Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Amendments to and the Restatement of OCC's Certificate of Incorporation, 69100-69102 [2016-24005]
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69100
Federal Register / Vol. 81, No. 193 / Wednesday, October 5, 2016 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.42
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–24006 Filed 10–4–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78983; File No. SR–OCC–
2016–010]
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change Related to
Amendments to and the Restatement
of OCC’s Certificate of Incorporation
September 29, 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
September 27, 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)(iii) 3 of
the Act and Rule 19b–4(f)(6) 4
thereunder so that the proposal was
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change by OCC
concerns the amendment and
restatement of OCC’s Certificate of
Incorporation to provide more clarity,
transparency, and consistency regarding
OCC’s Management Director,5 Exchange
42 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
5 On July 15, 2016, OCC filed a proposed rule
change with the Commission concerning
modifications and enhancements to OCC’s
governance arrangements. See Securities Exchange
Act Release No. 78438 (July 28, 2016), 81 FR 51220
(August 3, 2016) (SR–OCC–2016–002). As part of
the proposed rule change, OCC proposed
amendments to its Certificate of Incorporation to
remove an explicit requirement that OCC’s Board of
Directors (‘‘Board’’) have two Management Directors
and instead provide that the number of
Management Directors shall be such number as
shall be fixed by or pursuant to the By-Laws (which
the Board has authorized to be amended to state
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Director, Public Director, and Member
Director requirements across OCC’s
governing documents. The proposed
amendments and restatement would be
filed with the Secretary of the State of
Delaware in the form of an Amended
and Restated Certificate of
Incorporation, which is included in
Exhibit 5 to the proposed rule change.6
All capitalized terms not defined herein
have the same meaning as set forth in
the OCC By-Laws and Rules.7
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 and restate OCC’s
Certificate of Incorporation to provide
more clarity, transparency, and
consistency regarding OCC’s
Management Director,8 Exchange
Director, Public Director, and Member
Director requirements, which are being
filed in the form of an Amended and
Restated Certificate of Incorporation.9
that the Board shall have one (1) Management
Director). The Commission approved the proposed
rule change on September 16, 2016. See Securities
Exchange Act Release No. 78862 (September 16,
2016), 81 FR 65415 (September 22, 2016) (SR–OCC–
2016–002).
6 Pending all necessary regulatory filings and
approvals for the proposed rule change, OCC will
file the proposed amendments described herein
along with the amendments to OCC’s Certificate of
Incorporation contained in SR–OCC–2016–002 in
the form of an Amended and Restated Certificate of
Incorporation. The Amended and Restated
Certificate of Incorporation must also be filed with
the Secretary of the State of Delaware before
becoming effective.
7 OCC’s By-Laws and Rules can be found on
OCC’s public Web site: https://optionsclearing.com/
about/publications/bylaws.jsp.
8 See supra note 5.
9 Under Section 245 of the General Corporation
Law of the State of Delaware, a corporation may
integrate into a single instrument all of the
provisions of its certificate of incorporation which
are then in effect and operative and may at the same
time also further amend its certificate of
incorporation by adopting a restated certificate of
incorporation. See 8 Del. C. 1953, § 245. The
proposed Amended and Restated Certificate of
Incorporation would supersede OCC’s current
Restated Certificate of Incorporation (which was
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The proposed amendments to the
Certificate of Incorporation are
described in more detail below.
OCC proposes clarifying amendments
to Article V of the Certificate of
Incorporation to state that an individual
who serves as an Exchange Director for
more than one Equity Exchange
pursuant to the By-Laws shall be
entitled to such number of votes on each
proposition submitted to the Board for
a vote thereon or for written consent
thereto as shall correspond to the
number of Equity Exchanges
represented by him or her. Article III,
Section 6 of the By-Laws currently
provides that an individual may be
nominated by, elected by, and serve as
an Exchange Director for more than one
Equity Exchange and that each such
individual shall be counted, for all
purposes under the By-Laws (including,
without limitation, for the purpose of
determining whether a quorum is
present or whether a resolution has been
passed by the requisite number of
directors), as a separate Exchange
Director for each Equity Exchange that
elected him or her. OCC believes it is
appropriate under Delaware General
Corporation Law to include these voting
rights in its Certificate of Incorporation
(in addition to the By-Laws) in order to
clarify and reinforce the voting powers
of its Exchange Directors.
