Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 to Update Its By-Laws and Rules Pertaining to the Settlement of Exercised Cross-Rate Foreign Currency Options, 36993-36994 [E5-3330]
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Federal Register / Vol. 70, No. 122 / Monday, June 27, 2005 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change
has become effective upon filing
pursuant to Section 19(b)(3)(A) of the
Act 4 and Rule 19b-4(f) 5 thereunder
because it does not significantly affect
the respective rights or obligations of
the clearing agency or persons using the
service and does not adversely affect the
safeguarding of securities or funds in
the custody or control of NSCC or for
which it is responsible. At any time
within sixty days of the filing of the
proposed rule change, the Commission
may summarily abrogate such rule
change if it appears to the Commission
that such action is necessary or
appropriate in the public interest, for
the protection of investors, or otherwise
in furtherance of the purposes of the
Act.
IV. 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.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml) or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NSCC–2005–06 on the
subject line.
Paper comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
100 F Street, NE, Washington, DC
20549–9303.
All submissions should refer to File
Number SR–NSCC–2005–06. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). 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, 100 F Street, NE, Washington,
DC 20549. Copies of such filings also
will be available for inspection and
copying at the principal office of NSCC
and on NSCC’s Web site at https://
www.nscc.com. All comments received
will be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–NSCC–
2005–06 and should be submitted on or
before July 18, 2005.
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.6
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–3328 Filed 6–24–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51861 No. SR–OCC–2005–
07]
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change and
Amendment No. 1 to Update Its ByLaws and Rules Pertaining to the
Settlement of Exercised Cross-Rate
Foreign Currency Options
June 16, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
May 13, 2005, The Options Clearing
Corporation (‘‘OCC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) and on June 14, 2005,
amended 2 the proposed rule change
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 rule change from
interested parties.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The rule change updates OCC’s ByLaws and Rules pertaining to the
6 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 The amendment corrected an erroneous crossreference in the proposed rule.
36993
settlement of exercised cross-rate
foreign currency options (‘‘Cross-Rate
Options’’) in connection with the recent
installation of that portion of OCC’s
ENCORE clearing system that processes
those settlements.
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 these statements.3
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
The purpose of the proposed rule
change is to update OCC’s By-Laws and
Rules pertaining to the settlement of
Cross-Rate Options in connection with
the recent installation of OCC’s
ENCORE clearing system that processes
those settlements. The installation,
which occurred in April, 2005,
converted existing Cross-Rate Options
processing to the ENCORE technology
with only a few variations. OCC also
wishes to update its Rules by
eliminating detail that is more
appropriately included in operational
procedures than in OCC’s rulebook and
by making a few other changes
described below to reflect OCC’s
experience and certain developments
since the Cross-Rate Options rules
initially were adopted. As proposed to
be amended, these provisions of the ByLaws and Rules apply equally to
processing under both ENCORE and its
predecessor system.
Overview of the Exercise Settlement
Process for Cross-Rate Options
As set forth in revised Rules 2105 and
2106, following the assignment of
exercise notices with respect to CrossRate Options, the gross settlement
obligations for each currency arising
from obligations to pay and rights to
receive trading currencies and
underlying currencies are calculated for
all accounts with a particular clearing
number. Those gross amounts are netted
down to a single pay or collect amount
for each currency for all such accounts.
1 15
4 15
5 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
VerDate jul<14>2003
18:11 Jun 24, 2005
Jkt 205001
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
3 The Commission has modified the text of the
summaries prepared by OCC.
E:\FR\FM\27JNN1.SGM
27JNN1
36994
Federal Register / Vol. 70, No. 122 / Monday, June 27, 2005 / Notices
In the event that two or more
settlements in a currency arising from
different exercise/assignment dates
settle on the same date, those
settlements are also netted. If such
processing nets out all settlement
obligations for a currency then such
obligations are deemed discharged.
Settlement obligations arising from
multiple clearing numbers controlled by
the same clearing member are not netted
against each other.
To the extent a settlement obligation
remains, OCC makes available to each
clearing member that is obligated to pay
a currency (‘‘Paying Clearing Member’’)
and each clearing member that is
entitled to receive a currency payment
(‘‘Collecting Clearing Member’’) a report
showing the net amount of the currency
they are obligated to pay or entitled to
receive.
On the exercise settlement date, OCC
drafts the bank account of each Paying
Clearing Member in the amount of the
foreign currency there are obligated to
pay (‘‘Payment Amount’’) and then pays
the Payment Amount to each Collecting
Clearing Member in such amounts as
they are entitled to receive.
