Self-Regulatory Organizations; the Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Reflect the Elimination of a Discount to OCC's Clearing Fee Schedule, 17214-17216 [2014-06761]
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17214
Federal Register / Vol. 79, No. 59 / Thursday, March 27, 2014 / Notices
capacity to handle the additional traffic
associated with the listing of new series
that will result from the introduction of
VXST options.38
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,39 that the
proposed rule change (SR–CBOE–2014–
003) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.40
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–06758 Filed 3–26–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71769; File No. SR–OCC–
2014–05]
Self-Regulatory Organizations; the
Options Clearing Corporation; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Reflect
the Elimination of a Discount to OCC’s
Clearing Fee Schedule
March 21, 2014.
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 March
21, 2014, The Options Clearing
Corporation (‘‘OCC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change described in Items I and II
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 Rule
19b–4(f)(2) 4 thereunder, so that the
proposal was effective upon filing with
the Commission. The Commission is
publishing this notice to solicit
comments on the rule change from
interested parties.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
tkelley on DSK3SPTVN1PROD with NOTICES
OCC proposes to amend its Schedule
of Fees, effective April 1, 2014, to reflect
the elimination of a discount to OCC’s
clearing fee schedule.
38 See
supra note 27 and accompanying text.
U.S.C. 78s(b)(2).
40 17 CFR 200.30–3(a)(12).
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)(2).
39 15
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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
1. Purpose
The purpose of this proposed rule
change is to amend OCC’s Schedule of
Fees to reinstate the permanent reduced
fee schedule adopted, effective May 1,
2007, for securities options and
securities futures.5 In conjunction with
adopting this permanent reduced fee
schedule, OCC simultaneously
discounted the permanent schedule.
Effective January 1, 2008, OCC replaced
the May 1, 2007, discounted schedule 6
with the discount remaining in effect
until further action of by the Board.
Implementation of this schedule was
premised on the discounts not adversely
affecting OCC’s ability to meet its
expenses and maintain an acceptable
level of retained earnings. Article IX,
Section 9 of OCC’s By-Laws permits
OCC to establish a fee structure to cover
operating expenses, to maintain reserves
as are deemed reasonably necessary by
the Board to provide facilities for the
conduct of OCC’s business and to
accumulate such additional surplus as
the Board deems advisable to allow OCC
to meet its obligations to clearing
members and the general public.
OCC has determined to reinstate its
permanent reduced fee schedule. OCC’s
revenues principally are derived from
clearing fees charged to clearing
members and OCC’s current and
projected operating expenses have
increased due to current and anticipated
regulatory requirements.7 These
5 See Exchange Act Release No. 34–55709 (May
4, 2007), 72 FR 26669 (May 10, 2007) (SR–OCC–
2007–05). This schedule is applied to futures and
futures options as well.
6 See Exchange Act Release No. 34–57192
(January 24, 2008), 73 FR 5618 (January 30, 2008)
(SR–OCC–2007–17).
7 See Statements of Income and Comprehensive
Income in OCC’s 2013 Annual Report available on
OCC’s Web site, www.theocc.com. In 2013, clearing
fees represented over 90% of OCC’s total revenues.
Between 2012 and 2013, OCC annual expenses
increased by approximately 9%. OCC’s currently
projects a greater increase in expenses in 2014.
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Sfmt 4703
requirements include those proposed by
the Commission at its meeting on March
12, 2014, requiring OCC to be in a
position to cover potential general
business losses so that it can continue
operations if those losses materialize.8
OCC’s current and anticipated operating
expenses have also increased as a result
of costs associated with the engagement
of outside professionals to address
various regulatory issues arising under
the Dodd-Frank Act, notably additional
expectations and requirements arising
from OCC’s status as a Systemically
Important Financial Market Utility
(‘‘SIFMU’’), and OCC’s assessment of
and compliance with international
standards applicable to clearing
agencies. Employee costs additionally
are expected to rise further in 2014 as
resources are enhanced to meet current
and anticipated regulatory obligations,
including increased requirements to
produce data, analysis and information
to the Commission in connection with
its exercise of its supervisory authority
over OCC.
