Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Partial Amendments No. 1, 2, and 3 to Advance Notice Concerning Updates to and Formalization of OCC's Recovery and Orderly Wind-Down Plan, 38750-38752 [2018-16823]

Download as PDF 38750 Federal Register / Vol. 83, No. 152 / Tuesday, August 7, 2018 / Notices Nasdaq Market changes a rule that the Exchanges have incorporated by reference. Accordingly, it is ordered, pursuant to Section 36 of the Exchange Act,17 that the Exchanges are exempt from the rule filing requirements of Section 19(b) of the Exchange Act solely with respect to changes to the rules identified in its request that incorporate by reference certain Nasdaq Market rules that are the result of changes to such Nasdaq Market rules, provided that the Exchanges promptly provide written notice to their members whenever the Nasdaq Market proposes to change a rule that the Exchanges have incorporated by reference. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Brent J. Fields, Secretary. [FR Doc. 2018–16799 Filed 8–6–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83762; File No. SR–OCC– 2017–810] 19b–4(n)(1)(i) 2 under the Securities Exchange Act of 1934 (‘‘Act’’),3 The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) an advance notice pursuant to which OCC would formalize and update its Recovery and Orderly Wind-Down Plan (‘‘RWD Plan’’ or ‘‘Plan’’), consistent with the applicable requirement in Rule 17Ad–22(e)(3)(ii) 4 (‘‘Advance Notice’’). The Advance Notice was published for public comment in the Federal Register on January 23, 2018.5 On January 23, 2018, the Commission requested OCC provide it with additional information regarding the Advance Notice.6 OCC responded to this request for information, and the information was received on July 13, 2018.7 On July 11 and 12, 2018, OCC filed Partial Amendment No. 1 and Partial Amendment No. 2 to the Initial Filing. On July 12, 2018, OCC also filed a partial amendment (‘‘Partial Amendment No. 3’’) to the Initial Filing. This Partial Amendment No. 3 is intended to supersede and replace Amendments No. 1 and 2 in their entirety.8 Therefore, the Initial Filing 2 17 Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Partial Amendments No. 1, 2, and 3 to Advance Notice Concerning Updates to and Formalization of OCC’s Recovery and Orderly Wind-Down Plan August 1, 2018. I. Introduction Pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, entitled Payment, Clearing, and Settlement Supervision Act of 2010 (‘‘Clearing Supervision Act’’) 1 and Rule 17 15 U.S.C. 78mm. CFR 200.30–3(a)(76). 1 12 U.S.C. 5465(e)(1). daltland on DSKBBV9HB2PROD with NOTICES 18 17 VerDate Sep<11>2014 16:54 Aug 06, 2018 Jkt 244001 CFR 240.19b–4(n)(1)(i). U.S.C. 78a et seq. 4 17 CFR 240.17Ad–22(e)(3)(ii). 5 See Securities Exchange Act Release No. 82514 (January 17, 2018), 83 FR 3224 (January 23, 2018) (SR–OCC–2017–810) (hereinafter referred to as the ‘‘Initial Filing’’). Initial Filing, 83 FR 3224. 6 See Memorandum from Office of Clearance and Settlement, Division of Trading and Markets, dated January 23, 2018, available at https://www.sec.gov/ comments/sr-occ-2017-810/occ2017810-2948228161854.pdf. 7 See Memorandum from Office of Clearance and Settlement, Division of Trading and Markets, dated July 17, 2018, available at https://www.sec.gov/ comments/sr-occ-2017-810/occ2017810-4062513169149.pdf. 8 This Partial Amendment No. 3 is substantially the same as Partial Amendments No. 1 and 2 but would correct certain technical errors in the previous amendments (e.g., update a cross-reference to OCC filing SR–OCC–2017–809, as now amended by Amendment No. 2, and correct a pagination error in Exhibits 4 and 5). Substantive changes to the 3 15 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 together with Partial Amendment No. 3 reflects the changes being proposed. The Advance Notice, as amended by Partial Amendment No. 3 is described in Item II below, which Item has been prepared by OCC. The Commission is publishing this notice to solicit comments on the Advance Notice, as amended by Partial Amendments No. 1, 2 and 3, from interested persons. II. Clearing Agency’s Statement of the Terms of Substance of Partial Amendment No. 3 to the Advance Notice This Partial Amendment No. 3 would make the following three amendments to the Initial Filing: (1) Removal of sections of the RWD Plan concerning OCC’s proposed authority to require cash settlement of certain physically delivered options and single stock futures; (2) updating the list of OCC’s Critical Support Functions; 9 and (3) making three changes to Chapter 5 of the RWD Plan in order to conform to a change contemporaneously proposed in Amendment No. 2 to OCC advance notice filing SR–OCC–2017–809 concerning enhanced and new tools for recovery scenarios.10 With regard to the removal of sections of the RWD Plan concerning OCC’s proposed authority to require cash settlement of certain physically delivered options and single stock futures, OCC proposes to amend the following text on pages 16–17 and 55 of the Initial Filing (new text is underlined and proposed deletions are marked in strikethrough text). Initial Filing, as reflected in Partial Amendment No. 3, are described in Item II below. 