[Federal Register Volume 82, Number 149 (Friday, August 4, 2017)]
[Notices]
[Pages 36476-36484]
[FR Doc No: 2017-16395]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81260; File Nos. SR-NSCC-2017-803; SR-OCC-2017-804]

Self-Regulatory Organizations; National Securities Clearing
Corporation; The Options Clearing Corporation; Notice of No Objection
To Advance Notices Concerning the Adoption of a New Stock Options and
Futures Settlement Agreement Between the National Securities Clearing
Corporation and The Options Clearing Corporation

July 31, 2017.
    On June 1, 2017, National Securities Clearing Corporation
(``NSCC'') and The Options Clearing Corporation (``OCC,'' each a
``Clearing Agency,'' and collectively, ``Clearing Agencies'') filed
with the Securities and Exchange Commission (``Commission'') advance
notices SR-NSCC-2017-803 and SR-OCC-2017-804 respectively
(collectively, the ``Advance Notices''), pursuant to Section 806(e)(1)
of Title VIII of the Dodd-Frank Wall Street Reform and Consumer
Protection Act entitled the Payment, Clearing, and Settlement
Supervision Act of 2010 (``Clearing Supervision Act'') \1\ and Rule
19b-4(n)(1)(i) under the Securities Exchange Act of 1934 (``Act'').\2\
The Advance Notices were published for comment in the Federal Register
on July 5, 2017.\3\ The Commission did not

receive any comments to the Advance Notices. This publication serves as
notice that the Commission does not object to the changes set forth in
the Advance Notices.
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    \1\ 12 U.S.C. 5465(e)(1).
    \2\ 17 CFR 240.19b-4(n)(1)(i).
    \3\ Securities Exchange Act Release Nos. 81039 (June 28, 2017),
82 FR 31123 (July 5, 2017) (SR-NSCC-2017-803); 81040 (June 28,
2017), 82 FR 31109 (July 5, 2017) (SR-OCC-2017-804). The Clearing
Agencies also filed proposed rule changes with the Commission
pursuant to Section 19(b)(1) of the Act and Rule 19b-4 thereunder,
seeking approval of changes to their Rules necessary to implement
the proposal. 15 U.S.C. 78s(b)(1) and 17 CFR 240.19b-4,
respectively. The proposed rule changes were published for comment
in the Federal Register on June 20, 2017. Securities Exchange Act
Release Nos. 80942 (June 15, 2017), 82 FR 28141 (June 20, 2017) (SR-
NSCC-2017-007); 80941 (June 15, 2017), 82 FR 28207 (June 20, 2017)
(SR-OCC-2017-013). The Commission received one comment letter to SR-
OCC-2017-013. See letter from Pamela D. Marler, dated June 30, 2017.
Such comment letter does not specifically comment on any aspect of
the proposed rule changes.
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I. Description of the Advance Notices

    The Advance Notices filed by the Clearing Agencies are a proposal
to implement a new Stock Options and Futures Settlement Agreement
(``New Accord'') between the Clearing Agencies, and to amend the Rules
and Procedures of NSCC (``NSCC Rules'') and the By-Laws and Rules of
OCC to accommodate the proposed provisions of the New Accord.\4\
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    \4\ Terms not defined herein are defined in the NSCC Rules,
available at http://www.dtcc.com/~/media/Files/Downloads/legal/
rules/nscc_rules.pdf, or in OCC's By-Laws and Rules, available at
http://optionsclearing.com/about/publications/bylaws.jsp, as the
context implies.
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Background

    OCC issues and clears U.S.-listed options and futures on a number
of underlying financial assets including common stocks, currencies and
stock indices. OCC's Rules, however, provide that delivery of, and
payment for, securities underlying certain physically settled stock
options and single stock futures cleared by OCC are effected through
the facilities of a correspondent clearing corporation (i.e., NSCC) and
are not settled through the facilities of OCC. To enable this
arrangement concerning stock options, the Clearing Agencies currently
are parties to a Third Amended and Restated Options Exercise Settlement
Agreement, dated February 16, 1995, as amended (``Existing
Accord''),\5\ which governs the delivery and receipt of stock resulting
from the exercise and assignment of stock options (i.e., put and call
options issued by OCC (``Stock Options'')). Pursuant to the Existing
Accord, such stock must be: (i) Eligible for settlement through NSCC's
Continuous Net Settlement (``CNS'') Accounting Operation and (ii)
designated to settle on the third business day following the date the
related exercise or assignment is accepted by NSCC (``Options E&A''),
which is the current standard settlement cycle, known as ``regular
way'' settlement.\6\ All OCC Clearing Members that intend to engage in
Stock Options transactions are required to also be Members of NSCC or
to have appointed or nominated an NSCC Member to act on its behalf.\7\
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    \5\ The Existing Accord and the proposed changes thereunder were
previously approved by the Commission. See Securities Exchange Act
Release No. 37731 (September 26, 1996), 61 FR 51731 (October 3,
1996) (SR-OCC-96-04 and SR-NSCC-96-11) (Order Approving Proposed
Rule Change Related to an Amended and Restated Options Exercise
Settlement Agreement Between the Options Clearing Corporation and
the National Securities Clearing Corporation); Securities Exchange
Act Release No. 43837 (January 12, 2001), 66 FR 6726 (January 22,
2001) (SR-OCC-00-12) (Order Granting Accelerated Approval of a
Proposed Rule Change Relating to the Creation of a Program to
Relieve Strains on Clearing Members' Liquidity in Connection With
Exercise Settlements); and Securities Exchange Act Release No. 58988
(November 20, 2008), 73 FR 72098 (November 26, 2008) (SR-OCC-2008-18
and SR-NSCC-2008-09) (Notice of Filing and Order Granting
Accelerated Approval of Proposed Rule Changes Relating to Amendment
No. 2 to the Third Amended and Restated Options Exercise Settlement
Agreement).
    \6\ According to the Clearing Agencies, regular way settlement
is understood to be the financial services industry's standard
settlement cycle. Currently, regular way settlement of securities
underlying Stock Options and stock futures takes place on the third
business day following the date the related exercise, assignment or
delivery obligation is accepted by NSCC. On or prior to September 5,
2017, the standard settlement cycle will be shortened to two
business days after trade date, as required by the Commission. See
Securities Exchange Act Release No. 80295 (March 22, 2017), 82 FR
15564 (March 29, 2017) (S7-22-16) (Securities Transaction Settlement
Cycle). NSCC has amended its Rules with respect to the meaning of
regular way settlement to be consistent with the shorter standard
settlement cycle and will establish an effective date for these rule
changes in a subsequent rule filing. See Securities Exchange Act
Release No. 79734 (January 4, 2017), 82 FR 3030 (January 10, 2017)
(SR-NSCC-2016-007).
    \7\ A firm that is both an OCC Clearing Member and an NSCC
Member, or is an OCC Clearing Member that has designated an NSCC
Member to act on its behalf is referred to herein as a ``Common
Member.''
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    The Advance Notices are a proposal by the Clearing Agencies to
adopt a New Accord, which would provide for the settlement of the
securities underlying certain Stock Options and delivery obligations
arising from certain matured physically-settled single stock futures
contracts cleared by OCC (``Stock Futures''). The New Accord would
implement three major changes. First, the New Accord would expand the
category of securities that would be eligible for settlement and
guaranty under the agreement to certain securities (including stocks,
exchange-traded funds and exchange-traded notes) that (i) are required
to be delivered in the exercise and assignment of Stock Options and are
eligible to be settled through NSCC's Balance Order Accounting
Operation or (ii) are delivery obligations arising from Stock Futures
that have reached maturity and are eligible to be settled through
NSCC's CNS Accounting Operation or Balance Order Accounting
Operation.\8\ Second, the New Accord would modify the time of the
transfer of responsibilities from OCC to NSCC and, specifically, when
OCC's guarantee obligations under OCC's By-Laws and Rules with respect
to such transactions (``OCC's Guaranty'') end and NSCC's obligations
under Addendum K of the NSCC Rules with respect to such transactions
(``NSCC's Guaranty'') begin, i.e., when the ``Guaranty Substitution''
takes place. Third, the New Accord would put additional arrangements
into place concerning the procedures, information sharing, and overall
governance processes under the agreement. The Clearing Agencies propose
to make certain clarifying and conforming changes to the NSCC Rules and
the OCC By-Laws and Rules as necessary to implement the New Accord.
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    \8\ The New Accord would continue to provide for the settlement
of securities underlying Stock Options that settle through NSCC's
CNS Accounting Operation.
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    According to the Clearing Agencies, the primary purpose of the
proposed changes is to: (1) Provide consistent treatment across all
expiries for products with regular way \9\ settlement cycle
specifications; (2) reduce the operational complexities of the Existing
Accord by delineating a single point in time at which OCC's Guaranty
ceases and NSCC's Guaranty begins and clarifying the roles and
responsibilities of the Clearing Agencies in the event of a default of
a Common Member at either or both Clearing Agencies; and (3) improve
procedures, information sharing, and overall governance under the
agreement.
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    \9\ Under the New Accord, ``regular way settlement'' would have
a meaning agreed to by the Clearing Agencies. This will address any
changes to the standard settlement cycle. See supra note 6.
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    The New Accord would become effective, and wholly replace the
Existing Accord, at a date specified in a service level agreement to be
entered into between the Clearing Agencies.\10\
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    \10\ Such effective date would be a date following approval of
all required regulatory submissions to be filed by OCC and NSCC with
the appropriate regulatory authorities, including these Advance
Notices. See supra note 3.
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The Existing Accord

