Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Revise the Options Clearing Corporation's Schedule of Fees, 6917-6919 [2016-02443]
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Federal Register / Vol. 81, No. 26 / Tuesday, February 9, 2016 / Notices
Regulatory Authority (‘‘FINRA’’), on
behalf of the Exchange, or the regulatory
staff of the Exchange, will communicate
as needed regarding trading in the
Shares and SPX Index options with
other markets and other entities that are
members of the Intermarket
Surveillance Group (‘‘ISG’’), and FINRA,
on behalf of the Exchange, or the
regulatory staff of the Exchange, may
obtain trading information regarding
trading in the portfolio securities from
these markets and other entities. In
addition, the regulatory staff of the
Exchange may obtain information
regarding trading in the portfolio
securities from markets and other
entities that are members of ISG or with
which the Exchange has in place a
comprehensive surveillance sharing
agreement.
III. Discussion and Commission’s
Findings
After careful review, the Commission
finds that the exchange’s proposal is
consistent with the requirements of
Section 6 of the Act 11 and the rules and
regulations thereunder applicable to a
national securities exchange.12 In
particular, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) of the Act,13 which
requires, among other things, that the
Exchange’s rules be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest.
The Commission believes that it
would be difficult to manipulate the
price of the Shares by manipulating the
prices of its underlying assets. The
Fund’s portfolio will comprise cash,
short-term U.S. Treasury bills, and SPX
Puts.14 The Exchange contends that
neither short-term Treasury securities
nor SPX Puts are readily susceptible to
market manipulation due to the deep
liquidity in15 and extensive oversight of
11 15
U.S.C. 78f.
approving this proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
13 15 U.S.C. 78f(b)(5).
14 See Notice, supra note 3, 80 FR at 79373.
15 The Exchange states: ‘‘According to Federal
Reserve Bank of New York data as of September
2015, average daily trading volume for U.S.
Treasury bills totaled $67.8 billion. . . . SPX
options are among the most liquid index options in
the U.S. and derive their value from the actively
traded S&P 500 Index components. SPX options are
cash-settled with no delivery of stocks or ETFs, and
trade in competitive auction markets with price and
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12 In
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those markets.16 With respect to SPX
Puts, specifically, the Exchange has
provided data demonstrating that the
average daily trading volume (through
expiration) of recent SPX Puts compares
favorably to the average daily trading
volumes of at-the-money put options on
other major indexes and is, in fact,
higher than that of at-the-money puts on
the Russell 2000 index.17
For these reasons, the Commission
believes that it would be difficult to
manipulate the price of the Shares by
manipulating the prices of its
underlying assets. The Commission also
notes that, except as discussed above,
all other representations made in
support of the Prior Release remain
unchanged.
For the foregoing reasons, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act 18 and the rules and
regulations thereunder applicable to a
national securities exchange.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,19 that the
proposed rule change (SR–NYSEArca–
2015–113), be, and it hereby
is,approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–02440 Filed 2–8–16; 8:45 am]
BILLING CODE 8011–01–P
quote transparency. The Exchange believes that the
highly regulated S&P 500 options markets, and the
broad base and scope of the S&P 500 Index, make
securities that derive their value from that index,
including S&P 500 options, less susceptible to
potential market manipulation in view of market
capitalization and liquidity of the S&P 500 Index
components, price and quote transparency, and
arbitrage opportunities.’’ Id.
16 The Exchange states: ‘‘In addition, the Treasury
market and its participants are subject to a wide
range of oversight and regulations, including
requirements designed to prevent market
manipulation and other abuses. For example,
Treasury market participants and the Treasury
market, itself, are subject to significant oversight by
a number of regulatory authorities, including the
Treasury, the Commission, federal bank regulators,
and the Financial Industry Regulatory Authority.’’
Id., n.15. The Exchange represents that the SPX
Puts will be subject to CBOE and FINRA
surveillance programs. See id., 80 FR at 79374.
17 See id., 80 FR at 79372–73.
18 15 U.S.C. 78f(b)(5).
