[Federal Register Volume 88, Number 157 (Wednesday, August 16, 2023)]
[Notices]
[Pages 55775-55785]
[FR Doc No: 2023-17529]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98101; File No. SR-OCC-2022-012]

Self-Regulatory Organizations; The Options Clearing Corporation;
Order Approving Proposed Rule Change Concerning Collateral Haircuts and
Standards for Clearing Banks and Letters of Credit

August 10, 2023.

I. Introduction

    On December 19, 2022, the Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'') the
Proposed Rule Change SR-OCC-2022-012 (``Proposed Rule Change'')
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'') \1\ and Rule 19b-4 \2\ thereunder to amend OCC's
rules, policies, and procedures regarding (i) the valuation of
Government securities and government-sponsored enterprise (``GSE'')
debt securities deposited as margin or Clearing Fund collateral; (ii)
minimum standards for OCC's Clearing Bank relationships; and (iii)
letters of credit as margin collateral.\3\ The Proposed Rule Change was
published for public comment in the Federal Register on December 23,
2022.\4\ The Commission received comments regarding the Proposed Rule
Change.\5\ The

Commission designated a longer period within which to take action on
the Proposed Rule Change on February 3, 2023, extending the period to
March 23, 2023.\6\ The Commission instituted proceedings to determine
whether to approve or disapprove the Proposed Rule Change on March 21,
2023.\7\ The Commission designated a longer period for Commission
action on the proceedings to determine whether to approve or disapprove
the Proposed Rule Change on June 20, 2023.\8\ 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\ 17 CFR 240.19b-4.
    \3\ See Notice of Filing infra note 4, 87 FR at 79015.
    \4\ Securities Exchange Act Release No. 96533 (Dec. 19, 2022),
87 FR 79015 (Dec. 23, 2022) (File No. SR-OCC-2022-012) (``Notice of
Filing'').
    \5\ Comments on the proposed rule change are available at
https://www.sec.gov/comments/sr-occ-2022-012/srocc2022012.htm.
    \6\ Securities Exchange Act Release No. 96797 (Feb. 3, 2023), 88
FR 8505 (Feb. 9, 2023) (File No. SR-OCC-2022-012) (``Extension'').
    \7\ Securities Exchange Act Release No. 97178 (Mar. 21, 2023),
88 FR 18205 (Mar. 27, 2023) (File No. SR-OCC-2022-012).
    \8\ Securities Exchange Act Release No. 97765 (June 20, 2023),
88 FR 41441 (June 26, 2023) (File No. SR-OCC-2022-012).
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II. Background 9
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    \9\ Capitalized terms used but not defined herein have the
meanings specified in OCC's Rules and By-Laws, available at https://www.theocc.com/about/publications/bylaws.jsp.
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    OCC is a central counterparty (``CCP''), which means it interposes
itself as the buyer to every seller and seller to every buyer for
financial transactions. As the CCP for the listed options markets in
the U.S.,\10\ as well as for certain futures, OCC is exposed to certain
risks arising from its relationships with its members as well as the
banks that support OCC's clearance and settlement services. Such risks
include credit risk because OCC is obligated to perform on the
contracts it clears even where one of its members defaults. OCC manages
credit risk by collecting collateral from members (i.e., margin and
Clearing Fund resources) sufficient to cover OCC's credit exposure to
Clearing Members under a wide range of stress scenarios. In doing so,
OCC requires its Clearing Members to deposit collateral as margin to
support obligations on short options, futures contracts, and other
obligations arising within the members' accounts at OCC. OCC also
requires its members to deposit collateral serving as Clearing Fund
assets to protect OCC, should the margin of a defaulting member be
insufficient to address the potential losses from the defaulting
member's positions. OCC imposes a haircut to collateral to address the
risk that such collateral may be worth less in the future than at the
time it was pledged to OCC. With regard to risks posed by the banks
that support OCC's clearance and settlement services, OCC maintains
standards for third-party relationships, such as those with banks
through which OCC conducts settlement (``Clearing Banks''), and banks
that issue letters of credit that Clearing Members may deposit as
margin collateral.
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    \10\ OCC describes itself as ``the sole clearing agency for
standardized equity options listed on a national securities exchange
registered with the Commission (`listed options').'' See Notice of
Filing supra note 4, 87 FR at 79015.
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    As described in more detail below, OCC proposed to revise its
rules, including certain policies,\11\ to make the following three
changes related to the management of collateral haircuts and banking
relationships:
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    \11\ These policies include the Collateral Risk Management
Policy (``CRM Policy''), Margin Policy, and System for Theoretical
Analysis and Numerical Simulation (``STANS'') Methodology
Description. Id.
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    (1) Replace the current processes for applying haircuts to
Government and GSE debt securities provided as collateral \12\ with a
new process for applying fixed collateral haircuts that it would set
and adjust from time to time, based on a process defined in OCC's CRM
Policy;
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    \12\ Generally, OCC defines, by rule, specific haircuts for
Government and GSE debt securities. For margin collateral
specifically, OCC currently also has authority to value such
securities using Monte Carlo simulations as part of its STANS margin
methodology (known as ``Collateral in Margin'' or ``CiM'').
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    (2) Codify internal standards for Clearing Banks and letter-of-
credit issuers in OCC's Rules to provide transparency on minimum
standards for banking relationships that are critical to OCC's
clearance and settlement services; and
    (3) Authorize OCC to set more restrictive concentration limits for
letters of credit than those limits currently codified in its Rules.
    Based on its impact analysis, OCC does not expect changes in
collateral haircut valuation processes to have a significant impact on
Clearing Members.\13\ OCC stated that the fixed haircut schedule under
the proposed procedures-based approach initially would be the same as
currently codified in the Rules.\14\ Regarding the additional minimum
standards for Clearing Banks and letter-of-credit issuers, OCC
indicated that the institutions currently approved as such already meet
these proposed standards.\15\
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    \13\ See Notice of Filing supra note 4, 87 FR at 79015. OCC
provided its analysis in a confidential Exhibit 3 to File No. SR-
OCC-2022-012.
    \14\ See Notice of Filing supra note 4, 87 FR at 79015.
    \15\ Id.
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A. Collateral Haircuts for Government Securities and GSE Debt
Securities

    OCC proposed to eliminate the CiM treatment of Government
securities and GSE debt securities, as well as to remove the fixed
collateral haircuts schedule from its rules in favor of adopting rules
that describe OCC's process for setting and adjusting fixed haircuts
from time to time. OCC asserted that such a ``procedure-based
approach'' would allow for more frequent valuation, thus reflecting
current market conditions, including periods of stress.\16\ Under the
current structure, OCC accepts Government securities from Clearing
Members as contributions to the Clearing Fund.\17\ Additionally, OCC
accepts both Government securities and GSE debt securities as margin
collateral.\18\ Rule 604(b) specifies haircuts for Government
securities \19\ and GSE debt securities \20\ that are contributed as
margin collateral, while Rule 1002(a)(ii) \21\ specifies haircuts for
Government securities that are contributed to the Clearing Fund.
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    \16\ See Notice of Filing supra note 4, 87 FR at 79016-18.
    \17\ See OCC Rule 1002(a).
    \18\ See OCC Rule 604(b)(1), (2).
    \19\ ``Government securities shall be valued for margin purposes
at 99.5% of the current market value for maturities of up to one
year; 98% of the current market value for maturities in excess of
one year through five years; 96.5% of the current market value for
maturities in excess of five years through ten years; and 95% of the
current market value for maturities in excess of ten years.'' See
OCC Rule 604(b)(1).
    \20\ ``GSE debt securities shall be valued for margin purposes
at (1) 99% of the current market value for maturities of up to one
year; (2) 97% of the current market value for maturities in excess
of one year through five years; (3) 95% of the current market value
for maturities in excess of five years through ten years; and (4)
93% of the current market value for maturities in excess of ten
years.'' See OCC Rule 604(b)(2).
    \21\ ``For purposes of valuing Government securities for
calculating contributions to the Clearing Fund, Government
securities shall be valued at (1) 99.5% of the current market value
for maturities less than one year; (2) 98% of the current market
value for maturities between one and five years; (3) 96.5% of the
current market value for maturities between five and ten years; and
(4) 95% of the current market value for maturities in excess of ten
years.'' See OCC Rule 1002(a)(ii).
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(i) Removal of CiM Treatment
    OCC proposed to remove its authority to value Government securities
and GSE debt securities using the STANS margin methodology, which
currently is used to calculate haircuts applicable to margin
collateral.\22\ As currently written, Interpretation and Policy
(``I&P'') .06 to Rule 601 and Rule 604(f) grant OCC the authority to
determine the collateral value of any Government securities or GSE debt
securities pledged by Clearing Members as margin collateral either by:
(1) the CiM method of including them in Monte Carlo simulations as part
of OCC's STANS margin methodology; or