As noted above, the Board
unanimously determined to reinstate
the permanent reduced fee schedule to
compensate for these increased
expenses. In making this determination,
the Board carefully considered the
requirements of Article IX, Section 9 of
OCC’s By-Laws as well as the
expectations and obligations imposed
upon OCC as a SIFMU in the national
system for clearance and settlement.
The Board further evaluated the
potential for a refund of clearing fees in
2014. While no affirmative decision has
been made by the Board regarding such
refund, the Board recognized that OCC’s
current funding, reserve and surplus
needs might result in refunds, if any,
which are significantly lower in 2014
than in past years.9 OCC will monitor
the impact of returning to the
permanent reduced fee schedule as well
as OCC’s needs to evaluate whether
additional action should be taken. For
example, changes in revenues as a result
of significant fluctuations in cleared
volume (upwards or downwards) may
8 See Exchange Act Release No. 34–71699 (March
12, 2014). OCC anticipates that these requirements
will need to be met by the end of 2014. The
determination to reinstate the permanent reduced
fee schedule was based on an analysis of such
requirements and such reinstatement being effective
April 1, 2014. Implementation thereafter potentially
could have required an increase in the fees beyond
the reinstatement of the permanent reduced fee
schedule.
9 See OCC’s 2013 Annual Report, Footnote 8 to
the Notes to the Financial Statements for a
description of recent past refunds. Footnote 8
further discusses that OCC’s Board sets clearing fees
and determines the amounts of refunds, fee
reductions and discounts, if any, based upon OCC’s
current funding needs.
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Federal Register / Vol. 79, No. 59 / Thursday, March 27, 2014 / Notices
prompt a re-assessment of the fee
schedule (downwards or upwards).
Cleared volumes also will be evaluated
in connection with considering
potential refunds for 2014.
The impact of the costs to comply
with the new regulatory requirements
and reinstate the permanent reduced fee
schedule and the potential effect on a
2014 refund, if any, was discussed with
each of the clearing members that would
be most affected by these changes, most
of which are represented on the Board.
The vote of the Board to approve this
filing included the affirmative votes of
the six Member Directors present at the
meeting.
The following chart sets forth the
revised clearing fee schedule.
Contracts/trade
Current
discounted fee
schedule
1–500 .......................................................................................................................
501–1,000 ................................................................................................................
1,001–2,000 .............................................................................................................
>2,000 ......................................................................................................................
Market Maker/Specialist Scratch per side ...............................................................
$0.03/contract ........................................
0.024/contract ........................................
18.00/trade .............................................
18.00/trade .............................................
0.01 ........................................................
tkelley on DSK3SPTVN1PROD with NOTICES
OCC published an Information Memo
on March 10, 2014, to all of its clearing
members and exchanges notifying them
of the changes to the Schedule of Fees
that would become effective as of April
1, 2014, 10 and a second Information
Memo on March 13, 2014, notifying
them of the likely effects on the refunds
for 2014. The Information Memos
informed clearing members and
exchanges that due to current and
projected increases in operating
expenses related to regulatory
requirements, OCC would reinstate the
permanent reduced clearing fee
schedule adopted May 1, 2007, and that
refunds based on 2014 cleared volume
are likely to be significantly lower in
2014 as a result of the new regulatory
expectations and requirements, but that
it was expected that such impacts
should not extend beyond 2014 based
on current projections.
2. Statutory Basis
OCC believes the proposed rule
change is consistent with Section
17A(b)(3)(D) 11 of the Act, because by
eliminating a discount but otherwise
leaving the current clearing fee schedule
intact, OCC will continue to equitably
allocate fees among its clearing
members and other market participants.
OCC also believes that the proposed rule
change is consistent with Rule 17Ad–
22(d)(9) 12 because the fee schedule
amended by this rule change is publicly
available and therefore provides
clearing members and other market
participants with sufficient information
to allow them to identify and evaluate
the costs associated with OCC’s
services. The proposed rule change is
not inconsistent with the existing rules
10 OCC has represented that notwithstanding its
immediate effectiveness, implementation of this
rule change will be delayed until this rule change
is deemed certified under CFTC Regulation § 40.6.
11 15 U.S.C. 78q–1(b)(3)(D).
