Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Proposed Rule Change by The Options Clearing Corporation Concerning Amendments to Its Clearing Membership Standards

SECURITIES AND EXCHANGE COMMISSION [Release No. 34-106264; File No. SR-OCC-2026-009] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Proposed Rule Change by The Options Clearing Corporation Concerning Amendments to Its Clearing Membership Standards September 2, 2026. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act” or “Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on August 19, 2026, The Options Clearing Corporation (“OCC” or “Corporation”) filed with the Securities and Exchange Commission (“Commission” or “SEC”) 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. 1  15 U.S.C. 78s(b)(1). 2  17 CFR 240.19b-4. I. Clearing Agency's Statement of the Terms of Substance of the Proposed Rule Change This proposed rule change would amend its clearing membership standards as outlined in OCC's Rules. The proposed changes to OCC's Rules are contained in Exhibit 5 to File No. SR-OCC-2026-009. Material proposed to be added is marked by underlining and material proposed to be deleted is marked with strikethrough text. All terms with initial capitalization that are not otherwise defined herein have the same meaning as set forth in the OCC By-Laws and Rules. 3 3  OCC's By-Laws and Rules can be found on OCC's public website: https://www.theocc.com/Company-Information/Documents-and-Archives/By-Laws-and-Rules . II. Clearing Agency'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 these statements. (A) Clearing Agency's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Background OCC acts as the central counterparty clearing house (“CCP”) for all U.S. options exchanges and certain U.S. futures exchanges. OCC provides clearing services for options on equities, indices, Exchange Traded Funds (“ETFs”) and for certain transactions in futures and options on futures. Organizations become OCC Clearing Members to facilitate the clearing and settlement of their customer transactions or proprietary transactions through OCC. OCC also provides certain Clearing Members with the ability to submit stock loan transactions for novation, after which, OCC becomes the counterparty to both sides of the transactions, guaranteeing that these obligations will be fulfilled. In 2012, OCC was designated as a systemically important financial market utility (“SIFMU”) by the Financial Stability Oversight Council pursuant to Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”). With this designation came heightened regulatory expectations around financial, operational, and systems/data obligations. To keep pace with those expectations and ensure OCC continues to maintain a high level of market stability, OCC completed a review of its By-Laws and Rules in conjunction with changes in regulations and Clearing Member risk practices and processes. From this review, OCC modified its membership standards in a proposed rule filing approved by the Commission in 2023. 4 The modifications, among other things, (i) expanded OCC membership to new entity types and in additional jurisdictions and updated its membership requirements and associated processes, including on-boarding and off-boarding procedures, (ii) amended the financial responsibility standards by increasing the minimum capital requirements for Clearing Members, (iii) amended operational requirements for Clearing Members, and (iv) changed rules governing disciplinary actions. The proposed rule filing also reorganized and consolidated certain Clearing Member requirements to improve existing practices. 4   See Order Granting Approval of Proposed Rule Change by the Options Clearing Corporation Concerning the Amendment of its Clearing Membership Standards, Exchange Act Release No. 97439 (May 5, 2023), 88 FR 30373 (May 11, 2023) (SR-OCC-2023-002) (“Clearing Membership Standards”). To build on the enhancements made to OCC's membership standards in 2023 and continue to align with industry best practices  5 and evolving technology, 6 OCC recently conducted an in-depth review of its membership standards with a strategic focus on mitigating counterparty credit risk introduced by Clearing Members. From this review, OCC determined it was necessary to further enhance certain Clearing Member requirements to improve OCC's risk mitigation processes and practices. OCC's proposed changes to its clearing membership standards address, in part, (i) new onboarding requirements for eligible applicants for clearing membership at OCC (“applicants”), (ii) risk mitigation requirements for existing Clearing Members and specifically for Clearing Members that OCC determines may present a heightened risk profile, (iii) factors or circumstances that may result in an applicant's denial of membership or a Clearing Member's suspension of membership, (iv) the expansion of delegated authority to the designated delegates or agents of the Risk Committee as it pertains to the approval or denial of applicants on a risk-based approach, and (v) the expansion of the use of protective measures that OCC may impose on an applicant or Clearing Member. 5   See Bank for International Settlements, “Guidelines for Counterparty Credit Risk Management” (December2024) ISBN 978-92-9259-823-5; McKinsey& Company, “Moving from Crisis to Reform: Examining the State of Counterparty Credit Risk” October 27, 2023; FINRA Rules and Guidance for Funding & Liquidity https://www.finra.org/rules-guidance/key-topics/funding-liquidity . 