Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of a Proposed Rule Change, as Modified by Amendment No. 1, Concerning the Adoption of a New Minimum Cash Requirement for the Clearing Fund, 57015-57019 [2017-25857]

Download as PDF Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Notices Commission’s Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on December 22, 2017, and should be accompanied by proof of service on the applicants, in the form of an affidavit, or, for lawyers, a certificate of service. Pursuant to Rule 0–5 under the Act, hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission’s Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. Applicants, 3250 Lacey Road, Suite 130, Downers Grove, IL 60515, and Morrison C. Warren, Walter L. Draney and Suzanne M. Russell, Chapman and Cutler LLP, 111 West Monroe Street, Chicago, IL 60603. FOR FURTHER INFORMATION CONTACT: Laura L. Solomon, Senior Counsel, at (202) 551–6915 or David J. Marcinkus, Branch Chief, at (202) 551–6821 (Division of Investment Management, Chief Counsel’s Office). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained via the Commission’s Web site by searching for the file number, or for an applicant using the Company name box, at https:// www.sec.gov/search/search.htm, or by calling (202) 551–8090. Summary of the Application 1. Applicants request an order to permit (a) a Series 1 to acquire shares of Underlying Funds 2 in excess of the limits in sections 12(d)(1)(A) and (C) of the Act and (b) the Underlying Funds that are registered open-end investment companies, their principal underwriters and any broker or dealer registered under the Exchange Act to sell shares of the Underlying Funds to the Series in excess of the limits in section 12(d)(1)(B) of the Act.3 Applicants also sradovich on DSK3GMQ082PROD with NOTICES 1 Applicants request that the order apply to each existing and future series of the Trust and to any future registered UIT and series thereof sponsored by Ausdal or an entity controlling, controlled by or under common control with Ausdal (the ‘‘Series’’). 2 Certain of the Underlying Funds may be registered as an open-end investment company or a UIT, but have received exemptive relief from the Commission to permit their shares to be listed and traded on a national securities exchange at negotiated prices and to operate as exchange-traded funds (‘‘ETFs’’). 3 Applicants do not request relief for the Series to invest in reliance on the order in closed-end VerDate Sep<11>2014 16:44 Nov 30, 2017 Jkt 244001 request an order of exemption under sections 6(c) and 17(b) of the Act from the prohibition on certain affiliated transactions in section 17(a) of the Act to the extent necessary to permit the Underlying Funds to sell their shares to, and redeem their shares from, the Series.4 Applicants state that such transactions will be consistent with the policies of each Series and each Underlying Fund and with the general purposes of the Act and will be based on the net asset values of the Underlying Funds. 2. Applicants agree that any order granting the requested relief will be subject to the terms and conditions stated in the application. Such terms and conditions are designed to, among other things, help prevent any potential (i) undue influence over an Underlying Fund that is not in the same ‘‘group of investment companies’’ as the UIT through control or voting power, or in connection with certain services, transactions, and underwritings, (ii) excessive layering of fees, and (iii) overly complex fund structures, which are the concerns underlying the limits in sections 12(d)(1)(A), (B), and (C) of the Act. 3. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that (a) the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part of any person concerned; (b) the proposed transaction is consistent with the policies of each registered investment company involved; and (c) the proposed transaction is consistent with the general purposes of the Act. Section 6(c) of the Act permits the Commission to exempt any persons or transactions from any provision of the investment companies that are not listed and traded on a national securities exchange. 4 A Series generally would purchase and sell shares of an Underlying Fund that operates as an ETF through secondary market transactions rather than through principal transactions with the Underlying Fund. Applicants nevertheless request relief from section 17(a) to permit a Series to purchase or redeem shares from the ETF. A Series will purchase and sell shares of an Underlying Fund that is a closed-end fund through secondary market transactions at market prices rather than through principal transactions with the closed-end fund. Accordingly, applicants are not requesting section 17(a) relief with respect to transactions in shares of closed-end funds. PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 57015 Act if such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–25849 Filed 11–30–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meetings FEDERAL REGISTER CITATION OF PREVIOUS ANNOUNCEMENT: 82 FR 56089, November 27, 2017. PREVIOUSLY ANNOUNCED TIME AND DATE OF THE MEETING: Friday, December 1, 2017. The following matter will also be considered during the 12 p.m. Closed Meeting scheduled for Friday, December 1, 2017: Formal orders of investigation. CHANGES IN THE MEETING: CONTACT PERSON FOR MORE INFORMATION: For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact the Office of the Secretary at (202) 551– 5400. Dated: November 29, 2017. Brent J. Fields, Secretary. [FR Doc. 2017–26103 Filed 11–29–17; 4:15 pm] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82156; File No. SR–OCC– 2017–019] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of a Proposed Rule Change, as Modified by Amendment No. 1, Concerning the Adoption of a New Minimum Cash Requirement for the Clearing Fund November 27, 2017. 