OCC also proposes amendments to
Article V of its Certificate of
Incorporation to conform the language
regarding Public Directors to existing
language in the Certificate of
Incorporation used for Member
Directors. Specifically, the Certificate of
Incorporation would be amended to
state that the number of Public Directors
shall be such number as shall be fixed
by or pursuant to the By-Laws, divided
into three classes, as provided therein.
OCC believes that it is appropriate from
a corporate governance perspective to
specifically state in the Certificate of
Incorporation that OCC’s Public
Directors are divided into three classes.
OCC also proposes that the
requirements for Public Director terms
be clarified to state that each class of
Public Directors shall be elected for a
term which expires at the third annual
meeting of stockholders following their
election and upon the election and
qualification of their successors, subject
to their earlier death, disqualification,
resignation, or removal. The proposed
amendments would more closely align
the language for Public Director
requirements with that currently used to
filed with the Secretary of the State of Delaware on
November 3, 1987) and the subsequent amendments
thereto.
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describe Member Directors and is
consistent with the current
requirements for Public Directors in
Article III, Section 6A of OCC’s ByLaws. As a result, OCC believes the
proposed amendments would provide
more clarity and consistency in the
description of OCC’s Director
requirements in the Certificate of
Incorporation.
In addition, OCC proposes to amend
Article V of the Certificate of
Incorporation to eliminate an explicit
statement that there be ‘‘not less than
nine’’ Member Directors in order to
provide more clarity and consistency in
the description of OCC’s Director
requirements across OCC’s governing
documents. The proposed amendment
is intended only to be a technical
drafting change to the Certificate of
Incorporation and would not
substantively change OCC’s current
requirements regarding the number of
Member Directors required to serve on
OCC’s Board. While the Certificate of
Incorporation currently states that there
be ‘‘not less than nine’’ Member
Directors, the actual number of Member
Directors serving on OCC’s Board is
fixed by Article III, Section 1 of the ByLaws (which is currently fixed at nine
Member Directors). OCC believes it is
appropriate from a corporate governance
perspective that the number of various
categories of Directors be fixed within
one governing document of OCC.
Currently, the Certificate of
Incorporation only contains references
to specific numbers for Management
Directors and Member Directors;
however, as discussed above, the
Commission recently approved a
proposed rule change by OCC to amend
the Certificate of Incorporation to
remove specific requirements regarding
the number of Management Directors,
with such number being fixed by the
By-Laws.10 OCC notes that it is not
proposing any changes to the By-Laws
in connection with its Member Director
requirements. The number of Member
Directors would continue to be fixed at
nine pursuant to Article III, Section 1 of
the By-Laws.11
Finally, OCC proposes that these
amendments and restatement be filed in
the form of an Amended and Restated
Certificate of Incorporation, as reflected
in Exhibit 5 to this proposed rule
change. OCC’s Certificate of
supra note 5.
under Article XI of OCC’s ByLaws, any change in the number of Member
Directors required under Article III would require
an amendment approved by two-thirds of the
Directors then in office as well as the approval of
the holders of all of the outstanding Common Stock
of OCC entitled to vote thereon.
Incorporation has not been restated
since November 3, 1987. Since the 1987
restatement, the Certificate of
Incorporation has been amended six
times.12 Given the scope and number of
amendments to the Certificate of
Incorporation since the last restatement,
OCC believes it would be appropriate to
integrate into a single instrument all of
the provisions of OCC’s Certificate of
Incorporation that are currently in effect
(pending regulatory approval of the
proposed amendments described
herein) in order to provide more clarity
and transparency regarding OCC’s
governance arrangements. OCC notes
that, in addition to the changes
described above, the proposed
amendments also include technical,
non-substantive drafting changes to
correct typographical errors in Articles
IV and V of the Certificate of
Incorporation.
are currently in effect as well as changes
proposed herein. OCC believes that the
proposed changes would provide more
clarity and consistency in the
descriptions of OCC’s Director
requirements and would enhance the
readability of one of OCC’s primary
governing documents, its Certificate of
Incorporation, for Clearing Members,
other users of OCC, and the general
public. As a result, OCC believes that
the proposed rule change is designed, in
general, to protect investors and the
public interest in accordance with
Section 17A(b)(3)(F) of the Act 15 and is
reasonably designed to ensure that OCC
has clear and transparent governance
arrangements consistent with Rule
17Ad–22(d)(8) 16 thereunder. The
proposed rule change is not inconsistent
with the existing rules of OCC,
including any other rules proposed to be
amended.