19 15 U.S.C. 78s(b)(2).
20 17 CFR 200.30–3(a)(12).
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6917
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77041; File No. SR–OCC–
2016–001]
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Revise
the Options Clearing Corporation’s
Schedule of Fees
February 3, 2016.
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 January
20, 2016, The Options Clearing
Corporation (‘‘OCC’’) 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 OCC. OCC filed
the proposed rule change pursuant to
Section 19(b)(3)(A)(ii) 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 persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The purpose of this proposed rule
change by The Options Clearing
Corporation (‘‘OCC’’) is to revise OCC’s
Schedule of Fees effective March 1,
2016, to implement a reduction of
clearing fees in accordance with OCC’s
Fee Policy, which was recently adopted
as part of OCC’s Capital Plan.5
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
5 In 2015, the Commission approved (‘‘Approval
Order’’) OCC’s plan for raising additional capital
(‘‘Capital Plan’’), which was put in place in light of
proposed regulatory capital requirements applicable
to systemically important financial market utilities,
such as OCC. See Securities Exchange Act Release
No. 74452 (March 6, 2015) 80 FR 13058 (March 12,
2015) (SR–OCC–2015–02). OCC also filed proposals
in the Capital Plan Filing as an advance notice
under Section 806(e)(1) of the Payment, Clearing,
and Settlement Supervision Act of 2010. 12 U.S.C.
5465(e)(1). On February 26, 2015, the Commission
issued a notice of no objection to the advance notice
filing. See Exchange Act Release No. 74387
(February 26, 2015), 80 FR 12215 (March 6, 2015)
(SR–OCC–2014–813). BATS Global Markets, Inc.,
BOX Options Exchange LLC, KCG Holdings, Inc.,
Miami International Securities Exchange, LLC, and
Susquehanna International Group, LLP (collectively
‘‘Petitioners’’) each filed petitions for review of the
Approval Order, challenging the action taken by
delegated authority. The filing of the petitions
automatically stayed the Approval Order. OCC filed
a Motion to Lift the Stay on April 2, 2015, and the
2 17
E:\FR\FM\09FEN1.SGM
Continued
09FEN1
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Federal Register / Vol. 81, No. 26 / Tuesday, February 9, 2016 / Notices
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 revise OCC’s Schedule of
Fees in accordance with its new Fee
Policy. The revised fee schedule would
become effective on March 1, 2016.
By way of background, in 2015, the
Commission approved OCC’s Capital
Plan,6 which was put in place in light
of proposed regulatory capital
requirements applicable to systemically
important financial market utilities,
such as OCC. As part of OCC’s Capital
Plan, OCC adopted a Fee Policy
whereby OCC would set clearing fees at
a level that covers OCC’s operating
expenses plus a Business Risk Buffer 7
of 25%.8 The purpose of the Business
Risk Buffer is to ensure that OCC
accumulates sufficient capital to cover
unexpected fluctuations in operating
expenses, business capital needs, and
regulatory capital requirements.
OCC analyzed its current Schedule of
Fees 9 against projected revenues and
projected expenses for 2016 in
accordance with its Fee Policy. The
primary goal of this analysis was to
determine a fee setting approach for
2016 that covers OCC’s anticipated
operating expenses, seeks to minimize
Trades with contracts of:
the number of fee resets under normal
market conditions, and seeks to achieve
a Business Risk Buffer of 25%. To
project revenue (which is a product of
cleared contract volume and clearing
fees per contract), OCC estimated
cleared contract volume per month for
2016 by computing the average of the
previous 12 months of actual cleared
contract volume data, excluding the
high and low volume months, and used
such average as the anticipated cleared
contract volume per month for 2016.10
For expenses, OCC used projected 2016
expenses, computed at the end of 2015
as part of OCC’s 2016 budgeting process.
OCC arrived at the fee schedule
presented herein by determining the
figures that would result in a coverage
OCC’s anticipated operating expenses
plus a Business Risk Buffer of 25%.
