Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Remove the NSCC Equity Options and Bond Options Service From Addendum M of the NSCC Rules & Procedures, 44137-44139 [2020-15691]
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Federal Register / Vol. 85, No. 140 / Tuesday, July 21, 2020 / Notices
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
options exchanges. Because competitors
are free to modify their own fees in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited.
Moreover, as noted above, price
competition between exchanges is
fierce, with liquidity and market share
moving freely between exchanges in
reaction to fee and rebate changes. In
sum, if the changes proposed herein are
unattractive to market participants, it is
likely that the Exchange will lose
market share as a result. Accordingly,
the Exchange does not believe that the
proposed changes will impair the ability
of Members or competing order
execution venues to maintain their
competitive standing in the financial
markets.
Options 7, Section 5E
In terms of intra-market competition,
the Exchange does not believe that its
proposal will place any category of
Exchange market participant at a
competitive disadvantage. The proposed
change is designed to incentivize market
participants to direct PIM order flow to
the Exchange. Specifically, the
Exchange’s proposal to lower the
current regular and complex Fees for
PIM Contra-Side Orders, for both Penny
Symbols and Non-Penny Symbols, from
$0.05 per contract to $0.02 per contract
for all market participants, and
eliminate note 1 within Options 7,
Section 5E does not impose an undue
burden on competition. All market
participants would be uniformly
assessed a regular and complex Fee for
PIM Contra-Side Orders, for both Penny
Symbols and Non-Penny Symbols, of
$0.02 per contract.
jbell on DSKJLSW7X2PROD with NOTICES
Options 7, Section 1
The Exchange’s proposal to amend
Options 7, Section 1 to replace the term
‘‘Penny Pilot Program’’ with ‘‘Penny
Interval Program’’ does not impose an
undue burden on competition. This
amendment seeks to conform the name
of the program which governs the listing
of certain standardized options.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
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17:42 Jul 20, 2020
Jkt 250001
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 15 and Rule
19b–4(f)(2) 16 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: (i)
Necessary or appropriate in the public
interest; (ii) for the protection of
investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
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 Number SR–
MRX–2020–14 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
Number SR–MRX–2020–14. 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
PO 00000
15 15
16 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
Frm 00099
Fmt 4703
Sfmt 4703
44137
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
Number SR–MRX–2020–14 and should
be submitted on or before August 11,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–15690 Filed 7–20–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89322; File No. SR–NSCC–
2020–013]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Remove the NSCC
Equity Options and Bond Options
Service From Addendum M of the
NSCC Rules & Procedures
July 15, 2020.
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 July 10,
2020, National Securities Clearing
Corporation (‘‘NSCC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the clearing agency. NSCC filed the
proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f)(4) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
17 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).
4 17 CFR 240.19b–4(f)(4).
1 15
E:\FR\FM\21JYN1.SGM
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Federal Register / Vol. 85, No. 140 / Tuesday, July 21, 2020 / Notices
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change consists of
modifications to NSCC’s Rules &
Procedures (‘‘Rules’’) in order to remove
the NSCC Equity Options and Bond
Options Service from Addendum M
(‘‘Addendum M’’) of the Rules, as
described in greater detail below.5
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency 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. The
clearing agency has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
jbell on DSKJLSW7X2PROD with NOTICES
Background—Equity Options and
Bond Options Service. In 2004, NSCC
established a confirmation and
matching service for over-the-counter
(‘‘OTC’’) equity options transactions,
called the NSCC Equity Options
Service.6 The NSCC Equity Options
Service was created as a service by
NSCC for NSCC’s affiliate, DTCC Deriv/
SERV LLC (‘‘Deriv/SERV’’), in
connection with an OTC equity options
confirmation and matching service
developed and operated by Deriv/SERV
(‘‘OTC Matching and Confirmation
Service’’).7 The NSCC Equity Options
Service was added as Addendum M to
the Rules.8 In 2008, NSCC amended
Addendum M to expand the NSCC
Equity Options Service to include
matching and confirmation for OTC
bond option transactions and to rename
5 Capitalized terms not defined herein are defined
in the Rules available at https://www.dtcc.com/∼/
media/Files/Downloads/legal/rules/nscc_rules.pdf.
6 Securities Exchange Act Release No. 50652
(November 10, 2004), 69 FR 67377 (November 17,
2004) (SR–NSCC–2004–04). The Commission
granted approval on a temporary basis through May
31, 2005. Id. A subsequent NSCC rule filing sought
permanent approval of the service and was
approved on May 26, 2005. Securities Exchange Act
Release No. 51745 (May 26, 2005), 70 FR 33570
(June 8, 2005) (SR–NSCC–2005–04).