12 17 CFR 240.17Ad–22(d)(9).
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of the OCC including any other rules
proposed to be amended.
For the foregoing reasons, OCC
believes that the proposed rule change
is in the public interest, would be
consistent with the requirements of the
Act applicable to clearing agencies, and
would not impose a burden on
competition that is unnecessary or
inappropriate in furtherance of the
purposes of the Act.
(B) Clearing Agency’s Statement on
Burden on Competition
OCC does not believe that the
proposed rule change would impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.13
Changes to the rules of a clearing
agency may have an impact on the
participants in a clearing agency, their
customers, and the markets that the
clearing agency serves. This proposed
rule change primarily affects such users
and OCC believes that the proposed
modifications would not disadvantage
or favor any particular user in
relationship to another user because the
discount is being eliminated for, and the
clearing fees apply equally to, all users
of OCC’s services.
For the foregoing reasons, OCC
believes that the proposed rule change
is in the public interest, would be
consistent with the requirements of the
Act applicable to clearing agencies, and
would not impose a burden on
competition that is unnecessary or
inappropriate in furtherance of the
purposes of the Act.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants or Others
Written comments on the proposed
rule change were not and are not
PO 00000
U.S.C. 78q–1(b)(3)(I).
Frm 00090
Fmt 4703
Sfmt 4703
Standard fee
schedule
(effective
April 1, 2014)
$0.05/contract
0.04/contract
0.03/contract
55.00/trade
0.02
intended to be solicited with respect to
the proposed rule change and none have
been received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A) 14 and
Rule 19b–4(f)(2),15 the proposed rule
change is filed for immediate
effectiveness inasmuch as it pertains to
fees charged to OCC clearing members.
At any time within 60 days of the filing
of the proposed rule change, the
Commission may summarily abrogate
such rule 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.16
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
• 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–
OCC–2014–05 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–OCC–2014–05. This file
number should be included on the
14 15
13 15
17215
15 17
E:\FR\FM\27MRN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
27MRN1
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Federal Register / Vol. 79, No. 59 / Thursday, March 27, 2014 / Notices
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method of submission. 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 Section, 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 such
filing also will be available for
inspection and copying at the principal
office of OCC and on OCC’s Web site at
https://www.theocc.com/components/
docs/legal/rules_and_bylaws/sr_occ_14_
05.pdf.
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–OCC–2014–05 and should
be submitted on or before April 17,
2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–06761 Filed 3–26–14; 8:45 am]
notice is hereby given that on March 7,
2013, the International Securities
Exchange, LLC (the ‘‘Exchange’’ or the
‘‘ISE’’) filed with the Securities and
Exchange Commission the proposed
rule change, as described in Items I, II,
and III below, which items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The ISE proposes to amend the
Schedule of Fees. The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.ise.com), at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization 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.
The self-regulatory organization 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 the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71765; File No. SR–ISE–
2014–17]
tkelley on DSK3SPTVN1PROD with NOTICES
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Amend the Schedule of
Fees
March 21, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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The purpose of the proposed rule
change is to amend the Schedule of Fees
as described in more detail below. The
fee changes discussed apply to both
Standard Options and Mini Options
traded on Exchange. The Exchange’s
Schedule of Fees has separate tables for
fees applicable to Standard Options and
Mini Options. The Exchange notes that
while the discussion below relates to
fees for Standard Options, the fees for
Mini Options, which are not discussed
below, are and shall continue to be
1⁄10th of the fees for Standard Options.
1. Market Maker Plus Rebate for Select
Symbols
In order to promote and encourage
liquidity in symbols that are in the
penny pilot program (‘‘Select
Symbols’’), the Exchange currently
PO 00000
Frm 00091
Fmt 4703
Sfmt 4703
offers Market Makers 3 that meet the
quoting requirements for Market Maker
Plus 4 a rebate of $0.10 per contract for
adding liquidity in those symbols. In
addition, the Exchange pays a higher
rebate of $0.12 per contract to Market
Makers that meet the quoting
requirements for Market Maker Plus and
are affiliated with an Electronic Access
Member (‘‘EAM’’) that executes a total
affiliated Priority Customer 5 average
daily volume (‘‘ADV’’) of 200,000
contracts or more in a calendar month.6
The Exchange now proposes to increase
the Market Maker Plus rebate to $0.20
per contract, and $0.22 per contract for
Members that currently qualify for the
higher rebate based on affiliated Priority
Customer volume. The Exchange also
proposes to modify the requirements for
Market Maker Plus to only look to all
expirations in the front two months,7
and to reduce the premium
requirements for series on which the
Market Maker Plus calculations are
based.8 As proposed, a Market Maker
3 The term ‘‘Market Makers’’ refers to
‘‘Competitive Market Makers’’ and ‘‘Primary Market
Makers’’ collectively. See ISE Rule 100(a)(25).