As a result of the aforementioned
analysis, OCC proposes to revise its
Schedule of Fees as set forth below.11
Current fee
1–500 ......................................................................................................
501–1000 ................................................................................................
1001–2000 ..............................................................................................
>2000 ......................................................................................................
Proposed fee
$0.050/contract .................................................
$0.040/contract .................................................
$0.030/contract .................................................
$55.00/trade .....................................................
$0.041/contract.
$0.032/contract.
$0.024/contract.
$46.00/trade.
OCC anticipates that the proposed
changes to OCC’s Schedule of Fees
would result in an average decrease in
clearing fees of 19%. Moreover, and in
accordance with its Fee Policy, OCC
will continue to monitor cleared
contract volume and operating expenses
in order to determine if further revisions
to OCC’s Schedule of Fees are required
so that monies received from clearing
fees cover OCC’s operating expenses
plus a Business Risk Buffer of 25%.12
market participants pursuant to criteria
set forth in OCC’s Capital Plan, which
has been approved by the
Commission.14 The revised fee schedule
would result in lower clearing fees for
OCC’s clearing members and other
market participants and would be
equally applicable to all market
participants. The proposed rule change
is not inconsistent with the existing
rules of OCC, including any other rules
proposed to be amended.
2. Statutory Basis
(B) Clearing Agency’s Statement on
Burden on Competition
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants or Others
OCC does not believe that the
proposed rule change would have an
impact or impose a burden on
competition.15 Although this proposed
rule change affects clearing members,
their customers, and the markets that
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.
plus a business risk buffer, (2) maintain reserves
deemed reasonably necessary by OCC’s Board of
Directors, and (3) accumulate an additional surplus
deemed advisable by the Board of Directors to
permit OCC to meet its obligations to its clearing
members and the public. Clauses 2 and 3 above will
only be invoked at the discretion of OCC’s Board
of Directors and in extraordinary circumstances.
9 OCC previously revised its Schedule of Fees
effective April 1, 2014, to reinstate permanent
reduced fee rates for securities options and
securities futures that were originally adopted
effective May 1, 2007. See Securities Exchange Act
Release No. 71769 (March 21, 2014), 79 FR 17214
(March 27, 2014) (SR–OCC–2014–05).
10 In order to validate this approach, OCC back
tested its volume projecting methodology against
data from the previous five years and determined
that such methodology yields reasonable estimate of
future contract volume.
11 These changes are also reflected in Exhibit 5.
Market maker/specialist scratch and linkage fees
per side will remain unchanged at $0.020.
12 Any subsequent changes to OCC’s Schedule of
Fees would be the subject of a subsequent proposed
rule change filed with the Commission.
13 17 U.S.C. 78q–1(b)(3)(D).
14 See supra note 5.
15 15 U.S.C. 78q–1(b)(3)(I).
mstockstill on DSK4VPTVN1PROD with NOTICES
OCC believes that the proposed rule
change concerning a reduction to OCC’s
clearing fees is consistent with Section
17A(b)(3)(D) 13 of the Act, because the
proposed fee schedule provides for the
equitable allocation of reasonable fees
among its clearing members and other
Petitioners responded. The Commission
subsequently determined that the automatic stay of
delegated action should be discontinued, and the
Commission granted OCC’s Motion to Lift Stay of
the staff’s action in approving by delegated
authority File No. SR–OCC–2015–02.
6 See supra note 5.
7 The Business Risk Buffer is equal to net income
before refunds, dividends, and taxes divided by
total revenue.
8 OCC’s Schedule of Fees must also meet the
requirements set forth in Article IX, Section 9 of
OCC’s By-Laws. In general, Article IX, Section 9 of
OCC’s By-Laws requires that OCC’s fee structure be
designed to: (1) Cover OCC’s operating expenses
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OCC serves, OCC believes that the
proposed rule change would not
disadvantage or favor any particular
user of OCC’s services in relationship to
another user because the proposed
clearing fees apply equally to all users
of OCC. Accordingly, OCC does not
believe that the proposed rule change
would have any impact or impose a
burden on competition.