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 November 14, 2017, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule 1 15 2 17 E:\FR\FM\01DEN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 01DEN1 57016 Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Notices change as described in Items I, II and III below, which Items have been prepared primarily by OCC. On November 22, 2017, OCC filed Amendment No. 1 to the proposed rule change.3 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 This proposed rule change by the OCC would (1) revise OCC’s By-Laws to adopt a new minimum cash requirement for the Clearing Fund; (2) revise OCC’s By-Laws to provide for the pass-through of interest earned on Clearing Fund cash held in OCC’s Federal Reserve bank account; (3) enact changes to OCC’s Fee Policy that reflect the pass-through of interest earned on Clearing Fund cash held in OCC’s Federal Reserve bank account; and (4) make certain conforming changes to OCC’s Rules and By-Laws to affect the aforementioned changes.4 All terms with initial capitalization not defined here have the same meaning set forth in OCC’s ByLaws and Rules.5 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 sradovich on DSK3GMQ082PROD with NOTICES 1. Purpose OCC proposes to establish a minimum cash contribution requirement for its Clearing Fund in order to increase the amount of qualifying liquid resources available to OCC to account for extreme 3 In Amendment No. 1, OCC modified the proposed change to Article VIII, Section 4(a) of the By-Laws to clarify that interest earned on Clearing Fund cash deposits held at a Federal Reserve Bank accruing to the benefit of Clearing Members would be calculated daily based on each Clearing Member’s pro rata share of Clearing Fund cash deposits. OCC did not propose any other changes to the filing in Amendment No. 1. 4 OCC has filed an advance notice with the Commission in connection with this proposal. See SR–OCC–2017–808. 5 OCC’s By-Laws and Rules can be found on OCC’s public Web site: https://optionsclearing.com/ about/publications/bylaws.jsp. VerDate Sep<11>2014 16:44 Nov 30, 2017 Jkt 244001 scenarios that may result in liquidity demands exceeding OCC’s current Cover 1 liquidity resources, as calculated under the current historically-based methodology, and provide for a more consistent level of cash resources in its available prefunded financial resources. The proposed rule change also would provide for the pass-through of interest income earned on such deposits to its Clearing Members. OCC’s current practices and the proposed changes to such practices are described in more detail below. Current Practice Presently, Article VIII, Section 3(a) of OCC’s By-Laws provides that Clearing Fund contributions shall be in the form of cash and Government securities, but neither OCC’s By-Laws nor Rules provides a minimum cash requirement for contributions in the Clearing Fund. Article VIII, Section 4(a) of OCC’s ByLaws allows for OCC to invest cash contributions to the Clearing Fund, partially or wholly, in OCC’s account in Government securities, and to the extent that such contributions are not so invested they shall be deposited by OCC in a separate account or accounts for Clearing Fund contributions in approved custodians. Article VIII, Section 4(a) of OCC’s By-Laws, however, presently does not account for the treatment of interest earned on cash deposits held in the OCC’s Federal Reserve bank account. Proposed Change 1. Minimum Cash Clearing Fund Requirement OCC proposes to establish a minimum cash contribution requirement for its Clearing Fund in order to increase the amount of highly liquid resources available to OCC to account for extreme scenarios that may result in liquidity demands exceeding OCC’s current Cover 1 liquidity resources, as calculated under the current historically-based methodology, and provide for a more consistent level of cash resources in its available prefunded financial resources.6 Specifically, the proposed rule change would require that Clearing Members collectively contribute $3 billion in cash to the Clearing Fund (‘‘Cash Clearing Fund Requirement’’). Each Clearing 6 OCC’s Current Cover 1 liquidity resources are sized based on the liquidity needed to address exposures derived solely from historical results. Introducing the Cash Clearing Fund Requirement would increase OCC’s liquidity resources to address the exposures observed in a stress liquidity analysis performed using proposed sizing stress tests for OCC’s Clearing Fund. PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 Member’s proportionate share of the Cash Clearing Fund Requirement shall be equal in percentage to its proportionate share of the Clearing Fund as determined by the Clearing Fund allocation methodology in current Rule 1001. OCC has historically sized its liquidity resources based on historically observed liquidity demands and analysis of potential large forecasted liquidity demands over at least the next twelve months. OCC forecasts its future daily settlement activity under normal market conditions (e.g., mark-to-market settlements, and settlements resulting from the expiration of derivatives contracts) and compares such demands to its resources to ensure that at all times it will maintain a positive liquidity position to meet settlement obligations. OCC has performed an analysis of its stress liquidity demands based on a 1in-70 year hypothetical market event. OCC started its analysis by selecting the largest historical peak monthly settlements that occurred over the historical look back period of data generated by the stress test system. It then also selected certain large nonexpiration days to supplement the analysis. From this it estimated the mark-to-market and cash settled exercise and assignment obligations for the members driving the historical peak demand under the proposed stress tests scenario to determine the stressed peak demand. Through this analysis, OCC observed that peak stressed liquidity demands of the largest 1 or 2 members, which normally occur in conjunction with certain monthly expirations, can exceed the size OCC’s committed liquidity facilities (which currently total $3 billion). In these cases, while OCC did have cash in the Clearing Fund to supplement its liquidity resources, and the total of credit facilities and cash in the Clearing Fund did cover these peak stressed liquidity demands, OCC is unable to rely on these cash contributions to be present at any given time since there is no obligation on members to maintain any amount