Self-Regulatory Organizations; the Options Clearing Corporation; Order Approving Proposed Rule Change Concerning Changes to the Options Clearing Corporation's Management Structure, 20502-20506 [2017-08814]
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20502
Federal Register / Vol. 82, No. 83 / Tuesday, May 2, 2017 / Notices
The Commission is noticing a
recent Postal Service filing for the
Commission’s consideration concerning
a negotiated service agreement. This
notice informs the public of the filing,
invites public comment, and takes other
administrative steps.
DATES: Comments are due: May 4, 2017.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
SUMMARY:
Table of Contents
sradovich on DSK3GMQ082PROD with NOTICES
I. Introduction
II. Docketed Proceeding(s)
I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s Web site (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3007.40.
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
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16:36 May 01, 2017
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U.S.C. 3642, 39 CFR part 3010, and 39
CFR part 3020, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3015, and
39 CFR part 3020, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: CP2017–175; Filing
Title: Notice of United States Postal
Service of Filing a Functionally
Equivalent Global Expedited Package
Services 7 Negotiated Service
Agreement and Application for NonPublic Treatment of Materials Filed
Under Seal; Filing Acceptance Date:
April 26, 2017; Filing Authority: 39 CFR
3015.5; Public Representative: Curtis E.
Kidd; Comments Due: May 4, 2017.
This Notice will be published in the
Federal Register.
Stacy L. Ruble,
Secretary.
[FR Doc. 2017–08826 Filed 5–1–17; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL SERVICE
Product Change—Priority Mail
Negotiated Service Agreement
Postal ServiceTM.
Notice.
AGENCY:
ACTION:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Effective date: May 2, 2017.
FOR FURTHER INFORMATION CONTACT:
Elizabeth A. Reed, 202–268–3179.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on April 25, 2017,
it filed with the Postal Regulatory
Commission a Request of the United
States Postal Service to Add Priority
Mail Contract 313 to Competitive
Product List. Documents are available at
www.prc.gov, Docket Nos. MC2017–122,
CP2017–173.
SUMMARY:
Stanley F. Mires,
Attorney, Federal Compliance.
[FR Doc. 2017–08794 Filed 5–1–17; 8:45 am]
POSTAL SERVICE
BILLING CODE 7710–12–P
Product Change—Priority Mail Express
and Priority Mail Negotiated Service
Agreement
AGENCY:
ACTION:
Postal ServiceTM.
[Release No. 34–80531; File No. SR–OCC–
2017–002]
Notice.
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
SUMMARY:
DATES:
Effective date: May 2, 2017.
FOR FURTHER INFORMATION CONTACT:
Elizabeth A. Reed, 202–268–3179.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on April 25, 2017,
it filed with the Postal Regulatory
Commission a Request of the United
States Postal Service to Add Priority
Mail Express & Priority Mail Contract 47
to Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2017–123, CP2017–174.
SUPPLEMENTARY INFORMATION:
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April 26, 2017.
On February 22, 2017, the Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–OCC–2017–002
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder.2
The proposed rule change was
published for comment in the Federal
Register on March 13, 2017.3 The
Commission did not receive any
comment letters on the proposed rule
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 80168
(March 7, 2017), 82 FR 13522 (March 13, 2017) (SR–
OCC–2017–002).
2 17
[FR Doc. 2017–08791 Filed 5–1–17; 8:45 am]
BILLING CODE 7710–12–P
Self-Regulatory Organizations; the
Options Clearing Corporation; Order
Approving Proposed Rule Change
Concerning Changes to the Options
Clearing Corporation’s Management
Structure
1 15
Stanley F. Mires,
Attorney, Federal Compliance.
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SECURITIES AND EXCHANGE
COMMISSION
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Federal Register / Vol. 82, No. 83 / Tuesday, May 2, 2017 / Notices
change. This order approves the
proposed rule change.
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I. Description of the Proposed Rule
Change
This proposed rule change by OCC
will amend OCC’s By-Laws, Rules,
Board of Directors Charter (‘‘Board
Charter’’), Compensation and
Performance Committee Charter (‘‘CPC
Charter’’), Dividend Policy, and Refund
Policy to address organizational changes
within OCC’s management structure.
Specifically, OCC is proposing the
following: (1) Amendments to OCC’s
By-Laws to provide that the Executive
Chairman will also serve as Chief
Executive Officer (‘‘CEO’’); (2)
amendments to OCC’s By-Laws and
Rules to reflect that the President will
no longer be a recognized officer of
OCC; (3) amendments to OCC’s By-Laws
to provide that the Board will elect the
Chief Operating Officer (‘‘COO’’) and a
newly recognized Chief Administrative
Officer (‘‘CAO’’); (4) amendments to
OCC’s By-Laws and Rules to provide
that the COO and CAO will each have
authority to take certain actions or grant
exceptions where that authority was
previously granted to the President; (5)
conforming changes to OCC’s Board
Charter, CPC Charter, and the Dividend
and Refund Policies reflecting the
proposed amendments described above;
(6) amendments to OCC’s By-Laws to
separate the positions of Treasurer and
Chief Financial Officer (‘‘CFO’’); and (7)
a number of administrative changes and
refinements to the By-Laws and Rules.
(1) The Executive Chairman Also Serves
as a Newly Recognized CEO
Under the proposed rule change, the
Executive Chairman will continue to be
appointed by the Board and be
responsible for OCC’s control functions.
However, OCC proposes to amend
Article IV, Section 6 of the By-Laws to
provide that the Executive Chairman
will also serve as a newly recognized
CEO. In that capacity, the Executive
Chairman and CEO will be responsible
for all aspects of OCC’s business and the
day-to-day administration of its affairs
that are not otherwise assigned to the
COO or CAO.
OCC notes that, under its current ByLaws, the President is responsible for all
aspects of OCC’s business that do not
report directly to the Executive
Chairman and is responsible for the dayto-day administration of OCC’s affairs in
accordance with the directions of the
Executive Chairman. The proposed rule
change will provide the Executive
Chairman/CEO with explicit
responsibility for overseeing all aspects
of OCC’s business and the day-to-day
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administration of its affairs, with the
COO and CAO each being responsible
for aspects of the business of OCC that
do not report directly to the Executive
Chairman and CEO and administering
the day to day affairs and business of
OCC in accordance with the directions
of the Executive Chairman and CEO. In
connection with this change, OCC’s
senior management will be reorganized
within an Office of the Executive
Chairman that will be comprised of the
Executive Chairman (who will also
serve as CEO), the COO and the CAO.
