Self-Regulatory Organizations; the Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Revise the Options Clearing Corporation's Schedule of Fees, 6651-6653 [2018-02972]
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Federal Register / Vol. 83, No. 31 / Wednesday, February 14, 2018 / Notices
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange believes the proposed
fee change is reasonable because it
would help ensure that revenue
collected from the ORF, in combination
with other regulatory fees and fines,
does not exceed the Exchange’s total
regulatory costs. Moreover, the
Exchange believes the ORF ensures
fairness by assessing higher fees to those
TPHs that require more Exchange
regulatory services based on the amount
of customer options business they
conduct. Regulating customer trading
activity is much more labor intensive
and requires greater expenditure of
human and technical resources than
regulating non-customer trading
activity, which tends to be more
automated and less labor-intensive. As a
result, the costs associated with
administering the customer component
of the Exchange’s overall regulatory
program are materially higher than the
costs associated with administering the
non-customer component (e.g., TPH
proprietary transactions) of its
regulatory program.8 The Exchange
believes the proposed fee change is
equitable and not unfairly
discriminatory in that it is charged to all
TPHs on all their transactions that clear
in the customer range at the OCC.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
C2 Options does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, because it
applies to all TPHs. The proposed ORF
is comparable to fees charged by other
options exchanges for the same or
similar service. The Exchange believes
any burden on competition imposed by
the proposed rule change is outweighed
by the need to help the Exchange
adequately fund its regulatory activities
to ensure compliance with the Exchange
Act.
daltland on DSKBBV9HB2PROD with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
8 If the Exchange changes its method of funding
regulation or if circumstances otherwise change in
the future, the Exchange may decide to modify the
ORF or assess a separate regulatory fee on TPH
proprietary transactions if the Exchange deems it
advisable.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 9 and paragraph (f) of Rule
19b–4 10 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
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 No. SR–C2–
2018–003 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File No.
SR–C2–2018–003. 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 website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
10 17
PO 00000
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Fmt 4703
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6651
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 the
filing also will be available for
inspection and copying at the principal
office of the Exchange. 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 No.
SR–C2–2018–003, and should be
submitted on or before March 7, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–02980 Filed 2–13–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82657; File No. SR–OCC–
2018–005]
Self-Regulatory Organizations; the
Options Clearing Corporation; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Revise
the Options Clearing Corporation’s
Schedule of Fees
February 8, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January
29, 2018, The Options Clearing
Corporation (‘‘OCC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below. Items I and II have been
prepared primarily by OCC. OCC filed
the proposed rule change pursuant to
Section 19(b)(3)(A)(ii) of the Act 3 and
Rule 19b–4(f)(2) 4 thereunder so that the
proposal was effective upon filing with
the Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
1 15
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Federal Register / Vol. 83, No. 31 / Wednesday, February 14, 2018 / Notices
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change by OCC
would revise OCC’s Schedule of Fees to
introduce a cash management fee that
would cover administrative and other
operational expenses incurred by OCC
in connection with maintaining cash
deposits that are held in OCC’s Federal
Reserve bank account and passingthrough to Clearing Members the
interest earned on such deposits. The
proposed changes to the Schedule of
Fees can be found in Exhibit 5 to the
proposed rule change. Material
proposed to be added to OCC’s Fee
Schedule as currently in effect is
marked by underlining and material
proposed to be deleted is marked by
strikethrough text; material proposed to
be added to OCC’s Fee Schedule by
proposed rule change SR–OCC–2018–
004 is marked by double underlining
and material proposed to be deleted by
proposed rule change SR–OCC–2018–
004 is marked by double strikethrough
text. All capitalized terms not defined
herein have the same meaning as set
forth in the OCC By-Laws 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
daltland on DSKBBV9HB2PROD with NOTICES
(1) Purpose
The purpose of this proposed rule
change is to revise OCC’s Schedule of
Fees to introduce a cash management
fee that would cover administrative and
other operational expenses incurred by
OCC in connection with maintaining
cash deposits that are held in OCC’s
Federal Reserve bank account and
passing-through to Clearing Members
the interest earned on such deposits.
The revised fee schedule would become
effective on March 1, 2018.