(2) Statutory Basis
Section 17A(b)(3)(F) of the Act 13
requires that the rules of a clearing
agency be designed, in general, to
protect investors and the public interest.
OCC believes that the proposed rule
change is consistent with Section
17A(b)(3)(F) of the Act 14 and the rules
thereunder applicable to OCC because
the proposed rule change would provide
more clarity and transparency regarding
OCC’s governance arrangements to
Clearing Members, other users of OCC,
and the general public. Specifically, the
proposed rule change would enhance
the clarity, consistency, and
transparency of OCC’s governance
arrangements by: (i) Clarifying and
reinforcing the voting powers of OCC’s
Exchange Directors in OCC’s Certificate
of Incorporation; (ii) providing more
clarity and certainty regarding the
number of Directors in each specific
category of Directors required to serve
on OCC’s Board by consolidating those
requirements into OCC’s By-Laws; and
(iii) specifying in the Certificate of
Incorporation that OCC’s Public
Directors are divided into three classes
and describing the length of the terms
of OCC’s Public Directors in a manner
that more closely aligns with the
language currently used to describe
such requirements for Member
Directors. Moreover, the proposed rule
change would integrate into a single
instrument all of the provisions of
OCC’s Certificate of Incorporation that
(B) Clearing Agency’s Statement on
Burden on Competition
10 See
11 Furthermore,
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69101
12 The latest restatement of OCC’s Certificate of
Incorporation was dated November 3, 1987, and
was subsequently amended on June 1, 1992, August
12, 1997, October 28, 1999, March 16, 2012,
December 30, 2013, and March 6, 2015.
13 15 U.S.C. 78q–1(b)(3)(F).
14 Id.
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Frm 00066
Fmt 4703
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Section 17A(b)(3)(I) of the Act 17
requires that the rules of a clearing
agency not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act. As discussed in
more detail above, OCC believes that the
proposed rule change would provide
more clarity and transparency to users
(and potential users) of OCC regarding
OCC’s Management Director, Exchange
Director, Public Director, and Member
Director requirements and does not alter
the substantive requirements of OCC’s
governing documents. As such, OCC
believes that the proposed changes
would not have any impact or impose
any burden on competition not
necessary or appropriate 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) of the
Act,18 and Rule 19b–4(f)(6) 19
thereunder, the proposed rule change is
15 Id.
16 17
CFR 240.17Ad–22(d)(8).
U.S.C. 78q–1(b)(3)(I).
18 15 U.S.C. 78s(b)(3)(A).
19 17 CFR 240.19b–4(f)(6).
17 15
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69102
Federal Register / Vol. 81, No. 193 / Wednesday, October 5, 2016 / Notices
filed for immediate effectiveness
because it does not: (i) Significantly
affect the protection of investors or the
public interest; (ii) impose any
significant burden on competition; and
(iii) by its terms would not become
operative for 30 days after the date of
the filing, or such shorter time as the
Commission may designate.20
Additionally, OCC provided the
Commission with written notice of its
intent to file the proposed rule change,
along with a brief description and text
of the proposed rule change, at least five
business days prior to the date of filing
of the proposed rule change or such
shorter time as designated by the
Commission.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest
because it will allow OCC to implement
the proposed rule change immediately.
As stated by OCC, OCC believes that the
proposed rule change is not intended to
substantively alter OCC’s governance
arrangements, but is designed to provide
more clarity and transparency to
Clearing Members, other users of OCC,
and the general public. Therefore, the
Commission hereby waives the 30-day
operative delay and designates the
proposed rule change operative upon
filing with the Commission.21
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.22
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IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
20 OCC has requested that the Commission waive
the 30-day operative delay contained in Rule 19b–
4(f)(6)(iii) so that the proposal may become
operative immediately upon filing. As noted herein,
the proposed rule change is not intended to
substantively alter OCC’s governance arrangements
but is designed to provide additional clarity
regarding OCC’s governance arrangements and
improve the overall readability of OCC’s Certificate
of Incorporation. OCC believes that the prompt
implementation of these changes would be
consistent with the public interest and the
protection of investors.
21 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
22 Notwithstanding its immediate effectiveness,
implementation of this rule change will be delayed
until this change is deemed certified or otherwise
appropriately filed as a Weekly Notification of Rule
Amendments under CFTC Regulation § 40.6.
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including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
[FR Doc. 2016–24005 Filed 10–4–16; 8:45 am]
• 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–2016–010 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–2016–010. 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_
010.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–2016–010 and should
be submitted on or before October 26,
2016.
