OCC Comment on SEC RIN 3235-AN25 Regulation Systems Compliance and Integrity

Megan M. Cohen
June 13, 2023
By Megan M. Cohen ,General Counsel and Corporate Secretary

The Options Clearing Corporation (“OCC”) welcomes the opportunity to comment on the Securities and Exchange Commission’s (the “SEC” or the “Commission”) proposed amendments to Regulation Systems Compliance and Integrity (“Regulation SCI”) under the Securities Exchange Act of 1934 (the “Proposal”).

Founded in 1973, OCC is the world’s largest equity derivatives clearing organization. OCC operates under the jurisdiction of both the SEC and the Commodity Futures Trading Commission (the “CFTC”). As a registered clearing agency under the SEC’s jurisdiction, OCC clears and settles transactions for exchange-listed options. OCC is subject to Regulation SCI as an SCI entity. As a registered derivatives clearing organization under the CFTC’s jurisdiction, OCC clears and settles transactions in futures and options on futures. OCC also provides central counterparty clearing and settlement services for securities lending transactions. In addition, OCC has been designated by the Financial Stability Oversight Council as a systemically important financial market utility (“SIFMU”) under Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. As a SIFMU, OCC is subject to prudential regulation by the Board of Governors of the Federal Reserve System. OCC is recognized by the European Securities and Markets Authority as a Tier 1 CCP established in third countries under Article 25 of the European Market Infrastructure Regulation. OCC operates as a market utility and is owned by five exchanges.

OCC supports the Commission’s desire to enhance Regulation SCI to address the novel challenges and risks arising from the increased use of third-party providers by SCI entities and the reliance on new and evolving technology by market participants. The increasingly complex nature of technology integral to the securities markets creates new areas of potential risks, including increased exposure to cybersecurity events and the potential market disruption associated with such events. As a SIFMU, OCC is committed to the implementation and maintenance of best-in-class risk management practices in the areas of technology and cybersecurity.

As an SCI entity on the cusp of moving its core clearing and settlement systems to the cloud, as well as a significant user of third-party services to support its core functions, we offer the following comments on the Proposal for the Commission’s consideration.

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