By way of background, on January 12,
2018, Commission approved changes to
5 OCC’s By-Laws and Rules can be found on
OCC’s public website: https://optionsclearing.com/
about/publications/bylaws.jsp.
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22:07 Feb 13, 2018
Jkt 244001
OCC’s By-Laws and Rules that establish
a new minimum cash contribution
requirement for OCC’s Clearing Fund
and provide for the pass-through to
OCC’s Clearing Members of interest
income earned on cash Clearing Fund
deposits held in OCC’s Federal Reserve
bank account.6 As approved, the
minimum cash contribution
requirement will require OCC’s Clearing
Members to collectively contribute $3
billion in cash to OCC’s Clearing Fund,
with each Clearing Member’s
proportionate share of the minimum
cash requirement being equal in
percentage to its proportionate share of
the Clearing Fund.7 In addition, OCC’s
Executive Chairman, Chief
Administrative Officer, or Chief
Operating Officer, upon providing
notice to the Risk Committee of OCC’s
Board of Directors, will have the ability,
under certain limited circumstances, 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.8
In connection with the minimum cash
Clearing Fund requirement,
substantially all of OCC’s Clearing Fund
deposits consisting of cash will be held
in OCC’s Federal Reserve bank
account.9 OCC will pass the interest
income earned in such account through
to its Clearing Members, provided that
each such Clearing Member has
provided OCC with all tax
documentation as OCC may from time
to time require in order to effectuate
such payment.10 Interest earned will be
calculated daily based on each Clearing
Member’s pro rata share of Clearing
Fund cash deposits.11 In maintaining
these minimum cash balances in OCC’s
Federal Reserve bank account and
facilitating the pass-through of interest
earned on such balances, OCC will
incur certain administrative and other
operational expenses. These expenses
will include the operation of the Federal
Reserve bank account, certain systems
enhancements needed to maintain
minimum cash deposits and facilitate
6 See Securities Exchange Act Release No. 34–
82502 (January 12, 2018), 82 FR 2825 (January 19,
2018) (SR–OCC–2017–019).
7 Id. Each Clearing Member’s proportionate share
of the Clearing Fund is determined by the Clearing
Fund allocation methodology in current Rule 1001.
8 See supra note 6.
9 See supra note 6. OCC retains 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.
10 See supra note 6. Interest earned will be
calculated daily based on each Clearing Member’s
pro rata share of Clearing Fund cash deposits.
11 See supra note 6.
PO 00000
Frm 00146
Fmt 4703
Sfmt 4703
pass-through of interest earned, and
staffing costs to operate the cash
management and funding desk. In order
to defray these expenses, OCC is
proposing to implement a cash
management fee.
The proposed cash management fee
would be an annual rate equal to 5 basis
points (0.05%), calculated on a 365-day
calendar, and billed monthly on each
Clearing Member’s daily proportionate
share of cash on deposit in OCC’s
Federal Reserve bank account.12 This
proposed change is designed to provide
OCC with a level of revenue sufficient
to cover OCC’s administrative and
operating expenses, as described above.
(2) Statutory Basis
Section 17A(b)(3)(D) of the Act
requires that the rules of a clearing
agency provide for the equitable
allocation of reasonable dues, fees, and
other charges among its participants.13
The proposed cash management fee
would cover administrative and other
operational expenses incurred by OCC
in connection with passing through to
Clearing Members the interest earned on
Clearing Fund cash deposits that are
held in an account established by OCC
at a Federal Reserve bank. OCC believes
the proposed fee change is reasonable
because the new cash management fee
would be set at a level intended to cover
OCC’s expenses associated with
maintaining a minimum amount of
Clearing Fund cash (which requirement
is designed to satisfy certain liquidity
requirements under Rule 17Ad–22(e)(7))
and with passing-through to Clearing
Members the interest earned on such
deposits held in OCC’s Federal Reserve
bank account. Moreover, OCC believes
that the proposed fee change would
result in an equitable allocation of fees
among its participants because it is a fee
that would be equally applicable to all
similarly situated participants (i.e.,
Clearing Members). As a result, OCC
believes that the proposed fee schedule
provides for the equitable allocation of
reasonable fees in accordance with
Section 17A(b)(3)(D) of the Act.14 The
proposed rule change is not inconsistent
with the existing rules of OCC,
including any other rules proposed to be
amended.