7 Id. Deriv/SERV is a wholly owned subsidiary of
The Depository Trust & Clearing Corporation
(‘‘DTCC’’) which is the corporate parent of NSCC.
8 Addendum M, supra note 5.
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17:42 Jul 20, 2020
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the service the NSCC Equity Options
and Bond Options Service.9
NSCC provided matching and
confirmation services 10 to Deriv/SERV
through its NSCC Equity Options and
Bond Options Service pursuant to a
service agreement between NSCC and
Deriv/SERV. The NSCC Equity Options
and Bond Options Service is limited to
matching and confirmation of U.S.
Equity Options or U.S. Bond Options.11
The Equity Options and Bond Options
Service does not involve settlement and
is not a guaranteed service of NSCC.
NSCC has provided the service only to
its affiliate Deriv/SERV as contemplated
by Addendum M.12
Deriv/SERV operated the OTC
Matching and Confirmation Service
from 2004 until 2009. From 2009 to
2013, the OTC Matching and
Confirmation Service was operated by
Deriv/SERV through a joint venture
owned by Deriv/SERV and Markit North
America, Inc. and its affiliates
(collectively, ‘‘Markit’’), called
MarkitSERV LLC (‘‘MarkitSERV’’). As
part of the joint venture, Deriv/SERV
contributed the OTC Matching and
Confirmation Service to MarkitSERV
and agreed to provide services to
support the OTC Matching and
Confirmation Service, including
allowing the OTC Matching and
Confirmation Service to operate on
Deriv/SERV’s mainframe platform and
providing certain support services
relating to the platform. In 2013, Deriv/
SERV sold its interests in MarkitSERV
to Markit and entered into a support
agreement pursuant to which, among
other things, Deriv/SERV continued to
allow the OTC Matching and
Confirmation Service to operate off of
Deriv/SERV’s mainframe platform and
provide support services relating to the
platform. In 2014, MarkitSERV began a
process of moving the OTC Matching
9 Securities Exchange Act Release No. 58300
(August 4, 2008), 73 FR 46956 (August 12, 2008)
(SR–NSCC–2008–06).
10 Matching and confirmation involves
comparison of trade information for a trade from
two parties to determine whether trade information
from both parties is the same. If it is determined to
be the same, a confirmation will be sent to both
trade parties confirming that the trade information
matches.
11 Addendum M provides that ‘‘U.S. Equity
Option’’ means an over-the-counter equity option
for which either the buyer or the seller of the equity
option is a U.S. person and the equity option is
issued by a U.S. issuer and a ‘‘U.S. Bond Option’’
means an over-the-counter bond option for which
either the buyer or the seller of the bond option is
a U.S. person and the bond option is issued by a
U.S. issuer. Addendum M, supra note 5.
12 Id. Addendum M provides that NSCC ‘‘may
provide to its affiliate DTCC Deriv/SERV LLC . . .
a service through which U.S. Equity Option and
U.S. Bond Option transactions and their associated
cash flows are confirmed and matched.’’ Id.
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
and Confirmation Service relating to
equity options and bond options to its
own mainframe platform which was
completed by 2017. After MarkitSERV
moved the OTC Matching and
Confirmation Service relating to equity
options and bond options to its own
mainframe platform, Deriv/SERV ceased
to provide support services relating to
the OTC Matching and Confirmation
Service with respect to equity options
and bond options.
In 2010, Deriv/SERV began the Equity
Derivative Cash Flow Matching Service
(‘‘Equity Cash Flow Matching Service’’)
which provided for matching payment
information in OTC equity derivatives
transactions. The Equity Cash Flow
Matching Service was a separate service
from the OTC Matching and
Confirmation Service. Deriv/SERV
discontinued the Equity Cash Flow
Matching Service in April 2020.
Deriv/SERV used the Equity Options
and Bond Options Service in connection
with Deriv/SERV providing the OTC
Matching and Confirmation Service and
the Equity Cash Flow Matching Service.
To the extent that the OTC Matching
and Confirmation Service or the Equity
Cash Flow Matching Service involved a
transaction with U.S. Equity Options or
U.S. Bond Options, NSCC would
provide the matching and confirmation
services to Deriv/SERV for that
transaction pursuant to the Equity
Options and Bond Options Service and
service agreement between NSCC and
Deriv/SERV.
Deriv/SERV no longer offers, operates
or supports the OTC Matching and
Confirmation Service or the Equity Cash
Flow Matching Service and has no
current plans to provide or support
similar services relating to U.S. Equity
Options or U.S. Bond Options. As a
result, Deriv/SERV no longer utilizes the
NSCC Equity Options and Bond Options
Service.