OCC believes that this new management
structure will combine the breadth and
depth of experience and skill necessary
within OCC’s senior management team
to provide for the efficient and effective
management and operation of OCC,
improve OCC’s ability to serve Clearing
Members and the markets for which it
clears, and help to ensure that OCC is
so organized and has the capacity to
facilitate the prompt and accurate
clearance and settlement of the
transactions it clears.
(2) The President Is No Longer a
Recognized Officer of OCC
OCC proposes a number of
amendments throughout its By-Laws
and Rules to remove references to the
office of President to reflect the fact that
the President will no longer be a
recognized officer within OCC’s
management. As described in more
detail below, all references to the
authority and responsibilities of the
President will be removed and such
references will be replaced as
appropriate with references to the COO
and newly appointed CAO. OCC
believes that eliminating the role of
President and distributing the wide
range of authority and responsibilities
associated therewith to two senior
officers (the CAO and COO) will
provide for a broader range of
knowledge, skills, and experience
within OCC’s senior management team,
promote more efficient and effective
management and operation of OCC,
improve OCC’s ability to serve Clearing
Members and the markets for which it
clears, and help to ensure that OCC is
so organized and has the capacity to
facilitate the prompt and accurate
clearance and settlement of the
transactions it clears.
(3) Election of the COO and CAO
OCC proposes to amend Article IV,
Sections 1, 8 and 13 of the By-Laws to
provide that the Board will elect a COO
and a CAO and will set the salaries for
such officers. Accordingly, OCC will
continue to have a COO within its
management structure because, as noted
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20503
above, the President also serves as COO
under OCC’s existing By-Laws. The
CAO, however, is a newly recognized
officer within OCC’s management
structure. As is currently the case
regarding the President, neither the
COO nor the CAO will be required to be
a member of the Board upon election.
Also, consistent with the existing
prohibition against the same person
holding any two of the offices of
Executive Chairman, President and
Member Vice Chairman,4 the restriction
will continue to apply but will reference
the COO and CAO rather than the
President. As noted above, OCC believes
that eliminating the role of President
and distributing the wide range of
responsibilities associated therewith to
the COO and a newly appointed CAO
will provide for more efficient and
effective management and operation of
OCC, improve OCC’s ability to serve
Clearing Members and the markets for
which it clears, and help to ensure that
OCC is so organized and has the
capacity to facilitate the prompt and
accurate clearance and settlement of the
transactions it clears.
(4) Assignment of Certain
Responsibilities to the COO and CAO
The responsibility of management to
carry out OCC’s affairs is frequently
assigned to groups of officers, including
the Executive Chairman, President, and
other officers of appropriate seniority.
This approach provides flexibility to
help ensure that responsibility is not
concentrated in any one officer, that
OCC’s affairs are carried out efficiently,
and that management has the capacity
to continue carrying out OCC’s business
and day-to-day affairs even if a
particular officer is absent or becomes
disabled. To preserve the benefits of this
structure given the elimination of the
office of President, OCC proposes that
the COO and CAO will instead assume
certain responsibilities in the By-Laws
and Rules where they are currently
assigned, at least in part, to the
President.
Under the proposed changes to
Article IV, Section 8 of the By-Laws, the
COO and CAO will be responsible for
the aspects of OCC’s business that do
not report directly to the Executive
Chairman, as determined by the Board
to promote the efficient and effective
management and operation of OCC, and
they will administer their
responsibilities in accordance with
directions from the Executive Chairman.
Under the proposed management
structure changes, the COO initially will
be responsible for the oversight of OCC’s
4 See
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Article IV, Section 1 of the By-Laws.
02MYN1
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Federal Register / Vol. 82, No. 83 / Tuesday, May 2, 2017 / Notices
technology and operations functions
while the CAO will be responsible for
the oversight of the finance, human
resources, financial risk management,
corporate planning, product and
business development, and project
management aspects of OCC’s business.
In addition, in the event of any absence
or disability of the Executive Chairman,
the COO and CAO will each have the
authority and responsibility to fulfill the
duties and have the powers of the
Executive Chairman. However, in the
absence or disability of the Executive
Chairman, neither the COO nor the CAO
will be permitted to preside at meetings
of the Board or stockholders.
Under the proposed amendments to
Article IV, Sections 2, 3, 9, and 13 of the
By-Laws, the COO and CAO each will
have authority, consistent with the
authority previously granted to the
President, to appoint officers and agents
as they deem necessary or appropriate
to carry out the functions assigned to
them. This includes, but is not limited
to, the authority to appoint certain Vice
Presidents within management. Any
officers or agents who are appointed by
the COO or CAO will be subject to their
supervision and will be able to be
removed by the COO and CAO,
respectively, at any time, with or
without cause. Such officers or agents
will exercise powers and perform duties
as determined by the COO or the CAO
and the term and salary 5 of any such
positions will also be determined by the
COO or CAO, respectively. The
Executive Chairman and CEO will also
have the authority to set the terms,
powers, duties, and salaries of any
officer or agent appointed by the COO
or CAO and to remove officers or agents
appointed by the COO and CAO.
Other examples of the responsibilities
of the President being reallocated to the
COO and CAO in the By-Laws and
Rules include, but are not limited to,
that the COO and CAO will, under
certain conditions, have shared
authority with the Executive Chairman
and other officers to do the following:
(1) Approve banks or trust companies as
Approved Custodians; (2) declare the
existence of an emergency and take
related actions; (3) approve clearing
membership applications and grant
related extensions; (4) impose
restrictions on options exercises; (5)
determine reasonable means through
which to borrow or otherwise obtain
funds using Clearing Fund
5 Any salary fixed by the COO or CAO will be
subject to any contrary action taken by the Board,
as is the case today regarding any officers or agents
appointed by the Executive Chairman or the
President. See Article IV, Section 13 of the ByLaws.