of their contribution in cash. As a result, OCC believes it is necessary to increase or otherwise ensure the availability of highly liquid resources in the Clearing Fund to account for extreme scenarios that may result in liquidity demands exceeding OCC’s Cover 1 liquidity resources, as calculated under the current historically-based methodology. The proposed Cash Clearing Fund Requirement, when taken together with OCC’s $3 billion in committed liquidity facilities, would provide liquidity resources sufficient to cover 100% of E:\FR\FM\01DEN1.SGM 01DEN1 sradovich on DSK3GMQ082PROD with NOTICES Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Notices the peak stressed liquidity demands of the largest 1 or 2 members observed in OCC’s analysis. In addition, the proposed changes would allow OCC’s Executive Chairman, Chief Administrative Officer (‘‘CAO’’), or Chief Operating Officer (‘‘COO’’), upon providing notice to the Risk Committee, to temporarily increase the amount of cash required to be maintained in the Clearing Fund up to an amount that includes the size of the Clearing Fund as determined in accordance with Rule 1001 for the month in question for the protection of OCC, clearing members or the general public. Any determination by the Executive Chairman, CAO and/or COO to implement a temporary increase in Clearing Fund size would (i) be based upon then-existing facts and circumstances, (ii) be in furtherance of the integrity of OCC and the stability of the financial system, and (iii) take into consideration the legitimate interests of Clearing Members and market participants. The proposed rule change would require that any temporary increase in the Cash Clearing Fund Requirement be reviewed by the Risk Committee as soon as practicable, but in any event within 20 calendar days of the increase. In its review, the Risk Committee shall determine whether (1) the increase in the minimum Cash Clearing Fund Requirement is no longer required or (2) OCC’s Clearing Fund contribution requirements and other related rules should be modified to ensure that OCC continues to maintain sufficient liquid resources to cover its largest aggregate payment obligations in extreme but plausible market conditions. In the event that the Risk Committee would determine to permanently increase the Cash Clearing Fund Requirement, OCC would initiate any regulatory approval process required to effect such a change.7 A Clearing Member will be required to satisfy any increase in its required cash contribution pursuant to an increase in the Cash Clearing Fund Requirement no later than one hour before the close of the Fedwire on the business day following OCC’s issuance of an instruction to increase cash contributions. These changes would be reflected in new paragraph (a)(i) of Section 3 of Article VIII of OCC’s By-Laws, as well as in new Interpretation and Policy .04 to Section 3 of Article VIII. 7 However, OCC will not decrease the Cash Clearing Fund Requirement while the regulatory approvals for a change in the Cash Clearing Fund Requirement are being obtained to ensure that OCC continues to maintain sufficient liquid resources to cover its liquidity demands during that time. VerDate Sep<11>2014 16:44 Nov 30, 2017 Jkt 244001 2. Interest Pass Through for Clearing Fund Cash Held at the Federal Reserve In connection with the proposed Cash Clearing Fund Requirement, substantially all of OCC’s Clearing Fund deposits consisting of cash would be held in an account established by OCC at a Federal Reserve Bank.8 OCC proposes that it would pass the interest income earned in such account through to its Clearing Members. As a result, OCC proposes to revise Article VIII, Section 4(a) of OCC’s By-Laws to include a sentence to provide that any interest earned on cash deposits held at a Federal Reserve Bank shall accrue to the benefit of Clearing Members (calculated daily based on each Clearing Member’s pro rata share of Clearing Fund cash deposits), provided that such Clearing Members have provided OCC with all tax documentation as OCC may from time to time require in order to effectuate such payment.9 3. Changes to the Fee Policy To Accommodate Interest Passed Through to Clearing Members In order to accommodate the pass through of interest income, OCC would also amend its Fee Policy to add definitions for ‘‘Pass-Through Interest Revenue’’ and ‘‘Operating Expenses’’ to exclude from the calculation of the Business Risk Buffer projected interest revenue and expense, respectively, related to the pass-through of earned interest from OCC to Clearing Members.10 OCC also proposes to add a new example of the Business Risk Buffer calculation reflecting this change and make clarifying changes throughout the Policy to incorporate the use of the new defined terms. In addition, OCC proposes to amend the Fee Policy to remove references to ‘‘Proposed Rule 17Ad–22(e)(15)’’ to reflect the adoption of the Commission’s Covered Clearing Agency Standards. 8 OCC notes that it would retain the discretion to maintain a small portion of Clearing Fund cash deposits in other accounts (e.g., accounts with commercial banks) for various reasons, including facilitating normal substitution activity by its Clearing Members. 9 Article VIII, Section 4(a) currently states that all interest gained on cash Clearing Fund deposits belongs to OCC. 10 While interest income earned by OCC from its Federal Reserve bank account would be passed on to its Clearing Members, OCC anticipates that it would charge a cash management fee to cover associated costs (i.e., administrative and similar costs). OCC would file a separate proposed rule change with the Commission, subject to receiving all necessary regulatory approvals for the proposed changes described herein, prior to implementing any cash management fee. PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 57017 4. Conforming Changes In conjunction with the aforementioned changes, OCC is also proposing to make four related conforming changes. First, OCC proposes to revise Interpretation and Policy .01 of Rule 1001 to reflect that the new minimum Clearing Fund size is $3 billion (instead of $1 billion) plus 110% of the size of OCC’s committed liquidity facilities, which conforms to the proposed