Self-Regulatory Organizations; the Options Clearing Corporation; Notice of Filing of Partial Amendment No. 1 and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Partial Amendment No. 1, by the Options Clearing Corporation Concerning Adjustments to Cleared Contracts

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-104389; File No. SR-OCC-2025-017]</DEPDOC> <SUBJECT>Self-Regulatory Organizations; the Options Clearing Corporation; Notice of Filing of Partial Amendment No. 1 and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Partial Amendment No. 1, by the Options Clearing Corporation Concerning Adjustments to Cleared Contracts</SUBJECT> <DATE>December 12, 2025.</DATE> <HD SOURCE="HD1">I. Introduction</HD> On September 26, 2025, the Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change SR-OCC-2025-017, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)  thereunder, to revise and reorganize its rules pertaining to options contract adjustments. <SU>3</SU> <FTREF/> The proposed rule change was published for public comment in the <E T="04">Federal Register</E> on October 1, 2025. <SU>4</SU> <FTREF/> On November 3, 2025, pursuant to Section 19(b)(2) of the Exchange Act, <SU>5</SU> <FTREF/> the Commission designated a longer period within which to approve, disapprove, or institute proceedings to determine whether to approve or disapprove the proposed rule change, until December 30, 2025. <SU>6</SU> <FTREF/> On December 5, 2025, OCC partially amended SR-OCC-2025-017 to (1) correct proposed rule text describing the current composition and governance of OCC's Securities Committee, as approved by the Commission in a prior proposed rule change;  <SU>7</SU> <FTREF/> and (2) conform cross references found elsewhere in OCC's rules to the restatement of the contract adjustment rules proposed in the Notice of Filing (“Partial Amendment No. 1”). <SU>8</SU> <FTREF/> The Commission has received no comments regarding the proposed rule change. The Commission is publishing this notice to solicit comments on Partial Amendment No. 1 from interested persons, and, for the reasons discussed below, is approving the proposed rule change as modified by Partial Amendment No. 1 (hereinafter defined as the “Proposed Rule Change”). <FTNT> <SU>1</SU>  15 U.S.C. 78s(b)(1). </FTNT> <FTNT> <SU>2</SU>  17 CFR 240.19b-4. </FTNT> <FTNT> <SU>3</SU>   <E T="03">See</E> Notice of Filing <E T="03">infra</E> note 4, at 90 FR 47470. </FTNT> <FTNT> <SU>4</SU>   <E T="03">See</E> Exchange Act Release No. 104104 (Sept. 26, 2025), 90 FR 47470 (Oct. 1, 2025) (File No. SR-OCC-2025-017) (“Notice of Filing”). </FTNT> <FTNT> <SU>5</SU>  15 U.S.C. 78s(b)(2). </FTNT> <FTNT> <SU>6</SU>   <E T="03">See</E> Exchange Act Release No. 104173 (Nov. 3, 2025), 90 FR 51424 (Nov. 17, 2025) (File No. SR-OCC-2025-017). </FTNT> <FTNT> <SU>7</SU>   <E T="03">See</E> Exchange Act Release No. 93102 (Sept. 22, 2021), 86 FR 53718 (Sept. 28, 2021) (SR-OCC-2021-007). </FTNT> <FTNT> <SU>8</SU>  Partial Amendment No. 1 consists of (1) updated rule text to clarify that the Notice of Filing did not intend to implement a change to the governance arrangement or composition of the Securities Committee, as described in current By-Laws; and (2) Exhibit 5, showing updated interpretive guidance to accurately reflect cross-references. Partial Amendment No. 1 does not change the purpose of or basis for SR-OCC-2025-017. </FTNT> <HD SOURCE="HD1">II. Background</HD> OCC is a central counterparty (“CCP”), which means that, as part of its function as a clearing agency, it interposes itself as the buyer to every seller and the seller to every buyer for certain financial transactions. As the CCP for the listed options markets in the United States, <SU>9</SU> <FTREF/> as well as for certain futures and stock loans, OCC has certain processing obligations during the life of the products it clears. For example, it may be necessary for OCC to adjust the terms of a contract it has cleared. A contract adjustment refers to the modification of terms of an overlying derivative, like the options that are cleared and settled by OCC, in response to certain corporate actions that affect an underlying security—such as declaration of dividends or distributions, stock splits, rights offerings, reorganizations, or the merger or liquidation of an issuer. <SU>10</SU> <FTREF/> OCC states that it makes adjustments to maintain the economic value of existing positions by mirroring what occurs to the underlying security using determinative factors on a case-by-case basis. <SU>11</SU> <FTREF/> Currently, OCC has broad authority to effect contract adjustments and, typically, makes a determination based on (a) fairness to holders and writers (or purchasers and sellers) of the affected contracts; (b) the maintenance of a fair and orderly market in the affected contracts; (c) consistency of interpretation and practice; (d) efficiency of exercise settlement procedures; and (e) the coordination with other clearing agencies of the clearance and settlement of transactions in the underlying interest. <SU>12</SU> <FTREF/> <FTNT> <SU>9</SU>  OCC describes itself as “the sole clearing agency for standardized equity options listed on a national securities exchange registered with the Commission (`listed options').” <E T="03">See</E> Exchange Act Release No. 96533 (Dec. 19, 2022), 87 FR 79015 (Dec. 23, 2022) (File No. SR-OCC-2022-012). </FTNT> <FTNT> <SU>10</SU>   <E T="03">See</E> Notice of Filing, 90 FR at 47471. </FTNT> <FTNT> <SU>11</SU>   <E T="03">Id.