6  Evolving technology refers to trends or events driving technology changes in the financial services industry, including but not limited to: (i) an organization's increased reliance on technology to operate and deliver services, (ii) the adoption and use of digital banking services, and (iii) the rise in a remote work environment as more organizations allow their employees to work outside of a traditional office space. OCC's proposed changes will enhance OCC's risk mitigation processes and practices by requiring, in part, that applicants: (i) maintain a minimum operating history, (ii) maintain a physical office facility to conduct business with OCC, and (iii) provide, upon request by OCC, a business plan, assessed by an independent third-party, that demonstrates the applicant can meet and sustain financial and operational responsibility standards and financial obligations. Among other things, OCC's proposed changes also broaden the scope of required disclosures that applicants must provide during the onboarding process, such as information related to internal stress tests, credit agreements or audited financial statements. By proposing these changes, OCC is strengthening its holistic approach to reviewing and analyzing applicants that may present a heightened risk profile, which further mitigates counterparty credit risk. Additionally, OCC believes its proposed change that delegates certain authority to the designated delegates or agents of the Risk Committee will streamline the decision process and allow for applications and business expansion requests to be reviewed and acted upon in a shorter amount of time, providing a substantial benefit to the industry. OCC's proposed changes also clarify and expand upon the basis for denial of an applicant and the suspension of an existing Clearing Member, providing enhanced transparency to the industry. OCC's proposed changes address updated financial responsibility obligations for existing Clearing Members, which is intended to mitigate risk to OCC through the establishment of enhanced risk-based capital levels. Furthermore, OCC's proposed changes expand upon the use of protective measures, which will allow more assurance that OCC is able to protect itself and its members from emerging counterparty risks. Overall, OCC believes these proposed changes will strengthen OCC's onboarding requirements and provide OCC with the appropriate resources to ensure that applicants onboarded as Clearing Members present an acceptable risk profile such that they are likely to continue to meet OCC's membership standards in the future. The proposed changes will also allow OCC to more effectively risk manage existing Clearing Members that may pose a heightened risk profile and take measures to reduce that risk. While the membership standards that OCC proposes to change are described in further detail below, generally, they consist of the following: • Amending eligibility standards by requiring applicants to maintain a minimum operating history of one year;  7 7   See infra description of proposed Rule 201. • Amending admission procedures and conditions to admission to expand the delegation of authority to the Risk Committee's designated delegates or agents;  8 8   See infra description of proposed Rules 203 and 204. • Amending admission procedures to codify the processes that OCC would undertake in hearings before the Risk Committee for appeals of certain protective measures, or in hearings on denials of Clearing Member applications or reapplications;  9 9   See infra description of proposed Rules 203 and 307B. • Adopting requirements for applicants and Clearing Members related to confidential treatment of non-public information;  10 10   See infra description of proposed Rules 203, 207, 306. • Amending the conditions to admission to, among other things: 11 11   See infra description of proposed Rule 204. ○ Clarify and expand upon the basis for OCC's denial of membership; ○ Require more robust notification requirements from applicants that are subject to a formal investigation by a regulatory organization; ○ Restrict applicants that have been denied membership from reapplying for membership until the applicant has demonstrated, to OCC's satisfaction, that they have addressed the specific reason(s) for their denial; ○ Require certain applicants to provide OCC with a business plan demonstrating the applicant has a viable plan to meet and sustain financial and operational responsibility standards and financial obligations at OCC; ○ Incorporate a probationary period for certain applicants approved by OCC with contingencies to membership; • Amending requirements such that applicants and Clearing Members are required to maintain a physical office facility to conduct business with OCC, unless an applicant or Clearing Member utilizes a remote office model that OCC determines does not present heightened risk to OCC;  12 12   See infra description of proposed Rule 204 and 302. • Amending reporting requirements such that, upon OCC's request, an applicant or Clearing Member must furnish their parent or affiliate's audited financial statements to OCC;  13 13   See infra description of proposed Rules 204 and 306B. • Amending financial responsibility requirements by establishing risk-based minimum capital levels;  14 14   See infra description of proposed Rule 301. • Amending operational capability obligations related to a Clearing Member's books and records;  15 15   See infra description of proposed Rule 302. • Amending financial, operations, and risk management personnel requirements related to a Clearing Member's employment of individuals;  16 16   See infra description of proposed Rule 303. • Amending event-based reporting requirements specific to Early Warning Notices;  17 17   See infra description of proposed Rule 306A. • Amending requirements related to OCC's ability to impose protective measures on Clearing Members or applicants;  18 and 18   See infra description of proposed Rule 307. • Clarifying and expanding upon the basis for OCC's suspension of an existing Clearing Member. 19 19   See infra description of proposed Rule 1201(a). The proposed rule change generally would reflect each of these changes in the Rules by modifying the provisions currently set forth in Chapter I, II, III XI and XII of the Rules. OCC's proposed changes also include various clarifying, non-substantive updates to its Rules, including formatting and grammatical changes, and updates to section numbering as necessary to reflect proposed rules. OCC's proposed changes are described in more detail below under the section headers reflecting the proposed new Rules. 