new minimum cash requirement for the Clearing Fund. Second, OCC proposes to amend the definition of ‘‘Approved Custodian’’ in Article I, Section 1 of the By-Laws to clarify that the Federal Reserve Bank may also be an Approved Custodian, to the extent it is available to OCC. Third, OCC is proposing to delete existing Article VIII, Section 4(b), regarding the establishment of a segregated funds account for cash contributions to the Clearing Fund. The segregated funds account allows a Clearing Member to contribute cash to a bank or trust company account maintained in the name of OCC, subject to OCC’s exclusive control, but the account also includes the name of the Clearing Member and any interest accrues to the Clearing Member rather than OCC. OCC proposes to eliminate the account type because Clearing Members have not expressed interest in using such an account, no such accounts are in use today, and moving forward, substantially all cash Clearing Fund contributions will be held in OCC’s account at the Federal Reserve Bank. Fourth, OCC proposes to introduce new language to Article VIII, Section 4(a) to clarify that cash contributions to the Clearing Fund that are deposited at approved custodians may be commingled with the Clearing Fund contributions of different Clearing Members. 2. Statutory Basis Section 17A(b)(3)(F) of the Act,11 requires, among other things, that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions and, in general, to protect investors and the public interest. The proposed rule change is designed to improve the resiliency of OCC’s liquidity resources by establishing a new $3 billion minimum cash requirement for the Clearing Fund and by providing OCC authority to temporarily increase the Cash Clearing Fund Requirement from $3 billion up to an amount that includes the size of the 11 15 E:\FR\FM\01DEN1.SGM U.S.C. 78q–1(b)(3)(F). 01DEN1 sradovich on DSK3GMQ082PROD with NOTICES 57018 Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Notices Clearing Fund as determined in accordance with Rule 1001 for the month in question. The proposed rule change also is designed to improve the position of OCC’s Clearing Members by permitting OCC to pass through interest earned on Clearing Fund cash deposits held at OCC’s account with the Federal Reserve. In this regard, OCC believes the proposed rule change is designed to promote the prompt and accurate clearance and settlement of securities transactions and to protect investors and the public interest, in accordance with the requirements of Section 17A(b)(3)(F) of the Act.12 Additionally, Rule 17Ad–22(e)(7) 13 requires that a covered clearing agency (‘‘CCA’’) establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively measure, monitor and manage liquidity risk that arises in or is borne by the CCA. Rule 17Ad– 22(e)(7)(i) 14 requires CCAs to establish, implement, maintain, and enforce written policies and procedures reasonably designed to effectively measure, monitor, and manage the liquidity risk that arises in or is borne by OCC by maintaining sufficient liquid resources at the minimum in all relevant currencies to effect same-day settlement, and where appropriate, intraday and multiday settlement of payment obligations with a high degree of confidence under a wide range of stress scenarios, that includes but is not limited to, the default of the participant family that would generate the largest aggregate payment obligation for OCC in extreme but plausible market conditions. As explained above, OCC has performed an analysis of its stress liquidity demands using proposed sizing stress tests for the Clearing Fund and has observed that peak stressed liquidity demands of the largest 1 or 2 members, which normally occur in conjunction with certain monthly expirations, can exceed the size of OCC’s committed liquidity facilities (which currently total $3 billion). OCC believes that the proposed minimum $3 billion Cash Clearing Fund Requirement will adjust OCC’s available liquidity resources to account for extreme scenarios that may result in liquidity demands exceeding OCC’s Cover 1 liquidity resources. In this regard, OCC believes the proposed Cash Clearing Fund Requirement is designed to satisfy the requirements of Rule 17Ad– 22(e)(7)(i).15 Further, Rule 17Ad–22(e)(7)(viii) 16 requires that a CCA address foreseeable liquidity shortfalls that would not be covered by its liquid resources and Rule 17Ad–22(e)(7)(ix) 17 requires that a CCA describe its process to replenish any liquid resources that it may employ during a stress event. OCC believes that the proposed authority to temporarily increase the minimum cash requirement from $3 billion up to an amount that includes the size of the Clearing Fund (as determined in accordance with Rule 1001 for the month in question) would provide OCC with an additional means of addressing liquidity shortfalls that otherwise would not be covered by OCC’s liquid resources. Further, because the Clearing Fund is a resource that is replenished in accordance with Section 6 of Article VIII of OCC’s By-Laws, to the extent that Clearing Members are required to replenish their required contributions—in whole or in part— with cash following a proportionate charge during, the proposed change would provide a form of replenishment of OCC’s liquid resources. In this regard, OCC believes the proposed authority to require up to an all cash Clearing Fund requirement is designed to satisfy the requirements of Rules 17Ad– 22(e)(7)(viii) and (ix).18 The proposed rule change is not inconsistent with the existing rules of OCC, including any other rules proposed to be amended. (B) Clearing Agency’s Statement on Burden on Competition Section 17A(b)(3)(I) of the Act 19 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. OCC does not believe the proposed rule change would have any impact or impose any burden on competition. The primary purpose of the proposed rule change is to enhance OCC’s liquidity resources by establishing a $3 billion Cash Clearing Fund Requirement, which requirement could be temporarily increased up to an amount that includes the size of the Clearing Fund as determined in accordance with Rule 1001 for the month in question. Further, the proposed rule change is designed to revise Article VIII, Section 4(a) of OCC’s By-Laws and the Fee Policy to enable OCC to pass through interest earned on Clearing Fund cash held in OCC’s Federal Reserve bank account. The 12 Id. 16 17 13 17 17 17 CFR 240.17Ad–22(e)(7)(viii). CFR 240.17Ad–22(e)(7)(ix). 