4 A Market Maker Plus is a Market Maker who is
on the National Best Bid or National Best Offer at
least 80% of the time for series trading between
$0.03 and $5.00 (for options whose underlying
stock’s previous trading day’s last sale price was
less than or equal to $100) and between $0.10 and
$5.00 (for options whose underlying stock’s
previous trading day’s last sale price was greater
than $100) in premium in each of the front two
expiration months and at least 80% of the time for
series trading between $0.03 and $5.00 (for options
whose underlying stock’s previous trading day’s
last sale price was less than or equal to $100) and
between $0.10 and $5.00 (for options whose
underlying stock’s previous trading day’s last sale
price was greater than $100) in premium for all
expiration months in that symbol during the current
trading month. A Market Maker’s single best and
single worst overall quoting days each month, on
a per symbol basis, will be excluded in calculating
whether a Market Maker qualifies for this rebate, if
doing so will qualify a Market Maker for the rebate.
5 A Priority Customer is defined in ISE Rule
100(a)(37A) as a person or entity that is not a
broker/dealer in securities, and does not place more
than 390 orders in listed options per day on average
during a calendar month for its own beneficial
account(s).
6 See Securities Exchange Act Release No. 70872
(November 14, 2013), 78 FR 69718 (November 20,
2013) (SR–ISE–2013–57).
7 Currently, a Market Maker qualifies for Market
Maker Plus if it is on the NBBO a specified
percentage of the time in each of the front two
expiration months, and separately for all expiration
months in that symbol during the current trading
month. See supra note 2.
8 The Exchange currently determines whether a
Market Maker qualifies as a Market Maker Plus at
the end of each month by looking back at each
Market Maker’s quoting statistics per symbol during
that month. The Exchange will continue to monitor
each Market Maker’s quoting statistics to determine
whether a Market Maker qualifies for a rebate under
the standards proposed herein. The Exchange also
currently provides Market Makers a report on a
daily basis with quoting statistics so that Market
Makers can determine whether or not they are
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]]>Agencies
[Federal Register Volume 79, Number 59 (Thursday, March 27, 2014)]
[Notices]
[Pages 17214-17216]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-06761]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71769; File No. SR-OCC-2014-05]
Self-Regulatory Organizations; the Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Reflect the Elimination of a Discount to OCC's Clearing Fee Schedule
March 21, 2014.
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 March 21, 2014, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change described in Items I and II 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 Rule 19b-4(f)(2) \4\
thereunder, so that the proposal was effective upon filing with the
Commission. The Commission is publishing this notice to solicit
comments on the rule change from interested parties.
---------------------------------------------------------------------------
\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)(2).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
OCC proposes to amend its Schedule of Fees, effective April 1,
2014, to reflect the elimination of a discount to OCC's clearing fee
schedule.
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
1. Purpose
The purpose of this proposed rule change is to amend OCC's Schedule
of Fees to reinstate the permanent reduced fee schedule adopted,
effective May 1, 2007, for securities options and securities
futures.\5\ In conjunction with adopting this permanent reduced fee
schedule, OCC simultaneously discounted the permanent schedule.
Effective January 1, 2008, OCC replaced the May 1, 2007, discounted
schedule \6\ with the discount remaining in effect until further action
of by the Board. Implementation of this schedule was premised on the
discounts not adversely affecting OCC's ability to meet its expenses
and maintain an acceptable level of retained earnings. Article IX,
Section 9 of OCC's By-Laws permits OCC to establish a fee structure to
cover operating expenses, to maintain reserves as are deemed reasonably
necessary by the Board to provide facilities for the conduct of OCC's
business and to accumulate such additional surplus as the Board deems
advisable to allow OCC to meet its obligations to clearing members and
the general public.
