Submission for OMB Review; Comment Request, 60264-60265 [2017-27313]
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Federal Register / Vol. 82, No. 242 / Tuesday, December 19, 2017 / Notices
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proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to such organization. The
Commission finds that the proposal is
consistent with Section 17A(b)(3)(F) of
the Act 9 and Rule 17Ad–22(e)(7)(viii) 10
thereunder, as described in detail
below.
A. Consistency With Section
17A(b)(3)(F) of the Act
The Commission finds that the
proposed change is consistent with
Section 17A(b)(3)(F) of the Act,11 which
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. The Commission
understands that the proposed rule
change constitutes a limited expansion
of OCC’s ability to address liquidity
needs that arise from scenarios that,
while relatively less extreme than a
Settlement Entity suffering a
bankruptcy, insolvency, resolution,
suspension of operations, or similar
event, nevertheless can prevent daily
settlement from occurring. The
Commission therefore believes that the
proposed rule change is designed to
enhance OCC’s ability to access liquid
resources under such circumstances,
which, in turn, would allow OCC to
continue to meet its settlement
obligations to its Clearing Members in a
timely fashion, thereby promoting
prompt and accurate clearance and
settlement of securities transactions.
Specifically, the Commission believes
that the proposed rule change is
designed to expand OCC’s existing
borrowing authority in a scenario where
a Settlement Entity is temporarily
unable to achieve daily settlement, but
is not facing bankruptcy, insolvency,
resolution, suspension of operations, or
similar event. Therefore, the proposed
rule change is designed to provide OCC
with an alternative tool with which to
address what OCC describes as an
‘‘extraordinary circumstance’’ that
would enable OCC to borrow against the
Clearing Fund in order to avoid
disrupting its ordinary settlement cycle.
The Commission believes that the
authority to take such action is designed
to avoid imposing a disruption on
Clearing Members and reduce the need
to extend the settlement window, which
could allow OCC to settle transactions
in a more timely fashion. Accordingly,
the Commission finds that the proposed
rule change is designed to promote the
9 15
U.S.C. 78q–1(b)(3)(F).
CFR 240.17Ad–22(e)(7)(viii).
11 15 U.S.C. 78q–1(b)(3)(F).
10 17
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17:47 Dec 18, 2017
Jkt 244001
prompt and accurate clearance and
settlement of securities transactions,
and is therefore consistent with Section
17A(b)(3)(F) of the Act.12
B. Consistency With Rule 17Ad–
22(e)(7)(viii) Under the Act
The Commission further believes that
the proposed rule change is consistent
with Rule 17Ad–22(e)(7)(viii), which
requires that a covered clearing agency
establish, implement, maintain, and
enforce written policies and procedures
reasonably designed to, as applicable,
effectively measure, monitor, and
manage liquidity risk that arises in or is
borne by the covered clearing agency,
including measuring, monitoring, and
managing its settlement and funding
flows on an ongoing and timely basis,
and its use of intraday liquidity by, at
a minimum, addressing foreseeable
liquidity shortfalls that would not be
covered by its liquid resources and seek
to avoid unwinding, revoking, or
delaying the same-day settlement of
payment obligations.13
The Commission believes that the
proposed rule change is designed to
improve OCC’s ability to address a
temporary liquidity need resulting from
the failure of a Settlement Entity to
achieve timely settlement. The
Commission believes that the proposed
rule change is designed to provide OCC
with additional tools to address a
foreseeable, temporary liquidity
shortfall to prevent the unwinding,
revoking, or delaying of same-day
settlement should that scenario
materialize, and is therefore consistent
with Rule 17Ad–22(e)(7)(viii) under the
Act.
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 14 and the rules
and regulations thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,15 that the
proposed rule change (SR–OCC–2017–
017) be, and it hereby is, approved.
12 Id.
13 17
CFR 240.17Ad–22(e)(7)(viii).
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).
15 15 U.S.C. 78s(b)(2).
16 17 CFR 200.30–3(a)(12).