Key Terms of the Existing Accord

    According to the Clearing Agencies, under the Existing Accord, the
settlement of underlying securities resulting from Options E&A
generally proceeds according to the following sequence of events. NSCC
maintains and delivers to OCC a list (``CNS Eligibility Master File'')
that enumerates all CNS Securities, which are defined in NSCC Rule 1
and generally include securities that have been designated by NSCC as
eligible for processing through NSCC's CNS Accounting Operation and
eligible for book entry delivery at NSCC's affiliate, The Depository
Trust

Company (``CNS Eligible Securities'').\11\ OCC, in turn, uses this file
to make a final determination of which securities NSCC would not accept
and therefore would need to be settled on a broker-to-broker basis. OCC
then sends to NSCC a transactions file (``OCC Transactions File''),\12\
listing the specific securities that are to be delivered and received
as a result of Options E&A that have not previously been reported to
NSCC and for which settlement is to be made through NSCC.\13\ With
respect to each Options E&A, the OCC Transactions File includes the
CUSIP number of the security to be delivered, the identities of the
delivering and receiving Common Members, the quantity to be delivered,
the total value of the quantity to be delivered based on the exercise
price of the option for which such security is the underlying security,
and the exercise settlement date. After receiving the OCC Transactions
File, NSCC then has until 11:00 a.m. Central Time on the following
business day to reject any transaction listed in the OCC Transactions
File. NSCC can reject a transaction if the security to be delivered has
not been listed as a CNS Eligible Security in the CNS Eligibility
Master File or if information provided in the OCC Transactions File is
incomplete. Otherwise, if NSCC does not so notify OCC of its rejection
of an Options E&A by the time required under the Existing Accord, NSCC
will become unconditionally obligated to effect settlement of the
underlying securities resulting from Options E&A.
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    \11\ Supra note 4.
    \12\ According to the Clearing Agencies, delivery of the OCC
Transactions File with respect to an Options E&A typically happens
on the date of the option's exercise or expiration, though this is
not expressly stated in the Existing Accord. However, in theory, an
Options E&A could, due to an error or delay, be reported later than
the date of the option's exercise or expiration.
    \13\ According to the Clearing Agencies, this process would be
substantially the same under the New Accord with the exception that
the CNS Eligibility Master File and OCC Transactions File would be
renamed and would be expanded in scope to include additional
securities that would be eligible for guaranty and settlement under
the New Accord, as discussed in further detail below.
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    According to the Clearing Agencies, under the Existing Accord, even
after NSCC's trade guarantee has taken effect,\14\ OCC retains its
trade guarantee obligations with respect to the Options E&A until
certain deadlines \15\ have passed on the first business day following
the scheduled settlement date. Once such deadlines have passed, OCC is
released from its trade guarantee unless NSCC has notified OCC that the
relevant Common Member has failed to meet an obligation to NSCC or NSCC
has ceased to act for such Common Member pursuant to the NSCC
Rules.\16\ As a result, there is a period of time during which NSCC's
trade guarantee overlaps with OCC's trade guarantee and for which both
Clearing Agencies collect and hold margin from the Common Member.
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    \14\ Pursuant to Addendum K of the NSCC Rules, NSCC guarantees
the completion of CNS transactions and balance order transactions
that have reached the point at which, for bi-lateral submissions by
Members, such trades have been validated and compared by NSCC, and
for locked-in submissions, such trades have been validated by NSCC,
as described in the NSCC Rules. Transactions that are covered by the
Existing Accord, and that would be covered by the New Accord, are
expressly excluded from the timeframes described in Addendum K. See
supra note 4.
    \15\ The deadline is 6:00 a.m. Central Time for NSCC notifying
OCC of a Common Member failure and, if NSCC does not immediately
cease to act for such defaulting Common Member, 4:00 p.m. Central
Time for notifying OCC that NSCC has ceased to act.
    \16\ See NSCC Rule 46 (Rule 46 (Restrictions on Access to
Services). See supra note 4.
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    In the event that NSCC or OCC ceases to act on behalf of or
suspends a Common Member, that Common Member would become a
``defaulting member.'' Once a Common Member becomes a defaulting
member, the Existing Accord provides that if OCC were to suspend a
Common Member, NSCC would be required to make a payment to OCC equal to
the lesser of OCC's total loss resulting from the closeout or the
positive mark-to-market (``MTM'') amount relating to the defaulting
member's Options E&A and that if NSCC were to suspend a Common Member,
OCC would be required to make a payment to NSCC equal to the lesser of
NSCC's total loss resulting from closeout or the negative mark-to-
market amount relating to the defaulting member's Options E&A. A
Clearing Agency must request the transfer of any such payments by the
close of business on the tenth business day following the day of
default and, after a request is made, the other Clearing Agency is
required to make payment within five business days of the request.

The New Accord

Overview

    As noted above, the Clearing Agencies propose to adopt a New
Accord, which would provide for the settlement of certain securities
underlying Stock Options and Stock Futures transactions. According to
the Clearing Agencies, the New Accord is primarily designed to, among
other things, expand the category of securities that are eligible for
settlement and guaranty under the agreement; simplify the time of the
transfer of responsibilities from OCC to NSCC (specifically, the
Guaranty Substitution); and put additional arrangements into place
concerning the procedures, information sharing, and overall governance
processes under the agreement. The material provisions of the New
Accord are described in detail below.

Key Elements of the New Accord

Expanded Scope of Eligible Securities
    Pursuant to the proposed New Accord, on each day that both OCC and
NSCC are open for accepting trades for clearing (``Activity Date''),
NSCC would deliver to OCC an ``Eligibility Master File,'' which would
identify the securities, including stocks, exchange-traded funds and
exchange-traded notes, that are: (1) Eligible to settle through NSCC's
CNS Accounting Operation (as is currently the case under the Existing
Accord) or NSCC's Balance Order Accounting Operation (which is a
feature of the New Accord) and (2) required to be physically delivered
in settlement of (i) exercises and assignments of Stock Options (as is
currently the case under the Existing Accord) or (ii) delivery
obligations arising from maturing physically settled Stock Futures
(which is a feature of the New Accord) (all such securities
collectively being ``Eligible Securities''). OCC, in turn, would
deliver to NSCC its file of E&A/Delivery Transactions \17\ that list
the Eligible Securities to be delivered, or received, and for which
settlement is proposed to be made through NSCC on that Activity Date.
Guaranty Substitution (discussed further below) would not occur with
respect to an E&A/Delivery Transaction that is not submitted in the
proper format or that involves a security that is not identified as an
Eligible Security on the then-current Eligibility Master File. This
process is similar to the current process under the Existing Accord
with the exception of the expanded scope of Eligible Securities (and
additional fields necessary to accommodate such securities) that would
be listed on the Eligibility Master File and the E&A/Delivery
Transactions file.
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    \17\ ``E&A/Delivery Transactions'' are transactions involving
the settlement of securities underlying Stock Options and Stock
Futures under the New Accord. The delivery of E&A/Delivery
Transactions to NSCC would replace the delivery of the ``OCC
Transactions File'' from the Existing Accord. The actual information
delivered by OCC to NSCC would be the same as is currently provided
on the OCC Transactions File, but certain additional terms would be
included to accommodate the inclusion of Stock Futures, along with
information regarding the date that the instruction to NSCC was
originally created and the E&A/Delivery Transaction's designated
settlement date.