12 Accordingly, a Clearing Member can determine
the monthly amount of its cash management fee by
(1) dividing the annual interest rate by 365; (2) then
multiplying the product by the Clearing Member’s
proportionate share of cash on deposit in OCC’s
Federal Reserve bank account for each calendar day
in a given month; and (3) taking the sum all of the
products in step (2) for the given month.
13 17 U.S.C. 78q–1(b)(3)(D).
14 17 U.S.C. 78q–1(b)(3)(D).
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Federal Register / Vol. 83, No. 31 / Wednesday, February 14, 2018 / Notices
Electronic Comments
(B) Clearing Agency’s Statement on
Burden on Competition
Section 17A(b)(3)(I) of the Act 15
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 that the proposed rule change
would have any impact or impose a
burden on competition. Although this
proposed rule change affects Clearing
Members, their customers, and the
markets that OCC serves, OCC believes
that the proposed rule change would not
disadvantage or favor any particular
user of OCC’s services in relationship to
another user because the proposed cash
management fee would apply equally to
all Clearing Members. Accordingly, OCC
does not believe that the proposed rule
change would have any impact or
impose a burden on competition.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants or Others
Written comments on the proposed
rule change were not and are not
intended to be solicited with respect to
the proposed rule change and none have
been received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act 16 and Rule
19b–4(f)(2) 17 thereunder. At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.18
daltland on DSKBBV9HB2PROD with NOTICES
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:
15 15
U.S.C. 78q–1(b)(3)(I).
U.S.C. 78s(b)(3)(A)(ii).
17 17 CFR 240.19b–4(f)(2).
18 Notwithstanding its immediate effectiveness,
implementation of this rule change will be delayed
until this change is deemed certified under CFTC
Rule 40.6.
16 15
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22:07 Feb 13, 2018
Jkt 244001
• 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–2018–005 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090.
All submissions should refer to File
Number SR–OCC–2018–005. 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 website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website 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 website at
https://www.theocc.com/about/
publications/bylaws.jsp.
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–2018–005 and should
be submitted on or before March 7,
2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–02972 Filed 2–13–18; 8:45 am]
BILLING CODE 8011–01–P
19 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00147
Fmt 4703
Sfmt 4703
6653
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82669; File Nos. SR–DTC–
2017–021; SR–FICC–2017–021; SR–NSCC–
2017–017)
Self-Regulatory Organizations; The
Depository Trust Company; Fixed
Income Clearing Corporation; National
Securities Clearing Corporation;
Notice of Designation of Longer Period
for Commission Action on Proposed
Rule Changes To Adopt a Recovery &
Wind-Down Plan and Related Rules
February 8, 2018.
On December 18, 2017, The
Depository Trust Company (‘‘DTC’’),
Fixed Income Clearing Corporation
(‘‘FICC’’), and National Securities
Clearing Corporation (‘‘NSCC’’)
(collectively, ‘‘Clearing Agencies’’), each
filed with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change to adopt a
recovery and wind-down plan and
related rules (SR–DTC–2017–021, SR–
FICC–2017–021, and SR–NSCC–2017–
017), respectively (‘‘Proposed Rule
Changes’’), pursuant to Section 19(b)(1)
of the Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder.2
The Proposed Rule Changes were
published for comment in the Federal
Register on January 8, 2018.3 The
Commission did not receive any
comments on the Proposed Rule
Changes.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the notices for the
Proposed Rule Changes is February 22,
2018.
The Commission is extending the 45day time period for Commission action
on the Proposed Rule Changes. The
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Securities Exchange Act Release No. 82432
(January 2, 2018), 83 FR 884 (January 8, 2018) (SR–
DTC–2017–021); Securities Exchange Act Release
No. 82431 (January 2, 2018), 83 FR 871 (January 8,
2018) (SR–FICC–2017–021); Securities Exchange
Act Release No. 82430 (January 2, 2018), 83 FR 841
(January 8, 2018) (SR–NSCC–2017–017).