14 In
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–27228 Filed 12–18–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–385, OMB Control No.
3235–0441]
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Extension:
Rule 18f–3.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) (‘‘Paperwork
Reduction Act’’), the Securities and
Exchange Commission (‘‘the
Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for extension of the
previously approved collection of
information discussed below.
Rule 18f–3 (17 CFR 270.18f–3) under
the Investment Company Act of 1940
(15 U.S.C. 80a–1 et seq.) exempts from
section 18(f)(1) a fund that issues
multiple classes of shares representing
interests in the same portfolio of
securities (a ‘‘multiple class fund’’) if
the fund satisfies the conditions of the
rule. In general, each class must differ
in its arrangement for shareholder
services or distribution or both, and
must pay the related expenses of that
different arrangement. The rule includes
one requirement for the collection of
information. A multiple class fund must
prepare, and fund directors must
approve, a written plan setting forth the
separate arrangement and expense
allocation of each class, and any related
conversion features or exchange
privileges (‘‘rule 18f–3 plan’’). Approval
of the plan must occur before the fund
issues any shares of multiple classes
and whenever the fund materially
amends the plan. In approving the plan,
the fund board, including a majority of
the independent directors, must
determine that the plan is in the best
interests of each class and the fund as
a whole.
The requirement that the fund prepare
and directors approve a written rule
18f–3 plan is intended to ensure that the
fund compiles information relevant to
E:\FR\FM\19DEN1.SGM
19DEN1
Federal Register / Vol. 82, No. 242 / Tuesday, December 19, 2017 / Notices
sradovich on DSK3GMQ082PROD with NOTICES
the fairness of the separate arrangement
and expense allocation for each class,
and that directors review and approve
the information. Without a blueprint
that highlights material differences
among classes, directors might not
perceive potential conflicts of interests
when they determine whether the plan
is in the best interests of each class and
the fund. In addition, the plan may be
useful to Commission staff in reviewing
the fund’s compliance with the rule.
Based on an analysis of fund filings,
the Commission estimates that there are
approximately 7,743 multiple class
funds offered by 1,045 registrants. The
Commission estimates that each of the
1,045 registrants will make an average of
0.5 responses annually to prepare and
approve a written 18f–3 plan.1 The
Commission estimates each response
will take 6 hours, requiring a total of 3
hours per registrant per year.2 Thus the
total annual hour burden associated
with these requirements of the rule is
approximately 3,135 hours.3
Estimates of the average burden hours
are made solely for the purposes of the
Paperwork Reduction Act and are not
derived from a comprehensive or even
a representative survey or study of the
costs of Commission rules and forms.
The collection of information under rule
18f–3 is mandatory. The information
provided under rule 18f–3 will not be
kept confidential. An agency may not
conduct or sponsor, and a person is not
required to respond to, a collection of
information unless it displays a
currently valid OMB control number.
The public may view the background
documentation for this information
collection at the following website,
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to: Shagufta_
Ahmed@omb.eop.gov; and (ii) Pamela
Dyson, Director/Chief Information
Officer, Securities and Exchange
Commission, c/o Remi Pavlik-Simon,
100 F Street NE, Washington, DC 20549
or send an email to: PRA_Mailbox@
sec.gov. Comments must be submitted to
OMB within 30 days of this notice.
1 The Commission estimates that each registrant
prepares and approves a rule 18f–3 plan every two
years when issuing a new fund or new class or
amending a plan (or that 522.5 of all 1,045
registrants prepare and approve a plan each year).
2 0.5 responses per registrant × 6 hours per
response = 3 hours per registrant.
3 3 hours per registrant per year × 1,045
registrants = 3,135 hours per year.
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17:47 Dec 18, 2017
Jkt 244001
Dated: December 14, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–27313 Filed 12–18–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82310; File No. SR–OCC–
2017–010]
Self-Regulatory Organizations; the
Options Clearing Corporation; Order
Approving Proposed Rule Change
Relating to The Options Clearing
Corporation’s Default Management
Policy
December 13, 2017.