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    As with the Existing Accord, the proposed New Accord would continue
to provide for the settlement of securities underlying Stock Options
that settle through NSCC's CNS Accounting Operation and are designated
to settle regular way. In addition, the New Accord would expand the
category of securities eligible for settlement and guarantee by NSCC to
include Stock Futures deliveries that are eligible to settle through
NSCC's CNS Accounting Operation and are designated to settle regular
way. The New Accord would also provide for the settlement of securities
underlying both Stock Options and Stock Futures that are eligible to
settle through NSCC's Balance Order Accounting Operation on a regular
way basis. The primary purpose of expanding the category of securities
that are eligible for settlement and guaranty under the agreement is to
provide consistent treatment across all expiries for products with
regular way settlement cycle specifications and simplify the settlement
process for these additional securities transactions.
    The New Accord would not apply to Stock Options or Stock Futures
that are designated to settle on a shorter timeframe than the regular
way settlement timeframe. These Stock Options would continue to be
processed and settled as they would be today, outside of the New
Accord. The New Accord also would not apply to any Stock Options or
Stock Futures with underlying securities that are neither CNS
Securities nor Balance Order Securities.\18\ Transactions in these
securities are, and would continue to be processed on a trade-for-trade
basis away from NSCC's facilities. Such transactions may utilize other
NSCC services for which they are eligible, but would not be subject to
the New Accord.\19\
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    \18\ Balance Order Securities are defined in NSCC Rule 1, and
are generally securities, other than foreign securities, that are
eligible to be cleared at NSCC but are not eligible for processing
through the CNS Accounting Operation. See supra note 4.
    \19\ OCC will continue to guarantee settlement until settlement
actually occurs with respect to these Stock Options and Stock
Futures.
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Proposed Changes Related to Guaranty Substitution
    The New Accord would adopt a fundamentally different approach to
the delineation of the rights and responsibilities of the Clearing
Agencies with respect to Guaranty Substitution.
    As described above, the Existing Accord provides that, following
the default of a Common Member, and depending on the timing of the
exercise or assignment guarantee, the Clearing Agency that suspends the
Common Member will receive payment from the other Clearing Agency to
compensate for potential losses incurred in connection with the Common
Member's default. The proposed New Accord, in contrast, would clearly
delineate a point in time at which OCC's Guaranty ends and NSCC's
Guaranty begins (i.e., the Guaranty Substitution takes place) with
respect to E&A/Delivery Transactions. By focusing on the timing of the
Guaranty Substitution, rather than payment from one Clearing Agency to
the other, the New Accord would simplify the agreement and the
procedures for situations involving the default of a Common Member. The
New Accord additionally would minimize ``double-margining'' situations
when a Common Member may simultaneously owe margin to both NSCC and OCC
with respect to the same E&A/Delivery Transaction.
    Under the New Accord, after NSCC has received an E&A/Delivery
Transaction, the Guaranty Substitution would normally occur when NSCC
has received all Required Deposits to its Clearing Fund, calculated
taking into account such E&A/Delivery Transaction, of Common Members
(``Guaranty Substitution Time'').\20\ At the Guaranty Substitution
Time, NSCC's Guaranty would take effect, and OCC would no longer retain
any settlement obligations with respect to such E&A/Delivery
Transactions.
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    \20\ Procedure XV of the NSCC Rules provides that all Clearing
Fund requirements and other deposits be made within one hour of
demand, unless NSCC determines otherwise. See supra note 4.
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    The Guaranty Substitution would not occur, however, with respect to
any E&A/Delivery Transaction if NSCC has rejected such E&A/Delivery
Transaction due to an improper submission, as described above. The
Guaranty Substitution also would not occur if, after NSCC's receipt of
the E&A/Delivery Transaction but prior to receiving corresponding
Clearing Fund deposits, a Common Member involved in the E&A/Delivery
Transaction has defaulted on its obligations to NSCC by failing to meet
its Clearing Fund obligations, or NSCC has otherwise ceased to act for
such Common Member pursuant to the NSCC Rules (in either case, such
Common Member becomes a ``Defaulting NSCC Member'').
    NSCC would be required to promptly notify OCC if a Common Member
becomes a Defaulting NSCC Member, as described above. Upon receiving
such a notice, OCC would not submit to NSCC any additional E&A/Delivery
Transactions involving the Defaulting NSCC Member for settlement,
unless authorized representatives of both OCC and NSCC otherwise
consent. OCC would, however, deliver to NSCC a list of all E&A/Delivery
Transactions that have already been submitted to NSCC and that involve
the Defaulting NSCC Member (``Defaulted NSCC Member Transactions'').
The Guaranty Substitution would not occur with respect to such
Defaulted NSCC Member Transactions, unless both Clearing Agencies agree
otherwise. Therefore, NSCC would have no obligation to guarantee such
Defaulted NSCC Member Transactions, and OCC would continue to be
responsible for effecting the settlement of such Defaulted NSCC Member
Transactions pursuant to OCC's By-Laws and Rules. Once NSCC has
confirmed the list of Defaulted NSCC Member Transactions, Guaranty
Substitution would occur for all submitted E&A/Delivery Transactions
for that Activity Date that are not included on such list (i.e., those
transactions not involving the Defaulting NSCC Clearing Member). NSCC
would be required to promptly notify OCC upon the occurrence of the
Guaranty Substitution Time on each Activity Date.
    If OCC suspends a Common Member after NSCC has received the E&A/
Delivery Transactions but before the Guaranty Substitution has
occurred, and that Common Member has not become a Defaulting NSCC
Member, the Guaranty Substitution would proceed at the Guaranty
Substitution Time. In such a scenario, OCC would continue to be
responsible for guaranteeing the settlement of the E&A/Delivery
Transactions in question until the Guaranty Substitution Time, at which
time the responsibility would transfer to NSCC. If, however, the
suspended Common Member also becomes a Defaulting NSCC Member after
NSCC has received the E&A/Delivery Transactions but before the Guaranty
Substitution has occurred, Guaranty Substitution would not occur, and
OCC would continue to be responsible for effecting the settlement of
such Defaulted NSCC Member Transactions pursuant to OCC's By-Laws and
Rules (unless both Clearing Agencies agree otherwise).
    Finally, the New Accord also would provide for the consistent
treatment of all exercise and assignment activity under the agreement.
Under the Existing Accord, ``standard'' \21\ option contracts

become guaranteed by NSCC when the Common Member meets its morning
Clearing Fund Required Deposit at NSCC while ``non-standard'' exercise
and assignment activity becomes guaranteed by NSCC at midnight of the
day after trade date (T+1). Under the New Accord, all exercise and
assignment activity for Eligible Securities would be guaranteed by NSCC
as of the Guaranty Substitution Time, under the circumstances described
above, further simplifying the framework for the settlement of such
contracts.
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    \21\ Option contracts with ``standard'' expirations expire on
the third Friday of the specified expiration month, while ``non-
standard'' contracts expire on other days of the expiration month.
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Other Terms of the New Accord