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contributions; (6) sign certificates
representing shares in OCC; (7) waive or
suspend OCC’s By-Laws, Rules,
policies, procedures or any other of
OCC’s rules in emergency circumstances
to protect OCC or the public interest; (8)
impose restrictions on certain Clearing
Member transactions, positions and
activities; (9) extend settlement times in
emergency conditions; (10) waive the
required margin deposit of a Clearing
Member in the interest of maintaining
fair and orderly markets; 6 and (11)
authorize late filing of an exercise notice
by a Clearing Member.7
OCC believes the proposed changes
described above will result in an
appropriate and effective management
structure that combines the breadth and
depth of experience and skill necessary
within OCC’s senior management team
to (i) provide for the efficient and
effective management and operation of
OCC, (ii) improve OCC’s ability to serve
Clearing Members and the markets for
which it clears, and (iii) help to ensure
that OCC is so organized and has the
capacity to facilitate the prompt and
accurate clearance and settlement of the
transactions it clears. Moreover, the
proposed changes to OCC’s management
structure will provide important
flexibility to help ensure that
responsibility is not unduly
concentrated in any one officer, that
OCC’s affairs are carried out efficiently,
and that management has the capacity
to continue carrying out OCC’s business
and day-to-day affairs even if a
particular officer is absent or becomes
disabled.
OCC also proposes to amend Article
IV, Section 12 of the By-Laws to provide
that, in the event of a vacancy of the
office of Controller, the Executive
Chairman (in addition to the Board) will
have the authority to designate a person
to serve as chief accounting officer of
OCC until the office of Controller is
filled. OCC believes it will be
appropriate for the Executive Chairman
to replace the President in this role
given the Executive Chairman’s capacity
as Management Director.
(5) Conforming Changes to Certain OCC
Charters and Policies
In connection with the proposed
changes described above, OCC also
proposes to change certain references to
6 See Rule 609A. OCC also proposes to make a
ministerial change to this rule to clarify a reference
to the Securities and Exchange Commission.
7 See proposed changes in (1) OCC By-Laws
Article I, Section 1; (2) Article III, Section 15; (3)
Article V, Sections 1–3, I&P .01; (4) Article VI,
Section 17; (5) Article VIII, Section 5; (6) Article IX,
Section 12; (7) Article IX, Section 14; (8) OCC Rule
305; (9) Rule 505; (10) Rule 609A; and (11) Rule
801.
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the President that appear in its Board
Charter, CPC Charter, Dividend Policy
and Refund Policy. These changes are
described below and will not otherwise
modify OCC’s management structure.
OCC proposes to amend the Board
Charter to reflect that the Board has
responsibility for selecting, overseeing
and, where appropriate, replacing the
COO and CAO, and that the Board
evaluates and sets the compensation of
these officers. The proposed
amendments will also state that the
Board provides counsel and advice to
the COO and CAO and oversees those
officers as part of the Board’s evaluation
of whether OCC’s business is being
appropriately managed. OCC notes that
the proposed amendments are
consistent with the Board’s existing
obligations with respect to the election
and oversight of the President.
Additionally, OCC proposes to amend
the CPC Charter to reflect that the CPC
will generally oversee the
compensation, benefits and perquisites
of the COO and CAO, including
responsibility for making associated
recommendations to the Board, and to
identify that the CPC is responsible for
reviewing and approving the annual
goals and objectives of the COO and
CAO. OCC also proposes to amend the
CPC Charter to reflect that the CPC will
now meet at least annually with the
COO and CAO (instead of the President)
to discuss and review compensation and
performance levels of senior
management and other key officers. In
addition, the CPC Charter will be
amended to reflect that the CPC reviews
OCC’s employment contracts with the
COO and CAO (in place of the
President) and makes recommendations
to the Board regarding related
approvals.
OCC’s Refund Policy will be amended
to reflect that, in addition to the
Executive Chairman, the COO or CAO
will have authority under certain
conditions to determine the payment
date of refunds. This authority is
currently reserved to the Executive
Chairman and the President. OCC will
also amend the Dividend Policy to
reflect that, in addition to the Executive
Chairman, the COO or CAO (rather than
the President) will have authority under
certain conditions to determine the
payment date of dividends if for any
reason OCC’s Refund Policy is not in
effect. As a housekeeping matter that is
unrelated to the COO and CAO
assuming certain responsibilities of the
President, OCC is also updating its
Dividend Policy and Refund Policy to
reflect that the Commission recently
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adopted its Standards for Covered
Clearing Agencies.8
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(6) Separation of Treasurer and Chief
Financial Officer Positions
OCC proposes to amend Article IV,
Section 11 of the By-Laws to eliminate
a sentence that provides that OCC’s
Treasurer shall also serve as CFO absent
another person being designated by the
Board to serve in that capacity. OCC
believes that separating these positions
and eliminating this provision of the ByLaws will allow for greater flexibility
relative to the structure, management
and operation of OCC’s corporate
finance group. Under the proposed rule
change, the Board will continue to
appoint OCC’s Treasurer as currently
required under Article IV, Section 1 of
the By-Laws; however, the Treasurer
will no longer automatically serve as
CFO, and the Board will not be
responsible for appointing OCC’s CFO.
(7) Administrative Changes and
Refinements
OCC is proposing a number of
administrative changes and refinements
to its By-Laws and Rules. Specifically,
OCC proposes to add a definition of
‘‘Designated Officer’’ in Article I,
Section 1 of the By-Laws. The term is
already used elsewhere in OCC’s ByLaws and Rules (e.g., Article III, Section
15 of the By-Laws and Rule 1102). OCC
believes that locating this definition in
Article, I, Section 1 of the By-Laws with
the majority of the other definitions that
are used in OCC’s By-Laws and Rules
promotes organizational consistency
and clarity in OCC’s legal framework.
OCC also proposes to amend
Interpretation and Policy .01 of Rule 309
to change a reference to ‘‘OCC’’ to ‘‘the
Corporation’’ to conform to existing
convention in OCC’s By-Laws and
Rules.
Additionally, OCC proposes to amend
Interpretation and Policy .01 of Article
III, Section 7 of the By-Laws, which
concerns the use of the criteria of OCC’s
Fitness Standards for Directors, Clearing
Members and Others in the election of
Management Directors, to remove a
reference to the President. OCC notes
that, in addition to the proposed
elimination of the office of President in
this proposed rule change, in 2014, the
Commission approved a proposed rule
change providing that OCC’s President
will no longer be considered a
Management Director.9 OCC also
8 See Securities Exchange Act Release No. 78961
(September 28, 2016), 81 FR 70786 (October 13,
2016).
9 See Securities Exchange Act Release No. 73785
(December 8, 2014), 79 FR 73915 (December 12,
2014) (SR–OCC–2014–18).
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proposes to amend Interpretation and
Policy .02 of Rule 1104 to remove
references to the Management Vice
Chairman. In September 2016, the
Commission approved a proposed rule
change by OCC to eliminate the role of
Management Vice Chairman.10 OCC is
proposing to remove remaining
references to this position that were
intended to be removed as part of SR–
OCC–2016–002.