Proposed Rule Change. NSCC has
provided the NSCC Equity Options and
Bond Options Service only to its
affiliate, Deriv/SERV, and not to anyone
else, as contemplated by Addendum M.
Deriv/SERV no longer operates or
supports the OTC Matching and
Confirmation Service or the Equity Cash
Flow Matching Service and does not
utilize the NSCC Equity Options and
Bond Options Service. Therefore, NSCC
is proposing to discontinue the NSCC
Equity Options and Bond Options
Service and remove Addendum M from
the Rules.
2. Statutory Basis
Section 17A(b)(3)(F) of the Act
requires, in part, that the Rules be
designed to promote the prompt and
E:\FR\FM\21JYN1.SGM
21JYN1
Federal Register / Vol. 85, No. 140 / Tuesday, July 21, 2020 / Notices
accurate clearance and settlement of
securities transactions.13 NSCC believes
that the proposed rule change is
consistent with this provision because it
would provide enhanced clarity and
transparency for its members with
respect to services offered by NSCC, by
updating the Rules to remove a service
that was provided only to Deriv/SERV
and that is no longer utilized by Deriv/
SERV, as described above. Therefore, by
providing enhanced clarity and
transparency in the Rules regarding the
services provided by NSCC, NSCC
believes the proposed rule change
would promote the prompt and accurate
clearance and settlement of securities
transactions, consistent with the
requirements of the Act, in particular
Section 17A(b)(3)(F), cited above.
(B) Clearing Agency’s Statement on
Burden on Competition
NSCC does not believe that the
proposed rule change would have any
impact on competition. The NSCC
Equity Options and Bond Options
Service is a service offering provided by
NSCC specifically to Deriv/SERV, and
only to Deriv/SERV, in connection with
Deriv/SERV providing and supporting
the OTC Matching and Confirmation
Service and the Equity Cash Flow
Matching Service. Deriv/SERV no longer
provides or supports the OTC Matching
and Confirmation Service or the Equity
Cash Flow Matching Service and is not
expected to provide or support such
services in the future. As such, Deriv/
SERV does not utilize the NSCC Equity
Options and Bond Options Service and
is not likely to utilize the NSCC Equity
Options and Bond Options Service in
the future. Therefore, the proposed rule
change should not have any impact on
competition or on NSCC members other
than to clarify the services that NSCC
provides under the Rules.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
NSCC has not received or solicited
any written comments relating to this
proposal. NSCC will notify the
Commission of any written comments
received by NSCC.
jbell on DSKJLSW7X2PROD with NOTICES
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 14 and paragraph (f) of Rule
13 15
14 15
19b–4 thereunder.15 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.
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–
NSCC–2020–013 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–NSCC–2020–013. 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 the
filing also will be available for
inspection and copying at the principal
office of NSCC and on DTCC’s website
(https://dtcc.com/legal/sec-rulefilings.aspx). All comments received
will be posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
U.S.C. 78q–1(b)(3)(F).
U.S.C. 78s(b)(3)(A).
VerDate Sep<11>2014
17:42 Jul 20, 2020
15 17
Jkt 250001
PO 00000
CFR 240.19b–4(f).
Frm 00101
Fmt 4703
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–NSCC–
2020–013 and should be submitted on
or before August 11, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–15691 Filed 7–20–20; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #16551 and #16552;
Alabama Disaster Number AL–00109]
Presidential Declaration of a Major
Disaster for Public Assistance Only for
the State of Alabama
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Alabama (FEMA–4555–DR),
dated 07/10/2020.
Incident: Severe Storms, Tornadoes,
Straight-line Winds, and Flooding.
Incident Period: 04/12/2020 through
04/13/2020.
DATES: Issued on 07/10/2020.
Physical Loan Application Deadline
Date: 09/08/2020.
Economic Injury (EIDL) Loan
Application Deadline Date: 04/12/2021.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW, Suite 6050,
Washington, DC 20416, (202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
President’s major disaster declaration on
07/10/2020, Private Non-Profit
organizations that provide essential
services of a governmental nature may
file disaster loan applications at the
address listed above or other locally
announced locations.
The following areas have been
determined to be adversely affected by
the disaster:
SUMMARY:
16 17
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44139
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]]>Agencies
[Federal Register Volume 85, Number 140 (Tuesday, July 21, 2020)]
[Notices]
[Pages 44137-44139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15691]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89322; File No. SR-NSCC-2020-013]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed
Rule Change To Remove the NSCC Equity Options and Bond Options Service
From Addendum M of the NSCC Rules & Procedures
July 15, 2020.