(2) applying the fixed haircuts that are specified in OCC Rule 604(b).
OCC stated, however, that regulatory examination findings and OCC's
model validation analyses have identified certain weaknesses, including
that OCC may not adequately consider relevant stressed market
conditions for Government securities and GSE debt securities deposited
as margin and Clearing Fund collateral.\23\ OCC proposed to resolve
such shortcomings by deleting I&P .06 to Rule 601 and Rule 604(f), and
instead subjecting all Government securities and GSE debt securities
pledged as margin collateral to a fixed haircut schedule set in
accordance with a revised CRM Policy, discussed in more detail below.
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    \22\ See Notice of Filing supra note 4, 87 FR at 79016.
    \23\ Id.
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    OCC asserted that the resulting approach would be less
procyclical.\24\ Under the proposed change, OCC would value all such
deposits using a fixed haircut schedule.\25\ OCC stated that this
change would prevent spikes in margin requirements during periods of
heightened volatility that can occur under the current CiM
approach.\26\ As stated in the Notice of Filing, while the proposed
fixed haircut approach may be more conservative in periods of low
market volatility, it would prevent spikes in margin requirements
during periods of heightened volatility that may take place under the
existing CiM approach.\27\ The proposed changes would result in an
average impact of less than one percent of the value of Government
securities and GSE debt securities.\28\ OCC stated that it intends to
provide parallel reporting to its Clearing Members for a period of at
least four consecutive weeks prior to implementing the change.\29\
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    \24\ Id. The Commission has stated that procyclicality typically
refers to changes in risk-management practices that are positively
correlated with market, business, or credit cycle fluctuations that
may cause or exacerbate financial stability. Standards for Covered
Clearing Agencies, Securities Exchange Act Release No. 78961 (Sept.
28, 2016), 81 FR 70786, 70816 n. 318 (Oct. 13, 2016). The Commission
stated further that, while changes in collateral values tend to be
procyclical, collateral arrangements can increase procyclicality if
haircut levels fall during periods of low market stress and increase
during periods of high market stress. Id.
    \25\ Additionally, OCC would shift its categorization of
Government security and GSE debt security deposits currently valued
using STANS from margin balances to collateral balances to align its
reporting with the proposed haircut methodology. Specifically, the
value of CiM-eligible Government securities and GSE debt securities
would no longer be included in margin calculations, and thus would
no longer be included on OCC's margin reports. Following
implementation of the proposed changes, the value of the previously
CiM-eligible Government securities and GSE debt securities would be
found in OCC's collateral reports. See Notice of Filing supra note
4, 87 FR at 79016 n.10.
    \26\ See Notice of Filing supra note 4, 87 FR at 79016.
    \27\ Id.
    \28\ Id. As noted below, OCC is proposing to replace the fixed
haircut schedule in its rules that applies to Government securities
deposited in the Clearing Fund. The change would result in a
negligible impact to Clearing Fund collateral haircuts. Id. OCC
provided supporting data as a confidential Exhibit 3 to File No. SR-
OCC-2022-012.
    \29\ See Notice of Filing supra note 4, 87 FR at 79016. See note
25 supra regarding reporting changes that would be implemented in
connection with the proposed change. Further, OCC's rules require it
to provide reporting related to margin and Clearing Fund collateral
each day. See OCC Rule 605 and OCC Rule 1007.
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(ii) Removal of the Fixed Haircut Schedule From OCC's Rules
    OCC proposed to eliminate the fixed haircut schedules in its rules
for Government securities and GSE debt securities used as margin
collateral and Government securities deposited in the Clearing Fund,
and instead to adopt new subsections that would grant OCC the authority
to specify a schedule of haircuts from time to time based on changing
market conditions. Specifically, OCC's proposal would delete the fixed
collateral haircut schedule stated in Rule 604(b)(1)-(2) for Government
securities and GSE debt securities used as margin collateral, and in
Rule 1002(a)(ii) for Government securities deposited in the Clearing
Fund.\30\ OCC proposed to adopt a new section (e) under Rule 604 and
amend language in Rule 1002(a)(ii), to authorize OCC to determine the
current value of these types of securities, and generally apply a
schedule of haircuts that is specified from time to time upon prior
notice to Clearing Members. OCC proposed to describe the new process
for valuing such securities in its CRM Policy, as described in greater
detail in Section II.A.iii. below. Additionally, the proposed changes
to the CRM Policy would require OCC to communicate changes in haircut
rates to Clearing Members at least one full day in advance, and to
maintain the haircut schedule on OCC's public website.
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    \30\ OCC does not accept GSE debt securities as Clearing Fund
collateral.
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    As noted above, OCC would publish a haircut schedule from time to
time on its website, and such schedule would be determined based on the
proposed methodology in the CRM Policy. The proposed changes to Rule
604 would also authorize OCC to apply haircuts to Government securities
and GSE debt securities that are more conservative than those defined
in such haircut schedule, or, in unusual or unforeseen circumstances,
to assign partial or no value to such securities. The proposed change
would authorize OCC to take such action for its protection or the
protection of Clearing Members or the general public with prior notice
to Clearing Members.
    OCC also proposed changes to the CRM Policy that would provide
additional detail regarding the authority to apply more conservative
haircuts or reduce the value attributed to Government securities and
GSE debt securities.\31\ Consistent with the proposed addition to Rule
604, the CRM Policy would require OCC to communicate such actions to
Clearing Members prior to implementation. Additionally, OCC proposed to
add language to the CRM Policy to enumerate the factors that OCC would
consider when determining if such action would be appropriate for its
protection or the protection of Clearing Members or the general public,
including (i) volatility and liquidity, (ii) elevated sovereign credit
risk,\32\ and (iii) any other factors OCC determines are relevant.\33\
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    \31\ The CRM Policy currently authorizes OCC to take additional
mitigating actions in the form of reducing the value of such
securities and review and approval of such actions by OCC's
Management Committee and/or its delegates.
    \32\ OCC explained that while it already has authority under I&P
.15 to Rule 604 to make disapprovals of collateral based on similar
factors, the proposal is intended to enumerate sovereign credit risk
as a factor in the CRM Policy for haircuts on Government securities.
See Notice of Filing supra note 4, 87 FR at 79017, n.16.
    \33\ OCC also proposed to include ``any other factors the
Corporation determines are relevant'' for consistency with I&P .15
to OCC Rule 604 and because such a catch-all is designed to capture
unforeseen circumstances that might not previously have been
considered possible. Id.
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(iii) A Procedures-Based Approach To Setting Collateral Haircuts
    As described above, OCC proposed to establish a new process for
applying fixed collateral haircuts for Government securities and GSE
debt securities that OCC would set and adjust from time to time. OCC
proposed to define its new process, which it refers to as a
``procedures-based approach,'' in the CRM Policy. The proposed
procedures-based approach would replace the processes that OCC proposed
removing from its rules (i.e., dynamic haircuts calculated by OCC's
margin methodology and fixed haircuts defined by rule).
    The proposed procedures-based approach would rely on a financial
model to set and assess the adequacy of collateral haircuts. In
particular, the proposed amendments to the CRM Policy would provide
that OCC's Pricing and Margins team within its Financial Risk
Management (``FRM'') department

would monitor the adequacy of the haircuts using a Historical Value-at-
Risk approach (``H-VaR'') with multiple look-back periods (e.g., 2-
year, 5-year, and 10-year), updated at least monthly.\34\ Each look-
back period would comprise a synthetic time series of the greatest
daily negative return observed for each combination of security type
and maturity bucket (e.g., Government securities maturing in more than
10 years). The longest look-back period under the proposed H-VaR
approach would include defined periods of market stress.\35\ The CRM
Policy would further require OCC to maintain haircuts at a level at
least equal to a 99 percent confidence interval of the look-back period
that provides for the most conservative haircuts. Changes to the
haircut rate would be communicated to Clearing Members at least one
full day in advance and the schedule would be maintained on OCC's
public website.
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    \34\ Upon implementation of the proposed changes, OCC
anticipates that the collateral haircuts initially would be
identical to those outlined in Rules 604(b) and 1002(a). See Notice
of Filing supra note 4, 87 FR at 79017.
    \35\ The delineation of look-back periods, periods of stressed
market volatility included in the longest-term look-back period, and
the type and maturity buckets would be defined in procedures
maintained by OCC's Pricing and Margins business unit.
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(iv) Increased Frequency of Valuations
    OCC's proposed addition of Rule 604(e) and amendments to Rule
1002(a)(ii) would resolve an inconsistency between its Rules, which
require monthly reviews of collateral haircuts in relation to the
Clearing Fund, and its CRM Policy, which requires daily review of all
collateral haircuts, including both margin and Clearing Fund
collateral. Specifically, under the proposal, OCC would determine the
current market value for Government securities and GSE debt securities
at such intervals as it may from time to time prescribe, at least
daily, based on the quoted bid price supplied by a price source
designated by OCC.\36\ The proposed change also would explicitly remove
from the Rules the Risk Committee's authority for prescribing the
interval at which haircuts are set. Rather, the Pricing and Margins
business unit would continue to hold this authority, consistent with
the current CRM Policy.
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    \36\ Additionally, both the current and proposed language in the
CRM Policy provide leeway for more frequent valuation, when
warranted, and help to ensure that the designation of minimum
valuation intervals would not be a limiting factor. See Notice of
Filing supra note 4, 87 FR at 79017.
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    Under the current CRM Policy, the Pricing and Margins business unit
monitors haircuts daily for ``breaches'' (i.e., an erosion in value
exceeding the relevant haircut) and adequacy, with any issues being
promptly reported to appropriate decision-makers at OCC.\37\ Changes to
OCC's Rules and the CRM Policy, including the minimum valuation
interval, would remain subject to Risk Committee approval and the Risk
Committee would retain oversight over OCC's risk management
determinations.
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    \37\ OCC believed that Pricing and Margins, as the business unit
responsible for such monitoring, is well positioned to make the
determination about more frequent valuation intervals consistent
with the directive of the CRM Policy approved by the Risk Committee.
See Notice of Filing supra note 4, 87 FR at 79018.
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(v) Conforming Changes to OCC's Policies
    Based on the proposed changes to its Rules and policies, OCC also
proposed conforming changes to its CRM Policy, Margin Policy, and STANS
Methodology Description by:
     Establishing the CRM Policy as the relevant OCC policy
governing OCC's process for valuing Government securities and GSE debt
securities;
     Deleting descriptions that indicate that Government
securities and GSE debt securities pledged as margin collateral may be
valued using Monte Carlo simulations as part of OCC's STANS margin
methodology; \38\
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    \38\ The Margin Policy currently states that Government
securities may be valued using the CiM approach. OCC did not propose
to change the description of CiM generally, but rather would
maintain it other than the removal of references suggesting that it
applies to Government securities and GSE debt securities pledged as
margin. See Notice of Filing supra note 4, 87 FR at 79018.
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     Conforming capitalization of terms in the CRM Policy with
OCC's By-Laws;
     Deleting certain portions of the STANS Methodology
Description that exist to support the valuation of Government
securities and GSE debt securities using Monte Carlo simulations;
     Removing Treasuries (i.e., Government securities) from
OCC's model for generating yield curve distributions to form
theoretical price distributions for U.S. Government securities and for
modeling Treasury rates within STANS joint distribution of risk
factors; \39\
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    \39\ As described above, OCC would value such securities as
described in the CRM Policy rather than pursuant to STANS.
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     Revising the STANS Methodology Description to reflect the
fact that the Liquidation Cost Add-on charge would no longer be
assessed to Government security collateral deposits,\40\ while
incorporating stressed market periods in the H-VaR approach for setting
and adjusting the haircuts for collateral in the form of Government
securities and GSE debt securities used in margin accounts and
Government securities in the Clearing Fund, which is comparable to the
approach for incorporating stressed markets into the Liquidation Cost
Add-on.
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    \40\ The Liquidation Cost charge is a margin add-on charge that
is designed to estimate the cost to liquidate a portfolio based on
the mid-points of the bid-ask spreads for the financial instruments
within the portfolio, and would scale up such liquidation costs for
large or concentrated positions that would likely be more expensive
to close out. See Securities Exchange Act Release No. 86119 (June
17, 2019), 84 FR 29267, 29268 (June 21, 2019) (File No. SR-OCC-2019-
004). The Liquidation Cost charge considers the cost of liquidating
an underlying security, such as a Government security, during a
period of market stress. Id. As described above, OCC now proposes to
include defined periods of market stress in its collateral haircuts
methodology under the CRM Policy. OCC indicated that the Liquidation
Cost charge for such collateral is currently, and is expected to
remain, immaterial, based on its analysis of the average daily
Liquidation Cost charge across all accounts. See Notice of Filing
supra note 4, 87 FR at 79018.
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B. Minimum Standards for Clearing Banks and Letter-of-Credit Issuers