Finally, OCC proposes a number of
non-substantive amendments to correct
typographical errors in the By-Laws and
Rules (e.g., correction of typographical
error in Rule 305(c) to refer to the
‘‘Executive’’ Chairman and in Rule
309A to state ‘‘an’’ Appointed Clearing
Member).
II. Discussion and Commission
Findings
Section 19(b)(2)(C) of the Act 11
directs the Commission to approve a
proposed rule change of a selfregulatory organization if it finds that
such proposed rule change is consistent
with the requirements of the Act and
rules and regulations thereunder
applicable to such organization. The
Commission finds that the proposal is
consistent with Section 17A(b)(3)(A) of
the Act 12 and Rules 17Ad–22(e)(1) 13
and 17Ad–22(e)(2) 14 thereunder, as
described in detail below.
A. Consistency With Section
17A(b)(3)(A) of the Act
The Commission finds OCC’s
proposed changes to be consistent with
Section 17A(b)(3)(A) of the Act.15
Section 17A(b)(3)(A) of the Act 16
requires, among other things, that a
clearing agency be so organized and
have the capacity to be able to facilitate
the prompt and accurate clearance and
settlement of securities transactions and
derivative agreements, contracts, and
transactions for which it is responsible.
As noted above, after implementation of
the proposed changes, OCC’s Executive
Chairman will also serve as OCC’s CEO,
the President’s duties and powers will
be reallocated among the Executive
Chairman, COO and CAO, the COO and
CAO will have authority to take action
or grant exceptions under certain
conditions, and the positions of
Treasurer and CFO will be separated.
According to OCC, these leadership and
10 See Securities Exchange Act Release No. 78862
(September 16, 2016), 81 FR 65415 (September 22,
2016) (SR–OCC–2016–002).
11 15 U.S.C. 78s(b)(2)(C).
12 15 U.S.C. 78q–1(b)(3)(A).
13 17 CFR 240.17Ad–22(e)(1).
14 17 CFR 240.17Ad–22(e)(2).
15 15 U.S.C. 78q–1(b)(3)(A).
16 Id.
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20505
organizational changes are intended to
promote efficient management and
operation by doing the following: (i)
Providing for a broad range of
knowledge, skills, and experience
within OCC’s management team, (ii)
improving the alignment of officers’
responsibilities with their skills and
experience and thereby enhancing
efficiency and effectiveness within
OCC’s management, and (iii) ensuring
that there continues to be an appropriate
allocation of duties and powers among
officers such that management has the
capacity to continue carrying out OCC’s
affairs even if a particular officer is
absent or disabled. By promoting OCC’s
efficient management and operation, the
proposed leadership and organizational
changes will support OCC’s efforts to
ensure that it is organized and has the
capacity to be able to facilitate the
prompt and accurate clearance and
settlement of securities transactions.
B. Consistency With Rule 17Ad–22(e)(1)
The Commission finds that the
proposed changes are consistent with
Rule 17Ad–22(e)(1).17 Rule 17Ad–
22(e)(1) 18 requires each covered
clearing agency to establish, implement,
maintain and enforce written policies
and procedures reasonably designed to
provide for a well-founded, clear,
transparent, and enforceable legal basis
for each aspect of its activities in all
relevant jurisdictions. Pursuant to this
proposal, OCC is centralizing the
definition of ‘‘Designated Officer’’ in
Article I, Section 1 and making other
clarifying and conforming changes to
OCC’s governing documents. OCC states
that such conforming and clarifying
changes will promote organizational
consistency and clarity in OCC’s legal
framework to ensure that the legal
framework remains well-founded,
transparent and enforceable in all
relevant jurisdictions.
C. Consistency With Rule 17Ad–22(e)(2)
The Commission finds that the
proposed changes to specify the
responsibilities of the Chairman/CEO,
COO and CAO, as well as the proposed
changes to specify which positions are
board-appointed, are consistent with the
requirements in Rule 17Ad–22(e)(2).19
Rule 17Ad–22(e)(2) 20 requires each
covered clearing agency to establish,
implement, maintain and enforce
written policies and procedures
reasonably designed to provide for
governance arrangements that, among
17 17
CFR 240.17Ad–22(e)(1).
18 Id.
19 17
CFR 240.17Ad-22(e)(2).
20 Id.
E:\FR\FM\02MYN1.SGM
02MYN1
20506
Federal Register / Vol. 82, No. 83 / Tuesday, May 2, 2017 / Notices
other things, are clear and transparent
and specify clear and direct lines of
responsibility. According to OCC, the
proposed amendments to OCC’s ByLaws, Rules, charters and policies will
provide clear and transparent
statements of the responsibilities of its
Executive Chairman/CEO, COO and
CAO within the overall management
structure of OCC. In addition, the
proposed amendments support clarity
and transparency by reflecting in OCC’s
By-Laws and Rules organizational
changes to provide that the President
will no longer be a recognized officer of
OCC, to provide that the Board will
appoint the COO and CAO, and to
separate the positions of Treasurer and
CFO. Finally, the proposed changes, in
specifying the responsibilities of the
Chairman/CEO, COO and CAO, support
the requirement that OCC provide for
governance arrangements that specify
clear and direct lines of responsibility,
helping to clarify the roles that each
individual will fulfill and fostering
accountability at OCC.
III. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
change is consistent with the
requirements of the Act, and in
particular, with the requirements of
Section 17A of the Act 21 and the rules
and regulations thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,22
that the proposed rule change (SR–
OCC–2017–002) be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–08814 Filed 5–1–17; 8:45 am]
sradovich on DSK3GMQ082PROD with NOTICES
BILLING CODE 8011–01–P
21 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
22 15 U.S.C. 78s(b)(2).
23 17 CFR 200.30–3(a)(12).
VerDate Sep<11>2014
16:36 May 01, 2017
Jkt 241001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80529; File No. SR–
BatsBZX–2017–14]
Self-Regulatory Organizations; Bats
BZX Exchange, Inc.; Order Granting
Approval of a Proposed Rule Change,
as Modified by Amendment Nos. 3 and
5, To List and Trade Shares of the
Amplify YieldShares Oil Hedged MLP
Fund, a Series of the Amplify ETF
Trust, Under BZX Rule 14.11(i),
Managed Fund Shares
April 26, 2017.