1. Purpose The purpose of this proposed rule change by OCC is to modify its existing Rules to implement changes that are designed to strengthen its onboarding process for applicants and enhance its monitoring of current Clearing Members through updated financial, operational, and reporting requirements. OCC believes these proposed changes will help to mitigate counterparty credit risk and improve OCC's risk mitigation processes and practices. Chapter I—Definitions Proposed Rule 101—Definitions OCC proposes to adopt a definition for the term “anti-money laundering (“AML”)” as it is utilized in proposed Rule 204(e)  20 and proposed Rule 307C. 21 In Rule 101, OCC defines “AML” to mean, when used in respect of an applicant or Clearing Member's AML controls, compliance with anti-money laundering requirements imposed under U.S. law or comparable requirements in the Clearing Member's home jurisdiction. 20   See infra description of proposed Rule 204(e). 21   See infra description of proposed Rule 307C. OCC also proposes to adopt a key person clause by defining the term “Key Person” as it is utilized in proposed Rule 204(c)  22 and proposed Rule 307C. 23 The definition would provide that “Key Person” means any person associated with a Clearing Member or applicant that the Corporation deems is critical to the Clearing Member or applicant's operations or risk management, including, but not limited to, the Clearing Member's President, Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), Chief Risk Officer (“CRO”), and Chief Compliance Officer (“CCO”), or equivalent positions, or a major shareholder or partner of the Clearing Member. The purpose of adopting a definition for Key Person is to promote resiliency for OCC in the event an individual deemed to be a Key Person is unable to fulfill their position within a Clearing Member or applicant's management team. OCC's proposed definition of Key Person incorporates the provision “any person associated with a Clearing Member or applicant” to consider Clearing Members or applicants with legal structures that encompass multiple legal entities. The purpose of including the phrase “associated with” is to encompass positions beyond direct employment or control of the Clearing Member or applicant. For example, a director or partner level position may not be a direct employee of a Clearing Member or applicant, however, they may constitute a critical part of such Clearing Member or applicant's operations or risk management functions. As such, OCC believes it is necessary that the definition of Key Person extend to such individuals outside of direct employment, but who are still associated with the Clearing Member or applicant. As described in more detail in proposed Rule 307C, 24 if a Key Person's departure has a material impact on the Clearing Member's operations or financial profile, OCC believes it is necessary to maintain the ability to impose restrictions on the impacted Clearing Member. For example, a Key Person may control the day-to-day decisions, maintain key client relationships, or have extensive knowledge of the company such that their position is critical to the operation of the business. If that person's inability to fulfill such position would likely impact the business's operations or profitability, it could pose additional risk to OCC. Therefore, OCC believes that adopting a definition for Key Person will strengthen its risk mitigation practices and promote resiliency for OCC. 22   See infra description of proposed Rules 204(c), 204(c)(1), and 204(c)(2). 23   See infra description of proposed Rule 307C. 24   Id. To align with OCC's proposed rules concerning the protection of OCC's non-public information, 25 OCC proposes to add a definition of the term “OCC Confidential Information” to Rule 101. The definition would provide that “OCC Confidential Information” means all non-public information provided by OCC that (i) is marked or otherwise identified in writing prior to disclosure to the recipient as “confidential” or “business sensitive,”  26 (ii) is designated by the Corporation as confidential, or (iii) the recipient knows or under the circumstances surrounding disclosure, ought to reasonably know is confidential. 25   See infra description of proposed Rules 203, 207, 306. 26  These classifications correspond to OCC's internal procedures for classifying and marking records. OCC's proposed rules incorporate a reference to the term “OFAC” as it relates to an applicant's or Clearing Member's compliance with OFAC. For clarification, OCC proposes to define the term “OFAC” to mean the United States Department of the Treasury's Office of Foreign Assets Control as defined in Title 31, Chapter V of the Federal Regulations. 27 27  31 CFR 509.309. Lastly, OCC proposes to update the rule reference in the definition of the term “Office” in Rule 101. OCC proposes to eliminate reference to Rule 201 within the description and replace it with reference to Rule 302. OCC believes this proposed change aligns more closely with the new proposed edits to Rule 302 as it relates to requirements around maintaining a physical office space. Chapter II—Clearing Membership Proposed Rule 201—Eligibility OCC proposes to modify its eligibility standards for applicants to ensure that, in OCC's discretion, such applicants reflect a sound financial and operational profile. Specifically, OCC proposes to adopt a new subsection (b) to current OCC Rule 201  28 that would provide that Clearing Members must maintain a minimum operating history of one year in the same or substantially same business activities as being applied for, or in the alternative, must maintain senior personnel with sufficient financial, risk, and operational background and experience, in the sole opinion of OCC, to conduct the business of the Clearing Member. 