E:\FR\FM\09FEN1.SGM
09FEN1
Federal Register / Vol. 81, No. 26 / Tuesday, February 9, 2016 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective upon filing 16 pursuant to
Section 19(b)(3)(A)(ii) of the Act 17 and
Rule 19b–4(f)(2) thereunder 18 because it
constitutes a change in fees imposed by
OCC on its clearing members and other
market participants using OCC’s
services. At any time within 60 days of
the filing of the proposed rule change,
the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
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:
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 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_16_
001.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–2016–001 and should
be submitted on or before March 1,
2016.
SUPPLEMENTARY INFORMATION:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Robert W. Errett,
Deputy Secretary.
[Disaster Declaration #14609]
mstockstill on DSK4VPTVN1PROD 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–
OCC–2016–001 on the subject line.
[FR Doc. 2016–02443 Filed 2–8–16; 8:45 am]
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–OCC–2016–001. 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
Mississippi Disaster Number MS–
00083
16 Notwithstanding the immediate effectiveness of
the proposed rule change and OCC’s anticipated
implementation date of March 1, 2016,
implementation of this rule change is also
contingent on it being deemed certified under CFTC
Regulation § 40.6.
17 15 U.S.C. 78s(b)(3)(A)(ii).
18 17 CFR 240.19b–4(f)(2).
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6919
BILLING CODE 8011–01–P
The notice
of the President’s major disaster
declaration for Private Non-Profit
organizations in the State of Mississippi,
dated 01/04/2016, is hereby amended to
include the following areas as adversely
affected by the disaster.
Primary Counties: Clay, Itawamba,
Monroe, Prentiss, Tallahatchie.
All other information in the original
declaration remains unchanged.
(Catalog of Federal Domestic Assistance
Numbers 59002 and 59008)
James E. Rivera,
Associate Administrator for Disaster
Assistance.
[FR Doc. 2016–02483 Filed 2–8–16; 8:45 am]
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
California Disaster #CA–00243
Declaration of Economic Injury
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
This is a notice of an
Economic Injury Disaster Loan (EIDL)
declaration for the State of California,
dated 02/02/2016.
Incident: Ocean Conditions Resulting
in the Delayed Commercial Dungeness
Crab Season and Closure of Commercial
Rock Crab Fishery.
Incident Period: 11/06/2015 and
continuing.
Effective Date: 02/02/2016.
EIDL Loan Application Deadline Date:
11/02/2016.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW., Suite 6050,
Washington, DC 20416.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
Administrator’s EIDL declaration,
applications for economic injury
disaster loans may be filed at the
address listed above or other locally
announced locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties: Alameda, Butte,
Contra Costa, Del Norte, El Dorado,
Humboldt, Lake, Marin, Mendocino,
SUMMARY:
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #14589 and #14590]
U.S. Small Business
Administration.
ACTION: Amendment 2.
AGENCY:
This is an amendment of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Mississippi (FEMA–4248–
DR), dated 01/04/2016.
Incident: Severe Storms, Tornadoes,
Straight-line Winds, and Flooding.
Incident Period: 12/23/2015 through
12/28/2015.
Effective Date: 01/22/2016.
Physical Loan Application Deadline
Date: 03/04/2016.
Economic Injury (EIDL) Loan
Application Deadline Date: 10/04/2016.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW., Suite 6050,
Washington, DC 20416.
SUMMARY:
19 17
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 81, Number 26 (Tuesday, February 9, 2016)]
[Notices]
[Pages 6917-6919]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02443]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77041; File No. SR-OCC-2016-001]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Revise the Options Clearing Corporation's Schedule of Fees
February 3, 2016.