    OCC's proposal would update and codify existing internal minimum
standards that OCC uses to establish relationships with Clearing Banks
and letter-of-credit issuers. The core of these proposed minimum
standards would be the same for both Clearing Banks and letter-of-
credit issuers, including requirements for, at a minimum, $500 million
in Tier 1 Capital; \41\ maintaining certain Tier 1 Capital Ratios; and
providing that non-U.S. entities must be domiciled in a country that
has a sovereign rating considered to be ``low credit risk.'' OCC would
reserve the right to set other such standards from time to time. OCC
stated that these proposed changes would provide transparency on
minimum standards for banking relationships that are critical to its
clearance and settlement services. Details of proposed amendments to
Rule 203 for Clearing Banks and the Interpretations and Policies for
Rule 604 relating to letter-of-credit issuers are described below.
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    \41\ Tier 1 Capital is the required regulatory capital that is
permanently held by banks to absorb unexpected losses. See
generally, Bank for International Settlements, Financial Stability
Institute, ``Definition of capital in Basel III--Executive Summary''
(June 27, 2019), available at https://www.bis.org/fsi/fsisummaries/
defcap_b3.htm#:~:text=Regulatory%20capital%20under%20Basel%20III,the%
20components%20of%20regulatory%20capital; and The Federal Deposit
Insurance Corporation (FDIC), ``Risk Management Manual of
Examination Policies,'' Section 2.1 (Capital), available at https://www.fdic.gov/regulations/safety/manual/section2-1.pdf. Tier 1
Capital includes common equity Tier 1 Capital, such as certain bank-
issued common stock instruments, and additional Tier 1 Capital. See
12 CFR 217.20.

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(i) Clearing Banks
    OCC indicated that Clearing Banks play a critical role in its
clearance and settlement of options.\42\ As currently written, Rule 203
requires that every Clearing Member establish and maintain a bank
account at a Clearing Bank for each account maintained by it with OCC.
However, the sole eligibility requirement for a Clearing Bank expressly
delineated in current Rules is that the Clearing Bank be a bank or
trust company that has entered into an agreement with OCC in respect of
settlement of confirmed trades on behalf of Clearing Members.\43\ OCC's
By-Laws and Rules are silent on the internal governance process for
approving Clearing Bank relationships. Rather, the details as to the
financial and operational capability requirements and the governance
process for approving Clearing Banks are housed in OCC's internal
procedures, which are not publicly available.\44\ OCC proposed to amend
Rules 101 and 203 to clarify the term ``Clearing Bank'' and codify
minimum capital and operational requirements and the governance process
for approving its Clearing Banks.\45\ OCC believed that expressly
listing these requirements in its By-Laws and Rules will provide
Clearing Members and other market participants greater clarity and
transparency concerning OCC's Clearing Bank relationships.\46\
Specifically, Rule 101 would amend the definition of ``Clearing Bank''
to reflect that such Clearing Bank relationships are approved by the
Risk Committee, while leaving the rest of the definition intact. The
proposed changes to Rule 203 would codify the following practices for
Clearing Banks:
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    \42\ See Notice of Filing supra note 4, 87 FR at 79018.
    \43\ See OCC Rule 101.C(1).
    \44\ These internal procedures include, for example, a Tier 1
Capital requirement of $100 million for U.S. banks and $200 million
for non-U.S. banks, and in effect align with standards for Clearing
Banks codified in I&P .01 to OCC Rule 604 with respect to banks or
trust companies that OCC may approve to issue letters of credit as
margin collateral.
    \45\ See Notice of Filing supra note 4, 87 FR at 79018.
    \46\ Id.
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     Provide in Rule 203(b) that the Risk Committee may approve
a bank or trust company as a Clearing Bank if it meets the minimum
requirements;
     Require under Rule 203(b)(1) that any Clearing Bank,
whether domiciled in the U.S. or outside the U.S., maintain at least
$500 million (U.S.) in Tier 1 Capital, rather than the existing $100
million Tier 1 Capital requirement for letter-of-credit issuers
currently required under I&P .01 to OCC Rule 604;
     Require under Rules 203(b)(2) and (4) that Clearing Banks
maintain (i) common equity Tier 1 Capital (CET1) \47\ of 4.5%, (ii)
minimum Tier 1 Capital of 6%, (iii) total risk-based capital of 8%, and
(iv) a Liquidity Coverage Ratio of at least 100%, unless the Clearing
Bank is not required to compute the Liquidity Coverage Ratio;
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    \47\ See Rule 203(c). ``For purposes of this Rule, `Tier 1
Capital,' `Common Equity Tier 1 Capital (CET1),' `total risk-based
capital,' and `Liquidity Coverage Ratio' will mean those amounts or
ratios reported by a bank or trust company to its regulatory
authority.''
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     Provide under Rule 203(b)(3) that non-U.S. Clearing Banks
must be domiciled in a country that has a sovereign rating considered
to be ``low credit risk'' (i.e., A- by Standard & Poor's, A3 by
Moody's, A- by Fitch, or equivalent);
     Require under Rule 203(b)(5) that a Clearing Bank must
execute an agreement with OCC, including that the Clearing Bank: (A)
maintain the ability to utilize the Society for Worldwide Interbank
Financial Telecommunication (``SWIFT''), (B) maintain access to the
Federal Reserve Bank's Fedwire Funds Service, and (C) provide its
quarterly and annual financial statements to OCC and promptly notify
OCC of material changes to its operations, financial condition, and
ownership;
     Allow under Rule 203(b)(5)(A) the use of such other
messaging protocol, apart from SWIFT, as approved by the Risk
Committee; \48\ and
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    \48\ OCC stated that the Risk Committee may elect to temporarily
accommodate a Clearing Bank that does not meet these requirements if
it is actively implementing such capabilities. See Notice of Filing
supra note 4, 87 FR at 79019.
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     Add catchall language in Rule 203(b)(6) to provide that an
institution must meet such other standards as OCC may determine from
time to time.
    Language that forms the basis of Rule 203(b)(1)-(3) was taken, in
part, from the previously codified standards for letter-of-credit
issuers found in I&P .01 to Rule 604. OCC proposed to delete this rule
text relating to letter-of-credit issuers and move the essential
concepts to Rule 203(b)(1)-(3) concerning Clearing Banks. In doing so,
OCC also proposed to adjust certain thresholds related to Tier 1
Capital requirements and sovereign credit ratings. Most notably, the
proposed change would increase the Tier 1 Capital minimum requirement
from $100 million for U.S. institutions and $200 million for non-U.S.
institutions to $500 million for all institutions serving as Clearing
Banks or letter-of-credit issuers. Additionally, the proposed change
would lower the sovereign credit risk threshold for institutions
domiciled outside of the U.S. from countries rated as AAA to countries
that have a rating considered to be low credit risk (A- by Standard &
Poor's, A3 by Moody's, A- by Fitch, or equivalent). OCC then proposed
to incorporate by reference minimum requirements for Clearing Banks in
I&P .01 to Rule 604, which applies to letter-of-credit issuers, thus
aligning standards for Clearing Banks and letter-of-credit issuers and
erasing some distinctions between U.S. and non-U.S. institutions.
    OCC explained that the proposed changes in Rule 203(b) are meant to
serve as the articulation of minimum standards for establishing
relationships with Clearing Banks, and that OCC is not obligated to
enter into any Clearing Bank relationship merely because a bank or
trust company meets these enumerated standards.\49\ In proposing these
changes, OCC believed that the Risk Committee is the appropriate
governing body to approve such relationships because of the nature of
the risks presented by OCC's Clearing Bank relationships, including the
risk that OCC would need to borrow from or satisfy a loss using
Clearing Fund assets in order to meet its liquidity needs as a result
of the failure of a Clearing Bank to achieve daily settlement.\50\
Further, in reviewing its existing Clearing Banks, OCC found that a
$500 million (U.S.) Tier 1 Capital standard was more representative of
these institutions.\51\ In expanding the definition of ``low credit
risk'' under the proposed Rule 203(b)(3), OCC stated that these ratings
better reflect current understanding of countries considered to be
``low credit risk,'' and that, for example, it would permit OCC to
establish relationships with institutions from France with which OCC
previously had relationships before France's sovereign credit rating
fell below AAA.\52\
---------------------------------------------------------------------------