9 The amendment to the list of Critical Support Functions would be made to the confidential and redacted portions of the RWD Plan. 10 See Amendment No. 2 to SR–OCC–2017–809. The three amendments to Chapter 5 also would be made to the confidential and redacted portions of the RWD Plan. E:\FR\FM\07AUN1.SGM 07AUN1 Federal Register / Vol. 83, No. 152 / Tuesday, August 7, 2018 / Notices OCC plans to resubmit the proposed cash settlement tool previously filed in SR–OCC–2017–018 and SR–OCC–2017– 807 on a separate timeline from the rest VerDate Sep<11>2014 16:54 Aug 06, 2018 Jkt 244001 PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 of its enhanced and new tools for recovery scenarios and would submit a E:\FR\FM\07AUN1.SGM 07AUN1 EN07AU18.003</GPH> 62 of the Initial Filing (including associated footnotes). EN07AU18.002</GPH> daltland on DSKBBV9HB2PROD with NOTICES OCC also proposes to amend the following text on pages 22–23 and 61– 38751 38752 Federal Register / Vol. 83, No. 152 / Tuesday, August 7, 2018 / Notices In addition, OCC proposes to make the following amendments on pages 32 and 71 of the Initial Filing. With regard to updating the list of OCC’s Critical Support Functions, the amendment would revise OCC’s RWD Plan to consistently identify one of OCC’s internal functions as a Critical Support Function. Finally, OCC proposes to make two changes to Chapter 5 of the RWD Plan, which would align an exhibit, a related list and a related paragraph with the certain changes OCC is contemporaneously proposing in Amendment No. 2 to OCC advance notice filing SR–OCC–2017–809 concerning enhanced and new tools for recovery scenarios.11 Specifically, OCC would change the aforementioned exhibit, list and paragraph in Chapter 5 to recognize that while OCC does not intend, in the first instance for its tearup process to serve as a means of loss allocation, circumstances may arise such that, despite best efforts, OCC has inadequate remaining financial resources to extinguish torn-up positions at their assigned Tear-Up Price without forcing a reduction in the amount of unpaid value of such positions (e.g., despite best efforts, market movements not accounted for by monitoring, additional Clearing Member defaults occur immediately preceding a tear-up). In such circumstances, despite best efforts, OCC would use its partial tear-up process as a means of loss allocation. OCC has included an updated Exhibit 5 containing its RWD Plan as well as an Exhibit 4 showing the changes proposed in this Partial Amendment No. 3 to the proposed rule text in the Initial Filing, with the proposed changes in the Initial Filing marked in underlined and strikethrough text. Exhibits 4 and 5 have been redacted and filed separately with the Commission and confidential treatment for Exhibits 4 and 5 is requested pursuant to 17 CFR 240.24b– 2. The Partial Amendments No. 1, 2 and 3 would not change the purpose of or basis for the proposed changes. All other representations in the Initial Filing remain as stated therein and no other changes are being made. III. Date of Effectiveness of the Advance Notice and Timing for Commission Action 11 See Amendment No. 2 to SR–OCC–2017–809. VerDate Sep<11>2014 16:54 Aug 06, 2018 Jkt 244001 The proposed change may be implemented if the Commission does not object to the proposed change within 60 days of the later of (i) the date the proposed change was filed with the Commission or (ii) the date any additional information requested by the Commission is received. OCC shall not implement the proposed change if the Commission has any objection to the proposed change. The Commission may extend the period for review by an additional 60 days if the proposed change raises novel or complex issues, subject to the Commission providing the clearing agency with prompt written notice of the extension. A proposed change may be implemented in less than 60 days from the date the advance notice is filed, or the date further information requested by the Commission is received, if the Commission notifies the clearing agency in writing that it does not object to the proposed change and authorizes the clearing agency to implement the proposed change on an earlier date, subject to any conditions imposed by the Commission. OCC shall post notice on its website of proposed changes that are implemented. The proposal shall not take effect until all regulatory actions required with respect to the proposal are completed. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the advance notice is consistent with the Clearing Supervision Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commissions 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–2017–810 on the subject line. PO 00000 Frm 00076 Fmt 4703 Sfmt 9990 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–2017–810. 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 advance notice that are filed with the Commission, and all written communications relating to the advance notice 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 or 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–2017–810 and should be submitted on or before August 22, 2018. By the Commission. Brent J. Fields, Secretary. [FR Doc. 2018–16823 Filed 8–6–18; 8:45 am] BILLING CODE 8011–01–P E:\FR\FM\07AUN1.SGM 07AUN1 EN07AU18.024</GPH> daltland on DSKBBV9HB2PROD with NOTICES subsequent filing to the Commission to amend the RWD Plan at that time.