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 July 10, 2020, National Securities Clearing Corporation (``NSCC'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II and III below, which
Items have been prepared by the clearing agency. NSCC filed the
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and
Rule 19b-4(f)(4) thereunder.\4\ 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).
\4\ 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------
[[Page 44138]]
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change consists of modifications to NSCC's Rules
& Procedures (``Rules'') in order to remove the NSCC Equity Options and
Bond Options Service from Addendum M (``Addendum M'') of the Rules, as
described in greater detail below.\5\
---------------------------------------------------------------------------
\5\ Capitalized terms not defined herein are defined in the
Rules available at https://www.dtcc.com/~/media/Files/Downloads/
legal/rules/nscc_rules.pdf.
---------------------------------------------------------------------------
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, the clearing agency 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. The clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
Background--Equity Options and Bond Options Service. In 2004, NSCC
established a confirmation and matching service for over-the-counter
(``OTC'') equity options transactions, called the NSCC Equity Options
Service.\6\ The NSCC Equity Options Service was created as a service by
NSCC for NSCC's affiliate, DTCC Deriv/SERV LLC (``Deriv/SERV''), in
connection with an OTC equity options confirmation and matching service
developed and operated by Deriv/SERV (``OTC Matching and Confirmation
Service'').\7\ The NSCC Equity Options Service was added as Addendum M
to the Rules.\8\ In 2008, NSCC amended Addendum M to expand the NSCC
Equity Options Service to include matching and confirmation for OTC
bond option transactions and to rename the service the NSCC Equity
Options and Bond Options Service.\9\
---------------------------------------------------------------------------
\6\ Securities Exchange Act Release No. 50652 (November 10,
2004), 69 FR 67377 (November 17, 2004) (SR-NSCC-2004-04). The
Commission granted approval on a temporary basis through May 31,
2005. Id. A subsequent NSCC rule filing sought permanent approval of
the service and was approved on May 26, 2005. Securities Exchange
Act Release No. 51745 (May 26, 2005), 70 FR 33570 (June 8, 2005)
(SR-NSCC-2005-04).
\7\ Id. Deriv/SERV is a wholly owned subsidiary of The
Depository Trust & Clearing Corporation (``DTCC'') which is the
corporate parent of NSCC.
\8\ Addendum M, supra note 5.
\9\ Securities Exchange Act Release No. 58300 (August 4, 2008),
73 FR 46956 (August 12, 2008) (SR-NSCC-2008-06).
---------------------------------------------------------------------------
NSCC provided matching and confirmation services \10\ to Deriv/SERV
through its NSCC Equity Options and Bond Options Service pursuant to a
service agreement between NSCC and Deriv/SERV. The NSCC Equity Options
and Bond Options Service is limited to matching and confirmation of
U.S. Equity Options or U.S. Bond Options.\11\ The Equity Options and
Bond Options Service does not involve settlement and is not a
guaranteed service of NSCC. NSCC has provided the service only to its
affiliate Deriv/SERV as contemplated by Addendum M.\12\
---------------------------------------------------------------------------
\10\ Matching and confirmation involves comparison of trade
information for a trade from two parties to determine whether trade
information from both parties is the same. If it is determined to be
the same, a confirmation will be sent to both trade parties
confirming that the trade information matches.
\11\ Addendum M provides that ``U.S. Equity Option'' means an
over-the-counter equity option for which either the buyer or the
seller of the equity option is a U.S. person and the equity option
is issued by a U.S. issuer and a ``U.S. Bond Option'' means an over-
the-counter bond option for which either the buyer or the seller of
the bond option is a U.S. person and the bond option is issued by a
U.S. issuer. Addendum M, supra note 5.
\12\ Id. Addendum M provides that NSCC ``may provide to its
affiliate DTCC Deriv/SERV LLC . . . a service through which U.S.
Equity Option and U.S. Bond Option transactions and their associated
cash flows are confirmed and matched.'' Id.
---------------------------------------------------------------------------
Deriv/SERV operated the OTC Matching and Confirmation Service from
2004 until 2009. From 2009 to 2013, the OTC Matching and Confirmation
Service was operated by Deriv/SERV through a joint venture owned by
Deriv/SERV and Markit North America, Inc. and its affiliates
(collectively, ``Markit''), called MarkitSERV LLC (``MarkitSERV''). As
part of the joint venture, Deriv/SERV contributed the OTC Matching and
Confirmation Service to MarkitSERV and agreed to provide services to
support the OTC Matching and Confirmation Service, including allowing
the OTC Matching and Confirmation Service to operate on Deriv/SERV's
mainframe platform and providing certain support services relating to
the platform. In 2013, Deriv/SERV sold its interests in MarkitSERV to
Markit and entered into a support agreement pursuant to which, among
other things, Deriv/SERV continued to allow the OTC Matching and
Confirmation Service to operate off of Deriv/SERV's mainframe platform
and provide support services relating to the platform. In 2014,
MarkitSERV began a process of moving the OTC Matching and Confirmation
Service relating to equity options and bond options to its own
mainframe platform which was completed by 2017. After MarkitSERV moved
the OTC Matching and Confirmation Service relating to equity options
and bond options to its own mainframe platform, Deriv/SERV ceased to
provide support services relating to the OTC Matching and Confirmation
Service with respect to equity options and bond options.