PO 00000
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
Authority.23
Robert W. Errett,
Deputy Secretary.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78985; File No. SR–ISE–
2016–22]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing of Proposed Rule
Change To Amend the By-Laws of
Nasdaq, Inc. To Implement Proxy
Access
September 29, 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
September 15, 2016, International
Securities Exchange, LLC (‘‘ISE’’) or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. 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 Exchange is filing this proposed
rule change with respect to amendments
of the By-Laws (the ‘‘By-Laws’’) of its
parent corporation, Nasdaq, Inc.
(‘‘Nasdaq’’ or the ‘‘Company’’), to
implement proxy access. The proposed
amendments will be implemented on a
date designated by the Company
following approval by the Commission.
The text of the proposed rule change is
available on the Exchange’s Web site at
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
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
23 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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]]>Agencies
[Federal Register Volume 81, Number 193 (Wednesday, October 5, 2016)]
[Notices]
[Pages 69100-69102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-24005]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78983; File No. SR-OCC-2016-010]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Related to Amendments to and the Restatement of OCC's Certificate of
Incorporation
September 29, 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 September 27, 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)(iii) \3\ of the Act and Rule
19b-4(f)(6) \4\ thereunder so that the proposal was effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\42\ 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)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change by OCC concerns the amendment and
restatement of OCC's Certificate of Incorporation to provide more
clarity, transparency, and consistency regarding OCC's Management
Director,\5\ Exchange Director, Public Director, and Member Director
requirements across OCC's governing documents. The proposed amendments
and restatement would be filed with the Secretary of the State of
Delaware in the form of an Amended and Restated Certificate of
Incorporation, which is included in Exhibit 5 to the proposed rule
change.\6\ All capitalized terms not defined herein have the same
meaning as set forth in the OCC By-Laws and Rules.\7\
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\5\ On July 15, 2016, OCC filed a proposed rule change with the
Commission concerning modifications and enhancements to OCC's
governance arrangements. See Securities Exchange Act Release No.
78438 (July 28, 2016), 81 FR 51220 (August 3, 2016) (SR-OCC-2016-
002). As part of the proposed rule change, OCC proposed amendments
to its Certificate of Incorporation to remove an explicit
requirement that OCC's Board of Directors (``Board'') have two
Management Directors and instead provide that the number of
Management Directors shall be such number as shall be fixed by or
pursuant to the By-Laws (which the Board has authorized to be
amended to state that the Board shall have one (1) Management
Director). The Commission approved the proposed rule change on
September 16, 2016. See Securities Exchange Act Release No. 78862
(September 16, 2016), 81 FR 65415 (September 22, 2016) (SR-OCC-2016-
002).
\6\ Pending all necessary regulatory filings and approvals for
the proposed rule change, OCC will file the proposed amendments
described herein along with the amendments to OCC's Certificate of
Incorporation contained in SR-OCC-2016-002 in the form of an Amended
and Restated Certificate of Incorporation. The Amended and Restated
Certificate of Incorporation must also be filed with the Secretary
of the State of Delaware before becoming effective.
\7\ OCC's By-Laws and Rules can be found on OCC's public Web
site: https://optionsclearing.com/about/publications/bylaws.jsp.
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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 and restate
OCC's Certificate of Incorporation to provide more clarity,
transparency, and consistency regarding OCC's Management Director,\8\
Exchange Director, Public Director, and Member Director requirements,
which are being filed in the form of an Amended and Restated
Certificate of Incorporation.\9\ The proposed amendments to the
Certificate of Incorporation are described in more detail below.
---------------------------------------------------------------------------
\8\ See supra note 5.
\9\ Under Section 245 of the General Corporation Law of the
State of Delaware, a corporation may integrate into a single
instrument all of the provisions of its certificate of incorporation
which are then in effect and operative and may at the same time also
further amend its certificate of incorporation by adopting a
restated certificate of incorporation. See 8 Del. C. 1953, Sec.
245. The proposed Amended and Restated Certificate of Incorporation
would supersede OCC's current Restated Certificate of Incorporation
(which was filed with the Secretary of the State of Delaware on
November 3, 1987) and the subsequent amendments thereto.
---------------------------------------------------------------------------
OCC proposes clarifying amendments to Article V of the Certificate
of Incorporation to state that an individual who serves as an Exchange
Director for more than one Equity Exchange pursuant to the By-Laws
shall be entitled to such number of votes on each proposition submitted
to the Board for a vote thereon or for written consent thereto as shall
correspond to the number of Equity Exchanges represented by him or her.
