clearance and settlement services; (iv) to oversee OCC's
processes and framework for assessing, managing, and monitoring
strategic, financial, and operational risk; (v) to oversee OCC's
financial reporting, auditing, accounting, and compliance processes;
(vi) to oversee OCC's system of internal controls; (vii) to foster
processes designed to ensure that OCC complies with applicable laws
and regulations, and that OCC operates in an ethical manner; (viii)
to oversee OCC's major capital expenditures and approve the annual
budget and corporate plan; (ix) to oversee the development and
design of employee compensation, incentive, and benefit programs;
(x) to evaluate senior management performance regularly and approve
the compensation of the Chairman and President; and (xi) to assure
management succession.
---------------------------------------------------------------------------
The Board Charter also sets forth the duties and responsibilities
of individual Directors, including the duty to act in good faith in the
best interests of OCC, as well as with due regard for the fiduciary
responsibilities owed to OCC as a systemically important financial
market utility.\8\ Directors are also required to comply with the
provisions of the Code of Conduct for OCC Directors, including the
provisions relating to conflicts of interest and confidentiality.
---------------------------------------------------------------------------
\8\ On July 18, 2012, the Financial Stability Oversight Council
(``FSOC'') designated OCC as a systemically important financial
market utility under Title VIII of the Dodd-Frank Wall Street Reform
and Consumer Protection Act. Financial Stability Oversight Council,
2012 Annual Report, Appendix A, p.145, available at https://www.treasury.gov/initiatives/fsoc/Documents/2012%20Annual%20Report.pdf.
---------------------------------------------------------------------------
Committee Charters
OCC has long maintained Charters for the MRC, AC, and PC (each, a
``Committee,'' and collectively, the ``Committees''). These Committee
Charters describe the purpose of each Committee as assisting the Board
in fulfilling certain of its oversight responsibilities. The Committee
Charters further specify the policies and procedures governing the
membership,\9\ organization, scope of authority, functions, and
responsibilities of each Committee.
---------------------------------------------------------------------------
\9\ Each Committee Charter requires the inclusion of at least
one Public Director and empowers the Board to remove or replace any
Committee member at any time.
---------------------------------------------------------------------------
With respect to meetings, each Committee Charter establishes the
Committee's meeting schedule, quorum rules, minute-keeping, and
reporting requirements. Each Committee Charter further provides that
the meeting agenda is established by the Committee's chairman, or his
or her designee, in consultation with the Secretary and OCC's
management. A majority of the Committee members constitutes a quorum,
and if the chairman is not present at a meeting, the members who are
present must designate one of their number to serve as acting chairman.
All Committees are permitted to call executive sessions from which
guests of such Committee may be excluded, and Committee members are
permitted to participate in all meetings by teleconference or similar
means.\10\
---------------------------------------------------------------------------
\10\ Meeting minutes must be kept and shared with the Board.
---------------------------------------------------------------------------
Each Committee's charter describes the scope of its authority,
which includes the power to act, subject to the Board's direction, with
respect to any matter necessary or appropriate to accomplish the
purpose and responsibilities set forth in the Committee's Charter, as
well as the power to delegate this authority to any subcommittee that
the Committee may form. Each Committee is also authorized to make
inquiries into any matter related to its respective purpose and
responsibilities,\11\ and to confer with OCC's management and other
employees as it deems appropriate. Additionally, the chair of each
Committee is authorized to act on behalf of his or her Committee in the
event immediate action is required and it is impractical to convene
such Committee.\12\
---------------------------------------------------------------------------
\11\ The Committee Charters further permit each Committee to
hire specialists or rely on outside advisors or specialists to
assist in carrying out the Committee's activities, and further
confirm the Committees' authority to approve any related terms of
retention and fees. The MRC and PC's authority under these
provisions, however, is subject to Board approval.
\12\ In such instances, the committee chair must, as soon as
practicable, seek ratification from the full committee for any
actions the chair has taken unilaterally.
---------------------------------------------------------------------------
Each Committee Charter sets forth a detailed list of the
Committee's respective functions and responsibilities, and also
requires each Committee to review its charter annually and to submit
any revised charters to OCC's Board for reapproval.
III. Discussion
Section 19(b)(2)(C) of the Act \13\ directs 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 Act and the rules and regulations thereunder applicable to such
organization. Section 17A(b)(3)(F) of the Act \14\ requires that the
rules of a registered clearing agency be designed to, among other
things, promote the prompt and accurate clearance and settlement of
securities transactions, as well as protect investors and the public
interest. The Commission finds that the proposed rule change is
consistent with the Act's requirements because the new and revised
Board charters will clarify the responsibilities and operations of
OCC's Board and its committees. This clarity will help ensure that OCC
maintains a robust and transparent governance structure that should
promote the prompt and accurate clearance and settlement of securities
transactions, and should further safeguard investors and the public
interest.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(2)(C).
\14\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act, particularly
the requirements of Section 17A of the Act \15\ and the rules and
regulations thereunder applicable to OCC.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\16\ that proposed rule change SR-OCC-2013-17 be and hereby is
approved.\17\
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78s(b)(2).
\17\ 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.\18\
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-29621 Filed 12-11-13; 8:45 am]
BILLING CODE 8011-01-P