Agencies

[Federal Register Volume 83, Number 152 (Tuesday, August 7, 2018)]
[Notices]
[Pages 38750-38752]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16823]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83762; File No. SR-OCC-2017-810]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of Partial Amendments No. 1, 2, and 3 to Advance 
Notice Concerning Updates to and Formalization of OCC's Recovery and 
Orderly Wind-Down Plan

August 1, 2018.

I. Introduction

    Pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act, entitled Payment, Clearing, 
and Settlement Supervision Act of 2010 (``Clearing Supervision Act'') 
\1\ and Rule 19b-4(n)(1)(i) \2\ under the Securities Exchange Act of 
1934 (``Act''),\3\ The Options Clearing Corporation (``OCC'') filed 
with the Securities and Exchange Commission (``Commission'') an advance 
notice pursuant to which OCC would formalize and update its Recovery 
and Orderly Wind-Down Plan (``RWD Plan'' or ``Plan''), consistent with 
the applicable requirement in Rule 17Ad-22(e)(3)(ii) \4\ (``Advance 
Notice''). The Advance Notice was published for public comment in the 
Federal Register on January 23, 2018.\5\ On January 23, 2018, the 
Commission requested OCC provide it with additional information 
regarding the Advance Notice.\6\ OCC responded to this request for 
information, and the information was received on July 13, 2018.\7\ On 
July 11 and 12, 2018, OCC filed Partial Amendment No. 1 and Partial 
Amendment No. 2 to the Initial Filing. On July 12, 2018, OCC also filed 
a partial amendment (``Partial Amendment No. 3'') to the Initial 
Filing. This Partial Amendment No. 3 is intended to supersede and 
replace Amendments No. 1 and 2 in their entirety.\8\ Therefore, the 
Initial Filing together with Partial Amendment No. 3 reflects the 
changes being proposed.
---------------------------------------------------------------------------

    \1\ 12 U.S.C. 5465(e)(1).
    \2\ 17 CFR 240.19b-4(n)(1)(i).
    \3\ 15 U.S.C. 78a et seq.
    \4\ 17 CFR 240.17Ad-22(e)(3)(ii).
    \5\ See Securities Exchange Act Release No. 82514 (January 17, 
2018), 83 FR 3224 (January 23, 2018) (SR-OCC-2017-810) (hereinafter 
referred to as the ``Initial Filing''). Initial Filing, 83 FR 3224.
    \6\ See Memorandum from Office of Clearance and Settlement, 
Division of Trading and Markets, dated January 23, 2018, available 
at https://www.sec.gov/comments/sr-occ-2017-810/occ2017810-2948228-161854.pdf.
    \7\ See Memorandum from Office of Clearance and Settlement, 
Division of Trading and Markets, dated July 17, 2018, available at 
https://www.sec.gov/comments/sr-occ-2017-810/occ2017810-4062513-169149.pdf.
    \8\ This Partial Amendment No. 3 is substantially the same as 
Partial Amendments No. 1 and 2 but would correct certain technical 
errors in the previous amendments (e.g., update a cross-reference to 
OCC filing SR-OCC-2017-809, as now amended by Amendment No. 2, and 
correct a pagination error in Exhibits 4 and 5). Substantive changes 
to the Initial Filing, as reflected in Partial Amendment No. 3, are 
described in Item II below.
---------------------------------------------------------------------------

    The Advance Notice, as amended by Partial Amendment No. 3 is 
described in Item II below, which Item has been prepared by OCC. The 
Commission is publishing this notice to solicit comments on the Advance 
Notice, as amended by Partial Amendments No. 1, 2 and 3, from 
interested persons.

II. Clearing Agency's Statement of the Terms of Substance of Partial 
Amendment No. 3 to the Advance Notice

    This Partial Amendment No. 3 would make the following three 
amendments to the Initial Filing: (1) Removal of sections of the RWD 
Plan concerning OCC's proposed authority to require cash settlement of 
certain physically delivered options and single stock futures; (2) 
updating the list of OCC's Critical Support Functions; \9\ and (3) 
making three changes to Chapter 5 of the RWD Plan in order to conform 
to a change contemporaneously proposed in Amendment No. 2 to OCC 
advance notice filing SR-OCC-2017-809 concerning enhanced and new tools 
for recovery scenarios.\10\
---------------------------------------------------------------------------

    \9\ The amendment to the list of Critical Support Functions 
would be made to the confidential and redacted portions of the RWD 
Plan.
    \10\ See Amendment No. 2 to SR-OCC-2017-809. The three 
amendments to Chapter 5 also would be made to the confidential and 
redacted portions of the RWD Plan.
---------------------------------------------------------------------------

    With regard to the removal of sections of the RWD Plan concerning 
OCC's proposed authority to require cash settlement of certain 
physically delivered options and single stock futures, OCC proposes to 
amend the following text on pages 16-17 and 55 of the Initial Filing 
(new text is underlined and proposed deletions are marked in 
strikethrough text).