    \49\ See Notice of Filing supra note 4, 87 FR at 79019.
    \50\ See Notice of Filing supra note 4, 87 FR at 79018.
    \51\ Id.
    \52\ See Notice of Filing supra note 4, 87 FR at 79018-9.
---------------------------------------------------------------------------

(ii) Letter-of-Credit Issuers
    OCC proposed to revise Rule 604 regarding the acceptability of
letters of credit as margin collateral. Under the proposal, OCC would
align the minimum requirements for letter-of-credit issuers with some
of those for OCC's other banking relationships, including the above-
proposed standards

for Clearing Banks.\53\ I&P .01 to OCC Rule 604 currently sets forth
minimum standards for the types of U.S. and non-U.S. institutions that
OCC may approve as an issuer of letters of credit, including minimum
Tier 1 Capital requirements, and, for non-U.S. institutions, the
ultimate sovereign credit rating for the country where the principal
executive office is located, credit ratings for the institution's
commercial paper or other short-term obligations, and standards that
apply if there is no credit rating on the institution's commercial
paper or other short-term obligations. OCC proposed to amend I&P .01 to
Rule 604 in the following ways:
---------------------------------------------------------------------------

    \53\ See Notice of Filing supra note 4, 87 FR at 79015.
---------------------------------------------------------------------------

     Combine and restate, without substantive change, the
description of which institutions OCC may approve as letter-of-credit
issuers;
     Replace specific capital and sovereign credit rating
requirements with reference to proposed Rule 203(b)(1)-(3) prescribing
minimum standards for Clearing Banks; \54\
---------------------------------------------------------------------------

    \54\ OCC stated that in eliminating I&P .01(b)(3) concerning
credit ratings, OCC would remove the subjective process for
determining a ``AAA'' equivalent country based on consultation with
entities experienced in international banking and finance matters
satisfactory to the Risk Committee, in favor of the more objective
standards. See Notice of Filing supra note 4, 87 FR at 79019.
---------------------------------------------------------------------------

     Remove external credit rating standards for a non-U.S.
institution's commercial paper, other short-term obligations or long-
term obligations; \55\ and
---------------------------------------------------------------------------

    \55\ OCC stated that it has had to terminate several letter-of-
credit issuer relationships pursuant to these external credit rating
standards even though the institutions otherwise met OCC's
requirements and were not reporting elevated internal credit risk
metrics. By deleting I&P .01(b)(4), OCC would make its Rules
consistent with industry best practice, and instead would rely on
its Watch Level and Internal Credit Rating surveillance processes
under its Third-Party Risk Management Framework to determine
creditworthiness of institutions. Id. Proposed I&P .01(c) to OCC's
Rule 604 would provide OCC authority sufficient to determine
additional standards for issuers of letters of credit.
---------------------------------------------------------------------------

     Add catchall language to provide that an institution must
meet such other standards as OCC may determine from time to time.
    Additionally, OCC proposed conforming changes to better align I&P
.03 and .09 to Rule 604, requiring that all letters of credit must be
payable at an issuer's domestic branch.\56\ Currently, I&P .03 requires
any letter of credit issued by a non-U.S. institution be payable at a
Federal or State branch or agency thereof, while I&P .09 provides that
a letter of credit may be issued by a Non-U.S. branch of a U.S.
institution, as long as it otherwise conforms with Rule 604 and the
Interpretations and Policies thereunder and is payable at a U.S. office
of such institution. OCC's proposal would eliminate the text of I&P .09
in its entirety, and instead amend the text of I&P .03 to require
letters of credit used as margin collateral to be payable at an
issuer's ``domestic branch,'' \57\ or at the issuer's Federal or State
branch or agency.\58\ The amended I&P .03 would apply to U.S. and Non-
U.S. institutions alike.
---------------------------------------------------------------------------

    \56\ See Notice of Filing supra note 4, 87 FR at 79020.
    \57\ As that term is defined in the Federal Deposit Insurance
Act. See 12 U.S.C. 1813(o).
    \58\ As those terms are defined in I&P .01 by reference to the
International Banking Act of 1978.
---------------------------------------------------------------------------

C. Letter-of-Credit Concentration Limits

    Lastly, the proposal would allow OCC to set more restrictive
concentration limits for accepting letters of credit, while retaining
the currently codified concentration limits as thresholds.\59\ As
currently written, I&P .02 to Rule 604 provides that ``[n]o more than
50% of a Clearing Member's margin on deposit at any given time may
include letters of credit in the aggregate, and no more than 20% may
include letters of credit issued by any one institution.'' In addition,
I&P .04 to Rule 604 limits the total amount of letters of credit issued
for the account of any one Clearing Member by a U.S. or non-U.S.
institution to a maximum of 15% of such institution's Tier 1 Capital.
OCC proposed to retain these provisions, while simultaneously deleting
the current text of I&P .09 to Rule 604, as described above, and
replacing it with language that grants OCC the authority to specify,
from time to time, more restrictive limits for the amount of letters of
credit a Clearing Member may deposit in the aggregate or from any one
institution.\60\ Such determinations would be made based on market
conditions, the financial condition of approved issuers, and any other
factors OCC determines are relevant. Any such restrictive limit would
apply to all Clearing Members.
---------------------------------------------------------------------------

    \59\ See Notice of Filing supra note 4, 87 FR at 79015.
    \60\ Id. at 79020.
---------------------------------------------------------------------------

    Under the proposal, the CRM Policy would explicitly state that the
responsibility of setting and adjusting more conservative concentration
limits for letters of credit would lie with the Credit and Liquidity
Risk Working Group (``CLRWG''), which is a cross-functional group that
comprises representatives from relevant OCC business units including
Pricing and Margins, Collateral Services, and Credit Risk Management.
Similar to determinations surrounding collateral haircuts, the CRM
Policy would provide that OCC will maintain the concentration limits on
its website and will provide prior notice of any changes to the limits.
OCC would retain the current requirements under the CRM Policy and the
Model Risk Management Policy regarding the CLRWG's, at a minimum,
annual review of the CRM Policy, including concentration limits, and
the requirement that any changes to the CRM Policy resulting from the
review be presented the Management Committee and, if approved, then the
Risk Committee.
    OCC stated that the anticipated impact of more restrictive
concentration limits is low, considering that the use of letters of
credit as margin collateral is currently low.\61\ OCC explained that
while utilization of letters of credit is low, it plans to continue to
support letters of credit based on their acceptability as collateral
under Commodity Futures Trading Commission regulations.\62\
---------------------------------------------------------------------------

    \61\ Id.
    \62\ Id.
---------------------------------------------------------------------------

    The final proposed change would amend I&P .08 to Rule 604, which
currently provides that OCC will not accept a letter of credit issued
pursuant to Rule 604(c) for the account of a Clearing Member in which
the issuing institution, a parent, or an affiliate has an equity
interest in the amount of 20 percent or more of such Clearing Member's
total capital. The Proposed Rule Change would eliminate the reference
to 20 percent, thus resulting in a total prohibition on accepting
letters of credit for the account of a Clearing Member in which the
issuing institution, a parent, or an affiliate has any equity interest
in such Clearing Member's total capital.

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Exchange Act directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder applicable to such organization.\63\ After carefully
considering the Proposed Rule Change and the comment letters received,
the Commission finds that the proposal is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder applicable to OCC. More specifically, the Commission

finds that the proposal is consistent with Section 17A(b)(3)(F) and (I)
of the Exchange Act,\64\ and Rule 17Ad-22(e)(5),\65\ Rule 17Ad-
22(e)(9),\66\ Rule 17Ad-22(e)(22),\67\ and Rule 17Ad-22(e)(23) \68\
thereunder, as described in detail below.
---------------------------------------------------------------------------

    \63\ 15 U.S.C. 78s(b)(2)(C).
    \64\ 15 U.S.C. 78q-1(b)(3)(F) and 15 U.S.C. 78q-1(b)(3)(I).
    \65\ 17 CFR 240.17Ad-22(e)(5).
    \66\ 17 CFR 240.17Ad-22(e)(9).
    \67\ 17 CFR 240.17Ad-22(e)(22).
    \68\ 17 CFR 240.17Ad-22(e)(23).
---------------------------------------------------------------------------

A. Consistency With Section 17A(b)(3)(F) of the Exchange Act

    Section 17A(b)(3)(F) \69\ of the Exchange Act requires, among other
things, that the rules of a clearing agency be designed to promote the
prompt and accurate clearance and settlement of securities transactions
and derivative agreements, contracts, and transactions; and to assure
the safeguarding of securities and funds which are in the custody or
control of the clearing agency or for which it is responsible.
---------------------------------------------------------------------------

    \69\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Based on its review of the record, and for the reasons described
below, the Commission believes that the proposed changes to OCC's rules
and procedures regarding collateral haircuts and concentration limits
for letters of credit are consistent with promoting the prompt and
accurate clearance and settlement of securities and derivatives
transactions. As stated above, OCC is exposed to credit risk stemming
from its relationships with Clearing Members during the course of
fulfilling its core clearing services. One of the ways OCC manages this
credit risk is by collecting high-quality collateral for margin
accounts and the Clearing Fund, while recognizing that this collateral
may decrease in value at a future date. The Commission continues to
believe that a clearing agency generally should reduce the need for
procyclical adjustments by establishing stable and conservative
haircuts that are calibrated to include periods of stressed market
conditions, to the extent practicable and prudent.\70\ Procyclical
adjustments (i.e., lower haircuts during periods of low stress followed
by increased haircuts during times of high market stress) could
exacerbate market stress and contribute to driving down asset prices
further, resulting in additional collateral requirements.\71\ The
imposition of more conservative haircuts during normal market
conditions, therefore, would reduce the amount by which haircuts must
be adjusted during times of market stress. Based on the data provided
by OCC, the proposed replacement of OCC's current process for setting
collateral haircuts with the proposed H-VaR approach would yield more
conservative haircuts during times of low market stress, which, in
turn, would help reduce spikes in collateral haircuts during heightened
market volatility. As noted above, reducing such spikes would reduce
the potential for driving down asset prices that could result in the
imposition of additional collateral requirements on market participants
already faced with increased market stress.
---------------------------------------------------------------------------