    The New Accord would include a number of other provisions intended
to maintain certain terms of the Existing Accord or improve the
procedures, information sharing, and overall governance process under
the new agreement. Many of these terms are additions to or improvements
upon the terms of the Existing Accord.
    Under the proposed New Accord, the Clearing Agencies would agree to
address the specifics regarding the time, form, and manner of various
required notifications and actions in a separate service level
agreement, which the parties would be able to revisit as their
operational needs evolve. The separate service level agreement also
would specify an effective date for the New Accord, which would occur
on a date following approval and effectiveness of all required
regulatory submissions to be filed by OCC and NSCC with the appropriate
regulatory authorities. Similar to the Existing Accord, the proposed
New Accord would remain in effect: (a) Until it is terminated by the
mutual written agreement of OCC and NSCC; (b) until it is unilaterally
terminated by either Clearing Agency upon one year's written notice (as
opposed to six months under the Existing Accord); or (c) until it is
terminated by either NSCC or OCC upon the bankruptcy or insolvency of
the other, provided that the election to terminate is communicated to
the other party within three business days by written notice.
    Under the proposed New Accord, NSCC would agree to notify OCC if
NSCC ceases to act for a Common Member pursuant to the NSCC Rules no
later than the earlier of NSCC's provision of notice of such action to
the governmental authorities or notice to other NSCC Members.
Furthermore, if an NSCC Member for which NSCC has not yet ceased to act
fails to satisfy its Clearing Fund obligations to NSCC, NSCC would be
required to notify OCC promptly after discovery of the failure.
Likewise, OCC would be required to notify NSCC of the suspension of a
Common Member no later than the earlier of OCC's provision of notice to
the governmental authorities or other OCC Clearing Members.
    Under the Existing Accord, NSCC and OCC agree to share certain
reports and information regarding settlement activity and obligations
under the agreement. The New Accord would enhance this information
sharing between the Clearing Agencies. For example, the Clearing
Agencies would agree to share certain information, including general
risk management due diligence regarding Common Members, lists of Common
Members, and information regarding margin and settlement obligations of
the Common Members. The Clearing Agencies would also agree to provide
each other with any other information that the other reasonably
requests in connection with their obligations under the New Accord. All
such information would be required to be kept confidential, using the
same care and discretion that each Clearing Agency uses for the
safekeeping of its own members' confidential information. NSCC and OCC
would each be required to act in good faith to resolve and notify the
other of any errors, discrepancies or delays in the information it
provides.
    The New Accord also would include new terms to provide that, to the
extent a Clearing Agency is unable to perform any obligation as a
result of the failure of the other Clearing Agency to perform its
responsibilities on a timely basis, the time for the non-failing
Clearing Agency's performance would be extended, its performance would
be reduced to the extent of any such impairment, and it would not be
liable for any failure to perform its obligations. Further, NSCC and
OCC would agree that neither Clearing Agency would be liable to the
other Clearing Agency in connection with its performance of its
obligations under the proposed New Accord to the extent it has acted,
or omitted or ceased to act, with the permission or at the direction of
a governmental authority. Moreover, the proposed New Accord would
provide that in no case would either Clearing Agency be liable to the
other for punitive, incidental or consequential damages. The purpose of
these new provisions is to provide clear and specific terms regarding
each Clearing Agency's liability for non-performance under the
agreement.
    The proposed New Accord would also contain the usual and customary
representations and warranties for an agreement of this type, including
representations as to the parties' good standing, corporate power and
authority and operational capability, that the agreement complies with
laws and all government documents and does not violate any agreements,
and that all of the required regulatory notifications and filings would
be obtained prior to the New Accord's effective date. It would also
include representations that the proposed New Accord constitutes a
legal, valid and binding obligation on each of OCC and NSCC and is
enforceable against each, subject to standard exceptions. Furthermore,
the proposed New Accord would contain a force majeure provision, under
which NSCC and OCC would agree to notify the other no later than two
hours upon learning that a force majeure event has occurred and both
parties would be required to cooperate in good faith to mitigate the
effects of any resulting inability to perform or delay in performing.

Proposed Amendments to NSCC Rules

    Given the key differences between the Existing Accord and the New
Accord, as described above, NSCC proposes certain changes to Procedures
III and XV of the NSCC Rules to accommodate the terms of the New
Accord. In particular, NSCC would update Section B of Procedure III to
define the scope of the New Accord. First, the proposed Section B of
Procedure III would identify the E&A/Delivery Transactions, and would
make clear that the New Accord would apply only to E&A/Delivery
Transactions that are in either CNS Securities or Balance Order
Securities, as such terms are defined in the NSCC Rules. The proposed
Section B of Procedure III would also define the Common Members, or
firms that must be named as counterparties to E&A/Delivery
Transactions, as ``Participating Members.'' The proposal would describe
the Guaranty Substitution Time and would describe the circumstances
under which the Guaranty Substitution would not occur. Finally, the
proposed Section B of Procedure III would describe how E&A/Delivery
Transactions for which the Guaranty Substitution has occurred would be
processed at NSCC both if they are covered by the proposed New Accord
and if they are not covered by the proposed New Accord because, for
example, they are not transactions in CNS Securities or Balance Order
Securities or were not submitted for regular way settlement.
    Finally, NSCC is also proposing to amend Procedure XV to remove

reference to the exclusion of E&A/Delivery Transactions from the
calculation of the mark-to-market margin component of its Clearing Fund
calculations, which is no longer applicable under the proposed New
Accord where the Guaranty Substitution would replace the transfer of a
defaulting Common Member's margin payments under the Existing Accord.
Therefore, NSCC is not proposing any change to its margining
methodology, but will include E&A/Delivery Transactions in the
calculation of the mark-to-market margin component of Common Members'
Clearing Fund Required Deposits following implementation of the New
Accord.

Proposed Amendments to OCC's By-Laws and Rules

    OCC also proposes certain changes to its By-Laws and Rules to
accommodate the terms of the New Accord. The primary purpose of the
proposed changes is to: (1) Reflect the expanded scope of the New
Accord, (2) reflect changes related to the new Guaranty Substitution
mechanics of the New Accord; and (3) make other changes necessary to
conform to the terms of the New Accord or to otherwise provide
additional clarity around the settlement and margining \22\ treatment
of: (i) Eligible Securities under the New Accord, (ii) non-regular way
securities settling through the facilities of NSCC but outside of the
New Accord, and (iii) those securities settling outside of the New
Accord and away from NSCC on a broker-to-broker basis. These proposed
changes are discussed in greater detail below.
---------------------------------------------------------------------------

    \22\ OCC notes that, while it is proposing changes to its Rules
concerning margin requirements (e.g., which transactions would be
included as part of OCC's margin calculation at a given point in
time), OCC is not proposing any changes to its margin model (with
the exception that OCC would no longer collect and hold margin for
positions after NSCC's Guaranty has taken effect under the New
Accord).
---------------------------------------------------------------------------

Changes Related to the Expanded Scope of the New Accord

    First, OCC proposes to amend and replace the defined term ``CNS-
eligible'' \23\ to reflect the expanded definition of Eligible
Securities under the New Accord. The term ``CNS-eligible'' currently
describes the securities underlying the physically-settled stock
options that are eligible under the Existing Accord to be settled
through NSCC's CNS Accounting Operation. Under the New Accord, however,
the term Eligible Securities is more broadly defined to include
securities (both Stock Options and Stock Futures) eligible for
settlement via NSCC's CNS Accounting Operation and NSCC's Balance Order
Accounting Operation. Accordingly, OCC proposes to use ``CCC,'' for
``correspondent clearing corporation'' \24\ to describe the Eligible
Securities. Thus, the term ``CCC-eligible'' would replace ``CNS-
eligible'' throughout OCC's By-Laws and Rules.
---------------------------------------------------------------------------

    \23\ See Article I, Section (C)(23) of OCC's By-Laws.
    \24\ Under Article I of OCC's By-Laws, the term ``correspondent
clearing corporation'' means the National Securities Clearing
Corporation or any successor thereto which, by agreement with the
Corporation, provides facilities for settlements in respect of
exercised option contracts or BOUNDs (i.e., securities issued by OCC
pursuant to Article XXIV of OCC's By-Laws and Chapter XXV of OCC's
Rules) or in respect of delivery obligations arising from
physically-settled stock futures. See supra note 4.
---------------------------------------------------------------------------

    Next, because the New Accord would include the settlement of
securities underlying Stock Futures, OCC proposes to make several
changes to its rules regarding Stock Futures to accommodate this
expansion. More specifically, OCC proposes a conforming amendment to
Rule 901 Interpretation and Policy (.02) to clarify that, under the New
Accord, OCC will, subject to its discretion, cause the settlement of
all matured Stock Futures to be made through the facilities of NSCC to
the extent that the underlying securities are CCC-eligible as the term
is currently proposed.
    OCC also proposes clarifying and conforming revisions to newly
renumbered Rule 901(e) (currently Rule 901(d)) to specify that
settlements made through the facilities of the correspondent clearing
corporation are governed by Rule 901 and to clarify that, under the New
Accord, specifications made in any Delivery Advice may be revoked up
until the point at which NSCC's Guaranty has taken effect (the
``obligation time'' as discussed below) and not the opening of business
on the delivery date.