Article III, Section 6 of the By-Laws currently provides that an
individual may be nominated by, elected by, and serve as an Exchange
Director for more than one Equity Exchange and that each such
individual shall be counted, for all purposes under the By-Laws
(including, without limitation, for the purpose of determining whether
a quorum is present or whether a resolution has been passed by the
requisite number of directors), as a separate Exchange Director for
each Equity Exchange that elected him or her. OCC believes it is
appropriate under Delaware General Corporation Law to include these
voting rights in its Certificate of Incorporation (in addition to the
By-Laws) in order to clarify and reinforce the voting powers of its
Exchange Directors.
OCC also proposes amendments to Article V of its Certificate of
Incorporation to conform the language regarding Public Directors to
existing language in the Certificate of Incorporation used for Member
Directors. Specifically, the Certificate of Incorporation would be
amended to state that the number of Public Directors shall be such
number as shall be fixed by or pursuant to the By-Laws, divided into
three classes, as provided therein. OCC believes that it is appropriate
from a corporate governance perspective to specifically state in the
Certificate of Incorporation that OCC's Public Directors are divided
into three classes. OCC also proposes that the requirements for Public
Director terms be clarified to state that each class of Public
Directors shall be elected for a term which expires at the third annual
meeting of stockholders following their election and upon the election
and qualification of their successors, subject to their earlier death,
disqualification, resignation, or removal. The proposed amendments
would more closely align the language for Public Director requirements
with that currently used to
[[Page 69101]]
describe Member Directors and is consistent with the current
requirements for Public Directors in Article III, Section 6A of OCC's
By-Laws. As a result, OCC believes the proposed amendments would
provide more clarity and consistency in the description of OCC's
Director requirements in the Certificate of Incorporation.
In addition, OCC proposes to amend Article V of the Certificate of
Incorporation to eliminate an explicit statement that there be ``not
less than nine'' Member Directors in order to provide more clarity and
consistency in the description of OCC's Director requirements across
OCC's governing documents. The proposed amendment is intended only to
be a technical drafting change to the Certificate of Incorporation and
would not substantively change OCC's current requirements regarding the
number of Member Directors required to serve on OCC's Board. While the
Certificate of Incorporation currently states that there be ``not less
than nine'' Member Directors, the actual number of Member Directors
serving on OCC's Board is fixed by Article III, Section 1 of the By-
Laws (which is currently fixed at nine Member Directors). OCC believes
it is appropriate from a corporate governance perspective that the
number of various categories of Directors be fixed within one governing
document of OCC. Currently, the Certificate of Incorporation only
contains references to specific numbers for Management Directors and
Member Directors; however, as discussed above, the Commission recently
approved a proposed rule change by OCC to amend the Certificate of
Incorporation to remove specific requirements regarding the number of
Management Directors, with such number being fixed by the By-Laws.\10\
OCC notes that it is not proposing any changes to the By-Laws in
connection with its Member Director requirements. The number of Member
Directors would continue to be fixed at nine pursuant to Article III,
Section 1 of the By-Laws.\11\
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\10\ See supra note 5.
\11\ Furthermore, under Article XI of OCC's By-Laws, any change
in the number of Member Directors required under Article III would
require an amendment approved by two-thirds of the Directors then in
office as well as the approval of the holders of all of the
outstanding Common Stock of OCC entitled to vote thereon.
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Finally, OCC proposes that these amendments and restatement be
filed in the form of an Amended and Restated Certificate of
Incorporation, as reflected in Exhibit 5 to this proposed rule change.
OCC's Certificate of Incorporation has not been restated since November
3, 1987. Since the 1987 restatement, the Certificate of Incorporation
has been amended six times.\12\ Given the scope and number of
amendments to the Certificate of Incorporation since the last
restatement, OCC believes it would be appropriate to integrate into a
single instrument all of the provisions of OCC's Certificate of
Incorporation that are currently in effect (pending regulatory approval
of the proposed amendments described herein) in order to provide more
clarity and transparency regarding OCC's governance arrangements. OCC
notes that, in addition to the changes described above, the proposed
amendments also include technical, non-substantive drafting changes to
correct typographical errors in Articles IV and V of the Certificate of
Incorporation.
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\12\ The latest restatement of OCC's Certificate of
Incorporation was dated November 3, 1987, and was subsequently
amended on June 1, 1992, August 12, 1997, October 28, 1999, March
16, 2012, December 30, 2013, and March 6, 2015.