18 17 CFR 240.17Ad–22(e)(7)(viii) and (ix). 19 15 U.S.C. 78q–1(b)(3)(I). CFR 240.17Ad–22(e)(7). 14 17 CFR 240.17Ad–22(e)(7)(i). 15 17 CFR 240.17Ad–22(e)(7)(i). VerDate Sep<11>2014 16:44 Nov 30, 2017 Jkt 244001 PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 proposed rule change would apply equally to all Clearing Members and would not affect Clearing Members’ access to OCC’s services or disadvantage or favor any particular user in relationship to another user. As such, OCC believes that the proposed changes would not have any impact or impose any burden on competition. (C) Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments 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 Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: 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–2017–019 on the subject line. Paper Comments • Send paper comments in triplicate to Brent Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–OCC–2017–019. 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 E:\FR\FM\01DEN1.SGM 01DEN1 Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Notices 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_17_ 019.pdf. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–OCC–2017–019 and should be submitted on or before December 22, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–25857 Filed 11–30–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 32921] Notice of Applications for Deregistration Under Section 8(f) of the Investment Company Act of 1940 sradovich on DSK3GMQ082PROD with NOTICES November 27, 2017. The following is a notice of applications for deregistration under section 8(f) of the Investment Company Act of 1940 for the month of November 2017. A copy of each application may be obtained via the Commission’s Web site by searching for the file number, or for an applicant using the Company name box, at https://www.sec.gov/search/ search.htm or by calling (202) 551– 8090. An order granting each application will be issued unless the SEC orders a hearing. Interested persons 20 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:44 Nov 30, 2017 Jkt 244001 may request a hearing on any application by writing to the SEC’s Secretary at the address below and serving the relevant applicant with a copy of the request, personally or by mail. Hearing requests should be received by the SEC by 5:30 p.m. on December 20, 2017, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to Rule 0–5 under the Act, hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission’s Secretary. ADDRESSES: The Commission: Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel, at (202) 551– 6819 or Chief Counsel’s Office at (202) 551–6821; SEC, Division of Investment Management, Chief Counsel’s Office, 100 F Street NE., Washington, DC 20549–8010. NB Crossroads Private Markets Fund IV (TE)—Custody Client LLC [File No. 811–23169] Summary: Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. Applicant has never made a public offering of its securities and does not propose to make a public offering or engage in business of any kind. Filing Date: The application was filed on October 10, 2017 and amended on October 20, 2017. Applicant’s Address: 325 North Saint Paul Street, 49th Floor, Dallas, Texas 75201. NB Crossroads Private Markets Fund IV (TI)—Custody Client LLC [File No. 811–23115] Summary: Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. Applicant has never made a public offering of its securities and does not propose to make a public offering or engage in business of any kind. Filing Date: The application was filed on October 10, 2017 and amended on October 20, 2017. Applicant’s Address: 325 North Saint Paul Street, 49th Floor, Dallas, Texas 75201. PO 00000 Frm 00079 Fmt 4703 Sfmt 9990 57019 Cushing MLP Infrastructure Fund II [File No. 811–23093] Summary: Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. On October 13, 2017 and October 25, 2017, applicant made liquidating distributions to its shareholders, based on net asset value. Expenses of $800 incurred in connection with the liquidation were paid by the applicant’s investment adviser. Filing Date: The application was filed on October 27, 2017. Applicant’s Address: 8117 Preston Road, Suite 440, Dallas, Texas 75225. Deutsche Global High Income Fund, Inc. [File No. 811–06671] Summary: Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. On September 18, 2017, applicant made liquidating distributions to its shareholders, based on net asset value. Expenses of $8,516.98 incurred in connection with the liquidation were paid by the applicant. Filing Date: The application was filed on November 7, 2017. Applicant’s Address: 345 Park Avenue, New York, New York 10154. Pacholder High Yield Fund, Inc. [File No. 811–05639] Summary: Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. On July 11, 2017 and August 29, 2017, applicant made liquidating distributions to its shareholders, based on net asset value. Expenses of $54,878 incurred in connection with the liquidation were paid by the applicant. Applicant has retained approximately $225,000 in cash as well as other assets in approximately the amount of $10,000 for the purpose of paying liabilities and expenses incurred by the applicant as it concludes operations. Filing Date: The application was filed on November 14, 2017. Applicant’s Address: 270 Park Avenue, New York, New York 10017. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–25848 Filed 11–30–17; 8:45 am] BILLING CODE P E:\FR\FM\01DEN1.SGM 01DEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 82, Number 230 (Friday, December 1, 2017)]
[Notices]
[Pages 57015-57019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25857]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82156; File No. SR-OCC-2017-019]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of a Proposed Rule Change, as Modified by Amendment 
No. 1, Concerning the Adoption of a New Minimum Cash Requirement for 
the Clearing Fund