Changes Related to Guaranty Substitution

    OCC also proposes a series of amendments to its Rules to accurately
reflect the process under which the Guaranty Substitution occurs under
the New Accord. First, OCC proposes to amend Rule 901(c) so that the
term ``obligation time''--the time that the correspondent clearing
corporation becomes unconditionally obligated, in accordance with its
rules, to effect settlement in respect thereof or to close out the
securities contract arising therefrom--is synonymous with the Guaranty
Substitution Time under the New Accord (i.e., (i) settlement
obligations are reported to and are not rejected by NSCC; (ii) NSCC has
not notified OCC that NSCC has ceased to act for the relevant Clearing
Member; and (iii) the Clearing Fund requirements of the relevant
Clearing Member are received by NSCC). Under the New Accord, if a
default occurs prior to the Guaranty Substitution Time, the Guaranty
Substitution will not occur for any E&A/Delivery Transactions involving
the Defaulting NSCC Member, and OCC will continue to guarantee
settlement for those Defaulted NSCC Member Transactions.
    Next, OCC proposes to amend language in newly renumbered Rule
901(i) (currently Rule 901(h)) regarding the timing of the end of a
Clearing Member's obligations to OCC with respect to securities to be
settled through NSCC. Under the Existing Accord and OCC's existing
Rules, a Clearing Member's obligations to OCC end only once settlement
is completed. Under the New Accord, however, a Clearing Member's
obligations to OCC will end when OCC's obligations with respect to
guaranteeing settlement of the security would end (i.e., the Guaranty
Substitution Time or ``obligation time''). OCC therefore proposes to
amend newly renumbered Rule 901(i) to specify that a Clearing Member's
obligations to OCC will be deemed completed and performed once the
``obligation time'' has occurred.
    As discussed above, the New Accord eliminates the provisions of the
Existing Accord whereby OCC and NSCC guaranteed each other the
performance of Common Members and made certain payments to the other
upon the default of a Common Member. Therefore, OCC proposes to delete
discussions of such guarantees and payments from newly renumbered Rule
901(i) and Rule 1107.
    OCC also proposes amendments to Rules 910 and 911, which set forth
procedures for handling failures to make or take delivery of securities
in settlement of exercised or assigned Stock Options and matured
physically-settled Stock Futures, to add language to both rules to
clarify that the failure procedures set forth therein would not apply
with respect to any delivery to be made through NSCC pursuant to Rule
901. Under the New Accord, once the Guaranty Substitution Time with
respect to a specific E&A/Delivery Transaction occurs, OCC's Guaranty
ends and NSCC's Guaranty begins, leaving OCC with no involvement with
or responsibility for the settlement of the securities underlying that
transaction. Therefore, if there is a failure to make or take delivery
with respect to that transaction after Guaranty Substitution has
occurred, the

NSCC Rules will govern that failure. With respect to deliveries made on
a broker-to-broker basis under OCC Rules 903 through 912 (including
those that may utilize NSCC's Obligation Warehouse services), and which
are not governed by Rule 901, Guaranty Substitution does not occur and
OCC's failure procedures would apply.

Changes to OCC's Margin Rules

    Under the New Accord, OCC will no longer collect margin on a
transaction once it is no longer guaranteeing settlement for that
transaction. Therefore, OCC proposes to add language to Rule 601(f) to
clarify that OCC's margin calculations will not include delivery
obligations arising from any Stock Options or Stock Futures that are
eligible for settlement through NSCC and for which OCC has no further
settlement obligations because either (i) Guaranty Substitution has
occurred for E&A/Delivery Transactions under the New Accord (as
described in revised Rule 901(c)) or (ii) NSCC has otherwise accepted
transactions for non-regular way settlement under the NSCC Rules (as
describe in newly proposed Rule 901(d)).\25\ By not including these
transactions as part of OCC's margin calculation, OCC is hoping to
alleviate instances of ``double-margining'' for Common Members that may
otherwise simultaneously owe margin to NSCC and OCC with respect to the
same position.
---------------------------------------------------------------------------

    \25\ Related revisions to Rule 901(c) and newly proposed Rule
901(d) are discussed in more detail below.
---------------------------------------------------------------------------

    OCC also proposes to delete Rule 608A in its entirety. The New
Accord seeks to eliminate the situation under the Existing Accord where
Common Members are effectively ``double-margined'' or required to
simultaneously post margin with OCC and NSCC with respect to the same
position. As the New Accord eliminates this double-margining scenario,
Rule 608A, which provides procedures pursuant to which a Clearing
Member could use the securities deposited as margin with OCC as
collateral to secure a loan to pay its margin obligations to NSCC, is
now unnecessary.

Other Clarifying Changes Not Related to the New Accord

    OCC also proposes to amend its Rules to make clarifying changes
that are not directly required by the New Accord but would provide
additional clarity in its Rules in light of other changes being made to
accommodate the New Accord. Specifically, OCC proposes to revise Rule
901 Interpretation and Policy (.02) to provide that transactions that
involve the delivery of non-CCC eligible securities made on a broker-
to-broker basis (and away from NSCC) may nevertheless involve the use
of certain services of NSCC (e.g., NSCC's Obligation Warehouse). For
such transactions, because they are not covered by the New Accord and
NSCC at no point guarantees settlement, OCC Rule 901 would not apply
and delivery is governed by the broker-to-broker settlement procedures
set forth in OCC Rules 903 through 912, as is the case currently today.
Additionally, while OCC's existing Rules do not prohibit broker-to-
broker settlements from being facilitated through the services of a
correspondent clearing corporation, they do not explicitly contemplate
the possibility. OCC also proposes to make clarifying amendments to
Rule 904(b) and 910A(a) to more clearly distinguish between settlements
effected through NSCC's CNS Accounting Operation or Balance Order
Accounting Operations in accordance with OCC Rule 901 and deliveries
effected on a broker-to-broker basis utilizing services of NSCC under
OCC Rules 903 through 912 and to clearly state which OCC Rules apply in
each context.
    Further, OCC proposes to add a new paragraph (d) to Rule 901 to
clarify that OCC still intends, at its discretion, to effect settlement
of Stock Options and Stock Futures that are scheduled to be settled on
the first business day after exercise or maturity through NSCC pursuant
to Rule 901 and the relevant provisions of the NSCC Rules, even though
such contracts are outside the scope of the New Accord. These contracts
would continue to be settled as they are currently today.
    OCC also proposes clarifying and conforming changes to the
introductory language of Chapter IX of the Rules. Specifically, OCC
proposes conforming changes to the Rule to reflect the replacement of
the defined term ``CNS-eligible'' with ``CCC-eligible'' as described
above. The proposed changes would also clarify that OCC's broker-to-
broker settlement rules are contained in Rules 903-912, as Rule 902
concerns Delivery Advices, which also may be applicable to settlements
made through the correspondent clearing corporation pursuant to Rule
901. In addition, the proposed changes to the introductory language of
Chapter IX of the Rules would provide additional clarity around OCC's
existing authority to alter a previous designation of a settlement
method at any time prior to the designated delivery date by specifying
that this authority would apply to both settlements to be made through
the facilities of the correspondent clearing corporation pursuant to
Rule 901 or settlements to be made on a broker-to-broker basis pursuant
to Rules 903 through 912. Finally, OCC proposes a number of conforming
changes to Rules 901 and 912 to reflect the renumbering of various Rule
provisions due to the proposed amendments described above.