[[Page 38751]]

[GRAPHIC] [TIFF OMITTED] TN07AU18.002

    OCC also proposes to amend the following text on pages 22-23 and 
61-62 of the Initial Filing (including associated footnotes).
[GRAPHIC] [TIFF OMITTED] TN07AU18.003

    OCC plans to resubmit the proposed cash settlement tool previously 
filed in SR-OCC-2017-018 and SR-OCC-2017-807 on a separate timeline 
from the rest of its enhanced and new tools for recovery scenarios and 
would submit a

[[Page 38752]]

subsequent filing to the Commission to amend the RWD Plan at that time.
    In addition, OCC proposes to make the following amendments on pages 
32 and 71 of the Initial Filing.
[GRAPHIC] [TIFF OMITTED] TN07AU18.024

    With regard to updating the list of OCC's Critical Support 
Functions, the amendment would revise OCC's RWD Plan to consistently 
identify one of OCC's internal functions as a Critical Support 
Function.
    Finally, OCC proposes to make two changes to Chapter 5 of the RWD 
Plan, which would align an exhibit, a related list and a related 
paragraph with the certain changes OCC is contemporaneously proposing 
in Amendment No. 2 to OCC advance notice filing SR-OCC-2017-809 
concerning enhanced and new tools for recovery scenarios.\11\ 
Specifically, OCC would change the aforementioned exhibit, list and 
paragraph in Chapter 5 to recognize that while OCC does not intend, in 
the first instance for its tear-up process to serve as a means of loss 
allocation, circumstances may arise such that, despite best efforts, 
OCC has inadequate remaining financial resources to extinguish torn-up 
positions at their assigned Tear-Up Price without forcing a reduction 
in the amount of unpaid value of such positions (e.g., despite best 
efforts, market movements not accounted for by monitoring, additional 
Clearing Member defaults occur immediately preceding a tear-up). In 
such circumstances, despite best efforts, OCC would use its partial 
tear-up process as a means of loss allocation.
---------------------------------------------------------------------------

    \11\ See Amendment No. 2 to SR-OCC-2017-809.
---------------------------------------------------------------------------

    OCC has included an updated Exhibit 5 containing its RWD Plan as 
well as an Exhibit 4 showing the changes proposed in this Partial 
Amendment No. 3 to the proposed rule text in the Initial Filing, with 
the proposed changes in the Initial Filing marked in underlined and 
strikethrough text. Exhibits 4 and 5 have been redacted and filed 
separately with the Commission and confidential treatment for Exhibits 
4 and 5 is requested pursuant to 17 CFR 240.24b-2.
    The Partial Amendments No. 1, 2 and 3 would not change the purpose 
of or basis for the proposed changes. All other representations in the 
Initial Filing remain as stated therein and no other changes are being 
made.

III. Date of Effectiveness of the Advance Notice and Timing for 
Commission Action

    The proposed change may be implemented if the Commission does not 
object to the proposed change within 60 days of the later of (i) the 
date the proposed change was filed with the Commission or (ii) the date 
any additional information requested by the Commission is received. OCC 
shall not implement the proposed change if the Commission has any 
objection to the proposed change.
    The Commission may extend the period for review by an additional 60 
days if the proposed change raises novel or complex issues, subject to 
the Commission providing the clearing agency with prompt written notice 
of the extension. A proposed change may be implemented in less than 60 
days from the date the advance notice is filed, or the date further 
information requested by the Commission is received, if the Commission 
notifies the clearing agency in writing that it does not object to the 
proposed change and authorizes the clearing agency to implement the 
proposed change on an earlier date, subject to any conditions imposed 
by the Commission.
    OCC shall post notice on its website of proposed changes that are 
implemented. The proposal shall not take effect until all regulatory 
actions required with respect to the proposal are completed.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commissions internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-OCC-2017-810 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-2017-810. 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 advance notice that are filed with the 
Commission, and all written communications relating to the advance 
notice 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 or 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-2017-810 and 
should be submitted on or before August 22, 2018.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2018-16823 Filed 8-6-18; 8:45 am]
BILLING CODE 8011-01-P
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