November 27, 2017.
    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 November 14, 2017, The Options Clearing Corporation (``OCC'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule

[[Page 57016]]

change as described in Items I, II and III below, which Items have been 
prepared primarily by OCC. On November 22, 2017, OCC filed Amendment 
No. 1 to the proposed rule change.\3\ The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, OCC modified the proposed change to 
Article VIII, Section 4(a) of the By-Laws to clarify that interest 
earned on Clearing Fund cash deposits held at a Federal Reserve Bank 
accruing to the benefit of Clearing Members would be calculated 
daily based on each Clearing Member's pro rata share of Clearing 
Fund cash deposits. OCC did not propose any other changes to the 
filing in Amendment No. 1.
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    This proposed rule change by the OCC would (1) revise OCC's By-Laws 
to adopt a new minimum cash requirement for the Clearing Fund; (2) 
revise OCC's By-Laws to provide for the pass-through of interest earned 
on Clearing Fund cash held in OCC's Federal Reserve bank account; (3) 
enact changes to OCC's Fee Policy that reflect the pass-through of 
interest earned on Clearing Fund cash held in OCC's Federal Reserve 
bank account; and (4) make certain conforming changes to OCC's Rules 
and By-Laws to affect the aforementioned changes.\4\ All terms with 
initial capitalization not defined here have the same meaning set forth 
in OCC's By-Laws and Rules.\5\
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    \4\ OCC has filed an advance notice with the Commission in 
connection with this proposal. See SR-OCC-2017-808.
    \5\ 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
    OCC proposes to establish a minimum cash contribution requirement 
for its Clearing Fund in order to increase the amount of qualifying 
liquid resources available to OCC to account for extreme scenarios that 
may result in liquidity demands exceeding OCC's current Cover 1 
liquidity resources, as calculated under the current historically-based 
methodology, and provide for a more consistent level of cash resources 
in its available prefunded financial resources. The proposed rule 
change also would provide for the pass-through of interest income 
earned on such deposits to its Clearing Members. OCC's current 
practices and the proposed changes to such practices are described in 
more detail below.
Current Practice
    Presently, Article VIII, Section 3(a) of OCC's By-Laws provides 
that Clearing Fund contributions shall be in the form of cash and 
Government securities, but neither OCC's By-Laws nor Rules provides a 
minimum cash requirement for contributions in the Clearing Fund. 
Article VIII, Section 4(a) of OCC's By-Laws allows for OCC to invest 
cash contributions to the Clearing Fund, partially or wholly, in OCC's 
account in Government securities, and to the extent that such 
contributions are not so invested they shall be deposited by OCC in a 
separate account or accounts for Clearing Fund contributions in 
approved custodians. Article VIII, Section 4(a) of OCC's By-Laws, 
however, presently does not account for the treatment of interest 
earned on cash deposits held in the OCC's Federal Reserve bank account.
Proposed Change
1. Minimum Cash Clearing Fund Requirement
    OCC proposes to establish a minimum cash contribution requirement 
for its Clearing Fund in order to increase the amount of highly liquid 
resources available to OCC to account for extreme scenarios that may 
result in liquidity demands exceeding OCC's current Cover 1 liquidity 
resources, as calculated under the current historically-based 
methodology, and provide for a more consistent level of cash resources 
in its available prefunded financial resources.\6\ Specifically, the 
proposed rule change would require that Clearing Members collectively 
contribute $3 billion in cash to the Clearing Fund (``Cash Clearing 
Fund Requirement''). Each Clearing Member's proportionate share of the 
Cash Clearing Fund Requirement shall be equal in percentage to its 
proportionate share of the Clearing Fund as determined by the Clearing 
Fund allocation methodology in current Rule 1001.
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    \6\ OCC's Current Cover 1 liquidity resources are sized based on 
the liquidity needed to address exposures derived solely from 
historical results. Introducing the Cash Clearing Fund Requirement 
would increase OCC's liquidity resources to address the exposures 
observed in a stress liquidity analysis performed using proposed 
sizing stress tests for OCC's Clearing Fund.
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    OCC has historically sized its liquidity resources based on 
historically observed liquidity demands and analysis of potential large 
forecasted liquidity demands over at least the next twelve months. OCC 
forecasts its future daily settlement activity under normal market 
conditions (e.g., mark-to-market settlements, and settlements resulting 
from the expiration of derivatives contracts) and compares such demands 
to its resources to ensure that at all times it will maintain a 
positive liquidity position to meet settlement obligations.
    OCC has performed an analysis of its stress liquidity demands based 
on a 1-in-70 year hypothetical market event. OCC started its analysis 
by selecting the largest historical peak monthly settlements that 
occurred over the historical look back period of data generated by the 
stress test system. It then also selected certain large non-expiration 
days to supplement the analysis. From this it estimated the mark-to-
market and cash settled exercise and assignment obligations for the 
members driving the historical peak demand under the proposed stress 
tests scenario to determine the stressed peak demand. Through this 
analysis, OCC observed that peak stressed liquidity demands of the 
largest 1 or 2 members, which normally occur in conjunction with 
certain monthly expirations, can exceed the size OCC's committed 
liquidity facilities (which currently total $3 billion). In these 
cases, while OCC did have cash in the Clearing Fund to supplement its 
liquidity resources, and the total of credit facilities and cash in the 
Clearing Fund did cover these peak stressed liquidity demands, OCC is 
unable to rely on these cash contributions to be present at any given 
time since there is no obligation on members to maintain any amount of 
their contribution in cash. As a result, OCC believes it is necessary 
to increase or otherwise ensure the availability of highly liquid 
resources in the Clearing Fund to account for extreme scenarios that 
may result in liquidity demands exceeding OCC's Cover 1 liquidity 
resources, as calculated under the current historically-based 
methodology. The proposed Cash Clearing Fund Requirement, when taken 
together with OCC's $3 billion in committed liquidity facilities, would 
provide liquidity resources sufficient to cover 100% of