28  Current OCC Rule 201(b) would be renumbered as OCC Rule 201(c), and current OCC Rules 201(c)—201(e) would be renumbered as OCC Rules 201(d)—201(f), respectively. The proposed change requiring a minimum operating history of one year is designed to ensure that there is sufficient information for OCC to formulate a holistic view of the applicant's background to help determine, based on the applicant's history, whether the applicant could meet OCC's existing membership standards and whether the applicant is likely to continue to meet OCC's membership standards for the foreseeable future. The proposed change also provides OCC with flexibility to, in the event the applicant does not maintain an operating history of one year, evaluate the applicant's senior personnel to determine whether such personnel have sufficient background experience to conduct the business of the Clearing Member. By requiring a minimum operating history of one year, OCC believes this proposed change will allow applicants to demonstrate their continued capacity to operate their business. OCC believes this information will strengthen its onboarding process by eliminating at an early-stage applicants that do not maintain a sufficient operating history or sufficient personnel, in OCC's discretion, therefore mitigating potential risk to OCC. Proposed Rule 203—Admission Procedures OCC proposes to make substantive and organizational changes to proposed Rule 203—Admission Procedures. OCC's proposed changes would reorganize Rule 203 into six separate subsections, outlined in proposed subsections (a) through (f) of proposed Rule 203. OCC also proposes adding titles that label each subsection, enhancing clarity and ease of readability throughout the document. OCC's proposed changes adopt new rule text in its entirety in proposed subsections (b)(4) through (b)(6), (b)(8), (e) and (f) of proposed Rule 203, while proposed subsections (a), (b)(1) through (b)(3), (b)(7), (c), and (d) reorganize existing text and incorporate new text. The purpose of each substantive change is discussed below. i. Proposed Rule 203(a) OCC's proposed changes would reorganize existing Rule 203(a) into proposed Rules 203(a) and 203(b)(1) through (b)(3). The first sentence of current Rule 203(a) provides that applicants for clearing membership must be in such form and contain such information as OCC will from time to time require. Proposed Rule 203(a) would be titled “Form of Application.” In addition, Proposed Rule 203(a) would extend this provision to include reapplications under Rule 309. As described in more detail in below with respect to proposed Rule 309, OCC may determine that a Clearing Member must reapply for membership due to an event described in Rule 306A(b)(1) that causes a material impact on the Clearing Member's operational condition. If OCC makes such determination, the Clearing Member would be required to reapply for membership pursuant to the admission procedures described in Rule 203, and the reapplying Clearing Member would be afforded the same rights under Rule 203 as any new applicant of OCC. ii. Proposed Rule 203(b) OCC's proposed Rule 203(b) would be titled “Review by the Risk Committee or its Delegates” and would be organized into eight subparts, as outlined in proposed Rule 203(b)(1) through (b)(8). OCC's proposed changes reorganize rule text from existing Rule 203(a) into new proposed Rules 203(b)(1) through (b)(3) while also proposing additional provisions in those subsections. Proposed Rule 203(b)(7) contains certain text that was relocated from existing Rule 203(a) while also proposing new rule text. Lastly, OCC proposes to adopt Rule 203(b)(4) through (b)(6), and (b)(8) as entirely new rule text. a. Proposed Rule 203(b)(1) OCC proposes to modify its admission procedures to expand the delegation authority of the Risk Committee, specifically in their decision to approve or deny an applicant. OCC's existing Rule 203(a) provides, in part, that the Risk Committee must approve or deny an applicant for clearing membership, and that the Risk Committee may also approve, under certain circumstances, an applicant on an expedited basis. 29 OCC proposes to expand the Risk Committee's authority such that the Risk Committee may delegate, to its designated delegates or agents, the ability to approve or deny new applications or reapplications, and approve an applicant on an expedited basis. Specifically, proposed Rule 203(b)(1) would provide that the Risk Committee, or its designated delegates or agents, determine whether to approve or deny applications or reapplications for clearing membership. OCC proposes to reflect this change on the delegation of authority from the Risk Committee to its designated delegates or agents throughout Rule 203 and Rule 204, as described in further detail below. 29   See supra note 3 at Rule 203(a), (b). OCC believes the proposed change to delegate certain authority of the Risk Committee to its delegates or agents will streamline and accelerate the decision-making process and approval, while continuing to utilize a risk-based decision-making approach within OCC. New Clearing Member applicants are currently reviewed and decided upon by the Risk Committee at the regular Risk Committee meetings, which are scheduled approximately every quarter. OCC believes this delegation of authority will also benefit applicants that may require a more urgent response based on their business activity, because such applicants would not need to wait for a regularly scheduled Risk Committee meeting for their application to be presented to the Risk Committee and approved or denied by the Risk Committee. Given various dependencies in the application review process, such as receiving documentation from applicants and working through the required internal approvals, it can be challenging from a timing perspective to align such dependencies with the regularly scheduled Risk Committee meeting date. By expanding the potential delegation of authority to approve or deny applications outside of the regular scheduled Risk Committee meetings, OCC believes this will accelerate the decision-making process and reduce delays for applicants. OCC's proposed changes in proposed Rule 203(b)(1) also incorporate “reapplications” into this provision to align with proposed Rule 309. As described in proposed Rule 309 and outlined in the description of proposed Rule 203(a) above, if OCC determines that a Clearing Member must reapply for membership, the process for reapplication would follow the same admission procedures for new applicants described in Rule 203. As such, the reapplying Clearing Member would be afforded the same rights as new applicants under existing Rule 203, and the Risk Committee, or its designated delegates or agents, would determine whether to approve or deny the reapplications, as it would for new applicants. Furthermore, OCC also proposes to update existing language in proposed Rule 203(b)(1) to promote clarity and consistency on the Risk Committee's responsibility related to approval or denial of an applicant. OCC's existing Rule 203(a), which is reorganized, in part, to proposed Rule 203(b)(1), provides that the Risk Committee must review and approve or disapprove such applicants for clearing membership. 