    \70\ See Standards for Covered Clearing Agencies supra note 24,
81 FR at 70816-17.
    \71\ See Committee on Payment and Settlement Systems, Principles
for Financial Market Infrastructures, section 3.5.6 (Apr. 2012);
available at https://www.bis.org/publ/cpss101a.pdf.
---------------------------------------------------------------------------

    The proposed approach also would attempt to address the weaknesses
identified in the CiM model in response to regulatory and internal
examinations by, for example, incorporating periods of market stress
into the look-back period for the model under the proposed H-VaR
approach. Further, the proposed changes would add flexibility for OCC
to more frequently value collateral haircuts during time of
deteriorating market or other conditions while preserving notice
requirements to ensure that Clearing Members are aware of risk
management changes. Similarly, the proposed changes related to letters
of credit (e.g., limits not linked to a specific domicile in order to
impose the same requirements on both U.S. and non-U.S. issuers,
concentration limits, and a prohibition on affiliated issuers) would
support OCC's ability to manage risks posed by the collateral it
accepts from participants.
    Based on its review of the record, and for the reasons described
below, the Commission believes that OCC's proposed changes to rules and
procedures regarding minimum standards for Clearing Banks and letter-
of-credit issuers are consistent with assuring the safeguarding of
securities and funds which are in its custody or control or for which
it is responsible. The quality of acceptable custodians is crucial to
safeguarding these types of securities and funds, and one of the key
ways to measure this quality is by establishing minimum qualifying
standards. OCC's proposed Rule amendments would set more stringent Tier
1 Capital requirements for both Clearing Banks and letter-of-credit
issuers, while amending the sovereign credit ratings to reflect current
understanding, and requiring Clearing Banks to maintain the ability to
use SWIFT, a generally accepted and secure communication method, as a
primary messaging protocol. Although the proposal would remove from
OCC's Rules the external credit rating standards for a non-U.S.
institution's commercial paper and related obligations, the ability of
these institutions to meet their financial and other obligations to OCC
would still be considered under the Third-Party-Risk Management
Framework (``TPRMF''), along with other risk factors.\72\ Additionally,
the proposed changes to the minimum standards for Clearing Banks and
letter-of-credit issuers, when viewed as a whole, serve to strengthen
OCC's process for accepting letters of credit, which comprise a
fraction of margin,\73\ come with many related restrictions, and pose
minimal risk to OCC. Moreover, the proposal would provide clarity by
aligning minimum standards for Clearing Banks and letter-of-credit
issuers, and would make clear that these rule changes are meant to
serve as the articulation of minimum standards for establishing
relationships, and OCC would not be obligated to enter into any such
relationship merely because an institution meets these enumerated
standards. The Commission believes that aligning and codifying such
standards in OCC's rules facilitate OCC's maintenance of banking and
letter-of-credit issuer relationships that support its ability to
safeguard securities and funds for which it is responsible or that are
in its custody or control.
---------------------------------------------------------------------------

    \72\ The TPRMF is an OCC rule that requires OCC to evaluate
financial institutions such as Clearing Banks and other liquidity
providers when they on-board or off-board with OCC, and to
continuously monitor such institutions for so long as they maintain
a relationship with OCC. It requires OCC to evaluate such financial
institutions across a variety of factors, several of which assess
the ability of the institution to meet its financial and other
obligations to OCC, such as the financial, operational, legal, and
regulatory risks faced by the institution. See Securities Exchange
Act Release No. 90797 (Dec. 23, 2020), 85 FR 86592 (Dec. 30, 2020)
(File No. SR-OCC-2020-014) (approving adoption of OCC's TPRMF). The
TPRMF also provides for Watch List processes and internal escalation
procedures in instances of an institution's deteriorating financial
or operational ability to timely meet its future obligations to OCC,
including assessing the institution's operational difficulties, late
financial reports, and risk management issues. OCC, ``Third-Party
Risk Management Framework'' (Dec. 22, 2022), available at https://www.theocc.com/getmedia/68a1ea2d-ddae-4a93-a309-100bf70a0f28/Third-Party-Risk-Management-Framework.pdf.
    \73\ As of Dec. 31, 2022, OCC reported that bank letters of
credit accounted for only $130 million out of $152.7 billion of
margin at OCC. See OCC 2022 Financials, at 10, available at https://www.theocc.com/company-information/documents-and-archives/annual-reports.
---------------------------------------------------------------------------

    The Commission received comments stating that the proposal to
calculate collateral haircuts using the H-VaR model, rather than the
current CiM methodology, would ignore long-tail

risks \74\ and historical periods of significant market stress.\75\
Commenters also stated that fixed collateral haircuts do not accurately
reflect the potential fluctuations in asset values, including during
times of market stress.\76\ The Commission has reviewed the proposed H-
VaR methodology, including confidential policies, procedures, and
related materials.\77\ The H-VaR model would reflect asset value
fluctuations during times of market stress because it specifically
includes such periods in the defined lookback periods. With regard to
long-tail risk, the proposed rules would require OCC to maintain
haircuts at a level at least equal to a 99 percent confidence interval
of the look-back period that provides for most conservative
haircuts.\78\ Further, the Commission notes that regulatory and
internal examinations showed that the CiM method has previously
resulted in inaccuracies in sizing haircuts, and concludes that the use
of the H-VaR model in place of the CiM method would improve accuracy of
collateral haircuts. Additionally, fixed collateral haircuts are not a
fundamentally new approach for OCC. For example, OCC's Rule 1002
currently applies fixed haircuts to Government securities in the
Clearing Fund, and such haircuts are currently subject to review and
recalculation based, in part, on market fluctuations.\79\ Based on its
review of the record and having considered the comments described
above, the Commission believes that the proposed H-VaR methodology and
the continued use of fixed collateral haircuts is consistent with the
Exchange Act and the relevant rules thereunder.\80\
---------------------------------------------------------------------------

    \74\ The commenters did not elaborate on what was meant by
``long tail risk.'' See, e.g., Letter from Jean Garcia-Gomez (Feb.
12, 2023), available at https://www.sec.gov/comments/sr-occ-2022-012/srocc2022012-325181.htm. Given the related comments and context,
the Commission believes this to refer to the risk of loss due to an
event that has an extremely low probability of occurring (i.e., an
event that is far out in the tail of a distribution of possible
events).
    \75\ See, e.g., id. Commenters raised additional concerns
regarding sovereign credit ratings, and OCC's redaction of certain
exhibits to the filing. See, e.g., id. Regarding OCC's redaction of
certain exhibits, the Commission notes that OCC asserted that
Exhibits 3A-3C and 5B-5D to the filing, which contain internal
policies and procedures, internal statistical calculations and
descriptions, and confidential regulatory findings, were entitled to
confidential treatment because they contained commercial and
financial information that is not customarily released to the public
and is treated as the private information of OCC. Under Section
23(a)(3) of the Exchange Act, the Commission is not required to make
public statements filed with the Commission in connection with a
proposed rule change of a self-regulatory organization if the
Commission could withhold the statements from the public in
accordance with the Freedom of Information Act (``FOIA''), 5 U.S.C.
552. 15 U.S.C. 78w(a)(3). The Commission has reviewed the documents
for which OCC requests confidential treatment and concludes that
they could be withheld from the public under the FOIA. FOIA
Exemption 4 protects confidential commercial or financial
information. 5 U.S.C. 552(b)(4). Under Exemption 4, information is
confidential if it ``is both customarily and actually treated as
private by its owner and provided to government under an assurance
of privacy.'' Food Marketing Institute v. Argus Leader Media, 139 S.
Ct. 2356, 2366 (2019). In its requests for confidential treatment,
OCC stated that it has not disclosed the confidential exhibits to
the public, and the information is the type that would not
customarily be disclosed to the public. In addition, by requesting
confidential treatment, OCC had an assurance of privacy because the
Commission generally protects information that can be withheld under
Exemption 4. Thus, the Commission has determined to accord
confidential treatment to the confidential exhibits.
    \76\ Comments on the Proposed Rule Change are available at
https://www.sec.gov/comments/sr-occ-2022-012/srocc2022012.htm. See,
e.g., Letter from Jean Garcia-Gomez (Feb. 12, 2023), available at
https://www.sec.gov/comments/sr-occ-2022-012/srocc2022012-325181.htm.
    \77\ See Notice of Filing supra note 4, 87 FR at 79016-79018.
OCC provided its policies, procedures, and related documents in
confidential Exhibits 3A-3C, and 5B-5D to File No. SR-OCC-2022-012.
Such documents included changes to both high-level policies and
detailed technical documentation, as well as an analysis of the
impact that changes in the haircut methodology would have on the
value of collateral posted by members.
    \78\ See Notice of Filing supra note 4, 87 FR at 79017.
    \79\ Id.
    \80\ Commenters also raised a concern that the proposed rule
change would ``cut margin requirements.'' See, e.g., letter from
Daniel Lambden (Feb. 25, 2023), available at https://www.sec.gov/comments/sr-occ-2022-012/srocc2022012-326082.htm. Such comments are
not relevant to the filing because OCC did not propose changes to
how it calculates margin requirements.
---------------------------------------------------------------------------