[[Page 57017]]

the peak stressed liquidity demands of the largest 1 or 2 members 
observed in OCC's analysis.
    In addition, the proposed changes would allow OCC's Executive 
Chairman, Chief Administrative Officer (``CAO''), or Chief Operating 
Officer (``COO''), upon providing notice to the Risk Committee, to 
temporarily increase the amount of cash required to be maintained in 
the Clearing Fund up to an amount that includes the size of the 
Clearing Fund as determined in accordance with Rule 1001 for the month 
in question for the protection of OCC, clearing members or the general 
public. Any determination by the Executive Chairman, CAO and/or COO to 
implement a temporary increase in Clearing Fund size would (i) be based 
upon then-existing facts and circumstances, (ii) be in furtherance of 
the integrity of OCC and the stability of the financial system, and 
(iii) take into consideration the legitimate interests of Clearing 
Members and market participants.
    The proposed rule change would require that any temporary increase 
in the Cash Clearing Fund Requirement be reviewed by the Risk Committee 
as soon as practicable, but in any event within 20 calendar days of the 
increase. In its review, the Risk Committee shall determine whether (1) 
the increase in the minimum Cash Clearing Fund Requirement is no longer 
required or (2) OCC's Clearing Fund contribution requirements and other 
related rules should be modified to ensure that OCC continues to 
maintain sufficient liquid resources to cover its largest aggregate 
payment obligations in extreme but plausible market conditions. In the 
event that the Risk Committee would determine to permanently increase 
the Cash Clearing Fund Requirement, OCC would initiate any regulatory 
approval process required to effect such a change.\7\ A Clearing Member 
will be required to satisfy any increase in its required cash 
contribution pursuant to an increase in the Cash Clearing Fund 
Requirement no later than one hour before the close of the Fedwire on 
the business day following OCC's issuance of an instruction to increase 
cash contributions.
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    \7\ However, OCC will not decrease the Cash Clearing Fund 
Requirement while the regulatory approvals for a change in the Cash 
Clearing Fund Requirement are being obtained to ensure that OCC 
continues to maintain sufficient liquid resources to cover its 
liquidity demands during that time.
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    These changes would be reflected in new paragraph (a)(i) of Section 
3 of Article VIII of OCC's By-Laws, as well as in new Interpretation 
and Policy .04 to Section 3 of Article VIII.
2. Interest Pass Through for Clearing Fund Cash Held at the Federal 
Reserve
    In connection with the proposed Cash Clearing Fund Requirement, 
substantially all of OCC's Clearing Fund deposits consisting of cash 
would be held in an account established by OCC at a Federal Reserve 
Bank.\8\ OCC proposes that it would pass the interest income earned in 
such account through to its Clearing Members. As a result, OCC proposes 
to revise Article VIII, Section 4(a) of OCC's By-Laws to include a 
sentence to provide that any interest earned on cash deposits held at a 
Federal Reserve Bank shall accrue to the benefit of Clearing Members 
(calculated daily based on each Clearing Member's pro rata share of 
Clearing Fund cash deposits), provided that such Clearing Members have 
provided OCC with all tax documentation as OCC may from time to time 
require in order to effectuate such payment.\9\
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    \8\ OCC notes that it would retain the discretion to maintain a 
small portion of Clearing Fund cash deposits in other accounts 
(e.g., accounts with commercial banks) for various reasons, 
including facilitating normal substitution activity by its Clearing 
Members.
    \9\ Article VIII, Section 4(a) currently states that all 
interest gained on cash Clearing Fund deposits belongs to OCC.
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3. Changes to the Fee Policy To Accommodate Interest Passed Through to 
Clearing Members
    In order to accommodate the pass through of interest income, OCC 
would also amend its Fee Policy to add definitions for ``Pass-Through 
Interest Revenue'' and ``Operating Expenses'' to exclude from the 
calculation of the Business Risk Buffer projected interest revenue and 
expense, respectively, related to the pass-through of earned interest 
from OCC to Clearing Members.\10\ OCC also proposes to add a new 
example of the Business Risk Buffer calculation reflecting this change 
and make clarifying changes throughout the Policy to incorporate the 
use of the new defined terms. In addition, OCC proposes to amend the 
Fee Policy to remove references to ``Proposed Rule 17Ad-22(e)(15)'' to 
reflect the adoption of the Commission's Covered Clearing Agency 
Standards.
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    \10\ While interest income earned by OCC from its Federal 
Reserve bank account would be passed on to its Clearing Members, OCC 
anticipates that it would charge a cash management fee to cover 
associated costs (i.e., administrative and similar costs). OCC would 
file a separate proposed rule change with the Commission, subject to 
receiving all necessary regulatory approvals for the proposed 
changes described herein, prior to implementing any cash management 
fee.
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4. Conforming Changes
    In conjunction with the aforementioned changes, OCC is also 
proposing to make four related conforming changes. First, OCC proposes 
to revise Interpretation and Policy .01 of Rule 1001 to reflect that 
the new minimum Clearing Fund size is $3 billion (instead of $1 
billion) plus 110% of the size of OCC's committed liquidity facilities, 
which conforms to the proposed new minimum cash requirement for the 
Clearing Fund. Second, OCC proposes to amend the definition of 
``Approved Custodian'' in Article I, Section 1 of the By-Laws to 
clarify that the Federal Reserve Bank may also be an Approved 
Custodian, to the extent it is available to OCC. Third, OCC is 
proposing to delete existing Article VIII, Section 4(b), regarding the 
establishment of a segregated funds account for cash contributions to 
the Clearing Fund. The segregated funds account allows a Clearing 
Member to contribute cash to a bank or trust company account maintained 
in the name of OCC, subject to OCC's exclusive control, but the account 
also includes the name of the Clearing Member and any interest accrues 
to the Clearing Member rather than OCC. OCC proposes to eliminate the 
account type because Clearing Members have not expressed interest in 
using such an account, no such accounts are in use today, and moving 
forward, substantially all cash Clearing Fund contributions will be 
held in OCC's account at the Federal Reserve Bank. Fourth, OCC proposes 
to introduce new language to Article VIII, Section 4(a) to clarify that 
cash contributions to the Clearing Fund that are deposited at approved 
custodians may be commingled with the Clearing Fund contributions of 
different Clearing Members.
2. Statutory Basis
    Section 17A(b)(3)(F) of the Act,\11\ requires, among other things, 
that the rules of a clearing agency be designed to promote the prompt 
and accurate clearance and settlement of securities transactions and, 
in general, to protect investors and the public interest. The proposed 
rule change is designed to improve the resiliency of OCC's liquidity 
resources by establishing a new $3 billion minimum cash requirement for 
the Clearing Fund and by providing OCC authority to temporarily 
increase the Cash Clearing Fund Requirement from $3 billion up to an 
amount that includes the size of the