II. Discussion and Commission Findings

    Although the Clearing Supervision Act does not specify a standard
of review for an advance notice, its stated purpose is instructive: To
mitigate systemic risk in the financial system and promote financial
stability by, among other things, promoting uniform risk management
standards for systemically important financial market utilities and
strengthening the liquidity of systemically important financial market
utilities.\26\
---------------------------------------------------------------------------

    \26\ 12 U.S.C. 5461(b).
---------------------------------------------------------------------------

    Section 805(a)(2) of the Clearing Supervision Act \27\ authorizes
the Commission to prescribe risk management standards for the payment,
clearing and settlement activities of designated clearing entities
engaged in designated activities for which the Commission is the
supervisory agency. Section 805(b) of the Clearing Supervision Act \28\
provides the following objectives and principles for the Commission's
risk management standards prescribed under Section 805(a):
---------------------------------------------------------------------------

    \27\ 12 U.S.C. 5464(a)(2).
    \28\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

     To promote robust risk management;
     to promote safety and soundness;
     to reduce systemic risks; and
     to support the stability of the broader financial system.
    The Commission has adopted risk management standards under Section
805(a)(2) of the Clearing Supervision Act \29\ and Section 17A of the
Act (``Rule 17Ad-22'').\30\ Rule 17Ad-22 requires registered clearing
agencies to establish, implement, maintain, and enforce written
policies and procedures that are reasonably designed to meet certain
minimum requirements for their operations and risk management practices
on an ongoing basis.\31\ Therefore, it is appropriate for the
Commission to review proposed changes in advance notices against the
objectives and principles of these risk management standards as
described in

Section 805(b) of the Clearing Supervision Act and against Rule 17Ad-
22.\32\
---------------------------------------------------------------------------

    \29\ 12 U.S.C. 5464(a)(2).
    \30\ See 17 CFR 240.17Ad-22.
    \31\ Id.
    \32\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

A. Consistency With Section 805(b) of the Clearing Supervision Act

    The Commission believes that the changes proposed in the Advance
Notices are consistent with Section 805(b) of the Clearing Supervision
Act \33\ because they are designed to reduce systemic risk and to
promote robust risk management by mitigating operational risk.
---------------------------------------------------------------------------

    \33\ Id.
---------------------------------------------------------------------------

    The proposal would expand the category of securities eligible for
settlement and guarantee under the New Accord to include Stock Futures
deliveries that are eligible to settle through NSCC's CNS Accounting
Operation, as well as securities underlying Stock Options and Stock
Futures that are eligible to settle through NSCC's Balance Order
Accounting Operation, where each are scheduled to settle regular way.
By including these additional securities as part of the New Accord, the
proposal would provide for more uniform settlement processing of
securities with regular way settlement. According to the Clearing
Agencies, the expansion of the category of securities eligible for
settlement and guarantee under the New Accord would simplify the
settlement process for these additional securities transactions. By
providing for more uniform settlement processing, simplifying the
settlement process, and subjecting such transactions to enhanced
information sharing and governance, as described below, this change is
intended to promote robust risk management by mitigating operational
risk.
    The proposal would establish additional arrangements concerning the
procedures, information sharing, and overall governance processes under
the New Accord. For example, the Clearing Agencies would agree to share
certain information, including general risk management due diligence
regarding Common Members, lists of Common Members, and information
regarding margin and settlement obligations of the Common Members. The
Clearing Agencies also would agree to provide each other with any other
information that the other reasonably requests in connection with their
obligations under the New Accord. Such agreements are designed to help
the Clearing Agencies to more effectively identify, monitor, and manage
risks that may be presented by certain Common Members.
    The New Accord also would establish the Guaranty Substitution Time
(i.e., a specific point in time where trade guarantee obligations would
transfer from OCC to NSCC), with respect to the applicable securities
transactions, as described above. The Guaranty Substitution Time would
help eliminate ambiguity and complexity that exists in the current
guarantee practice regarding which Clearing Agency is responsible for
guaranteeing settlement at any given moment, and help provide greater
certainty that, in the event of the default of a Common Member, the
default would be handled pursuant to the rules and procedures of the
Clearing Agency whose guarantee is then in effect. This proposed change
is designed to help strengthen the Clearing Agencies' abilities to plan
for, manage, and, therefore, mitigate the risks that the default of a
Common Member could present to the Clearing Agencies, other clearing
members, and the market as a whole.
    By assisting the Clearing Agencies with mitigating operational
risk, as well as more effectively managing risks presented by certain
Common Members, including the risk presented by Common Member defaults,
the proposed changes are designed to reduce systemic risk and promote
robust risk management. Therefore, the Commission believes that the
changes proposed in the Advance Notices are consistent with Section
805(b) of the Clearing Supervision Act.\34\
---------------------------------------------------------------------------

    \34\ Id.
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(20)

    The Commission believes that the changes proposed in the Advance
Notices are consistent with Rule 17Ad-22(e)(20) under the Act, which
requires, in part, that the Clearing Agencies establish, implement,
maintain and enforce written policies and procedures reasonably
designed to identify, monitor, and manage risks related to any link the
clearing agency establishes with one or more other clearing
agencies.\35\
---------------------------------------------------------------------------

    \35\ 17 CFR 240.17Ad-22(e)(20).
---------------------------------------------------------------------------

    Under the terms of the Existing Accord, even after NSCC's trade
guarantee has taken effect, OCC is not released from its trade
guarantee with respect to the transactions until certain deadlines have
passed, as discussed above. As a result, the Existing Accord creates a
complicated framework for the settlement of securities underlying
certain Stock Options, which could lead to an unanticipated disruption
to the Clearing Agencies' respective clearing operations.
    The New Accord is designed to better mitigate and manage the risks
related to the link the Clearing Agencies have established with each
other to settle the securities underlying Stock Options and Stock
Futures. For example, by instituting the Guaranty Substitution Time,
the New Accord would provide for a clearer, simpler framework for the
settlement of securities underlying certain Stock Options and Stock
Futures by setting a specific time at which trade guarantee obligations
would transfer from OCC to NSCC. This would help eliminate the
ambiguity that currently exists regarding which Clearing Agency is
responsible for guaranteeing settlement at any given moment. It would
also provide greater certainty that in the event of a Common Member
default, the default would be handled pursuant to the rules and
procedures of the Clearing Agency whose guarantee is then in effect.
This greater certainty, in turn, is designed to help improve the OCC's
and NSCC's ability to plan for and manage the risk presented by the
default of a Common Member, and the effects that such a default could
have on other members and the markets the Clearing Agencies serve.
    In connection with the proposal to put additional arrangements into
place concerning the procedures, information sharing, and overall
governance processes under the New Accord, the Clearing Agencies would
agree to share certain information, including general surveillance
information regarding their members. Such arrangements are designed to
help each Clearing Agency more effectively identify, monitor, and
manage risks that may be presented by Common Members.
    For the above reasons, the Commission believes that the New Accord
is designed to assist the Clearing Agencies in identifying, monitoring,
and managing risks related to the link between the Clearing Agencies.
Therefore, the Commission believes that the changes proposed in the
Advance Notices are consistent with Rule 17Ad-22(e)(20).\36\
---------------------------------------------------------------------------

    \36\ Id.
---------------------------------------------------------------------------