Description of the Specific Rule
Changes
The principal changes are to Rules
2105 through 2107. Rules 2105 and
2106 have been substantially redrafted
to provide for the settlement process
described above. Rule 2107, which
described an alternate settlement
procedure known as Delivery versus
Payment (‘‘DVP’’), is removed because
there are no systems or banking
mechanisms to support DVP settlements
for Cross-Rate Options.
Rule 2104(b) is being amended to
grant the Chairman, Management Vice
Chairman, President, and any delegate
of such officers the authority to advance
or postpone the settlement date for
exercises of Cross-Rate Options. This
change is being implemented because it
may be impractical to convene a Board
meeting in time to take action on the
day that unusual conditions arise and
because OCC needs the flexibility to
respond quickly to events affecting the
exercise settlement date for Cross-Rate
Options.4
Certain non-substantive changes are
made to Rules 602(f)(2), 2102, 2108–10,
and 2112 and to Article XX, Section 1
4 Similar changes were recently implemented to
Rule 903(b) (‘‘Obligations to Deliver’’) and Rule
1604(b) (‘‘Exercise Settlement Date for Foreign
Currency Options’’). Securities Exchange Act
Release Nos. 34–47629 (Apr. 3, 2003), 68 FR 17715
(Apr. 10, 2003) [File No. SR–OCC–2002–21] and
34–49987 (July 8, 2004), 69 FR 42490 (July 15,
2004) [File No. SR–OCC–2004–07].
VerDate jul<14>2003
18:11 Jun 24, 2005
Jkt 205001
of the By-laws to correct crossreferences and to conform to
terminology used elsewhere in the
revised rules.
OCC believes the rule change is
consistent with Section 17A of the Act,5
as amended, because the changes are
designed to promote the prompt and
accurate clearance and settlement of
transactions in and exercises of crossrate foreign currency options and to
assure safeguarding of securities and
funds in the custody and control of
OCC.
(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
The foregoing proposed rule change
has become effective upon filing
pursuant to Section 19(b)(3)(A) of the
Act 6 and Rule 19b–4(f)(4) 7 thereunder
because it does not adversely affect the
safeguarding of securities or funds in
the custody or control of OCC or for
which it is responsible and does not
significantly affect the respective rights
or obligations of the clearing agency or
persons using the service. At any time
within sixty days of the filing of the
proposed rule change, the Commission
may summarily abrogate such rule
change if it appears to the Commission
that such action is necessary or
appropriate in the public interest, for
the protection of investors, or otherwise
in furtherance of the purposes of the
Act.
IV. 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.
Comments may be submitted by any of
the following methods:
PO 00000
U.S.C. 78q–1.
U.S.C. 78s(b)(3)(A).
7 17 CFR 240.19b–4(f)(4).
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml) or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–OCC–2005–07 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
100 F Street, NE, Washington, DC
20549–9303.
All submissions should refer to File
Number SR–OCC–2005–07. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). 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, 100 F Street, NE, Washington,
DC 20549. Copies of such filings also
will be available for inspection and
copying at the principal office of OCC
and on OCC’s Web site at https://
www.optionsclearing.com. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–OCC–2005–07 and should
be submitted on or before July 18, 2005.
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.8
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–3330 Filed 6–24–05; 8:45 am]
BILLING CODE 8010–01–P
5 15
6 15
Frm 00079
Fmt 4703
Sfmt 4703
8 17
E:\FR\FM\27JNN1.SGM
CFR 200.30–3(a)(12).
27JNN1
]]>Agencies
[Federal Register Volume 70, Number 122 (Monday, June 27, 2005)]
[Notices]
[Pages 36993-36994]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-3330]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51861 No. SR-OCC-2005-07]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendment No. 1 to Update Its By-Laws and Rules Pertaining to the
Settlement of Exercised Cross-Rate Foreign Currency Options
June 16, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on May 13, 2005, The Options
Clearing Corporation (``OCC'') filed with the Securities and Exchange
Commission (``Commission'') and on June 14, 2005, amended \2\ the
proposed rule change 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 rule change from interested
parties.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ The amendment corrected an erroneous cross-reference in the
proposed rule.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The rule change updates OCC's By-Laws and Rules pertaining to the
settlement of exercised cross-rate foreign currency options (``Cross-
Rate Options'') in connection with the recent installation of that
portion of OCC's ENCORE clearing system that processes those
settlements.
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 these
statements.\3\
---------------------------------------------------------------------------
\3\ The Commission has modified the text of the summaries
prepared by OCC.