In 2010, Deriv/SERV began the Equity Derivative Cash Flow Matching
Service (``Equity Cash Flow Matching Service'') which provided for
matching payment information in OTC equity derivatives transactions.
The Equity Cash Flow Matching Service was a separate service from the
OTC Matching and Confirmation Service. Deriv/SERV discontinued the
Equity Cash Flow Matching Service in April 2020.
Deriv/SERV used the Equity Options and Bond Options Service in
connection with Deriv/SERV providing the OTC Matching and Confirmation
Service and the Equity Cash Flow Matching Service. To the extent that
the OTC Matching and Confirmation Service or the Equity Cash Flow
Matching Service involved a transaction with U.S. Equity Options or
U.S. Bond Options, NSCC would provide the matching and confirmation
services to Deriv/SERV for that transaction pursuant to the Equity
Options and Bond Options Service and service agreement between NSCC and
Deriv/SERV.
Deriv/SERV no longer offers, operates or supports the OTC Matching
and Confirmation Service or the Equity Cash Flow Matching Service and
has no current plans to provide or support similar services relating to
U.S. Equity Options or U.S. Bond Options. As a result, Deriv/SERV no
longer utilizes the NSCC Equity Options and Bond Options Service.
Proposed Rule Change. NSCC has provided the NSCC Equity Options and
Bond Options Service only to its affiliate, Deriv/SERV, and not to
anyone else, as contemplated by Addendum M. Deriv/SERV no longer
operates or supports the OTC Matching and Confirmation Service or the
Equity Cash Flow Matching Service and does not utilize the NSCC Equity
Options and Bond Options Service. Therefore, NSCC is proposing to
discontinue the NSCC Equity Options and Bond Options Service and remove
Addendum M from the Rules.
2. Statutory Basis
Section 17A(b)(3)(F) of the Act requires, in part, that the Rules
be designed to promote the prompt and
[[Page 44139]]
accurate clearance and settlement of securities transactions.\13\ NSCC
believes that the proposed rule change is consistent with this
provision because it would provide enhanced clarity and transparency
for its members with respect to services offered by NSCC, by updating
the Rules to remove a service that was provided only to Deriv/SERV and
that is no longer utilized by Deriv/SERV, as described above.
Therefore, by providing enhanced clarity and transparency in the Rules
regarding the services provided by NSCC, NSCC believes the proposed
rule change would promote the prompt and accurate clearance and
settlement of securities transactions, consistent with the requirements
of the Act, in particular Section 17A(b)(3)(F), cited above.
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\13\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Clearing Agency's Statement on Burden on Competition
NSCC does not believe that the proposed rule change would have any
impact on competition. The NSCC Equity Options and Bond Options Service
is a service offering provided by NSCC specifically to Deriv/SERV, and
only to Deriv/SERV, in connection with Deriv/SERV providing and
supporting the OTC Matching and Confirmation Service and the Equity
Cash Flow Matching Service. Deriv/SERV no longer provides or supports
the OTC Matching and Confirmation Service or the Equity Cash Flow
Matching Service and is not expected to provide or support such
services in the future. As such, Deriv/SERV does not utilize the NSCC
Equity Options and Bond Options Service and is not likely to utilize
the NSCC Equity Options and Bond Options Service in the future.
Therefore, the proposed rule change should not have any impact on
competition or on NSCC members other than to clarify the services that
NSCC provides under the Rules.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
NSCC has not received or solicited any written comments relating to
this proposal. NSCC will notify the Commission of any written comments
received by NSCC.
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 \14\ and paragraph (f) of Rule 19b-4
thereunder.\15\ 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.
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f).
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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-NSCC-2020-013 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-NSCC-2020-013. 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 the filing also will be available for inspection
and copying at the principal office of NSCC and on DTCC's website
(https://dtcc.com/legal/sec-rule-filings.aspx). 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-NSCC-2020-013 and should be submitted on
or before August 11, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-15691 Filed 7-20-20; 8:45 am]
BILLING CODE 8011-01-P