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 January 20, 2016, The Options Clearing Corporation (``OCC'') 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 OCC. OCC filed the proposed rule
change pursuant to Section 19(b)(3)(A)(ii) \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 persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The purpose of this proposed rule change by The Options Clearing
Corporation (``OCC'') is to revise OCC's Schedule of Fees effective
March 1, 2016, to implement a reduction of clearing fees in accordance
with OCC's Fee Policy, which was recently adopted as part of OCC's
Capital Plan.\5\
---------------------------------------------------------------------------
\5\ In 2015, the Commission approved (``Approval Order'') OCC's
plan for raising additional capital (``Capital Plan''), which was
put in place in light of proposed regulatory capital requirements
applicable to systemically important financial market utilities,
such as OCC. See Securities Exchange Act Release No. 74452 (March 6,
2015) 80 FR 13058 (March 12, 2015) (SR-OCC-2015-02). OCC also filed
proposals in the Capital Plan Filing as an advance notice under
Section 806(e)(1) of the Payment, Clearing, and Settlement
Supervision Act of 2010. 12 U.S.C. 5465(e)(1). On February 26, 2015,
the Commission issued a notice of no objection to the advance notice
filing. See Exchange Act Release No. 74387 (February 26, 2015), 80
FR 12215 (March 6, 2015) (SR-OCC-2014-813). BATS Global Markets,
Inc., BOX Options Exchange LLC, KCG Holdings, Inc., Miami
International Securities Exchange, LLC, and Susquehanna
International Group, LLP (collectively ``Petitioners'') each filed
petitions for review of the Approval Order, challenging the action
taken by delegated authority. The filing of the petitions
automatically stayed the Approval Order. OCC filed a Motion to Lift
the Stay on April 2, 2015, and the Petitioners responded. The
Commission subsequently determined that the automatic stay of
delegated action should be discontinued, and the Commission granted
OCC's Motion to Lift Stay of the staff's action in approving by
delegated authority File No. SR-OCC-2015-02.
---------------------------------------------------------------------------
[[Page 6918]]
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 revise OCC's
Schedule of Fees in accordance with its new Fee Policy. The revised fee
schedule would become effective on March 1, 2016.
By way of background, in 2015, the Commission approved OCC's
Capital Plan,\6\ which was put in place in light of proposed regulatory
capital requirements applicable to systemically important financial
market utilities, such as OCC. As part of OCC's Capital Plan, OCC
adopted a Fee Policy whereby OCC would set clearing fees at a level
that covers OCC's operating expenses plus a Business Risk Buffer \7\ of
25%.\8\ The purpose of the Business Risk Buffer is to ensure that OCC
accumulates sufficient capital to cover unexpected fluctuations in
operating expenses, business capital needs, and regulatory capital
requirements.
---------------------------------------------------------------------------
\6\ See supra note 5.
\7\ The Business Risk Buffer is equal to net income before
refunds, dividends, and taxes divided by total revenue.
\8\ OCC's Schedule of Fees must also meet the requirements set
forth in Article IX, Section 9 of OCC's By-Laws. In general, Article
IX, Section 9 of OCC's By-Laws requires that OCC's fee structure be
designed to: (1) Cover OCC's operating expenses plus a business risk
buffer, (2) maintain reserves deemed reasonably necessary by OCC's
Board of Directors, and (3) accumulate an additional surplus deemed
advisable by the Board of Directors to permit OCC to meet its
obligations to its clearing members and the public. Clauses 2 and 3
above will only be invoked at the discretion of OCC's Board of
Directors and in extraordinary circumstances.
---------------------------------------------------------------------------
OCC analyzed its current Schedule of Fees \9\ against projected
revenues and projected expenses for 2016 in accordance with its Fee
Policy. The primary goal of this analysis was to determine a fee
setting approach for 2016 that covers OCC's anticipated operating
expenses, seeks to minimize the number of fee resets under normal
market conditions, and seeks to achieve a Business Risk Buffer of 25%.
To project revenue (which is a product of cleared contract volume and
clearing fees per contract), OCC estimated cleared contract volume per
month for 2016 by computing the average of the previous 12 months of
actual cleared contract volume data, excluding the high and low volume
months, and used such average as the anticipated cleared contract
volume per month for 2016.\10\ For expenses, OCC used projected 2016
expenses, computed at the end of 2015 as part of OCC's 2016 budgeting
process. OCC arrived at the fee schedule presented herein by
determining the figures that would result in a coverage OCC's
anticipated operating expenses plus a Business Risk Buffer of 25%.
