[Federal Register Volume 67, Number 110 (Friday, June 7, 2002)]
[Notices]
[Pages 39460-39461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-14298]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-46005; File No. SR-OCC-2001-09]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of a Proposed Rule Change Regarding Access to The
Option Clearing Corporation's Information and Data Systems Via
Electronic Means
May 30, 2002.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on August 1, 2001, The
Options Clearing Corporation (``OCC'') filed with the Securities and
Exchange Commission (``Commission'') and on April 23, 2002, amended the
proposed rule change as described in Items I, II, and III below, which
items have been prepared primarily by OCC. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change would amend OCC's Rules regarding access
to its information and data systems via electronic means.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, OCC included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. OCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such
statements.\2\
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\2\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Currently, OCC Rules support on-line data entry and data retrieval,
but these provisions are limited solely to direct access via on-line
terminals. OCC is in the process of developing a new clearance and
settlement system to replace its existing system.\3\ The new system
will support internet access at a clearing member's election. The
proposed rule change would add the definition of ``electronic data
entry,'' which would be broken down into ``electronic data entry'' and
``electronic data retrieval,'' to Rule 101 to provide a more flexible
and broader description of electronic means to communicate with
clearing members.\4\
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\3\ As previously reported to the Commission, OCC is developing
a new clearance and settlement system known as ENCORE to replace its
existing system, INTRACS. OCC's implementation strategy is to
replace INTRACS on a modular basis with new development code modules
replacing targeted pieces of INTRACS which will then be
``decommissioned''. Newly developed and installed code will
interface with remaining portions of INTRACS until the old system is
completely replaced.
\4\ Under the proposal, ``electronic data entry'' would be
defined as the transmission by a clearing member to OCC via
electronic means of reports, notices, instructions, data, or other
items. ``Electronic data retrieval'' would be defined as the
retrieval by a clearing member via electronic means of reports,
notices, instructions, data, and other items made available by OCC.
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The proposed rule change would also eliminate outdated provisions
that require clearing members to send representatives to access lock
boxes to obtain papers and documents distributed by OCC and would
clarify the manner in which clearing members exchange information with
OCC. Under the proposed rule change, Rules 205 (``Submission of Items
to Corporation [OCC]'') and 206 (``Retrieval of Items from Corporation
[OCC]'') would require that a clearing member submit and retrieve
instructions, notices, reports, data, and other items via electronic
data entry or electronic data retrieval unless otherwise prescribed by
OCC. Rules 205 and 206 would also provide that such electronic
transmissions would constitute valid ``writings'' for purposes of
applicable law. In the event unusual or unforeseen conditions prevent a
clearing member from submitting or retrieving such items
electronically, OCC would retain discretion to designate alternative
means or to extend any applicable time cut-off times as may be deemed
reasonable, practicable, and equitable under the circumstances.
The proposed rule change would amend Rule 208 (``Reports by the
Corporation [OCC]'') to provide clearing members with the ability to
notify OCC via facsimile or e-mail of any errors contained in reports
made available by OCC.
Under the proposed rule change, a new Rule 212 (``Security
Measures'') would set forth the obligations of clearing members to
comply with security measures implemented by OCC, including access
codes and authorization stamps. Under Rule 212, a clearing member would
be bound by submissions made using a current access code or
authorization stamp.
Finally, the proposed rule change would make conforming changes to
Interpretations and Policies under Rules 801 (``Exercise of Options'')
and 1606A (``Alternative Settlement Procedures'') to delete references
to ``on-line data entry'' and to replace those references with the
newly defined ``electronic data entry.'' Interpretations and Policies
.01 under Rule 801 also would be amended to accurately reference
amended Rule 205 relating to the extension of cut-off times in the
event of unusual or unforeseen conditions.
Attached as Exhibit B to the proposed rule change is the
``Supplement to the Agreement for OCC Services for Internet Access''
proposed to be entered into between OCC and its clearing members. OCC
is developing a front-end portal
[[Page 39461]]
called MyOCC that will provide a unified access point from which
clearing members will be able to obtain information from various
applications contained within MyOCC for which the clearing member is
authorized to have access. Access to MyOCC will be available to
clearing members through the internet, existing enhanced clearing
member interface terminals, or dedicated leased lines. To the extent
clearing members elect to access OCC's information and data systems
through internet connections, the Supplement specifies requirements
relating to access codes, registration, authorization, and security.
This Supplement is structured to fit within OCC's existing
framework of the ``Agreement for OCC Services''.\5\ Provisions of the
Supplement, which are generally self-explanatory, describe the
respective responsibilities of the clearing member and OCC. Section 1
describes the scope of information and data systems that will be made
available through the internet. Section 2 creates a requirement on the
part of the clearing member to maintain a backup communication channel
as a means to obtain access to OCC's information and data systems.
Sections 3 and 4 set forth criteria relating to the right to use
internet access. Section 5 allocates responsibility relating to the
confidentiality and security of access codes. That section also
requires the clearing member to provide information as may be necessary
to register its authorized users for internet access and to maintain
its own equipment. Section 5 also requires the clearing member to
represent and warrant that it is authorized to obtain internet access
on behalf of a managed clearing member. Sections 6 through 9 set forth
further rights and responsibilities of the parties including
limitations on liability, indemnification, and termination provisions,
etc. Section 10 discloses that OCC may monitor the use of internet
access to ensure compliance with the Supplement. Section 11 contains
general terms including interpretation, severability, waiver, survival,
and governing law.
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\5\ See Securities Exchange Act Release No. 21015, 49 FR 23971
(June 4, 1984) (File No. SR-OCC-84-7) for the text of the Agreement
for OCC Services.
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The proposed rule change is consistent with section 17A of the Act
because it promotes new data processing and communications techniques
resulting in more efficient, effective, and safe procedures for
clearance and settlement activities.
(B) Self-Regulatory Organization's Statement on Burden on Competition
OCC does not believe that the proposed rule change would impose any
burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
Written comments were not and are not intended to be solicited with
respect to the proposed rule change, and none have been received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the self-regulatory organization consents,
the Commission will:
(A) By order approve such proposed rule change or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
VI. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street NW, Washington, DC 20549-0609.
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Section, 450 Fifth Street NW.,
Washington, DC 20549. Copies of such filing will also be available for
inspection and copying at the principal office of OCC. All submissions
should refer to the File No. SR-OCC-2001-09 and should be submitted by
June 24, 2002.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-14298 Filed 6-6-02; 8:45 am]
BILLING CODE 8010-01-P