30 OCC's proposed changes in proposed Rule 203(b)(1) update this language to state that the Risk Committee, or its designated delegates or agents, “determine whether to approve or deny” applications or reapplications for clearing membership. OCC believes the proposed language “determine whether to approve or deny” provides a more precise description of the Risk Committee's responsibilities, intended to promote transparency for Clearing Members and the general public. 30   See supra note 3 at Rule 203(a). b. Proposed Rule 203(b)(2) Proposed Rule 203(b)(2) consists entirely of text relocated from the third sentence of existing Rule 203(a), with no substantive changes. Specifically, the sentence provides that the Risk Committee, or its designated delegates or agents, may examine the books and papers of any applicant, take such evidence as they may deem necessary or employ such other means as they may deem desirable or appropriate to ascertain relevant facts bearing upon the applicant's qualifications. OCC believes relocating this information from existing Rule 203(a) into proposed Rule 203(b)(2) enhances organizational efficiency in the document. c. Proposed Rule 203(b)(3) OCC's proposed changes reorganize and restate the fourth sentence of existing Rule 203(a) into proposed Rule 203(b)(3). That sentence currently provides that if the Risk Committee proposes to disapprove an application for clearing membership, it must first furnish the applicant with a written statement of its proposed recommendation and the specific grounds therefor, and afford the applicant an opportunity to be heard and to present evidence on its own behalf. Proposed Rule 203(b)(3) would incorporate the proposed expansion of the delegation authority of the Risk Committee in their decision to approve or deny an applicant by extending this obligation to the Risk Committee's designated delegates or agents. Proposed Rule 203(b)(3) would also incorporate “reapplications” of Clearing Members to align with proposed Rule 309, as described below. Proposed Rule 203(b)(3) would provide that the written statement informing the applicant or Clearing Member of the specific grounds of the proposed denial would be furnished by OCC's Corporate Secretary. As such, proposed Rule 203(b)(3) would provide clarity regarding whose responsibility it would be to transmit the written statement, clarifying it would be OCC's Corporate Secretary, not the Risk Committee. In addition, this change would provide transparency concerning the point at which the proposed process for Risk Committee review of such proposed denial would begin, as discussed below with respect to proposed Rule 203(b)(4) through (8). Proposed Rule 203(b)(3) would also use the terms “deny” or “denial,” instead of “disapprove” and “recommendation,” respectively, to align with the changes to Proposed Rule 203(a). d. Proposed Rules 203(b)(4)-(b)(6) OCC proposes to adopt subsections (b)(4) through (b)(6) of proposed Rule 203 as new rule text. The purpose in adopting subsections (b)(4) through (b)(6) is to codify within OCC's rules the processes that OCC would undertake in hearings before the Risk Committee on denials of Clearing Member applications or reapplications. 31 OCC believes this detailed process set forth in (b)(4) through (b)6) of proposed Rule 203 will promote greater transparency for Clearing Members and applicants with respect to denial of participation and the procedures afforded to them. 31  OCC also proposes to codify these same procedures for appeals of certain protective measures, as described in proposed Rule 307B. First, proposed Rule 203(b)(4) establishes the process by which a Clearing Member or applicant may request a hearing, and the notice requirements OCC must provide before that hearing takes place. Specifically, proposed Rule 203(b)(4) would provide that a Clearing Member or applicant may request a hearing by filing with the Secretary of OCC within five (5) business days from the date on which the Secretary of OCC furnished the applicant with a written statement under paragraph (b)(3) setting forth the name of the representative of the Clearing Member or applicant who may be contacted with respect to the hearing. Furthermore, the proposed change would provide that the Secretary of OCC will give the Clearing Member or applicant not less than ten (10) business days' prior written notice of the place and time of the hearing. Next, proposed Rule 203(b)(5) outlines the requirements that a Clearing Member or applicant must fulfill after requesting a hearing, including submitting a detailed written statement of objections and indicating their intent to attend the hearing and whether they will have legal representation. Specifically, proposed Rule 203(b)(5) would provide that within seven (7) business days after the Clearing Member or applicant files such written request with OCC, the Clearing Member or applicant must submit to the Secretary of OCC a clear and concise statement setting forth with particularity the basis for its objection to the denial, whether the Clearing Member or applicant intends to attend the hearing, and whether the Clearing Member or applicant chooses to be represented by counsel