    The Commission also received comments stating that lowering or
eliminating sovereign credit rating requirements for non-U.S. Clearing
Banks and letter-of-credit issuers increases the risk taken on by
OCC.\81\ The Commission has considered the materials submitted by OCC
with regard to the Proposed Rule Change.\82\ OCC's rules do not
currently prescribe acceptable sovereign credit rating for the domicile
of any non-U.S. Clearing Bank. OCC is not proposing to weaken minimum
standards, but rather to codify the current requirement to allow only
those Clearing Banks domiciled in the U.S. or in locations with
sovereign rating considered to be low credit risk. The Commission
believes the proposed standards (i.e., A- by Standard & Poor's, A3 by
Moody's, A- by Fitch, or equivalent, which would include institutions
domiciled in countries such as France) represents a reasonable choice
by OCC to identify sovereigns with low credit risk.\83\ The Commission
recognizes that the proposal would change the acceptable ratings for
letter-of-credit issuers; however, the proposed standard would still
require that such banks be domiciled in the United States or in
locations with sovereign ratings considered to be low credit risk, as
noted above. Moreover, the removal of external credit rating standards
for a non-U.S. institution's commercial paper and related obligations
from OCC's Rules does not mean that creditworthiness will not be
considered at all. Rather, the proposal calls for an evaluation of
credit risk as part of a broader review of factors, such as financial,
operational, legal, and regulatory risks, with regard to Clearing Banks
and liquidity providers, such as letters of credit issuers under the
TPRMF.\84\ The sovereign credit rating requirements are part of a
broader set of minimum standards for Clearing Banks and letter-of-
credit issuers, including the Tier 1 Capital that OCC proposes to
increase, thus providing further safeguards that mitigate or eliminate
the additional risk to OCC. Based on its review of the record and
having considered the comments described above, the Commission believes
that the proposed sovereign credit rating requirements are consistent
with the Exchange Act and the relevant rules thereunder.
---------------------------------------------------------------------------

    \81\ See note 75, supra.
    \82\ See Notice of Filing supra note 4, 87 FR at 79018-79020.
OCC provided its policies, procedures, and related documents in
confidential Exhibits 3A-3C, and 5B-5D to File No. SR-OCC-2022-012.
Such documents include changes to policy governing OCC's management
of risk presented by letters of credit.
    \83\ OCC acknowledged that the sovereign credit rating
requirement historically applied to letter-of-credit issuers is
different than what is currently applied to its Clearing Banks, and
that OCC would change the sovereign credit rating requirement for
letter-of-credit issuers to conform to that for the Clearing Banks.
See Notice of Filing supra note 4, 87 FR at 79018-79019.
    \84\ See note 72, supra.
---------------------------------------------------------------------------

    The Commission received further comments stating that the proposed
changes would reduce or remove external audit, supervision, and credit
ratings, contrary to recommendations made in a 2015 paper from the Bank
of International Settlements (``BIS'').\85\ These comments are not
relevant to the proposal being considered here. The Proposed Rule
Change is unrelated to and does not address external audit or
supervision and, contrary to commenters' assertions, it would not
remove the consideration of credit ratings. Where the proposal
addresses credit ratings, it does so in the limited context of
sovereign credit ratings

considered to be of low credit risk, transferring the rules regarding
consideration of creditworthiness of Clearing Banks and liquidity
providers from the OCC rulebook to the TPRMF, and as part of a broader
set of minimum requirements for Clearing Banks and letter-of-credit
issuers. The BIS paper discusses, among other things, how interactions
among internal lines of defense and external controls can enhance
governance at financial institutions.\86\ These issues are not relevant
to the Proposed Rule Change. Further, unlike the commenters suggest,
the BIS paper does not discuss credit ratings at all. Additionally,
even though the proposal would adjust the required sovereign credit
rating, and transfer the rules regarding consideration of
creditworthiness of Clearing Banks and liquidity providers from the OCC
rulebook to the TPRMF, it would still only allow for countries with low
credit risk and institutions that are able to meet obligations to OCC,
and these requirements are part of a larger set of minimum standards,
such as more stringent Tier 1 Capital requirements and the requirement
for Clearing Banks to maintain the ability to use SWIFT, that serve to
enhance OCC's banking and letter-of-credit relationships. As such,
after having considered the comments relating to the BIS paper, the
Commission continues to believe that the proposal is consistent with
the Exchange Act and the relevant rules thereunder.
---------------------------------------------------------------------------

    \85\ Isabella Arndorfer, Bank of International Settlements, and
Andrea Minto, Utrecht University, Occasional Paper No. 11, ``The
`four lines of defence model' for financial institutions,''
Financial Stability Institute ((Dec. 23, 2015), available at https://www.bis.org/fsi/fsipapers11.pdf. (``BIS paper'').
    \86\ Id.
---------------------------------------------------------------------------

    Therefore, the Commission finds that, taken together, the proposed
changes described above are consistent with the requirements of Section
17A(b)(3)(F) of the Exchange Act.\87\
---------------------------------------------------------------------------

    \87\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

B. Consistency With Section 17A(b)(3)(I) of the Exchange Act

    Section 17A(b)(3)(I) of the Exchange Act requires that the rules of
a clearing agency do not impose any burden on competition not necessary
or appropriate in furtherance of the purposes of the Exchange Act.\88\
---------------------------------------------------------------------------

    \88\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

    In response to the Notice of Filing,\89\ the Commission received a
comment \90\ opposing the proposal stating that the ``increase to the
current Tier 1 Capital requirement will have a negative effect by
eliminating [Lakeside Bank] as a member Clearing Bank'' and that such
elimination ``will reduce competition.'' \91\ The commenter, Lakeside,
states further that large Clearing Banks ``tend to not provide service
for small and mid-sized Clearing Brokers,'' which appears to suggest
that the proposed change could reduce direct access to clearing for
OCC's current membership.\92\ Finally, the commenter states that the
``proposed Tier 1 Capital rule change to $500 million is arbitrary and
capricious and not explained other than the OCC's belief the new
requirement reduces the risk of a Clearing Banks failure to achieve
their daily settlement obligations.'' \93\
---------------------------------------------------------------------------

    \89\ See Notice of Filing supra note 4, 87 FR at 79015.
    \90\ Letter from Lakeside Bank dated January 26, 2023
(``Lakeside Ltr''), available at https://www.sec.gov/comments/sr-occ-2022-012/srocc2022012.htm. See also Letter from Lakeside Bank
dated March 15, 2023 (``Lakeside Ltr 2''), available at https://www.sec.gov/comments/sr-occ-2022-012/srocc2022012-328270.htm.
Lakeside Ltr 2 did not present novel comments.
    \91\ Lakeside Ltr at 1.
    \92\ Id. The Commission also received a comment stating that the
proposed increase to capital requirements would impact smaller
members. Letter from Kevin Lau (Feb. 14, 2023), available at https://www.sec.gov/comments/sr-occ-2022-012/srocc2022012-325669.htm.
    \93\ Lakeside Ltr at 2.
---------------------------------------------------------------------------

    In a subsequent comment letter, OCC responded to the concerns
raised by Lakeside.\94\ OCC stated that its proposal would not impose a
burden on competition \95\ because Clearing Members of various sizes
``currently have established relationships with OCC-approved Clearing
Banks that meet the proposed standards.'' \96\ Further, OCC stated that
``Lakeside Bank does not currently provide settlement banking services
as a Clearing Bank for any OCC Clearing Member.'' \97\ Moreover, OCC
stated that its ``current rules do not obligate OCC to enter into a
Clearing Bank relationship with a bank simply because the bank meets
its present standards.'' \98\ OCC stated that obligating it to enter
into Clearing Bank relationships simply because an institution meets
the minimum standards and without further due diligence ``would not be
consistent with sound third-party risk management practices.'' \99\ On
the contrary, ``OCC believes that strengthening OCC standards for
entering into Clearing Bank arrangements is necessary and appropriate
to ensure the overall safety and soundness of the markets OCC serves.''
\100\ OCC stated further that it ``determined the proposed Tier 1
Capital requirement to align with the Tier 1 Capital held by the
Clearing Banks that have demonstrated records of performance, including
the resources to devote to and meet OCC's operational expectations for
providing such critical services.'' \101\
---------------------------------------------------------------------------

    \94\ Letter from Megan Cohen, Managing Director, OCC, to Vanessa
Countryman, Secretary, Commission, dated February 2, 2023 (``OCC
Ltr''), available at https://www.sec.gov/comments/sr-occ-2022-012/srocc2022012.htm.
    \95\ The Exchange Act requires that the rules of the clearing
agency do not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Exchange Act. See
15 U.S.C. 78q-1(b)(3)(I).
    \96\ OCC Ltr at 3.
    \97\ Id. at 1.
    \98\ Id. at 2.
    \99\ Id. at 2.
    \100\ Id. at 3. As OCC additionally explained, ``If a Clearing
Bank is unable to timely make incoming payments on behalf of one or
more Clearing Members, OCC may face liquidity challenges requiring
it to draw on resources that could impose unexpected costs or other
adverse consequences for its Clearing Members and, ultimately,
market participants.'' Id.
    \101\ Id.
---------------------------------------------------------------------------

    Based on the information provided, the Commission believes that the
proposal would not impose a burden on competition that is not necessary
or appropriate in furtherance of the purposes of the Exchange Act. All
of OCC's current members maintain relationships with Clearing Banks
that meet the proposed standards. The Commission did not receive
comments raising concerns from current or prospective OCC participants.
With regard to monitoring, managing, and limiting the credit and
liquidity risk arising from commercial settlement banks, the Commission
has provided guidance that a clearing agency generally should consider
establishing and monitoring adherence to strict criteria for its
settlement banks that take account of, among other things, their
capitalization.\102\ The Commission believes, therefore, that
strengthening capital requirements for settlement banks, such as OCC's
Clearing Banks, can serve an important risk management purpose. The
Commission acknowledges the concerns raised by Lakeside with regard to
competition among settlement banks and access to central clearing at
OCC.\103\ As noted above, the proposal does not limit access to current
OCC members, and, even if the proposed changes were not approved, OCC's
current rules would not necessarily obligate OCC to

maintain a Clearing Bank relationship with Lakeside or a similar
institution.
---------------------------------------------------------------------------