I. Introduction
On February 17, 2017, Bats BZX
Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’ or
‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
list and trade shares (‘‘Shares’’) of the
Amplify YieldShares Oil Hedged MLP
Fund (‘‘Fund’’), a series of the Amplify
ETF Trust (‘‘Trust’’). The proposed rule
change was published for comment in
the Federal Register on March 7, 2017.3
On March 30, 2017, the Exchange filed
Amendment No. 2 to the proposed rule
change.4 On April 7, 2017, the Exchange
filed Amendment No. 3 to the proposed
rule change,5 and on April 24, 2017, the
Exchange filed Amendment No. 5 to the
proposed rule change.6 The Commission
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 34–
80136 (March 1, 2017), 82 FR 12860.
4 The Exchange filed and withdrew Amendment
No. 1 on March 30, 2017. Amendment No. 2
replaced the original filing in its entirety.
5 In Amendment No. 3, which amended and
replaced the proposed rule change, as modified by
Amendment No. 2, in its entirety, the Exchange: (a)
Added representations clarifying that the proposed
rule change will constitute continued listing
requirements for listing Shares on the Exchange; (b)
added representations that the Fund will conform
with certain requirements applicable to Managed
Fund Shares; and (c) made other technical and
clarifying amendments. Because Amendment No. 3
does not materially alter the substance of the
proposed rule change or raise unique or novel
regulatory issues, it is not subject to notice and
comment. Amendment No. 3 is available at https://
www.sec.gov/comments/sr-batsbzx-2017-14/
batsbzx201714-1692102-149689.pdf.
6 The Exchange filed Amendment No. 4 on April
19, 2017, and withdrew it on April 24, 2017. In
Amendment No. 5, the Exchange: (1) Clarified how
the composition of the Fund’s holdings would be
calculated; and (2) provided additional detail
regarding the historical average daily contract
volume for WTI Crude Oil Futures (as defined
below). Because Amendment No. 5 does not
materially alter the substance of the proposed rule
change or raise unique or novel regulatory issues,
it is not subject to notice and comment.
Amendment No. 5 is available at https://
2 17
PO 00000
Frm 00051
Fmt 4703
Sfmt 4703
received no comments on the proposed
rule change. This order approves the
proposed rule change, as modified by
Amendment Nos. 3 and 5.
II. Exchange’s Description of the
Proposal
The Exchange proposes to list and
trade the Shares under BZX Rule
14.11(i), which governs the listing and
trading of Managed Fund Shares on the
Exchange. The Shares will be offered by
the Trust, which is registered with the
Commission as an investment company
and has filed a Registration Statement
on Form N–1A with the Commission.7
The Exchange states that the Fund
will invest in equity securities of energy
master limited partnerships (‘‘MLPs’’)
and selectively hedge its positions to
limit the correlation of its performance
to the price of West Texas Intermediate
Crude Oil (‘‘WTI Crude Oil’’). WTI
Crude Oil, also known as Texas light
sweet, is a grade of crude oil used as a
benchmark in oil futures contracts
pricing. According to the Exchange, the
Fund will seek to exceed the
performance of the Oil Hedged MLP
Index (‘‘Benchmark’’) 8 by actively
selecting its investments from the
underlying components of the
Benchmark. The Exchange represents
that the Fund is not an index tracking
exchange-traded fund and is not
required to invest in all of the
components of the Benchmark.
However, the Exchange states that
generally, the Fund will seek to hold
similar instruments to those in the
Benchmark and will therefore invest in
MLPs and short exposure oil futures
contracts included in the Benchmark.
The Exchange represents that it
submitted the proposal in order to allow
the Fund to hold listed derivatives,
specifically WTI Crude Oil futures
traded on the New York Mercantile
Exchange and ICE Futures Europe
(‘‘WTI Crude Oil Futures’’), in a manner
that would exceed the limitations of
BZX Rule 14.11(i)(4)(C)(iv)(b), which
prevents, among other things, a series of
Managed Fund Shares from holding
listed derivatives based on any single
underlying reference asset in excess of
30 percent of the weight of its portfolio
(including gross notional exposures)
(‘‘30% Limitation’’).9 Namely, the
www.sec.gov/comments/sr-batsbzx-2017-14/
batsbzx201714-1719288-150433.pdf.
7 See Post-Effective Amendment No. 27 to
Registration Statement on Form N–1A for the Trust,
dated January 6, 2017 (File Nos. 333–207937 and
811–23108).
8 The Benchmark is developed, maintained, and
sponsored by ETP Ventures LLC.
9 BZX Rule 14.11(i)(4)(C)(iv)(b) requires that the
aggregate gross notional value of listed derivatives
E:\FR\FM\02MYN1.SGM
02MYN1
]]>Agencies
[Federal Register Volume 82, Number 83 (Tuesday, May 2, 2017)]
[Notices]
[Pages 20502-20506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08814]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80531; File No. SR-OCC-2017-002]
Self-Regulatory Organizations; the Options Clearing Corporation;
Order Approving Proposed Rule Change Concerning Changes to the Options
Clearing Corporation's Management Structure
April 26, 2017.
On February 22, 2017, the Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'')
proposed rule change SR-OCC-2017-002 pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4
thereunder.\2\ The proposed rule change was published for comment in
the Federal Register on March 13, 2017.\3\ The Commission did not
receive any comment letters on the proposed rule
[[Page 20503]]
change. This order approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 80168 (March 7,
2017), 82 FR 13522 (March 13, 2017) (SR-OCC-2017-002).
---------------------------------------------------------------------------
I. Description of the Proposed Rule Change
This proposed rule change by OCC will amend OCC's By-Laws, Rules,
Board of Directors Charter (``Board Charter''), Compensation and
Performance Committee Charter (``CPC Charter''), Dividend Policy, and
Refund Policy to address organizational changes within OCC's management
structure. Specifically, OCC is proposing the following: (1) Amendments
to OCC's By-Laws to provide that the Executive Chairman will also serve
as Chief Executive Officer (``CEO''); (2) amendments to OCC's By-Laws
and Rules to reflect that the President will no longer be a recognized
officer of OCC; (3) amendments to OCC's By-Laws to provide that the
Board will elect the Chief Operating Officer (``COO'') and a newly
recognized Chief Administrative Officer (``CAO''); (4) amendments to
OCC's By-Laws and Rules to provide that the COO and CAO will each have
authority to take certain actions or grant exceptions where that
authority was previously granted to the President; (5) conforming
changes to OCC's Board Charter, CPC Charter, and the Dividend and
Refund Policies reflecting the proposed amendments described above; (6)
amendments to OCC's By-Laws to separate the positions of Treasurer and
Chief Financial Officer (``CFO''); and (7) a number of administrative
changes and refinements to the By-Laws and Rules.