at the hearing. Additionally, proposed Rule 203(b)(5) would include that the Secretary of OCC may extend a Clearing Member's time for submitting a written request for review or a written statement for good cause shown. Finally, proposed Rule 203(b)(6) establishes the formal procedures governing how a hearing before the Risk Committee would be conducted, covering attendance, representation, recordkeeping, evidence submission and objections, hearing order, and post-hearing follow-up. OCC had previously developed and the Risk Committee had deployed these procedures for challenges to limitations on membership under OCC Rule 307B. OCC now proposes to codify them in Rule 203(b)(6) for transparency. Specifically, proposed Rule 203(b)(6) would provide that a hearing will proceed before the Risk Committee pursuant to the procedures set forth in (A) through (I) of proposed Rule 203(b)(6). Sections (A) through (I) of proposed Rule 203(b)(6) would establish the below procedures: 32 32  The bullet points set forth correspond to subsections (A) through (I) of Section (b)(6), presented in sequential order. ○ If the applicant fails to appear at the hearing, it may be deemed to have waived the right to review. ○ The Clearing Member or applicant may be represented by counsel, but such representation is not required. ○ OCC will keep a verbatim record of the hearing, which shall be the official record of the hearing. The applicant must refrain from making audio or video recordings or transmission of the hearing. The verbatim record of the hearing shall constitute OCC Confidential Information. ○ OCC and the Clearing Member or applicant (each a “Party”) may offer evidence through documentary evidence entered as exhibits in the proceeding. ○ Parties must provide copies of any documents or other materials that they plan to use at the hearing as evidence. Such evidence must be exchanged no later than the date established by the Risk Committee. ○ The formal rules of evidence, including the Federal Rules of Evidence, do not apply to hearings held under this Rule. Parties may argue that any documentary evidence presented by the opposing party should not be considered by the Risk Committee by objecting orally at the hearing on the basis that the evidence is irrelevant, immaterial, unduly repetitious, or unduly prejudicial. After considering the objecting party's reasons for excluding the evidence, the Risk Committee members will determine if the document will be admitted into evidence and into the record. ○ Following the presentation of each document, members of the Risk Committee may pose questions to the presenter of the document about the evidence offered. ○ Subject to the Risk Committee's authority to change the order, the hearing will be conducted in the following order: (i) open of record; (ii) presentation of the facts of the case, including documents, by an Officer of the Corporation, or an Officer's delegate or the Corporation's counsel; (iii) the applicant's presentation of facts of the case, including documents; (iv) rebuttal by an Officer of the Corporation, or an Officer's delegate or the Corporation's counsel; (v) the applicant's rebuttal; and (vi) the close of record. ○ Following the hearing, if necessary, the Risk Committee may submit questions in writing to either Party, with copies of all communication provided to each Party. e. Proposed Rule 203(b)(7) Proposed Rule 203(b)(7) establishes the notice requirements and finality of the Risk Committee's decision to deny an application or reapplication. From an organizational standpoint, proposed Rule 203(b)(7) incorporates certain rule text that was relocated from existing Rule 203(a) into proposed Rule 203(b)(7), while also introducing new rule text. Specifically, proposed Rule 203(b)(7) provides that if the Risk Committee, or its designated delegates or agents, denies an application or reapplication, OCC will provide the applicant or Clearing Member a written notice of the decision, accompanied by a statement of the specific grounds on which the denial is based. Furthermore, the proposed changes would state that any decision made under this Rule will be final upon the date OCC's Corporate Secretary provides a copy of the written notice of the decision to the Party. Proposed Rule 203(b)(7) would incorporate the concept of reapplication as described under proposed Rule 309 such that Clearing Members would be afforded the same rights under proposed Rule 203 as new applicants. OCC's proposed changes also replace the word “disapproves” with “denies” to remain consistent with the word choice in proposed Rule 203(b)(1) through (b)(3). In addition, OCC's proposed changes eliminate existing rule text that requires the decision must be “mailed or delivered to the applicant.” OCC proposes this change for efficiency and will amend its processes accordingly if the change is approved. Finally, proposed Rule 203(b)(7) would make other non-substantive changes, such as (i) replacing “its” with “the” in reference to the Risk Committee's written notice of decision, and (ii) eliminating the word “therefore” because this was relocated text that OCC believes it is no longer necessary. f. Proposed Rule 203(b)(8) Proposed Rule 203(b)(8) establishes that a final denial of a Clearing Member's reapplication, pursuant to proposed Rule 309, will constitute grounds for summary suspension under Rule 1102. Specifically, proposed Rule 203(b)(8) would provide that a final decision to deny a reapplication of a Clearing Member pursuant to Rule 309 and this Rule will constitute a suspension or expulsion from a self- regulatory organization and therefore grounds for summary suspension under Rule 1102. Proposed Rule 203(b)(8) mirrors existing Interpretation and Policy .01 to Rule 1201 ( i.e., proposed Rule 1201(b)), which provides the same with respect to a suspension or expulsion following disciplinary proceedings. In effect, these proposed rules provide that following a determination to expel a member—whether upon a denial of a reapplication under proposed Rule 309 after affording the Clearing Member the