    \102\ See Standards for Covered Clearing Agencies supra note 24,
81 FR at 70826.
    \103\ Lakeside also raised concerns regarding potential future
rule changes at the Chicago Mercantile Exchange (``CME'') and the
Depository Trust and Clearing Corporation (``DTCC''). See Lakeside
Ltr at 2. Such concerns are not ripe for consideration here because
(1) CME is not currently registered as a clearing agency with the
Commission, and (2) there are no proposed changes related to this
matter pending with the Commission from the Depository Trust
Company, Fixed Income Clearing Corporation, or National Securities
Clearing Corporation (i.e., the three registered clearing agencies
whose parent is DTCC).
---------------------------------------------------------------------------

    Therefore, the Commission finds that the proposed changes described
above are consistent with the requirements of Section 17A(b)(3)(I) of
the Exchange Act.\104\
---------------------------------------------------------------------------

    \104\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

C. Consistency With Rule 17Ad-22(e)(5) Under the Exchange Act

    Rule 17Ad-22(e)(5) \105\ under the Exchange Act requires each
covered clearing agency to establish, implement, maintain, and enforce
written policies and procedures reasonably designed to set and enforce
appropriately conservative haircuts and concentration limits if the
covered clearing agency requires collateral to manage its or its
participants' credit exposures; and require a review of the sufficiency
of its collateral haircuts and concentration limits to be performed not
less than annually. In adopting Rule 17Ad-22(e)(5), the Commission
provided guidance that ``to reduce the need for procyclical
adjustments, a covered clearing agency generally should consider
establishing stable and conservative haircuts that are calibrated to
include periods of stressed market conditions, to the extent practical
and prudent.'' \106\
---------------------------------------------------------------------------

    \105\ 17 CFR 240.17Ad-22(e)(5).
    \106\ See Standards for Covered Clearing Agencies supra note 24,
81 FR at 70816-17.
---------------------------------------------------------------------------

    Based on the information and data provided by OCC, the Commission
believes that OCC's proposed H-VaR approach would help reduce spikes
during heightened market volatility by yielding more conservative
haircuts during normal market conditions. The proposed approach also
would attempt to address the weaknesses identified in the CiM model in
response to regulatory and internal examinations by, for example,
incorporating periods of market stress into the look-back period for
the model. Additionally, OCC's proposal to amend its internal CRM
Policy to list specific factors, such as volatility and liquidity, and
elevated sovereign credit risk when determining the value of GSE debt
securities and Government securities used as margin or Clearing Fund
collateral, would provide guideposts to set and enforce appropriately
conservative haircuts. OCC's proposed changes also would grant it new
authority to set and adjust more restrictive concentration limits for
accepting letters of credit, as well as expressly list the factors for
making such determinations, and establish a prohibition on accepting
letters of credit for the account of a Clearing Member where the
issuing institution, a parent, or an affiliate has any equity interest
in such Clearing Member's total capital. Thus, the Commission believes
that OCC's proposed changes to letter-of-credit concentration limits,
when reviewed in combination with the proposed minimum standards for
Clearing Banks and letter-of-credit issuers, would be appropriately
conservative and may help eliminate wrong-way risk found in some
Clearing Members' relationships with such issuers.\107\ Finally, the
Commission believes that reviews at regular intervals of collateral
haircuts and concentration limits proposed in the CRM Policy and Rules
would be consistent with the requirement for, at a minimum, an annual
review.
---------------------------------------------------------------------------

    \107\ Wrong-way risk can be either general or specific. General
wrong-way risk arises at a central counterparty (``CCP'') when the
potential losses of either a participant's portfolio or a
participant's collateral is correlated with the default probability
of that participant. Specific wrong-way risk arises at a CCP when an
exposure to a participant is highly likely to increase when the
creditworthiness of that participant is deteriorating. See Standards
for Covered Clearing Agencies supra note 24, 81 FR at 70816, n.317.
---------------------------------------------------------------------------

    Accordingly, the Commission finds that the proposed changes are
consistent with Rule 17Ad-22(e)(5) \108\ under the Exchange Act.
---------------------------------------------------------------------------

    \108\ 17 CFR 240.17Ad-22(e)(5).
---------------------------------------------------------------------------

D. Consistency With Rule 17Ad-22(e)(9) Under the Exchange Act

    Rule 17Ad-22(e)(9) \109\ under the Exchange Act requires each
covered clearing agency to establish, implement, maintain, and enforce
written policies and procedures reasonably designed to, among other
things, minimize and manage credit and liquidity risk arising from
conducting its money settlements in commercial bank money if central
bank money is not used by the covered clearing agency. The Commission
believes that including OCC's minimum standards for Clearing Banks in
its rules would support OCC's ability to monitor its relationships with
Clearing Banks and manage the financial and operational risks inherent
in such relationships. The Commission also believes that the
requirements for Clearing Banks, taken as a whole, as well as the
mandatory approval of any new Clearing Bank by the Risk Committee prior
to onboarding, would help reduce credit and liquidity risk arising from
conducting its money settlements in commercial bank money. Accordingly,
the Commission finds that the proposed changes are consistent with Rule
17Ad-22(e)(9) \110\ under the Exchange Act.
---------------------------------------------------------------------------

    \109\ 17 CFR 240.17Ad-22(e)(9).
    \110\ Id.
---------------------------------------------------------------------------

E. Consistency With Rule 17Ad-22(e)(22) Under the Exchange Act

    Rule 17Ad-22(e)(22) \111\ under the Exchange Act requires each
covered clearing agency to establish, implement, maintain, and enforce
written policies and procedures reasonably designed to use, or at a
minimum accommodate, relevant internationally accepted communication
procedures and standards in order to facilitate efficient payment,
clearing, and settlement. As described above, OCC proposed codifying
its requirement that its Clearing Banks maintain the ability to utilize
SWIFT, whenever possible. The proposed change would codify the process
that OCC proposed in 2017.\112\ Previously, the Commission did not to
object to the process, in part, based on the belief that the proposal
to expand the usage of SWIFT as a standard for OCC's Clearing Banks is
consistent with Rule 17Ad-22(e)(22).\113\ The Commission believes that
codifying the requirement would further support OCC's existing process
and use of SWIFT to facilitate efficient payment, clearing, and
settlement. Accordingly, the Commission finds that the proposed changes
are consistent with Rule 17Ad-22(e)(22) \114\ under the Exchange Act.
---------------------------------------------------------------------------

    \111\ 17 CFR 240.17Ad-22(e)(22).
    \112\ See Securities Exchange Act Release No. 82055 (Nov. 13,
2017), 82 FR 54448 (Nov. 17, 2017) (File No. SR-OCC-2017-805).
    \113\ See Securities Exchange Act Release No. 82221 (Dec. 5,
2017), 82 FR 58230, 58232 (Dec. 11, 2017) (File No. SR-OCC-2017-
805).
    \114\ 17 CFR 240.17Ad-22(e)(22).
---------------------------------------------------------------------------

F. Consistency With Rule 17Ad-22(e)(23) Under the Exchange Act

    Rule 17Ad-22(e)(23)(i) and (ii) \115\ under the Exchange Act
requires each covered clearing agency to establish, implement,
maintain, and enforce written policies and procedures reasonably
designed to, among other things, publicly disclose all relevant rules
and material procedures; and provide sufficient information to enable
participants to identify and evaluate the risks, fees, and other
material costs they incur by participating in the covered clearing
agency. Based on its review of the record, and for the reasons
described below, the Commission finds that the proposed changes, taken
together, are consistent with the requirements of Rule 17Ad-
22(e)(23)(i) and (ii).\116\
---------------------------------------------------------------------------

    \115\ 17 CFR 240.17Ad-22(e)(23)(i) and (ii).
    \116\ Id.
---------------------------------------------------------------------------

    By adopting rules that require OCC to provide prior notice through
public

disclosures on its website relating to information on collateral
haircuts for Government securities and GSE debt securities, and
concentration limits for letters of credit, the Commission believes
that OCC's rules would support the communication of information that
Clearing Members may use to identify and evaluate the haircuts and
concentration limits resulting from OCC's valuation processes.
Additionally, the Commission believes that codifying minimum standards
for Clearing Banks and letter-of-credit issuers in OCC's public rules
would provide increased clarity and transparency to Clearing Members
and market participants, while preserving OCC's flexibility and
authority in disapproving specific relationships based on individual
facts and circumstances. As such, the Commission believes that the
proposed rule and policy revisions are consistent with publicly
disclosing all relevant rules and material procedures; and providing
sufficient information to enable participants to identify and evaluate
the risks, fees, and other material costs incurred with participation
in the covered clearing agency.
    The Commission finds, therefore, that OCC's proposals, described
above, are consistent with the requirements of Rule 17Ad-22(e)(23)(i)
and (ii) under the Exchange Act.\117\
---------------------------------------------------------------------------

    \117\ Id.
---------------------------------------------------------------------------

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
Proposed Rule Change is consistent with the requirements of the
Exchange Act, and in particular, the requirements of Section 17A of the
Exchange Act \118\ and the rules and regulations thereunder.
---------------------------------------------------------------------------

    \118\ In approving this Proposed Rule Change, the Commission has
considered the proposed rules' impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\119\ that the Proposed Rule Change (SR-OCC-2022-012), be,
and hereby is, approved.
---------------------------------------------------------------------------

    \119\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\120\
---------------------------------------------------------------------------

    \120\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-17529 Filed 8-15-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 233 (Wednesday, December 6, 2017)]
[Notices]
[Page 57590]
[FR Doc No: 2017-26244]

=======================================================================
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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER18-348-000]

Shoe Creek Solar LLC; Supplemental Notice That Initial Market-
Based Rate Filing Includes Request for Blanket Section 204
Authorization

    This is a supplemental notice in the above-referenced proceeding of
Shoe Creek Solar LLC`s application for market-based rate authority,
with an accompanying rate tariff, noting that such application includes
a request for blanket authorization, under 18 CFR part 34, of future
issuances of securities and assumptions of liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR part 34, of future issuances of securities and assumptions of
liability, is December 20, 2017.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
5 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426.
    The filings in the above-referenced proceeding are accessible in
the Commission's eLibrary system by clicking on the appropriate link in
the above list. They are also available for electronic review in the
Commission's Public Reference Room in Washington, DC. There is an
eSubscription link on the Web site that enables subscribers to receive
email notification when a document is added to a subscribed docket(s).
For assistance with any FERC Online service, please email
[email protected]. or call<PHONE_NUMBER> (toll free). For
TTY, call<PHONE_NUMBER>.