---------------------------------------------------------------------------
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The purpose of the proposed rule change is to update OCC's By-Laws
and Rules pertaining to the settlement of Cross-Rate Options in
connection with the recent installation of OCC's ENCORE clearing system
that processes those settlements. The installation, which occurred in
April, 2005, converted existing Cross-Rate Options processing to the
ENCORE technology with only a few variations. OCC also wishes to update
its Rules by eliminating detail that is more appropriately included in
operational procedures than in OCC's rulebook and by making a few other
changes described below to reflect OCC's experience and certain
developments since the Cross-Rate Options rules initially were adopted.
As proposed to be amended, these provisions of the By-Laws and Rules
apply equally to processing under both ENCORE and its predecessor
system.
Overview of the Exercise Settlement Process for Cross-Rate Options
As set forth in revised Rules 2105 and 2106, following the
assignment of exercise notices with respect to Cross-Rate Options, the
gross settlement obligations for each currency arising from obligations
to pay and rights to receive trading currencies and underlying
currencies are calculated for all accounts with a particular clearing
number. Those gross amounts are netted down to a single pay or collect
amount for each currency for all such accounts.
[[Page 36994]]
In the event that two or more settlements in a currency arising from
different exercise/assignment dates settle on the same date, those
settlements are also netted. If such processing nets out all settlement
obligations for a currency then such obligations are deemed discharged.
Settlement obligations arising from multiple clearing numbers
controlled by the same clearing member are not netted against each
other.
To the extent a settlement obligation remains, OCC makes available
to each clearing member that is obligated to pay a currency (``Paying
Clearing Member'') and each clearing member that is entitled to receive
a currency payment (``Collecting Clearing Member'') a report showing
the net amount of the currency they are obligated to pay or entitled to
receive.
On the exercise settlement date, OCC drafts the bank account of
each Paying Clearing Member in the amount of the foreign currency there
are obligated to pay (``Payment Amount'') and then pays the Payment
Amount to each Collecting Clearing Member in such amounts as they are
entitled to receive.
Description of the Specific Rule Changes
The principal changes are to Rules 2105 through 2107. Rules 2105
and 2106 have been substantially redrafted to provide for the
settlement process described above. Rule 2107, which described an
alternate settlement procedure known as Delivery versus Payment
(``DVP''), is removed because there are no systems or banking
mechanisms to support DVP settlements for Cross-Rate Options.
Rule 2104(b) is being amended to grant the Chairman, Management
Vice Chairman, President, and any delegate of such officers the
authority to advance or postpone the settlement date for exercises of
Cross-Rate Options. This change is being implemented because it may be
impractical to convene a Board meeting in time to take action on the
day that unusual conditions arise and because OCC needs the flexibility
to respond quickly to events affecting the exercise settlement date for
Cross-Rate Options.\4\
---------------------------------------------------------------------------
\4\ Similar changes were recently implemented to Rule 903(b)
(``Obligations to Deliver'') and Rule 1604(b) (``Exercise Settlement
Date for Foreign Currency Options''). Securities Exchange Act
Release Nos. 34-47629 (Apr. 3, 2003), 68 FR 17715 (Apr. 10, 2003)
[File No. SR-OCC-2002-21] and 34-49987 (July 8, 2004), 69 FR 42490
(July 15, 2004) [File No. SR-OCC-2004-07].
---------------------------------------------------------------------------
Certain non-substantive changes are made to Rules 602(f)(2), 2102,
2108-10, and 2112 and to Article XX, Section 1 of the By-laws to
correct cross-references and to conform to terminology used elsewhere
in the revised rules.
OCC believes the rule change is consistent with Section 17A of the
Act,\5\ as amended, because the changes are designed to promote the
prompt and accurate clearance and settlement of transactions in and
exercises of cross-rate foreign currency options and to assure
safeguarding of securities and funds in the custody and control of OCC.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
(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
The foregoing proposed rule change has become effective upon filing
pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(4) \7\
thereunder because it does not adversely affect the safeguarding of
securities or funds in the custody or control of OCC or for which it is
responsible and does not significantly affect the respective rights or
obligations of the clearing agency or persons using the service. At any
time within sixty days of the filing of the proposed rule change, the
Commission may summarily abrogate such rule change if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of the Act.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------
IV. 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. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml) or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-OCC-2005-07 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549-9303.
All submissions should refer to File Number SR-OCC-2005-07. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/
rules/sro.shtml). 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, 100 F Street,
NE, Washington, DC 20549. Copies of such filings also will be available
for inspection and copying at the principal office of OCC and on OCC's
Web site at https://www.optionsclearing.com. All comments received will
be posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-OCC-2005-07 and should be submitted on
or before July 18, 2005.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\8\
---------------------------------------------------------------------------
\8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-3330 Filed 6-24-05; 8:45 am]
BILLING CODE 8010-01-P