(1) The Executive Chairman Also Serves as a Newly Recognized CEO
Under the proposed rule change, the Executive Chairman will
continue to be appointed by the Board and be responsible for OCC's
control functions. However, OCC proposes to amend Article IV, Section 6
of the By-Laws to provide that the Executive Chairman will also serve
as a newly recognized CEO. In that capacity, the Executive Chairman and
CEO will be responsible for all aspects of OCC's business and the day-
to-day administration of its affairs that are not otherwise assigned to
the COO or CAO.
OCC notes that, under its current By-Laws, the President is
responsible for all aspects of OCC's business that do not report
directly to the Executive Chairman and is responsible for the day-to-
day administration of OCC's affairs in accordance with the directions
of the Executive Chairman. The proposed rule change will provide the
Executive Chairman/CEO with explicit responsibility for overseeing all
aspects of OCC's business and the day-to-day administration of its
affairs, with the COO and CAO each being responsible for aspects of the
business of OCC that do not report directly to the Executive Chairman
and CEO and administering the day to day affairs and business of OCC in
accordance with the directions of the Executive Chairman and CEO. In
connection with this change, OCC's senior management will be
reorganized within an Office of the Executive Chairman that will be
comprised of the Executive Chairman (who will also serve as CEO), the
COO and the CAO. OCC believes that this new management structure will
combine the breadth and depth of experience and skill necessary within
OCC's senior management team to provide for the efficient and effective
management and operation of OCC, improve OCC's ability to serve
Clearing Members and the markets for which it clears, and help to
ensure that OCC is so organized and has the capacity to facilitate the
prompt and accurate clearance and settlement of the transactions it
clears.
(2) The President Is No Longer a Recognized Officer of OCC
OCC proposes a number of amendments throughout its By-Laws and
Rules to remove references to the office of President to reflect the
fact that the President will no longer be a recognized officer within
OCC's management. As described in more detail below, all references to
the authority and responsibilities of the President will be removed and
such references will be replaced as appropriate with references to the
COO and newly appointed CAO. OCC believes that eliminating the role of
President and distributing the wide range of authority and
responsibilities associated therewith to two senior officers (the CAO
and COO) will provide for a broader range of knowledge, skills, and
experience within OCC's senior management team, promote more efficient
and effective management and operation of OCC, improve OCC's ability to
serve Clearing Members and the markets for which it clears, and help to
ensure that OCC is so organized and has the capacity to facilitate the
prompt and accurate clearance and settlement of the transactions it
clears.
(3) Election of the COO and CAO
OCC proposes to amend Article IV, Sections 1, 8 and 13 of the By-
Laws to provide that the Board will elect a COO and a CAO and will set
the salaries for such officers. Accordingly, OCC will continue to have
a COO within its management structure because, as noted above, the
President also serves as COO under OCC's existing By-Laws. The CAO,
however, is a newly recognized officer within OCC's management
structure. As is currently the case regarding the President, neither
the COO nor the CAO will be required to be a member of the Board upon
election. Also, consistent with the existing prohibition against the
same person holding any two of the offices of Executive Chairman,
President and Member Vice Chairman,\4\ the restriction will continue to
apply but will reference the COO and CAO rather than the President. As
noted above, OCC believes that eliminating the role of President and
distributing the wide range of responsibilities associated therewith to
the COO and a newly appointed CAO will provide for more efficient and
effective management and operation of OCC, improve OCC's ability to
serve Clearing Members and the markets for which it clears, and help to
ensure that OCC is so organized and has the capacity to facilitate the
prompt and accurate clearance and settlement of the transactions it
clears.
---------------------------------------------------------------------------
\4\ See Article IV, Section 1 of the By-Laws.
---------------------------------------------------------------------------
(4) Assignment of Certain Responsibilities to the COO and CAO
The responsibility of management to carry out OCC's affairs is
frequently assigned to groups of officers, including the Executive
Chairman, President, and other officers of appropriate seniority. This
approach provides flexibility to help ensure that responsibility is not
concentrated in any one officer, that OCC's affairs are carried out
efficiently, and that management has the capacity to continue carrying
out OCC's business and day-to-day affairs even if a particular officer
is absent or becomes disabled. To preserve the benefits of this
structure given the elimination of the office of President, OCC
proposes that the COO and CAO will instead assume certain
responsibilities in the By-Laws and Rules where they are currently
assigned, at least in part, to the President.
Under the proposed changes to Article IV, Section 8 of the By-Laws,
the COO and CAO will be responsible for the aspects of OCC's business
that do not report directly to the Executive Chairman, as determined by
the Board to promote the efficient and effective management and
operation of OCC, and they will administer their responsibilities in
accordance with directions from the Executive Chairman. Under the
proposed management structure changes, the COO initially will be
responsible for the oversight of OCC's
[[Page 20504]]
technology and operations functions while the CAO will be responsible
for the oversight of the finance, human resources, financial risk
management, corporate planning, product and business development, and
project management aspects of OCC's business. In addition, in the event
of any absence or disability of the Executive Chairman, the COO and CAO
will each have the authority and responsibility to fulfill the duties
and have the powers of the Executive Chairman. However, in the absence
or disability of the Executive Chairman, neither the COO nor the CAO
will be permitted to preside at meetings of the Board or stockholders.
Under the proposed amendments to Article IV, Sections 2, 3, 9, and
13 of the By-Laws, the COO and CAO each will have authority, consistent
with the authority previously granted to the President, to appoint
officers and agents as they deem necessary or appropriate to carry out
the functions assigned to them. This includes, but is not limited to,
the authority to appoint certain Vice Presidents within management. Any
officers or agents who are appointed by the COO or CAO will be subject
to their supervision and will be able to be removed by the COO and CAO,
respectively, at any time, with or without cause. Such officers or
agents will exercise powers and perform duties as determined by the COO
or the CAO and the term and salary \5\ of any such positions will also
be determined by the COO or CAO, respectively. The Executive Chairman
and CEO will also have the authority to set the terms, powers, duties,
and salaries of any officer or agent appointed by the COO or CAO and to
remove officers or agents appointed by the COO and CAO.
---------------------------------------------------------------------------
\5\ Any salary fixed by the COO or CAO will be subject to any
contrary action taken by the Board, as is the case today regarding
any officers or agents appointed by the Executive Chairman or the
President. See Article IV, Section 13 of the By-Laws.
