[Federal Register: August 2, 2005 (Volume 70, Number 147)]
[Notices]
[Page 44414-44415]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02au05-78]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52125; File No. SR-OCC-2005-09]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to OCC's Data Distribution Service
July 26, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on June 24, 2005, 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, which items have been prepared primarily by
OCC. The Commission is publishing this notice to solicit comments on
the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The purpose of the proposed rule change is to adopt a new DDS
Supplement to support the conversion of OCC's data distribution service
(``DDS'') \2\ to the technology used by OCC's new clearing system,
ENCORE.
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\2\ OCC offers certain ancillary services to clearing members
that are not set forth in OCC's By-laws and Rules. Examples of such
services include different channels by which clearing members may
elect to receive data processed by OCC or to communicate
instructions to OCC.
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II. Self-Regulatory Organization'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 such
statements.\3\
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\3\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
An OCC clearing member may subscribe to DDS in order to receive in
a machine readable format a copy of data processed by OCC that is
proprietary to that clearing member (e.g., position and post-trade
entries) and that is ``non-proprietary'' (i.e., data not specific to
the clearing member) produced by OCC, including series, prices, and
other information. A subscribing clearing member may instruct OCC to
provide data to its managing clearing member or to its service bureau.
Parties that are not clearing members may also subscribe to DDS in
order to receive certain non-proprietary data. Data provided as a part
of ENCORE DDS is organized into different ``message types'' that a
subscriber may elect to receive.
ENCORE DDS has been developed to provide a secure, flexible
framework for distributing messages to subscribers pursuant to their
elections.\4\ As is the case today, ENCORE DDS subscribers will be
permitted to choose whether to access messages from OCC servers or to
directly receive message transmissions from OCC. Subscribers may elect
to receive messages on a real time basis (a new DDS offering) and/or on
a batch basis (a current DDS offering) although not all message types
will be made available under both methods.\5\ For subscribers electing
to receive DDS on a real time basis, an ``end of day'' message will
alert them not to expect any further information from OCC for that day.
ENCORE DDS will be available to subscribers through leased lines, the
internet, or both. OCC will support the current DDS format and the
ENCORE DDS format during a transition period.
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\4\ Fees charged for DDS to clearing members and non-clearing
members (as set forth in OCC's Schedule of Fees) will not be changed
at this time.
\5\ For example, price messages currently are expected to be
only offered on a batch basis.
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The DDS Supplement is structured to fit within OCC's existing
framework for the Agreement for OCC Services and will replace the
current form supplement between clearing members and OCC.\6\ The DDS
Supplement's provisions are generally self-explanatory, and they are
intended to describe the respective responsibilities of OCC and the
subscribing clearing member. Section 1 describes DDS and, if
applicable, permits a clearing member to direct OCC to deliver messages
to the clearing member's managing clearing member or service bureau, as
applicable. Section 2 sets forth criteria associated with subscribing
to DDS. Sections 3 through 5 set forth further responsibilities of the
parties including limitations on warranties, liability,\7\ and
indemnification. Section 6 contains general terms regarding survival of
certain provisions. Annex I provides an overview of message types
offered as a part of ENCORE DDS. Annex II is a form which permits a
clearing member to provide contact information regarding its managing
clearing member and a certification of the managing clearing member
with respect to DDS. Annex III is a comparable form for service
bureaus.
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\6\ The DDS Supplement to be entered into between OCC and
clearing members subscribing to DDS is attached to the filing of
proposed rule change as Exhibit 5.
\7\ The limitation of liability provision contained in the DDS
Supplement is based on the comparable provisions of the Supplement
for Internet Access, which was approved by the Commission in
Securities Exchange Act Release No. 46152 (July 1, 2002) 67 FR 45166
(July 8, 2002) [File No. SR-OCC-2001-09]. OCC has filed a proposed
rule change with the Commission to establish a standard of care by
which any potential liability of OCC to its clearing members would
be judged [File No. SR-OCC-2003-13]. If approved, that proposed rule
change would amend supplements to the Agreement for OCC Services to
the extent a standard of care is established therein to reference
the standard as it would be set forth in OCC's By-laws.
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OCC believes that the proposed change is consistent with Section
17A of the Act because ENCORE DDS provides a more efficient and
effective means to furnish machine readable clearing-related data to
clearing members. The proposed rule change is not inconsistent with the
existing rules of OCC, including any other rules proposed to be
amended.
(B) Self-Regulatory Organization's Statement on Burden on Competition
OCC does not believe that the proposed rule change would impose any
burden on competition.
[[Page 44415]]
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
Written comments 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)(iii) of the Act \8\ and Rule 19b-4(f)(4) \9\ promulgated
thereunder because the proposal effects a change in an existing service
of OCC that (A) does not adversely affect the safeguarding of
securities or funds in the custody or control of OCC or for which it is
responsible and (B) does not significantly affect the respective rights
or obligations of OCC or persons using the service. At any time within
sixty days of the filing of the proposed rule change, the Commission
may summarily abrogate 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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\8\ 15 U.S.C. 78s(b)(3)(A)(iii).
\9\ 17 CFR 240.19b-4(f)(4).
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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 (http://www.sec.gov/rules/sro.shtml.
) or Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-OCC-2005-09 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-OCC-2005-09. This
file number should be included on the subject line if e-mail 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 Web site (http://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 inspection
and copying in the Commission's Public Reference Section, 100 F Street,
NE., Washington, DC 20549. Copies of such filing also will be available
for inspection and copying at the principal office of OCC and on OCC's
Web site at http://www.optionsclearing.com.
All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-OCC-2005-09
and should be submitted on or before August 23, 2005.
For the Commission, by the Division of Market Regulation, pursuant
to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4111 Filed 8-1-05; 8:45 am]
BILLING CODE 8010-01-P