On October 12, 2017, The Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–OCC–2017–010
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 November 1, 2017.3 The
Commission did not receive any
comment letters on the proposed rule
change. This order approves the
proposed rule change.
I. Description of the Proposed Rule
Change
This proposed rule change by OCC
will formalize OCC’s Default
Management Policy (‘‘DM Policy’’). The
proposed rule change does not require
any changes to the text of OCC’s ByLaws or Rules.4
As described by OCC, the DM Policy
would apply in the event of a default by
a Clearing Member, settlement bank, or
a financial market utility (‘‘FMU’’) with
which OCC has a relationship.5 The
purpose of the DM Policy is to outline
OCC’s default management framework
and describe the default management
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 34–
81955 (Oct. 26, 2017), 82 FR 50707 (Nov. 1, 2017)
(File No. SR–OCC–2017–010).
4 All terms with initial capitalization that are not
otherwise defined herein have the same meaning as
set forth in the OCC By-Laws and Rules.
5 The DM Policy identifies the following
securities or commodities clearing organizations as
examples of such FMUs: The Depository Trust
Company, National Securities Clearing Corporation,
and the Chicago Mercantile Exchange. In an event
of default by one of these securities or commodities
clearing organizations, or by a settlement bank, OCC
has authority under certain conditions pursuant to
Article VIII, Sections 1(a)(vii) and 5(b) of the ByLaws to manage the default using Clearing Member
contributions to the Clearing Fund.
2 17
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60265
steps that OCC has authority to take
depending upon the facts and
circumstances of a default. The DM
Policy focuses on Clearing Member
default, which OCC believes is
appropriate because Clearing Member
default represents a substantial part of
the overall default risk that is posed to
OCC in connection with its central
counterparty clearing services.6 OCC
notes that the DM Policy is part of a
broader framework used by OCC to
manage the default of a Clearing
Member, settlement bank, or FMU,
including OCC’s By-Laws, Rules, and
other policies and procedures. The
broader framework is designed to
collectively ensure that OCC would
appropriately manage any such default
consistent with OCC’s obligations as a
covered clearing agency.7
The DM Policy describes the authority
of OCC’s Board of Directors (‘‘Board’’) or
a Designated Officer 8 to summarily
suspend a Clearing Member pursuant to
OCC Rule 1102(a) in the event the
Clearing Member defaults. The DM
Policy further provides that, pursuant to
OCC Rule 707, OCC may suspend a
Clearing Member that participates in a
cross-margining program in the event of
a default regarding its cross-margining
accounts. Upon any suspension of a
Clearing Member, the DM Policy states
that OCC would immediately notify a
number of parties, including the
suspended Clearing Member, regulatory
authorities, participant and other
exchanges (as applicable) in which the
suspended Clearing Member is a
common member, other Clearing
Members,9 and OCC’s Board.10
In the event of a Clearing Member
suspension, the DM Policy provides that
6 For purposes of the DM Policy, references to a
Clearing Member suspension or default contemplate
the circumstances specified in OCC Rule 1102,
which constitute events of ‘‘default’’ under
Interpretation and Policy .01 to the Rule.
7 On September 28, 2016, the Commission
amended Rule 17Ad-22 under the Act by adding
new Rule 17Ad-22(e) to establish requirements for
the operation and governance of registered clearing
agencies that meet the definition of a covered
clearing agency, as defined by Rule 17Ad-22(a)(5).
Standards for Covered Clearing Agencies, Securities
Exchange Act Release No. 34–78961 (Sept. 28,
2016), 81 FR 70786 (Oct. 13, 2016).
8 For this purpose, the term Designated Officer
includes the Executive Chairman, Chief
Administrative Officer (‘‘CAO’’), Chief Operating
Officer (‘‘COO’’), Chief Risk Officer (‘‘CRO’’), and
Executive Vice President—Financial Risk
Management (‘‘EVP–FRM’’).
9 OCC Rule 1103 requires OCC to notify all
Clearing Members of the suspension as soon as
possible.