---------------------------------------------------------------------------
\5\ See Exchange Act Release No. 34-55709 (May 4, 2007), 72 FR
26669 (May 10, 2007) (SR-OCC-2007-05). This schedule is applied to
futures and futures options as well.
\6\ See Exchange Act Release No. 34-57192 (January 24, 2008), 73
FR 5618 (January 30, 2008) (SR-OCC-2007-17).
---------------------------------------------------------------------------
OCC has determined to reinstate its permanent reduced fee schedule.
OCC's revenues principally are derived from clearing fees charged to
clearing members and OCC's current and projected operating expenses
have increased due to current and anticipated regulatory
requirements.\7\ These requirements include those proposed by the
Commission at its meeting on March 12, 2014, requiring OCC to be in a
position to cover potential general business losses so that it can
continue operations if those losses materialize.\8\ OCC's current and
anticipated operating expenses have also increased as a result of costs
associated with the engagement of outside professionals to address
various regulatory issues arising under the Dodd-Frank Act, notably
additional expectations and requirements arising from OCC's status as a
Systemically Important Financial Market Utility (``SIFMU''), and OCC's
assessment of and compliance with international standards applicable to
clearing agencies. Employee costs additionally are expected to rise
further in 2014 as resources are enhanced to meet current and
anticipated regulatory obligations, including increased requirements to
produce data, analysis and information to the Commission in connection
with its exercise of its supervisory authority over OCC.
---------------------------------------------------------------------------
\7\ See Statements of Income and Comprehensive Income in OCC's
2013 Annual Report available on OCC's Web site, www.theocc.com. In
2013, clearing fees represented over 90% of OCC's total revenues.
Between 2012 and 2013, OCC annual expenses increased by
approximately 9%. OCC's currently projects a greater increase in
expenses in 2014.
\8\ See Exchange Act Release No. 34-71699 (March 12, 2014). OCC
anticipates that these requirements will need to be met by the end
of 2014. The determination to reinstate the permanent reduced fee
schedule was based on an analysis of such requirements and such
reinstatement being effective April 1, 2014. Implementation
thereafter potentially could have required an increase in the fees
beyond the reinstatement of the permanent reduced fee schedule.
---------------------------------------------------------------------------
As noted above, the Board unanimously determined to reinstate the
permanent reduced fee schedule to compensate for these increased
expenses. In making this determination, the Board carefully considered
the requirements of Article IX, Section 9 of OCC's By-Laws as well as
the expectations and obligations imposed upon OCC as a SIFMU in the
national system for clearance and settlement. The Board further
evaluated the potential for a refund of clearing fees in 2014. While no
affirmative decision has been made by the Board regarding such refund,
the Board recognized that OCC's current funding, reserve and surplus
needs might result in refunds, if any, which are significantly lower in
2014 than in past years.\9\ OCC will monitor the impact of returning to
the permanent reduced fee schedule as well as OCC's needs to evaluate
whether additional action should be taken. For example, changes in
revenues as a result of significant fluctuations in cleared volume
(upwards or downwards) may
[[Page 17215]]
prompt a re-assessment of the fee schedule (downwards or upwards).
Cleared volumes also will be evaluated in connection with considering
potential refunds for 2014.
---------------------------------------------------------------------------
\9\ See OCC's 2013 Annual Report, Footnote 8 to the Notes to the
Financial Statements for a description of recent past refunds.
Footnote 8 further discusses that OCC's Board sets clearing fees and
determines the amounts of refunds, fee reductions and discounts, if
any, based upon OCC's current funding needs.
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The impact of the costs to comply with the new regulatory
requirements and reinstate the permanent reduced fee schedule and the
potential effect on a 2014 refund, if any, was discussed with each of
the clearing members that would be most affected by these changes, most
of which are represented on the Board. The vote of the Board to approve
this filing included the affirmative votes of the six Member Directors
present at the meeting.
The following chart sets forth the revised clearing fee schedule.