---------------------------------------------------------------------------
Other examples of the responsibilities of the President being
reallocated to the COO and CAO in the By-Laws and Rules include, but
are not limited to, that the COO and CAO will, under certain
conditions, have shared authority with the Executive Chairman and other
officers to do the following: (1) Approve banks or trust companies as
Approved Custodians; (2) declare the existence of an emergency and take
related actions; (3) approve clearing membership applications and grant
related extensions; (4) impose restrictions on options exercises; (5)
determine reasonable means through which to borrow or otherwise obtain
funds using Clearing Fund contributions; (6) sign certificates
representing shares in OCC; (7) waive or suspend OCC's By-Laws, Rules,
policies, procedures or any other of OCC's rules in emergency
circumstances to protect OCC or the public interest; (8) impose
restrictions on certain Clearing Member transactions, positions and
activities; (9) extend settlement times in emergency conditions; (10)
waive the required margin deposit of a Clearing Member in the interest
of maintaining fair and orderly markets; \6\ and (11) authorize late
filing of an exercise notice by a Clearing Member.\7\
---------------------------------------------------------------------------
\6\ See Rule 609A. OCC also proposes to make a ministerial
change to this rule to clarify a reference to the Securities and
Exchange Commission.
\7\ See proposed changes in (1) OCC By-Laws Article I, Section
1; (2) Article III, Section 15; (3) Article V, Sections 1-3, I&P
.01; (4) Article VI, Section 17; (5) Article VIII, Section 5; (6)
Article IX, Section 12; (7) Article IX, Section 14; (8) OCC Rule
305; (9) Rule 505; (10) Rule 609A; and (11) Rule 801.
---------------------------------------------------------------------------
OCC believes the proposed changes described above will result in an
appropriate and effective management structure that combines the
breadth and depth of experience and skill necessary within OCC's senior
management team to (i) provide for the efficient and effective
management and operation of OCC, (ii) improve OCC's ability to serve
Clearing Members and the markets for which it clears, and (iii) help to
ensure that OCC is so organized and has the capacity to facilitate the
prompt and accurate clearance and settlement of the transactions it
clears. Moreover, the proposed changes to OCC's management structure
will provide important flexibility to help ensure that responsibility
is not unduly concentrated in any one officer, that OCC's affairs are
carried out efficiently, and that management has the capacity to
continue carrying out OCC's business and day-to-day affairs even if a
particular officer is absent or becomes disabled.
OCC also proposes to amend Article IV, Section 12 of the By-Laws to
provide that, in the event of a vacancy of the office of Controller,
the Executive Chairman (in addition to the Board) will have the
authority to designate a person to serve as chief accounting officer of
OCC until the office of Controller is filled. OCC believes it will be
appropriate for the Executive Chairman to replace the President in this
role given the Executive Chairman's capacity as Management Director.
(5) Conforming Changes to Certain OCC Charters and Policies
In connection with the proposed changes described above, OCC also
proposes to change certain references to the President that appear in
its Board Charter, CPC Charter, Dividend Policy and Refund Policy.
These changes are described below and will not otherwise modify OCC's
management structure.
OCC proposes to amend the Board Charter to reflect that the Board
has responsibility for selecting, overseeing and, where appropriate,
replacing the COO and CAO, and that the Board evaluates and sets the
compensation of these officers. The proposed amendments will also state
that the Board provides counsel and advice to the COO and CAO and
oversees those officers as part of the Board's evaluation of whether
OCC's business is being appropriately managed. OCC notes that the
proposed amendments are consistent with the Board's existing
obligations with respect to the election and oversight of the
President.
Additionally, OCC proposes to amend the CPC Charter to reflect that
the CPC will generally oversee the compensation, benefits and
perquisites of the COO and CAO, including responsibility for making
associated recommendations to the Board, and to identify that the CPC
is responsible for reviewing and approving the annual goals and
objectives of the COO and CAO. OCC also proposes to amend the CPC
Charter to reflect that the CPC will now meet at least annually with
the COO and CAO (instead of the President) to discuss and review
compensation and performance levels of senior management and other key
officers. In addition, the CPC Charter will be amended to reflect that
the CPC reviews OCC's employment contracts with the COO and CAO (in
place of the President) and makes recommendations to the Board
regarding related approvals.
OCC's Refund Policy will be amended to reflect that, in addition to
the Executive Chairman, the COO or CAO will have authority under
certain conditions to determine the payment date of refunds. This
authority is currently reserved to the Executive Chairman and the
President. OCC will also amend the Dividend Policy to reflect that, in
addition to the Executive Chairman, the COO or CAO (rather than the
President) will have authority under certain conditions to determine
the payment date of dividends if for any reason OCC's Refund Policy is
not in effect. As a housekeeping matter that is unrelated to the COO
and CAO assuming certain responsibilities of the President, OCC is also
updating its Dividend Policy and Refund Policy to reflect that the
Commission recently
[[Page 20505]]
adopted its Standards for Covered Clearing Agencies.\8\
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 78961 (September 28,
2016), 81 FR 70786 (October 13, 2016).
---------------------------------------------------------------------------
(6) Separation of Treasurer and Chief Financial Officer Positions
OCC proposes to amend Article IV, Section 11 of the By-Laws to
eliminate a sentence that provides that OCC's Treasurer shall also
serve as CFO absent another person being designated by the Board to
serve in that capacity. OCC believes that separating these positions
and eliminating this provision of the By-Laws will allow for greater
flexibility relative to the structure, management and operation of
OCC's corporate finance group. Under the proposed rule change, the
Board will continue to appoint OCC's Treasurer as currently required
under Article IV, Section 1 of the By-Laws; however, the Treasurer will
no longer automatically serve as CFO, and the Board will not be
responsible for appointing OCC's CFO.
(7) Administrative Changes and Refinements
OCC is proposing a number of administrative changes and refinements
to its By-Laws and Rules. Specifically, OCC proposes to add a
definition of ``Designated Officer'' in Article I, Section 1 of the By-
Laws. The term is already used elsewhere in OCC's By-Laws and Rules
(e.g., Article III, Section 15 of the By-Laws and Rule 1102). OCC
believes that locating this definition in Article, I, Section 1 of the
By-Laws with the majority of the other definitions that are used in
OCC's By-Laws and Rules promotes organizational consistency and clarity
in OCC's legal framework. OCC also proposes to amend Interpretation and
Policy .01 of Rule 309 to change a reference to ``OCC'' to ``the
Corporation'' to conform to existing convention in OCC's By-Laws and
Rules.