4 15 U.S.C. 78s(b)(2).
2 17
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]]>Agencies
[Federal Register Volume 83, Number 31 (Wednesday, February 14, 2018)]
[Notices]
[Pages 6651-6653]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-02972]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82657; File No. SR-OCC-2018-005]
Self-Regulatory Organizations; the Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Revise the Options Clearing Corporation's Schedule of Fees
February 8, 2018.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 29, 2018, The Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below. Items
I and II have been prepared primarily by OCC. OCC filed the proposed
rule change pursuant to Section 19(b)(3)(A)(ii) of the Act \3\ and Rule
19b-4(f)(2) \4\ thereunder so that the proposal was effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
[[Page 6652]]
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change by OCC would revise OCC's Schedule of Fees
to introduce a cash management fee that would cover administrative and
other operational expenses incurred by OCC in connection with
maintaining cash deposits that are held in OCC's Federal Reserve bank
account and passing-through to Clearing Members the interest earned on
such deposits. The proposed changes to the Schedule of Fees can be
found in Exhibit 5 to the proposed rule change. Material proposed to be
added to OCC's Fee Schedule as currently in effect is marked by
underlining and material proposed to be deleted is marked by
strikethrough text; material proposed to be added to OCC's Fee Schedule
by proposed rule change SR-OCC-2018-004 is marked by double underlining
and material proposed to be deleted by proposed rule change SR-OCC-
2018-004 is marked by double strikethrough text. All capitalized terms
not defined herein have the same meaning as set forth in the OCC By-
Laws and Rules.\5\
---------------------------------------------------------------------------
\5\ OCC's By-Laws and Rules can be found on OCC's public
website: https://optionsclearing.com/about/publications/bylaws.jsp.
---------------------------------------------------------------------------
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, OCC included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. OCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
(1) Purpose
The purpose of this proposed rule change is to revise OCC's
Schedule of Fees to introduce a cash management fee that would cover
administrative and other operational expenses incurred by OCC in
connection with maintaining cash deposits that are held in OCC's
Federal Reserve bank account and passing-through to Clearing Members
the interest earned on such deposits. The revised fee schedule would
become effective on March 1, 2018.
By way of background, on January 12, 2018, Commission approved
changes to OCC's By-Laws and Rules that establish a new minimum cash
contribution requirement for OCC's Clearing Fund and provide for the
pass-through to OCC's Clearing Members of interest income earned on
cash Clearing Fund deposits held in OCC's Federal Reserve bank
account.\6\ As approved, the minimum cash contribution requirement will
require OCC's Clearing Members to collectively contribute $3 billion in
cash to OCC's Clearing Fund, with each Clearing Member's proportionate
share of the minimum cash requirement being equal in percentage to its
proportionate share of the Clearing Fund.\7\ In addition, OCC's
Executive Chairman, Chief Administrative Officer, or Chief Operating
Officer, upon providing notice to the Risk Committee of OCC's Board of
Directors, will have the ability, under certain limited circumstances,
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.\8\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 34-82502 (January
12, 2018), 82 FR 2825 (January 19, 2018) (SR-OCC-2017-019).
\7\ Id. Each Clearing Member's proportionate share of the
Clearing Fund is determined by the Clearing Fund allocation
methodology in current Rule 1001.
\8\ See supra note 6.
---------------------------------------------------------------------------
In connection with the minimum cash Clearing Fund requirement,
substantially all of OCC's Clearing Fund deposits consisting of cash
will be held in OCC's Federal Reserve bank account.\9\ OCC will pass
the interest income earned in such account through to its Clearing
Members, provided that each such Clearing Member has provided OCC with
all tax documentation as OCC may from time to time require in order to
effectuate such payment.\10\ Interest earned will be calculated daily
based on each Clearing Member's pro rata share of Clearing Fund cash
deposits.\11\ In maintaining these minimum cash balances in OCC's
Federal Reserve bank account and facilitating the pass-through of
interest earned on such balances, OCC will incur certain administrative
and other operational expenses. These expenses will include the
operation of the Federal Reserve bank account, certain systems
enhancements needed to maintain minimum cash deposits and facilitate
pass-through of interest earned, and staffing costs to operate the cash
management and funding desk. In order to defray these expenses, OCC is
proposing to implement a cash management fee.