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\9\ OCC previously revised its Schedule of Fees effective April
1, 2014, to reinstate permanent reduced fee rates for securities
options and securities futures that were originally adopted
effective May 1, 2007. See Securities Exchange Act Release No. 71769
(March 21, 2014), 79 FR 17214 (March 27, 2014) (SR-OCC-2014-05).
\10\ In order to validate this approach, OCC back tested its
volume projecting methodology against data from the previous five
years and determined that such methodology yields reasonable
estimate of future contract volume.
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As a result of the aforementioned analysis, OCC proposes to revise
its Schedule of Fees as set forth below.\11\
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\11\ These changes are also reflected in Exhibit 5. Market
maker/specialist scratch and linkage fees per side will remain
unchanged at $0.020.
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Trades with contracts of: Current fee Proposed fee
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1-500.................................... $0.050/contract............ $0.041/contract.
501-1000................................. $0.040/contract............ $0.032/contract.
1001-2000................................ $0.030/contract............ $0.024/contract.
>2000.................................... $55.00/trade............... $46.00/trade.
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OCC anticipates that the proposed changes to OCC's Schedule of Fees
would result in an average decrease in clearing fees of 19%. Moreover,
and in accordance with its Fee Policy, OCC will continue to monitor
cleared contract volume and operating expenses in order to determine if
further revisions to OCC's Schedule of Fees are required so that monies
received from clearing fees cover OCC's operating expenses plus a
Business Risk Buffer of 25%.\12\
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\12\ Any subsequent changes to OCC's Schedule of Fees would be
the subject of a subsequent proposed rule change filed with the
Commission.
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2. Statutory Basis
OCC believes that the proposed rule change concerning a reduction
to OCC's clearing fees is consistent with Section 17A(b)(3)(D) \13\ of
the Act, because the proposed fee schedule provides for the equitable
allocation of reasonable fees among its clearing members and other
market participants pursuant to criteria set forth in OCC's Capital
Plan, which has been approved by the Commission.\14\ The revised fee
schedule would result in lower clearing fees for OCC's clearing members
and other market participants and would be equally applicable to all
market participants. The proposed rule change is not inconsistent with
the existing rules of OCC, including any other rules proposed to be
amended.
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\13\ 17 U.S.C. 78q-1(b)(3)(D).
\14\ See supra note 5.
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(B) Clearing Agency's Statement on Burden on Competition
OCC does not believe that the proposed rule change would have an
impact or impose a burden on competition.\15\ Although this proposed
rule change affects clearing members, their customers, and the markets
that OCC serves, OCC believes that the proposed rule change would not
disadvantage or favor any particular user of OCC's services in
relationship to another user because the proposed clearing fees apply
equally to all users of OCC. Accordingly, OCC does not believe that the
proposed rule change would have any impact or impose a burden on
competition.
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\15\ 15 U.S.C. 78q-1(b)(3)(I).
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(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.
[[Page 6919]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective upon filing \16\
pursuant to Section 19(b)(3)(A)(ii) of the Act \17\ and Rule 19b-
4(f)(2) thereunder \18\ because it constitutes a change in fees imposed
by OCC on its clearing members and other market participants using
OCC's services. At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
such rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act.
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\16\ Notwithstanding the immediate effectiveness of the proposed
rule change and OCC's anticipated implementation date of March 1,
2016, implementation of this rule change is also contingent on it
being deemed certified under CFTC Regulation Sec. 40.6.
\17\ 15 U.S.C. 78s(b)(3)(A)(ii).
\18\ 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-2016-001 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-OCC-2016-001. 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 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_16_001.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-2016-001 and should be submitted on
or before March 1, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-02443 Filed 2-8-16; 8:45 am]
BILLING CODE 8011-01-P