</E> (“The future occurrence of corporate actions is not always foreseeable at the time parties enter a derivatives trade, and therefore the occurrence of such a corporate action is not priced into the economics of the trade. Because derivative contract positions of trading parties may exist for weeks, months or years after the position was established, corporate actions may occur during the life of the contract that affect the economic position of the parties.”). </FTNT> <FTNT> <SU>12</SU>   <E T="03">Id.</E> OCC also maintains a Securities Committee, consisting of one designated representative of each Securities Exchange and OCC's Chief Executive Officer. This Securities Committee is authorized to adopt statements of policy or interpretations having general application to specified types of events or OCC cleared contracts to help guide adjustment policy for new or unusual situations, as needed. <E T="03">Id.</E> </FTNT> As part of its contract adjustment risk management, OCC proposes to (1) adopt rules reflecting OCC's current practices in making adjustment determinations; and (2) relocate, consolidate, and update references to adjustment-related provisions within its By-Laws and Rules. <SU>13</SU> <FTREF/> Regarding substantive revisions, OCC proposes to codify within its Rules the current practices related to adjustment determinations ( <E T="03">e.g.,</E> by specifying additional circumstances when OCC will generally not make an adjustment or specifying additional factors guiding adjustment determinations). <SU>14</SU> <FTREF/> As to the non-substantive reorganization of adjustment-related provisions, OCC proposes to (i) relocate OCC's existing provisions from its By-Laws to the new Chapter XXVIII of the Rules, which would encompass Rules 2801 through 2805;  <SU>15</SU> <FTREF/> (ii) consolidate provisions regarding OCC's adjustment authority and practices for actively traded products with similar methods of adjustments  <SU>16</SU> <FTREF/> to eliminate duplicative provisions ( <E T="03">e.g.,</E> consolidating provisions for adjustments to stock futures and stock options); and (iii) update references to current adjustment By-Laws sections contained in other adjustment provisions of the By-Laws for products not actively traded, and with regard to governance provisions for amendments to Rules and By-Laws. The proposed changes are described in more detail below. <FTNT> <SU>13</SU>   <E T="03">See</E> Notice of Filing, 90 FR at 47470. </FTNT> <FTNT> <SU>14</SU>   <E T="03">See</E> Notice of Filing, 90 FR at 47481-84. </FTNT> <FTNT> <SU>15</SU>  OCC also proposes certain non-substantive clarifying changes to the relocated language. </FTNT> <FTNT> <SU>16</SU>  OCC does not propose consolidating By-Law provisions into the Rules for products that do not currently trade. Specifically, Article XIV, Sections 3A and 3B (Adjustments for Binary Options), Article XV, Section 4 (Adjustments for Foreign Currency Options), Article XVI, Section 3 (Adjustments for Yield-Based Treasury Options), Article XXIV, Section 4 (Adjustments for BOUNDS), and Article XXVI (Adjustments for Packaged Spread Options) will remain in the By-Laws with updates to reflect references to other adjustment provisions relocated to OCC's Rules. </FTNT> <HD SOURCE="HD2">A. Codification of Current Practices</HD> OCC represents that the proposed provisions concerning its adjustment process result from and reflect longstanding practices that OCC developed under its existing adjustment authority but that have not been codified as rules. <SU>17</SU> <FTREF/> OCC maintains that this codification is meant to provide more detail, transparency, and clarity around its adjustment process. <SU>18</SU> <FTREF/> The provisions codifying OCC's current adjustment practices would be written into Chapter XXVIII of the Rules and are discussed at greater length below. <FTNT> <SU>17</SU>   <E T="03">See</E> Notice of Filing, 90 FR at 47481. To illustrate such longstanding practices, OCC points to past guidance that has been publicly released in the form of Information Memos. <E T="03">See generally</E> Notice of Filing, 90 FR at 47481-47483. </FTNT> <FTNT> <SU>18</SU>   <E T="03">Id.</E> </FTNT> <HD SOURCE="HD3">1. Applicability to Specific Types of Contracts</HD> Rule 2802(a)(1) would add a list of the ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 48k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━