C. Consistency With Rule 17Ad-22(e)(21)

    The Commission believes that the proposal is consistent with Rule
17Ad-22(e)(21) under the Act, which requires, in part, that the
Clearing Agencies establish, implement, maintain and enforce written
policies and procedures reasonably designed to be efficient and
effective in meeting the requirements of

its participants and the markets it serves.\37\ As described above, the
proposal would modify the timing of the Guaranty Substitution by
establishing the Guaranty Substitution Time. In doing so, the New
Accord would minimize the ``double margining'' issue \38\ that is
present under the Existing Accord. As a result, Common Members would no
longer be required to post margin at both Clearing Agencies to cover
the same transactions. By simplifying the terms of the existing
agreement in this way, the New Accord is designed to be more efficient
and effective in meeting the requirements of OCC's and NSCC's
participants and the markets they serve.
---------------------------------------------------------------------------

    \37\ 17 CFR 240.17Ad-22(e)(21).
    \38\ As noted above, under the Existing Accord, even after
NSCC's trade guarantee has taken effect, OCC retains its trade
guarantee obligations with respect to the options exercise or
assignment until certain deadlines have passed on the first business
day following the scheduled settlement date. Once such deadlines
have passed, OCC is released from its trade guarantee unless NSCC
has notified OCC that the relevant Common Member has failed to meet
an obligation to NSCC or NSCC has ceased to act for such firm. This
results in a period of time during which NSCC's trade guarantee
overlaps with OCC's trade guarantee, for which both Clearing
Agencies collect and hold margin from the Common Member. See supra
note 15.
---------------------------------------------------------------------------

    Furthermore, as described above, the proposed changes would
establish additional arrangements between the Clearing Agencies
concerning the procedures, information sharing, and overall governance
processes under the New Accord. Such arrangements could enhance
information sharing between the Clearing Agencies and enable them to
more effectively identify, monitor, and manage risks that may be
presented by certain Common Members.
    Because the New Accord would allow for greater information sharing
and eliminate the need for Common Members to post margin at both
Clearing Agencies for the same transactions, the Commission believes
the proposal is designed to be efficient and effective in meeting the
requirements of Common Members. Therefore, the Commission believes that
the changes proposed in the Advance Notices are consistent with the
requirements of Rule 17Ad-22(e)(21).\39\
---------------------------------------------------------------------------

    \39\ 17 CFR 240.17Ad-22(e)(21).
---------------------------------------------------------------------------

III. Conclusion

    It is therefore noticed, pursuant to Section 806(e)(1)(I) of the
Clearing Supervision Act,\40\ that the Commission does not object to
these advance notice proposals (SR-NSCC-2017-803 and SR-OCC-2017-804)
and that the Clearing Agencies are authorized to implement the
proposals as of the date of this notice or the date of an order by the
Commission approving a proposed rule change that reflects rule changes
that are consistent with the relevant advance notice proposal (SR-NSCC-
2017-007, SR-OCC-2017-013), whichever is later.
---------------------------------------------------------------------------

    \40\ 12 U.S.C. 5465(e)(1)(I).

    By the Commission.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-16395 Filed 8-3-17; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 204 (Wednesday, October 22, 2014)]
[Notices]
[Page 63115]
[FR Doc No: 2014-25007]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Notice of Effectiveness of Exempt Wholesale Generator Status

------------------------------------------------------------------------
                                                           Docket Nos.
------------------------------------------------------------------------
Dominion Solar Gen-Tie, LLC...........................       EG14-71-000
Desert Green Solar Farm LLC...........................       EG14-72-000
Seiling Wind, LLC.....................................       EG14-73-000
Seiling Wind II, LLC..................................       EG14-74-000
Mammoth Plains Wind Project, LLC......................       EG14-75-000
TX Jumbo Road Wind, LLC...............................       EG14-76-000
Palo Duro Wind Energy, LLC............................       EG14-77-000
OCI Alamo 4 LLC.......................................       EG14-78-000
Newark Energy Center, LLC.............................       EG14-79-000
------------------------------------------------------------------------

    Take notice that during the months of September 2014, the status of
the above-captioned entities as Exempt Wholesale Generators became
effective by operation of the Commission's regulations. 18 CFR
366.7(a).

    Dated: October 15, 2014.
Kimberly D. Bose,
Secretary.
[FR Doc. 2014-25007 Filed 10-21-14; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 84, Number 131 (Tuesday, July 9, 2019)]
[Notices]
[Page 32804]
[FR Doc No: 2019-14623]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86299; File No. SR-NYSEArca-2019-33]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of
Designation of a Longer Period for Commission Action on a Proposed Rule
Change, as Modified by Amendment No. 1, Regarding Certain Changes to
Investments of the First Trust TCW Unconstrained Plus Bond ETF

July 3, 2019.
    On May 6, 2019, NYSE Arca, Inc. (``Exchange'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\
and Rule 19b-4 thereunder,\2\ a proposed rule change to modify certain
investments of the First Trust TCW Unconstrained Plus Bond ETF, the
shares of which are currently listed and traded on the Exchange under
NYSE Arca Rule 8.600-E. On May 16, 2019, the Exchange filed Amendment
No. 1 to the proposed rule change. The proposed rule change, as
modified by Amendment No. 1, was published for comment in the Federal
Register on May 28, 2019.\3\ The Commission has received no comment
letters on the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 85903 (May 21,
2019), 84 FR 24576.
---------------------------------------------------------------------------

    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 notice for this proposed rule change
is July 12, 2019. The Commission is extending this 45-day time period.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    The Commission finds it appropriate to designate a longer period
within which to take action on the proposed rule change so that it has
sufficient time to consider the proposed rule change. Accordingly, the
Commission, pursuant to Section 19(b)(2) of the Act,\5\ designates
August 26, 2019 as the date by which the Commission shall either
approve or disapprove, or institute proceedings to determine whether to
disapprove, the proposed rule change (File No. SR-NYSEArca-2019-33), as
modified by Amendment No. 1.
---------------------------------------------------------------------------

    \5\ Id.
    \6\ 17 CFR 200.30-3(a)(31).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-14623 Filed 7-8-19; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 99 (Thursday, May 22, 2014)]
[Rules and Regulations]
[Pages 29323-29324]
[FR Doc No: 2014-11382]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2013-0986; Airspace Docket No. 13-AGL-25]

Establishment of Class E Airspace; Bois Blanc Island, MI

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

SUMMARY: This action establishes Class E airspace at Bois Blanc Island,
MI. Controlled airspace is necessary to accommodate new Area Navigation
(RNAV) Standard Instrument Approach Procedures at Bois Blanc Island
Airport. The FAA is taking this action to enhance the safety and
management of Instrument Flight Rule (IFR) operations at the airport.

DATES: Effective date: 0901 UTC, July 24, 2014. The Director of the
Federal Register approves this incorporation by reference action under
1 CFR Part 51, subject to the annual revision of FAA Order 7400.9 and
publication of conforming amendments.

FOR FURTHER INFORMATION CONTACT: Raul Garza, Jr., Central Service
Center, Operations Support Group, Federal Aviation Administration,
Southwest Region, 2601 Meacham Blvd., Fort Worth, TX 76137; telephone
817-321-7654.

SUPPLEMENTARY INFORMATION:

History

    On March 14, 2014, the FAA published in the Federal Register a
notice of proposed rulemaking (NPRM) to establish Class E airspace for
the Bois Blanc Island, MI, area, creating controlled airspace at Bois
Blanc Island Airport (79 FR 14449) Docket No. FAA-2013-0986. Interested
parties were invited to participate in this rulemaking effort by
submitting written comments on the proposal to the FAA. No comments
were received. Class E airspace designations are published in paragraph
6005 of FAA Order 7400.9X dated August 7, 2013, and effective September
15, 2013, which is incorporated by reference in 14 CFR 71.1. The Class
E airspace designations listed in this document will be published
subsequently in the Order.