[[Page 57018]]

Clearing Fund as determined in accordance with Rule 1001 for the month 
in question. The proposed rule change also is designed to improve the 
position of OCC's Clearing Members by permitting OCC to pass through 
interest earned on Clearing Fund cash deposits held at OCC's account 
with the Federal Reserve. In this regard, OCC believes the proposed 
rule change is designed to promote the prompt and accurate clearance 
and settlement of securities transactions and to protect investors and 
the public interest, in accordance with the requirements of Section 
17A(b)(3)(F) of the Act.\12\
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    \11\ 15 U.S.C. 78q-1(b)(3)(F).
    \12\ Id.
---------------------------------------------------------------------------

    Additionally, Rule 17Ad-22(e)(7) \13\ requires that a covered 
clearing agency (``CCA'') establish, implement, maintain and enforce 
written policies and procedures reasonably designed to effectively 
measure, monitor and manage liquidity risk that arises in or is borne 
by the CCA. Rule 17Ad-22(e)(7)(i) \14\ requires CCAs to establish, 
implement, maintain, and enforce written policies and procedures 
reasonably designed to effectively measure, monitor, and manage the 
liquidity risk that arises in or is borne by OCC by maintaining 
sufficient liquid resources at the minimum in all relevant currencies 
to effect same-day settlement, and where appropriate, intraday and 
multiday settlement of payment obligations with a high degree of 
confidence under a wide range of stress scenarios, that includes but is 
not limited to, the default of the participant family that would 
generate the largest aggregate payment obligation for OCC in extreme 
but plausible market conditions. As explained above, OCC has performed 
an analysis of its stress liquidity demands using proposed sizing 
stress tests for the Clearing Fund and has observed that peak stressed 
liquidity demands of the largest 1 or 2 members, which normally occur 
in conjunction with certain monthly expirations, can exceed the size of 
OCC's committed liquidity facilities (which currently total $3 
billion). OCC believes that the proposed minimum $3 billion Cash 
Clearing Fund Requirement will adjust OCC's available liquidity 
resources to account for extreme scenarios that may result in liquidity 
demands exceeding OCC's Cover 1 liquidity resources. In this regard, 
OCC believes the proposed Cash Clearing Fund Requirement is designed to 
satisfy the requirements of Rule 17Ad-22(e)(7)(i).\15\
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    \13\ 17 CFR 240.17Ad-22(e)(7).
    \14\ 17 CFR 240.17Ad-22(e)(7)(i).
    \15\ 17 CFR 240.17Ad-22(e)(7)(i).
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    Further, Rule 17Ad-22(e)(7)(viii) \16\ requires that a CCA address 
foreseeable liquidity shortfalls that would not be covered by its 
liquid resources and Rule 17Ad-22(e)(7)(ix) \17\ requires that a CCA 
describe its process to replenish any liquid resources that it may 
employ during a stress event. OCC believes that the proposed authority 
to temporarily increase the minimum cash requirement from $3 billion up 
to an amount that includes the size of the Clearing Fund (as determined 
in accordance with Rule 1001 for the month in question) would provide 
OCC with an additional means of addressing liquidity shortfalls that 
otherwise would not be covered by OCC's liquid resources. Further, 
because the Clearing Fund is a resource that is replenished in 
accordance with Section 6 of Article VIII of OCC's By-Laws, to the 
extent that Clearing Members are required to replenish their required 
contributions--in whole or in part--with cash following a proportionate 
charge during, the proposed change would provide a form of 
replenishment of OCC's liquid resources. In this regard, OCC believes 
the proposed authority to require up to an all cash Clearing Fund 
requirement is designed to satisfy the requirements of Rules 17Ad-
22(e)(7)(viii) and (ix).\18\
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    \16\ 17 CFR 240.17Ad-22(e)(7)(viii).
    \17\ 17 CFR 240.17Ad-22(e)(7)(ix).
    \18\ 17 CFR 240.17Ad-22(e)(7)(viii) and (ix).
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    The proposed rule change is not inconsistent with the existing 
rules of OCC, including any other rules proposed to be amended.

(B) Clearing Agency's Statement on Burden on Competition

    Section 17A(b)(3)(I) of the Act \19\ 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. OCC does not 
believe the proposed rule change would have any impact or impose any 
burden on competition. The primary purpose of the proposed rule change 
is to enhance OCC's liquidity resources by establishing a $3 billion 
Cash Clearing Fund Requirement, which requirement could be temporarily 
increased up to an amount that includes the size of the Clearing Fund 
as determined in accordance with Rule 1001 for the month in question. 
Further, the proposed rule change is designed to revise Article VIII, 
Section 4(a) of OCC's By-Laws and the Fee Policy to enable OCC to pass 
through interest earned on Clearing Fund cash held in OCC's Federal 
Reserve bank account. The proposed rule change would apply equally to 
all Clearing Members and would not affect Clearing Members' access to 
OCC's services or disadvantage or favor any particular user in 
relationship to another user. As such, OCC believes that the proposed 
changes would not have any impact or impose any burden on competition.
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    \19\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants or Others

    Written comments 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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

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-2017-019 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-OCC-2017-019. 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

[[Page 57019]]

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_17_019.pdf.
    All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-OCC-2017-019 and should be 
submitted on or before December 22, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
Eduardo A. Aleman,
Assistant Secretary.
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    \20\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2017-25857 Filed 11-30-17; 8:45 am]
 BILLING CODE 8011-01-P

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