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(2) Statutory Basis
Section 17A(b)(3)(F) of the Act \13\ requires that the rules of a
clearing agency be designed, in general, to protect investors and the
public interest. OCC believes that the proposed rule change is
consistent with Section 17A(b)(3)(F) of the Act \14\ and the rules
thereunder applicable to OCC because the proposed rule change would
provide more clarity and transparency regarding OCC's governance
arrangements to Clearing Members, other users of OCC, and the general
public. Specifically, the proposed rule change would enhance the
clarity, consistency, and transparency of OCC's governance arrangements
by: (i) Clarifying and reinforcing the voting powers of OCC's Exchange
Directors in OCC's Certificate of Incorporation; (ii) providing more
clarity and certainty regarding the number of Directors in each
specific category of Directors required to serve on OCC's Board by
consolidating those requirements into OCC's By-Laws; and (iii)
specifying in the Certificate of Incorporation that OCC's Public
Directors are divided into three classes and describing the length of
the terms of OCC's Public Directors in a manner that more closely
aligns with the language currently used to describe such requirements
for Member Directors. Moreover, the proposed rule change would
integrate into a single instrument all of the provisions of OCC's
Certificate of Incorporation that are currently in effect as well as
changes proposed herein. OCC believes that the proposed changes would
provide more clarity and consistency in the descriptions of OCC's
Director requirements and would enhance the readability of one of OCC's
primary governing documents, its Certificate of Incorporation, for
Clearing Members, other users of OCC, and the general public. As a
result, OCC believes that the proposed rule change is designed, in
general, to protect investors and the public interest in accordance
with Section 17A(b)(3)(F) of the Act \15\ and is reasonably designed to
ensure that OCC has clear and transparent governance arrangements
consistent with Rule 17Ad-22(d)(8) \16\ thereunder. 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\ 15 U.S.C. 78q-1(b)(3)(F).
\14\ Id.
\15\ Id.
\16\ 17 CFR 240.17Ad-22(d)(8).
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(B) Clearing Agency's Statement on Burden on Competition
Section 17A(b)(3)(I) of the Act \17\ requires that the rules of a
clearing agency not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act. As discussed in
more detail above, OCC believes that the proposed rule change would
provide more clarity and transparency to users (and potential users) of
OCC regarding OCC's Management Director, Exchange Director, Public
Director, and Member Director requirements and does not alter the
substantive requirements of OCC's governing documents. As such, OCC
believes that the proposed changes would not have any impact or impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act.
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\17\ 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.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A) of the Act,\18\ and Rule 19b-
4(f)(6) \19\ thereunder, the proposed rule change is
[[Page 69102]]
filed for immediate effectiveness because it does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
by its terms would not become operative for 30 days after the date of
the filing, or such shorter time as the Commission may designate.\20\
Additionally, OCC provided the Commission with written notice of its
intent to file the proposed rule change, along with a brief description
and text of the proposed rule change, at least five business days prior
to the date of filing of the proposed rule change or such shorter time
as designated by the Commission.
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(6).
\20\ OCC has requested that the Commission waive the 30-day
operative delay contained in Rule 19b-4(f)(6)(iii) so that the
proposal may become operative immediately upon filing. As noted
herein, the proposed rule change is not intended to substantively
alter OCC's governance arrangements but is designed to provide
additional clarity regarding OCC's governance arrangements and
improve the overall readability of OCC's Certificate of
Incorporation. OCC believes that the prompt implementation of these
changes would be consistent with the public interest and the
protection of investors.
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because it will allow OCC to implement the proposed rule change
immediately. As stated by OCC, OCC believes that the proposed rule
change is not intended to substantively alter OCC's governance
arrangements, but is designed to provide more clarity and transparency
to Clearing Members, other users of OCC, and the general public.
Therefore, the Commission hereby waives the 30-day operative delay and
designates the proposed rule change operative upon filing with the
Commission.\21\
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\21\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.\22\
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\22\ Notwithstanding its immediate effectiveness, implementation
of this rule change will be delayed until this change is deemed
certified or otherwise appropriately filed as a Weekly Notification
of Rule Amendments under CFTC Regulation Sec. 40.6.
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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-2016-010 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-2016-010. 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_010.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-2016-010 and
should be submitted on or before October 26, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated Authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-24005 Filed 10-4-16; 8:45 am]
BILLING CODE 8011-01-P