The Rule

    This action amends Title 14 Code of Federal Regulations (14 CFR)
Part 71 by establishing Class E airspace extending upward from 700 feet
above the surface within a 6.3-mile radius of Bois Blanc Island
Airport, Bois Blanc Island, MI, for new standard instrument approach
procedures developed at the airport. Controlled airspace is needed for
the safety and management of IFR operations at the airport.
    The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
Therefore, this regulation: (1) Is not a ``significant regulatory
action'' under Executive Order 12866; (2) is not a ``significant rule''
under DOT Regulatory Policies and Procedures (44 FR 11034; February 26,
1979); and (3) does not warrant preparation of a regulatory evaluation
as the anticipated impact is so minimal. Since this is a routine matter
that only affects air traffic procedures and air navigation, it is
certified that this rule, when promulgated, does not have a significant
economic impact on a substantial number of small entities under the
criteria of the Regulatory Flexibility Act.

    The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the U.S. Code. Subtitle 1, Section 106, describes
the authority of the FAA Administrator. Subtitle VII, Aviation
Programs, describes in more detail the scope of the agency's authority.
This rulemaking is promulgated under the authority described in
Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the
FAA is charged with prescribing regulations to assign the use of
airspace necessary to ensure the safety of aircraft and the efficient
use of airspace. This regulation is within the scope of that authority
as it establishes controlled airspace at Bois Blanc Island Airport,
Bois Blanc Island, MI.

Environmental Review

    The FAA has determined that this action qualifies for categorical
exclusion under the National Environmental Policy Act in accordance
with FAA Order 1050.1E, ``Environmental Impacts: Policies and
Procedures,'' paragraph 311a. This airspace action is not expected to
cause any potentially significant environmental impacts, and no
extraordinary circumstances exist that warrant preparation of an
environmental assessment.

List of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

Adoption of the Amendment

    In consideration of the foregoing, the Federal Aviation
Administration amends 14 CFR part 71 as follows:

PART 71--DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND REPORTING POINTS

0
1. The authority citation for 14 CFR part 71 continues to read as
follows:

     Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854,
24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

Sec.  71.1  [Amended]

0
2. The incorporation by reference in 14 CFR 71.1 of the Federal
Aviation Administration Order 7400.9X, Airspace Designations and
Reporting Points, dated August 7, 2013, and effective September 15,
2013, is amended as follows:

Paragraph 6005: Class E airspace areas extending upward from 700
feet or more above the surface.

* * * * *

AGL MI E5 Bois Blanc Island, MI [New]

Bois Blanc Island Airport, MO
    (Lat. 38[deg]20'52'' N., long. 93[deg]20'43'' W.)

    That airspace extending upward from 700 feet above the surface
within a 6.3-mile radius of Bois Blanc Island Airport.

    Issued in Fort Worth, Texas, on May 7, 2014.
Walter Tweedy,
Manager, Operations Support Group, ATO Central Service Center.
[FR Doc. 2014-11382 Filed 5-21-14; 8:45 am]
BILLING CODE 4910-13-P


PAPERWORK REDUCTION ACT SUBMISSION Please read the instructions before completing this form. For additional forms or assistance in completing this form, contact your agency's Paperwork Clearance Officer. Send two copies of this form, the collection instrument to be reviewed, the Supporting Statement, and any additional documentation to: Office of Information and Regulatory Affairs, Office of Management and Budget. Docket Library, Room 10102, 725 17th Street NW Washington, DC 20503.

1. Agency/ Subagency originating request EPA/ Office of Air and Radiation/ Office of Air Quality Planning and Standards 2. OMB control number b. X None a. ___ ___ ___ ___  ___ ___ ___ ___ 2060 3. Type of information collection ( check one) a. X New collection b. G Revision of a currently approved collection c. G Extension of a currently approved collection d. G Reinstatement, without change, of a previously approved collection for which approval has expired e. G Reinstatement, with change, of a previously approved collection for which approval has expired f. G Existing collection in use without an OMB control number For b f, note item A2 of Supporting Statement instructions 4. Type of review requested ( check one) a. X Regular b. G Emergency  Approval requested by: ______/______/______ c. G Delegated 5. Small entities Will this information collection have a significant economic impact on a substantial number of small entities? G Yes X No 6. Requested expiration date a. X Three years from approval date b. G Other Specify: ______/______

7. Title " Reporting and Recordkeeping Requirements for National Emission Standards for Hazardous Air Pollutants for Plastic Parts and Products Surface Coating ( 40 CFR Part 63, subpart PPPP)".

8. Agency form numbers: ICR 2044.01 9. Keywords : Environmental Protection, Air Pollution, Plastic Parts, Products Surface Coating 10. Abstract. Each owner or operator of a source affected by the proposed standards would be required to submit an initial notification that the source is subject to the standard. Each respondent would submit semiannual compliance reports. Additional records and notifications would depend on how the owner or operator chooses to comply with the standards. The owner or operator of a plastic parts and products surface coating operation that is subject to these proposed standards would be required to control hazardous air pollutants ( HAP) by either limiting the HAP content of materials used in the coating operations ( compliant material option), demonstrating that the source wide HAP emissions meet the emission limit ( emission rate without add on controls option), or by using an emission capture and control system to demonstrate that the source wide emissions meet the emission limitation ( emission rate with add on controls option).

11. Affected public ( Mark primary with " P" and all others that apply with " X") a. ___ Individuals or households d.___ Farms b. _ P_ Business or other for profit e._ x_ Federal Government c. ___ Not for profit institutions f. _ x_ State, Local, or Tribal Governments 12. Obligation to respond ( Mark primary with " P" and all others that apply with " X") a. G Voluntary b. G Required to obtain or retain benefits c. P Mandatory 13. Annual reporting and recordkeeping hour burden a. Number of respondents 203 b. Total annual responses 203 1. Percentage of these responses collected electronically 0% c. Total annual hours requested 1 d. Current OMB inventory 0 e. Difference 1 f. Explanation of difference 1. Program change 1 2. Adjustment __________________________________ 14. Annual reporting and recordkeeping cost burden ( in thousands of dollars) a. Total annualized capital/ start up costs 1 b. Total annual costs ( O& M) 1 c. Total annualized cost requested 2 d. Current OMB inventory 0 e. Difference 2 f. Explanation of difference 1. Program change 2 2. Adjustment 15. Purpose of information collection ( Mark primary with " P" and all others that apply with " X") a. ____ Application for benefits e. ____ Program planning or management b. ____ Program evaluation f. ____ Research c. ___ General purpose statistics g. __ P_ Regulatory or compliance d. ____ Audit 16. Frequency of recordkeeping or reporting ( check all that apply) a. X Recordkeeping b. G Third party disclosure c. X Reporting 1. G On occasion 2. G Weekly 3. G Monthly 4. G Quarterly 5.

Semi annually 6. G Annually 7. G Biennially 8 .

Other ( describe) one time 17. Statistical methods Does this information collection employ statistical methods?

G Yes X No 18. Agency contact ( person who can best answer question regarding the content of this submission)

Name: Kim Teal, U. S. EPA, MD 13 Phone: ( 919) 541 5580 OMB 83 I 10/ 95 19. Certification for paperwork Reduction Act Submissions On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9.

NOTE: The text of 5 CFR 1320.9, and related provisions of 5 CFR 1320.8 ( b)( 3), appear at the end of the instructions. The certification is to be made with reference to those regulatory provisions as set forth in the instructions.

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:

( a) It is necessary for the proper performance of agency functions;

( b) It avoids unnecessary duplication;

( c) It reduces burden on small entities;

( d) It uses plain, coherent, and unambiguous terminology that is understandable to respondents;

( e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

( f) It indicates the retention periods for recordkeeping requirements;

( g) It informs respondents of the information called for under 5 CFR 1320.8 ( b)( 3):

( i) Why the information is being collected;

( ii) Use of information;

( iii) Burden estimate;

( iv) Nature of response ( voluntary, required for a benefit, or mandatory);

( v) Nature and extent of confidentiality; and ( vi) Need to display currently valid OMB control number;

( h) It was developed by an office that has planned and allocated resources for the efficient and effective manage ment and use of the information to be collected ( see note in Item 19 of the instructions);

( i) It uses effective and efficient statistical survey methodology; and ( j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item below and explain the reason in Item 18 of the Supporting Statement.

Signature of Program Office Official Date Signature of Senior Official or designee Director, Collection Strategies Information Division Date OMB 83 I 10/ 95