---------------------------------------------------------------------------
\9\ See supra note 6. OCC retains 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.
\10\ See supra note 6. Interest earned will be calculated daily
based on each Clearing Member's pro rata share of Clearing Fund cash
deposits.
\11\ See supra note 6.
---------------------------------------------------------------------------
The proposed cash management fee would be an annual rate equal to 5
basis points (0.05%), calculated on a 365-day calendar, and billed
monthly on each Clearing Member's daily proportionate share of cash on
deposit in OCC's Federal Reserve bank account.\12\ This proposed change
is designed to provide OCC with a level of revenue sufficient to cover
OCC's administrative and operating expenses, as described above.
---------------------------------------------------------------------------
\12\ Accordingly, a Clearing Member can determine the monthly
amount of its cash management fee by (1) dividing the annual
interest rate by 365; (2) then multiplying the product by the
Clearing Member's proportionate share of cash on deposit in OCC's
Federal Reserve bank account for each calendar day in a given month;
and (3) taking the sum all of the products in step (2) for the given
month.
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(2) Statutory Basis
Section 17A(b)(3)(D) of the Act requires that the rules of a
clearing agency provide for the equitable allocation of reasonable
dues, fees, and other charges among its participants.\13\ The proposed
cash management fee would cover administrative and other operational
expenses incurred by OCC in connection with passing through to Clearing
Members the interest earned on Clearing Fund cash deposits that are
held in an account established by OCC at a Federal Reserve bank. OCC
believes the proposed fee change is reasonable because the new cash
management fee would be set at a level intended to cover OCC's expenses
associated with maintaining a minimum amount of Clearing Fund cash
(which requirement is designed to satisfy certain liquidity
requirements under Rule 17Ad-22(e)(7)) and with passing-through to
Clearing Members the interest earned on such deposits held in OCC's
Federal Reserve bank account. Moreover, OCC believes that the proposed
fee change would result in an equitable allocation of fees among its
participants because it is a fee that would be equally applicable to
all similarly situated participants (i.e., Clearing Members). As a
result, OCC believes that the proposed fee schedule provides for the
equitable allocation of reasonable fees in accordance with Section
17A(b)(3)(D) of the Act.\14\ The proposed rule change is not
inconsistent with the existing rules of OCC, including any other rules
proposed to be amended.
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\13\ 17 U.S.C. 78q-1(b)(3)(D).
\14\ 17 U.S.C. 78q-1(b)(3)(D).
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[[Page 6653]]
(B) Clearing Agency's Statement on Burden on Competition
Section 17A(b)(3)(I) of the Act \15\ 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 that the proposed rule change would have any impact or impose a
burden on competition. Although this proposed rule change affects
Clearing Members, their customers, and the markets that OCC serves, OCC
believes that the proposed rule change would not disadvantage or favor
any particular user of OCC's services in relationship to another user
because the proposed cash management fee would apply equally to all
Clearing Members. Accordingly, OCC does not believe that the proposed
rule change would have any impact or impose a burden on competition.
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\15\ 15 U.S.C. 78q-1(b)(3)(I).
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(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants or Others
Written comments on the proposed rule change were not and are not
intended to be solicited with respect to the proposed rule change and
none have been received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \16\ and Rule 19b-4(f)(2) \17\ thereunder.
At any time within 60 days of the filing of the proposed rule change,
the Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.\18\
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\16\ 15 U.S.C. 78s(b)(3)(A)(ii).
\17\ 17 CFR 240.19b-4(f)(2).
\18\ Notwithstanding its immediate effectiveness, implementation
of this rule change will be delayed until this change is deemed
certified under CFTC Rule 40.6.
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-OCC-2018-005 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-OCC-2018-005. 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 website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website 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 website at
https://www.theocc.com/about/publications/bylaws.jsp.
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-2018-005 and
should be submitted on or before March 7, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-02972 Filed 2-13-18; 8:45 am]
BILLING CODE 8011-01-P