process described above or as a sanction for a violation of OCC's By-Laws and Rules under existing Chapter XII of the Rules—suspension of the Clearing Member may proceed in accordance with Chapter XI of the Rules (Suspension of a Clearing Member). iii. Proposed Rule 203(c) OCC's proposed changes reorganize existing Rule 203(b) to become proposed Rule 203(c), and add the title “Expediated Approvals.” OCC believes these proposed changes will help to improve readability and ease of navigation throughout OCC's rules. OCC's proposed changes also incorporate the expansion of the delegation authority of the Risk Committee in their decision to approve or deny an applicant on an expediated basis, as discussed above in the description of proposed Rule 203(b)(1). Specifically, OCC's proposed changes provide that the Risk Committee, “or its designated delegates or agents,” may approve an applicant on an expedited basis if approval of such applicant is appropriate for the protection of investors and the public interest. iv. Proposed Rule 203(d) OCC's proposed changes would also modify the provisions applicable to Clearing Members seeking to engage in clearing activities beyond the scope of their current authorizations. Specifically, OCC's proposed changes would reorganize existing Rule 203(c) to become new Rule 203(d)—“Business Expansion Requests.” OCC believes the proposed addition of a title will improve readability and ease of navigation throughout OCC's rules. Proposed Rule 203(d) would provide that Clearing Members' business expansion requests may be reviewed and approved or disapproved “by the Risk Committee, or its designated delegates or agents” pursuant to the procedures of OCC. OCC's proposed changes eliminate the specific reference to the CEO and COO  33 and eliminate the provision requiring that the Risk Committee must be given not less than ten business days from the date it is notified of any such approval/disapproval to determine whether the business expansion request should be reviewed by the Risk Committee. Because the parties seeking to engage in business expansion requests are existing Clearing Members that have already gone through enhanced due diligence in the application process, OCC believes it is not necessary that all business expansion requests be considered for review by the Risk Committee. Rather, OCC proposes a new risk-based framework pursuant to OCC's procedures such that only business expansion requests that have been escalated by OCC's CEO or COO (“OCEO”) would be subject to the review and approval of the Risk Committee. Furthermore, pursuant to OCC's Decision Authority Framework, it would be up to the discretion of the OCEO to determine, based on the specific business expansion request, whether it would be necessary to involve the Risk Committee in the decision-making process. 34 33  The revised rule text would authorize the Risk Committee, or its designated delegates or agents, as the decision makers. As a confidential Exhibit 3a to File No. SR-OCC-2026-009, OCC provided a copy of its Clearing Member On-Boarding and Off-Boarding Procedure which includes the Proposed Decision Authority Framework for New Clearing Member Applicants and Business Expansions (“Decision Authority Framework”). OCC's Decision Authority Framework outlines the designated delegates or agents of the Risk Committee and their level or review or decision, based on the Clearing Member applicant and business expansion. 34  Per OCC's Decision Authority Framework, which is included in the Clearing Member On-Boarding and Off-Boarding Procedure as confidential Exhibit 3a to SR-OCC-2026-009, business expansion requests will not require Risk Committee approval, however the OCEO may escalate any business expansion request to the Risk Committee at its discretion. As mentioned above, OCC's current process for business expansion requests entails that business expansion requests are approved or disapproved by the CEO or COO, provided the Risk Committee will be given not less than ten business days from the date it is notified of such approval or disapproval to determine whether the business expansion request should be reviewed by the Risk Committee. 35 OCC's current process allows the Risk Committee a 10-day negative consent period upon being notified of such approval or disapproval. If there is no objection from the Risk Committee during that timeframe, the business expansion request is approved or disapproved depending on the determination of the CEO or COO. Based on the information available to OCC at this time, OCC is not aware of a specific instance in which the Risk Committee exercised its authority to review or object to business expansion requests in the past. The purpose of proposed Rule 203(d) is to eliminate the requirement that every business expansion request be required to be reviewed by the Risk Committee. OCC believes the proposed change will streamline business expansion requests by eliminating the 10-day negative consent period and promoting a clear decision-making approach for either the Clearing and Liquidity Risk Working Group (“CLRWG”) or the OCEO. 35   See supra note 3 at Rule 203(c). v. Proposed Rule 203(e) OCC proposes to adopt subsection (e) of proposed Rule 203 to codify within OCC's Rules its intent to inform the Risk Committee of all decisions related to applicants or business expansion requests. Specifically, Proposed Rule 203(e) would provide that OCC will provide notice to the Risk Committee of all decisions made by the Risk Committee's designated delegates or agents related to the approval or denial of any applicant or business expansion request. As described in more detail above, OCC proposes to expand the Risk Committee's authority so that the Risk Committee may delegate, to its designated delegates or agents, the authority to approve or deny new applicants and business expansion requests. The purpose of the proposed Rule 203(e) is to align with the proposed delegated authority framework and provide transparency to the Risk Committee of all decisions being made by the Risk Committee's designated