    Dated: November 30, 2017.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2017-26244 Filed 12-5-17; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 86, Number 233 (Wednesday, December 8, 2021)]
[Notices]
[Pages 69636-69637]
[FR Doc No: 2021-26581]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 11286-026]

City of Abbeville; Notice of Application Accepted for Filing and
Soliciting Comments, Motions To Intervene, and Protests

    Take notice that the following hydroelectric application has been
filed with the Commission and is available for public inspection:
    a. Type of Application: Application for Temporary Variance and
Approval of Reservoir Drawdown Plan.
    b. Project No.: 11286-026.
    c. Date Filed: November 16, 2021, as supplemented on November 24
and December 2, 2021.
    d. Applicant: City of Abbeville.
    e. Name of Project: Abbeville Hydroelectric Project.
    f. Location: The project is located on the Rocky River in Abbeville
and Anderson counties, South Carolina.
    g. Filed Pursuant to: Federal Power Act 16 U.S.C. 791a-825r.
    h. Applicant Contact: Mr. Tim Hall, Public Utilities Director, City
of Abbeville, 306 Cambridge Street, P.O. Box 639, Abbeville, SC 29620;
(864) 366-5058.
    i. FERC Contact: Christopher Chaney,<PHONE_NUMBER>,
[email protected].
    j. Deadline for filing comments, motions to intervene, and protests
is 30 days from the issuance date of this notice by the Commission.
    The Commission strongly encourages electronic filing. Please file
comments, motions to intervene, and protests using the Commission's
eFiling system at http://www.ferc.gov/docs-filing/efiling.asp.
Commenters can submit brief comments up to 6,000 characters, without
prior registration, using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact
information at the end of your comments. For assistance, please contact
FERC Online Support at [email protected],<PHONE_NUMBER> (toll
free), or<PHONE_NUMBER> (TTY). In lieu of electronic filing, you may
submit a paper copy. Submissions sent via the U.S. Postal Service must
be addressed to: Kimberly D. Bose, Secretary, Federal Energy Regulatory
Commission, 888 First Street NE, Room 1A, Washington, DC 20426.
Submissions sent via any other carrier must be addressed to: Kimberly
D. Bose, Secretary, Federal Energy Regulatory Commission, 12225 Wilkins
Avenue, Rockville, MD 20852. The first page of any filing should
include the docket number P-11286-026. Comments emailed to Commission
staff are not considered part of the Commission record.
    The Commission's Rules of Practice and Procedure require all
intervenors filing documents with the Commission to serve a copy of
that document on each person whose name appears on the official service
list for the project. Further, if an intervenor files comments or
documents with the Commission relating to the merits of an issue that
may affect the responsibilities of a particular resource agency, it
must also serve a copy of the document on that resource agency.
    k. Description of Request: The City of Abbeville (licensee)
requests approval to implement a temporary drawdown of the reservoir to
an elevation of 528 feet mean sea level (msl). Under the licensee's
proposal, the reservoir would be drawn down 12 feet below the seasonal
minimum elevation of 540 feet msl allowed under Article 401 of the
project's license. The licensee states the drawdown is necessary to
conduct repairs on the penstock fill valve. As proposed in the December
2, 2021 supplement, the drawdown would begin on January 10, 2022, and
the licensee would start refilling the reservoir on January 28, 2022.
The licensee estimates the reservoir refill would take approximately 30
days. As required under Article 403 of the project's license, the
licensee's request includes an associated Reservoir Drawdown Plan for
Commission approval.
    l. Locations of the Application: This filing may also be viewed on
the Commission's website at http://www.ferc.gov using the ``eLibrary''
link. Enter the docket number excluding the last three digits in the
docket number field to access the document. You may also register
online at http://www.ferc.gov/docs-filing/esubscription.asp to be
notified via email of new filings and issuances related to this or
other pending projects. For assistance, call 1-866-208-3676 or email
[email protected], for TTY, call<PHONE_NUMBER>. Agencies may
obtain copies of the application directly from the applicant.
    m. Individuals desiring to be included on the Commission's mailing
list should so indicate by writing to the Secretary of the Commission.
    n. Comments, Protests, or Motions to Intervene: Anyone may submit
comments, a protest, or a motion to intervene in accordance with the
requirements of Rules of Practice and Procedure, 18 CFR 385.210, .211,
.214, respectively. In determining the appropriate action to take, the
Commission will consider all protests or other comments filed, but only
those who file a motion to intervene in accordance with the
Commission's Rules may become a party to the proceeding. Any comments,
protests, or motions to intervene must be received on or before the
specified comment date for the particular application.
    o. Filing and Service of Documents: Any filing must (1) bear in all
capital letters the title ``COMMENTS'', ``PROTEST'', or ``MOTION TO
INTERVENE'' as applicable; (2) set forth in the heading the name of the
applicant and the project number of the application to which the filing
responds; (3) furnish the name, address, and telephone number of the
person commenting, protesting, or intervening; and (4) otherwise comply
with the requirements of 18 CFR 385.2001 through 385.2005. All
comments, motions to intervene, or protests must set forth their
evidentiary basis. Any filing made by an intervenor must be accompanied
by proof of service on all persons listed in the service list prepared
by the Commission in this proceeding, in accordance with 18 CFR
385.2010.

    Dated: December 2, 2021.
Kimberly D. Bose,
Secretary.
[FR Doc. 2021-26581 Filed 12-7-21; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register: October 11, 2007 (Volume 72, Number 196)]
[Notices]
[Page 57922-57923]
[DOCID:fr11oc07-43]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket Nos. TS06-11-000; TS06-11-001]

Wabash Valley Power Association, Inc.; Notice of Filing

October 3, 2007.
    Take notice that on July 3, 2007, Wabash Valley Power Association,
Inc. (Wabash Valley) filed a supplement to its request for an exemption
from the Commission order on its request for exemption from the
Commission's Standards of Conduct Requirements under Order No. 2004,
FERC Statutes & Regulations 31,355 (2003). Wabash Valley filed its
application pursuant to Part 358.1(c) of the Commission's regulations.
    Wabash Valley states that copies of the filing were served upon the
public

utility commission in Illinois, Michigan, Indiana, Ohio and Missouri.
    Any person desiring to intervene or to protest this filing must
file in accordance with Rules 211 and 214 of the Commission's Rules of
Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be
considered by the Commission in determining the appropriate action to
be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of
intervention or motion to intervene, as appropriate. Such notices,
motions, or protests must be filed on or before the date as indicated
below. Anyone filing an intervention or protest must serve a copy of
that document on the Applicant. Anyone filing an intervention or
protest on or before the intervention or protest date need not serve
motions to intervene or protests on persons other than the Applicant.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper using the ``eFiling'' link at http://www.ferc.gov.
 Persons unable to file electronically should submit an

original and 14 copies of the protest or intervention to the Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426.
    This filing is accessible on-line at http://www.ferc.gov, using the

``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the Web site that enables subscribers to receive e-mail
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please e-mail
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For

TTY, call<PHONE_NUMBER>.
    Comment Date: 5 p.m. Eastern Time Tuesday, October 9, 2007.

Kimberly D. Bose,
Secretary.
 [FR Doc. E7-20011 Filed 10-10-07; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register Volume 78, Number 42 (Monday, March 4, 2013)]
[Notices]
[Page 14141]
[FR Doc No: 2013-04987]

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SECURITIES AND EXCHANGE COMMISSION

Sunshine Act Meetings

    Notice is hereby given, pursuant to the provisions of the
Government in the Sunshine Act, Public Law 94-409, that the Securities
and Exchange Commission will hold an Open Meeting on Wednesday, March
6, 2013 at 10:00 a.m., in the Auditorium, Room L-002.
    The subject matter of the Open Meeting will be:
    The Commission will consider whether to propose Regulation Systems
Compliance and Integrity (Regulation SCI) under the Securities Exchange
Act of 1934 (``Exchange Act'') and conforming amendments to Regulation
ATS under the Exchange Act.
    At times, changes in Commission priorities require alterations in
the scheduling of meeting items.
    For further information and to ascertain what, if any, matters have
been added, deleted or postponed, please contact:
    The Office of the Secretary at<PHONE_NUMBER>.

    Dated: February 27, 2013.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-04987 Filed 2-28-13; 11:15 am]
BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 141 (Wednesday, July 23, 2014)]
[Notices]
[Page 42786]
[FR Doc No: 2014-17298]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. EL14-71-000]

Black Hills Power, Inc.; Notice of Institution of Section 206
Proceeding and Refund Effective Date

    On July 17, 2014, the Commission issued an order in Docket No.
EL14-71-000, pursuant to section 206 of the Federal Power Act (FPA), 16
U.S.C. 824e (2012), instituting an investigation into the justness and
reasonableness of the formula rate protocols of Black Hills Power,
Inc., as joint administrator, under the Joint Open Access Transmission
Tariff of Black Hills, Basin Electric Power Cooperative, and Powder
River Energy Corporation. Black Hills Power, Inc., 148 FERC ] 61,035
(2014).
    The refund effective date in Docket No. EL14-71-000, established
pursuant to section 206(b) of the FPA, will be the date of publication
of this notice in the Federal Register.

    Dated: July 17, 2014.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2014-17298 Filed 7-22-14; 8:45 am]
BILLING CODE 6717-01-P