[Federal Register: September 21, 2006 (Volume 71, Number 183)]
[Notices]
[Page 55258-55259]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21se06-92]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54448; File No. SR-OCC-2006-07]
Self-Regulatory Organizations; The Options Clearing Corporation;
Order Approving Proposed Rule Change Relating to a Surcharge for Non-
Clearing Member Subscribers That Have Not Met a Mandated Conversion
Date for Its Data Distribution Service
September 14, 2006.
I. Introduction
On May 15, 2006, The Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') proposed
rule change SR-OCC-2006-07 pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal
was published in the Federal Register on July 10, 2006.\2\ On July 21,
2006, OCC amended the proposed rule change.\3\ No comment letters were
received. For the reasons discussed below, the Commission is approving
the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 54060 (June 28, 2006),
71 FR 38961.
\3\ The amendment, as noted below, is not substantive and did
not require republication of the notice. Infra, note 4 and
accompanying text.
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[[Page 55259]]
II. Description
The purpose of the rule change is to implement a surcharge to the
monthly service fee charged to non-clearing member subscribers of OCC's
Data Distribution Service (``DDS'') that have not converted to the new
DDS format by the revised mandated conversion date of September 29,
2006.
Both clearing members and non-clearing members may subscribe to
DDS. A clearing member may subscribe to DDS in order to receive in a
machine readable format data processed by OCC that is proprietary to
such clearing member (e.g., position and post-trade entries) as well as
non-proprietary data (i.e., data not specific to the clearing member)
produced by OCC (e.g., information relating to series and prices). Non-
clearing members may subscribe to DDS in order to receive certain non-
proprietary data.
In December, 2004, OCC informed all DDS subscribers that OCC was
requiring them to convert to the new ENCORE DDS format by February 28,
2006. Although OCC diligently worked with subscribers to facilitate
their implementation of the new DDS format, it became apparent that
some subscribers needed additional time in order to complete their
systems work. Accordingly, in December, 2005, OCC announced an
extension of the mandated conversion date to September 29, 2006.
After the mandated conversion date, OCC will continue to support
the old legacy data service distribution system. However, for
subscribers that do not meet the revised conversion date of September
29, 2006, OCC will charge a monthly surcharge of $1,000 per month in
order to reasonably allocate the costs of continuing to support the old
legacy data distribution system.\4\ The surcharge will be imposed
starting with the October 2006 billing cycle and will continue until
the subscriber converts to the new DDS format and ceases to receive any
legacy data service distribution transmissions. OCC will terminate all
legacy data service transmissions after March 30, 2007.\5\
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\4\ Pursuant to a separate rule change, OCC will impose the
$1,000 per month surcharge on clearing member subscribers to DDS
that likewise fail to convert to the new format. Implementation of
the surcharge on clearing members is pending approval of this rule
filing by the Commission. Securities Exchange Act Release No. 54059
(June 28, 2006), 71 FR 38962 (July 10, 2006) [File No. SR-CC-2006-
06].
\5\ The March 30, 2007, termination date was the subject of the
amendment to the proposed rule change filed on July 21, 2006.
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III. Discussion
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.\6\ The Commission finds that OCC's
proposed rule change is consistent with this requirement because by
establishing a surcharge for continued use of its old legacy data
distribution system, OCC will be able to more equitably allocate its
cost of providing continued service to those DDS subscribers that have
failed to convert to OCC's ENCORE DDS format.
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\6\ 15 U.S.C. 78q-1(b)(3)(D).
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IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular Section 17A of the Act and the rules and regulations
thereunder.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (File No. SR-OCC-2006-07) be and
hereby is approved.
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\7\ 15 U.S.C. 78s(b)(2).
\8\ 17 CFR 200.30-3(a)(12).
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For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\8\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06-7839 Filed 9-20-06; 8:45 am]
BILLING CODE 8010-01-P