Additionally, OCC proposes to amend Interpretation and Policy .01
of Article III, Section 7 of the By-Laws, which concerns the use of the
criteria of OCC's Fitness Standards for Directors, Clearing Members and
Others in the election of Management Directors, to remove a reference
to the President. OCC notes that, in addition to the proposed
elimination of the office of President in this proposed rule change, in
2014, the Commission approved a proposed rule change providing that
OCC's President will no longer be considered a Management Director.\9\
OCC also proposes to amend Interpretation and Policy .02 of Rule 1104
to remove references to the Management Vice Chairman. In September
2016, the Commission approved a proposed rule change by OCC to
eliminate the role of Management Vice Chairman.\10\ OCC is proposing to
remove remaining references to this position that were intended to be
removed as part of SR-OCC-2016-002.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 73785 (December 8,
2014), 79 FR 73915 (December 12, 2014) (SR-OCC-2014-18).
\10\ See Securities Exchange Act Release No. 78862 (September
16, 2016), 81 FR 65415 (September 22, 2016) (SR-OCC-2016-002).
---------------------------------------------------------------------------
Finally, OCC proposes a number of non-substantive amendments to
correct typographical errors in the By-Laws and Rules (e.g., correction
of typographical error in Rule 305(c) to refer to the ``Executive''
Chairman and in Rule 309A to state ``an'' Appointed Clearing Member).
II. Discussion and Commission Findings
Section 19(b)(2)(C) of the Act \11\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Act and rules and regulations thereunder applicable
to such organization. The Commission finds that the proposal is
consistent with Section 17A(b)(3)(A) of the Act \12\ and Rules 17Ad-
22(e)(1) \13\ and 17Ad-22(e)(2) \14\ thereunder, as described in detail
below.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(2)(C).
\12\ 15 U.S.C. 78q-1(b)(3)(A).
\13\ 17 CFR 240.17Ad-22(e)(1).
\14\ 17 CFR 240.17Ad-22(e)(2).
---------------------------------------------------------------------------
A. Consistency With Section 17A(b)(3)(A) of the Act
The Commission finds OCC's proposed changes to be consistent with
Section 17A(b)(3)(A) of the Act.\15\ Section 17A(b)(3)(A) of the Act
\16\ requires, among other things, that a clearing agency be so
organized and have the capacity to be able to facilitate the prompt and
accurate clearance and settlement of securities transactions and
derivative agreements, contracts, and transactions for which it is
responsible. As noted above, after implementation of the proposed
changes, OCC's Executive Chairman will also serve as OCC's CEO, the
President's duties and powers will be reallocated among the Executive
Chairman, COO and CAO, the COO and CAO will have authority to take
action or grant exceptions under certain conditions, and the positions
of Treasurer and CFO will be separated. According to OCC, these
leadership and organizational changes are intended to promote efficient
management and operation by doing the following: (i) Providing for a
broad range of knowledge, skills, and experience within OCC's
management team, (ii) improving the alignment of officers'
responsibilities with their skills and experience and thereby enhancing
efficiency and effectiveness within OCC's management, and (iii)
ensuring that there continues to be an appropriate allocation of duties
and powers among officers such that management has the capacity to
continue carrying out OCC's affairs even if a particular officer is
absent or disabled. By promoting OCC's efficient management and
operation, the proposed leadership and organizational changes will
support OCC's efforts to ensure that it is organized and has the
capacity to be able to facilitate the prompt and accurate clearance and
settlement of securities transactions.
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\15\ 15 U.S.C. 78q-1(b)(3)(A).
\16\ Id.
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B. Consistency With Rule 17Ad-22(e)(1)
The Commission finds that the proposed changes are consistent with
Rule 17Ad-22(e)(1).\17\ Rule 17Ad-22(e)(1) \18\ requires each covered
clearing agency to establish, implement, maintain and enforce written
policies and procedures reasonably designed to provide for a well-
founded, clear, transparent, and enforceable legal basis for each
aspect of its activities in all relevant jurisdictions. Pursuant to
this proposal, OCC is centralizing the definition of ``Designated
Officer'' in Article I, Section 1 and making other clarifying and
conforming changes to OCC's governing documents. OCC states that such
conforming and clarifying changes will promote organizational
consistency and clarity in OCC's legal framework to ensure that the
legal framework remains well-founded, transparent and enforceable in
all relevant jurisdictions.
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\17\ 17 CFR 240.17Ad-22(e)(1).
\18\ Id.
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C. Consistency With Rule 17Ad-22(e)(2)
The Commission finds that the proposed changes to specify the
responsibilities of the Chairman/CEO, COO and CAO, as well as the
proposed changes to specify which positions are board-appointed, are
consistent with the requirements in Rule 17Ad-22(e)(2).\19\ Rule 17Ad-
22(e)(2) \20\ requires each covered clearing agency to establish,
implement, maintain and enforce written policies and procedures
reasonably designed to provide for governance arrangements that, among
[[Page 20506]]
other things, are clear and transparent and specify clear and direct
lines of responsibility. According to OCC, the proposed amendments to
OCC's By-Laws, Rules, charters and policies will provide clear and
transparent statements of the responsibilities of its Executive
Chairman/CEO, COO and CAO within the overall management structure of
OCC. In addition, the proposed amendments support clarity and
transparency by reflecting in OCC's By-Laws and Rules organizational
changes to provide that the President will no longer be a recognized
officer of OCC, to provide that the Board will appoint the COO and CAO,
and to separate the positions of Treasurer and CFO. Finally, the
proposed changes, in specifying the responsibilities of the Chairman/
CEO, COO and CAO, support the requirement that OCC provide for
governance arrangements that specify clear and direct lines of
responsibility, helping to clarify the roles that each individual will
fulfill and fostering accountability at OCC.
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\19\ 17 CFR 240.17Ad-22(e)(2).
\20\ Id.
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III. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed change is consistent with the requirements of the Act, and in
particular, with the requirements of Section 17A of the Act \21\ and
the rules and regulations thereunder.
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\21\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\22\ that the proposed rule change (SR-OCC-2017-002) be,
and it hereby is, approved.
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\22\ 15 U.S.C. 78s(b)(2).
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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-08814 Filed 5-1-17; 8:45 am]
BILLING CODE 8011-01-P