10 With respect to pending transactions of a
suspended Clearing Member, the DM Policy
provides that these will be handled pursuant to
OCC Rule 1105, provided that OCC has no
obligation to accept the trades effected by a
suspended Clearing Member post-suspension.
E:\FR\FM\19DEN1.SGM
19DEN1
Agencies
[Federal Register Volume 82, Number 242 (Tuesday, December 19, 2017)]
[Notices]
[Pages 60264-60265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27313]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-385, OMB Control No. 3235-0441]
Submission for OMB Review; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736.
Extension:
Rule 18f-3.
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.) (``Paperwork Reduction Act''), the
Securities and Exchange Commission (``the Commission'') has submitted
to the Office of Management and Budget (``OMB'') a request for
extension of the previously approved collection of information
discussed below.
Rule 18f-3 (17 CFR 270.18f-3) under the Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) exempts from section 18(f)(1) a fund
that issues multiple classes of shares representing interests in the
same portfolio of securities (a ``multiple class fund'') if the fund
satisfies the conditions of the rule. In general, each class must
differ in its arrangement for shareholder services or distribution or
both, and must pay the related expenses of that different arrangement.
The rule includes one requirement for the collection of information. A
multiple class fund must prepare, and fund directors must approve, a
written plan setting forth the separate arrangement and expense
allocation of each class, and any related conversion features or
exchange privileges (``rule 18f-3 plan''). Approval of the plan must
occur before the fund issues any shares of multiple classes and
whenever the fund materially amends the plan. In approving the plan,
the fund board, including a majority of the independent directors, must
determine that the plan is in the best interests of each class and the
fund as a whole.
The requirement that the fund prepare and directors approve a
written rule 18f-3 plan is intended to ensure that the fund compiles
information relevant to
[[Page 60265]]
the fairness of the separate arrangement and expense allocation for
each class, and that directors review and approve the information.
Without a blueprint that highlights material differences among classes,
directors might not perceive potential conflicts of interests when they
determine whether the plan is in the best interests of each class and
the fund. In addition, the plan may be useful to Commission staff in
reviewing the fund's compliance with the rule.
Based on an analysis of fund filings, the Commission estimates that
there are approximately 7,743 multiple class funds offered by 1,045
registrants. The Commission estimates that each of the 1,045
registrants will make an average of 0.5 responses annually to prepare
and approve a written 18f-3 plan.\1\ The Commission estimates each
response will take 6 hours, requiring a total of 3 hours per registrant
per year.\2\ Thus the total annual hour burden associated with these
requirements of the rule is approximately 3,135 hours.\3\
---------------------------------------------------------------------------
\1\ The Commission estimates that each registrant prepares and
approves a rule 18f-3 plan every two years when issuing a new fund
or new class or amending a plan (or that 522.5 of all 1,045
registrants prepare and approve a plan each year).
\2\ 0.5 responses per registrant x 6 hours per response = 3
hours per registrant.
\3\ 3 hours per registrant per year x 1,045 registrants = 3,135
hours per year.
---------------------------------------------------------------------------
Estimates of the average burden hours are made solely for the
purposes of the Paperwork Reduction Act and are not derived from a
comprehensive or even a representative survey or study of the costs of
Commission rules and forms. The collection of information under rule
18f-3 is mandatory. The information provided under rule 18f-3 will not
be kept confidential. An agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information
unless it displays a currently valid OMB control number.
The public may view the background documentation for this
information collection at the following website, www.reginfo.gov.
Comments should be directed to: (i) Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Office of Management and Budget, Room 10102, New Executive Office
Building, Washington, DC 20503, or by sending an email to:
[email protected]; and (ii) Pamela Dyson, Director/Chief
Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 100 F Street NE, Washington, DC 20549 or send an email
to: [email protected]. Comments must be submitted to OMB within 30
days of this notice.
Dated: December 14, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-27313 Filed 12-18-17; 8:45 am]
BILLING CODE 8011-01-P