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Current Standard fee schedule
Contracts/trade discounted fee (effective April 1,
schedule 2014)
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1-500......................... $0.03/contract. $0.05/contract
501-1,000..................... 0.024/contract. 0.04/contract
1,001-2,000................... 18.00/trade.... 0.03/contract
>2,000........................ 18.00/trade.... 55.00/trade
Market Maker/Specialist 0.01........... 0.02
Scratch per side.
------------------------------------------------------------------------
OCC published an Information Memo on March 10, 2014, to all of its
clearing members and exchanges notifying them of the changes to the
Schedule of Fees that would become effective as of April 1, 2014, \10\
and a second Information Memo on March 13, 2014, notifying them of the
likely effects on the refunds for 2014. The Information Memos informed
clearing members and exchanges that due to current and projected
increases in operating expenses related to regulatory requirements, OCC
would reinstate the permanent reduced clearing fee schedule adopted May
1, 2007, and that refunds based on 2014 cleared volume are likely to be
significantly lower in 2014 as a result of the new regulatory
expectations and requirements, but that it was expected that such
impacts should not extend beyond 2014 based on current projections.
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\10\ OCC has represented that notwithstanding its immediate
effectiveness, implementation of this rule change will be delayed
until this rule change is deemed certified under CFTC Regulation
Sec. 40.6.
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2. Statutory Basis
OCC believes the proposed rule change is consistent with Section
17A(b)(3)(D) \11\ of the Act, because by eliminating a discount but
otherwise leaving the current clearing fee schedule intact, OCC will
continue to equitably allocate fees among its clearing members and
other market participants. OCC also believes that the proposed rule
change is consistent with Rule 17Ad-22(d)(9) \12\ because the fee
schedule amended by this rule change is publicly available and
therefore provides clearing members and other market participants with
sufficient information to allow them to identify and evaluate the costs
associated with OCC's services. The proposed rule change is not
inconsistent with the existing rules of the OCC including any other
rules proposed to be amended.
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\11\ 15 U.S.C. 78q-1(b)(3)(D).
\12\ 17 CFR 240.17Ad-22(d)(9).
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For the foregoing reasons, OCC believes that the proposed rule
change is in the public interest, would be consistent with the
requirements of the Act applicable to clearing agencies, and would not
impose a burden on competition that is unnecessary or inappropriate in
furtherance of the purposes of the Act.
(B) Clearing Agency's Statement on Burden on Competition
OCC does not believe that the proposed rule change would impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.\13\
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\13\ 15 U.S.C. 78q-1(b)(3)(I).
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Changes to the rules of a clearing agency may have an impact on the
participants in a clearing agency, their customers, and the markets
that the clearing agency serves. This proposed rule change primarily
affects such users and OCC believes that the proposed modifications
would not disadvantage or favor any particular user in relationship to
another user because the discount is being eliminated for, and the
clearing fees apply equally to, all users of OCC's services.
For the foregoing reasons, OCC believes that the proposed rule
change is in the public interest, would be consistent with the
requirements of the Act applicable to clearing agencies, and would not
impose a burden on competition that is unnecessary or inappropriate in
furtherance of the purposes of the Act.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants or Others
Written comments on the proposed rule change were not and are not
intended to be solicited with respect to the proposed rule change and
none have been received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A) \14\ and Rule 19b-4(f)(2),\15\ the
proposed rule change is filed for immediate effectiveness inasmuch as
it pertains to fees charged to OCC clearing members. At any time within
60 days of the filing of the proposed rule change, the Commission may
summarily abrogate such rule 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.\16\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(2).
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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
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-OCC-2014-05 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-OCC-2014-05. This file
number should be included on the
[[Page 17216]]
subject line if email is used. To help the Commission process and
review your comments more efficiently, please use only one method of
submission. 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 Section, 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 such filing also will be available for inspection
and copying at the principal office of OCC and on OCC's Web site at
https://www.theocc.com/components/docs/legal/rules_and_bylaws/sr_occ_14_05.pdf.
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-OCC-2014-05
and should be submitted on or before April 17, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-06761 Filed 3-26-14; 8:45 am]
BILLING CODE 8011-01-P