delegates or agents as it relates to the approval or disapproval of applicants or business expansion requests. vi. Proposed Rule 203(f)(1) Though (2) OCC also proposes to establish rules related to the confidential treatment of non-public information and proposes to adopt Rule 203(f) “Confidential Information.” In its capacity as a self-regulatory organization, OCC collects non-public information from its applicants to assess whether each applicant meets OCC's membership standards. In addition, OCC collects non-public information from its Clearing Members as part of its ongoing monitoring of their continued adherence to those standards. Such non-public information includes, but is not limited to, information on the applicant or Clearing Members financial and operational condition, agreements with other counterparties, and written policies and procedures. OCC may also provide non-public information to its Clearing Members and applicants to support its participants' risk management and operations with respect to their participation in OCC. Examples of non-public information OCC may share with participants include, but are not limited to, the detailed methodology descriptions for OCC's proprietary margin and stress testing methodologies, 36 and operation manuals providing participants with detailed instructions about how to use OCC's clearance and settlement systems. 36  The Commission has reviewed such documents and has concluded that they are appropriately withheld from OCC's public filings under Section 23(a)(3) of the Exchange Act, 15 U.S.C. 78w(a)(3), under Exemption 4 of the Freedom of Information Act (“FOIA”), 5 U.S.C. 552(b)(4). See, e.g., Exchange Act Release No. 95319 (July 19, 2022), 87 FR 44167, 44171 n.49 (July 25, 2022) (SR-OCC-2022-001) (concluding that FOIA Exemption 4 applied to OCC's STANS Methodology Description). With respect to non-public information that an applicant shares with OCC, assurance of confidentiality would be provided through the addition of paragraph (f)(1) to OCC Rule 203. Proposed Rule 203(f)(1) provides, in part, that any non-public information furnished to OCC pursuant to this Chapter will be held in confidence as may be required under the laws, rules and regulations applicable to OCC that relate to the confidentiality of records. For the avoidance of doubt, the proposed change would also provide that nothing in this Rule would prevent OCC from releasing such non-public information, in its sole discretion, to (i) any governmental or regulatory authority ( e.g., the SEC of CFTC); or (ii) any regulatory organization to which the applicant is a member or participant ( e.g., Financial Industry Regulatory Authority (“FINRA”) with respect to a broker dealer, or other registered clearing agencies in which the applicant or Clearing Member is a common member). 37 37  For purposes of these Rules, “regulatory organization” is already defined in OCC Rule 101 to include, among other organizations, (i) any self-regulatory organization (as defined in Section 3(a) of the Securities Exchange Act, 15 U.S.C. 78c(a)(26)) of which the Clearing Member is a member or participant, and (ii) any clearing organization (as defined in Regulation 1.3 under the Commodity Exchange Act, 17 CFR 1.3), board of trade, contract market and registered futures association of which the Clearing Member is a member or participant. OCC would also add a paragraph (2) to Rule 203(f), which would require that each applicant must maintain OCC Confidential Information in confidence to the same extent and using the same means it uses to protect its own confidential information, but no less than a reasonable standard of care, and that the applicant must not use OCC Confidential Information or disclose OCC Confidential Information to any third party except as necessary to perform such applicant's obligations under the By-Laws and Rules or as otherwise required by applicable law. Furthermore, proposed Rule 203(f)(2) would entitle OCC to seek any temporary or permanent injunction or other equitable relief in addition to any monetary damages related to the disclosure of OCC Confidential Information. Specifically, proposed Rule 203(f)(2) would state that each applicant acknowledges that breach of its confidentiality obligations under these Rules may result in serious and irreparable harm to OCC for which there is no adequate remedy at law, and in the event of such a breach by the applicant, OCC will be entitled to seek any temporary or permanent injunction or other equitable relief in addition to any monetary damages. In addition, by promulgating Rule 203(f)(2), OCC would be entitled to impose disciplinary proceedings for an applicant's violation of the confidentiality requirements, consistent with existing Chapter XII of OCC's Rules. Finally, proposed Rule 203(f)(2) would state that nothing in this Rule will prevent OCC or the applicant from providing such OCC Confidential Information to any governmental or regulatory authority subject to request for confidential treatment. Proposed Rule 204—Conditions to Admission OCC proposes to enhance its conditions to admission to provide OCC with the appropriate resources to thoroughly evaluate each applicant, based on specific conditions described in the Rules, to determine if such applicant currently meets OCC's membership standards and if such applicant is likely to continue to meet OCC's membership standards in the future. OCC's proposed modifications expand upon its basis for denial of an applicant and strengthen the financial and reporting requirements for applicants to ensure applicants reflect an acceptable risk profile, based on OCC's discretion. i. Proposed Rules 204(a), 204(c), and 204(d) Consistent with the proposed changes to proposed Rule 203 described above, OCC proposes to modify Rule 204 to expand the delegation of authority of the Risk Committee to the Risk Committee's designated delegates or agents. Specifically, OCC proposes to modify Rule 204(a) to provide that the Risk Committee, “or its designated delegates or agents, may approve any application for clearing membership