Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Position Sub-Accounts, 71588-71589 [E5-6623]
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Federal Register / Vol. 70, No. 228 / Tuesday, November 29, 2005 / Notices
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:
• 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–2005–13 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–2005–13. 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 filing 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–2005–13 and should
be submitted on or before December 20,
2005.
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
20:13 Nov 28, 2005
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
12 17
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Jonathan G. Katz,
Secretary.
[FR Doc. E5–6618 Filed 11–28–05; 8:45 am]
Jkt 208001
[Release No. 34–52789; File No. SR–OCC–
2005–14]
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change Relating to
Position Sub-Accounts
November 17, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
September 29, 2005, The Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which items
have been prepared primarily by OCC.
OCC filed the proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act,2 and Rule 19b–4(f)(4)
thereunder,3 which renders the proposal
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The proposed rule change sets forth
certain interpretations as to the
treatment of position sub-accounts
maintained with respect to one or more
account types established by a clearing
member under a particular clearing
member number 4 in the event of the
clearing member’s liquidation.5
1 15
U.S.C. 78s(b)(1).
U.S.C. 78s(b)(3)(A)(iii).
3 17 CFR 240.19b–4(f)(4).
4 Clearing member numbers are used to identify
clearing members within OCC’s system. For a
variety of reasons, a clearing member may use more
than one clearing member number. See Securities
Exchange Act Release No. 47194 (January 15, 2003),
68 FR 3923 (January 27, 2003) [File No. SR–OCC–
2002–26].
5 The proposed change to Article VI, Section 3,
Interpretation and Policy .02 is conforming in
nature and reflects the Commission’s recent
approval of the proposed rule change in Securities
Exchange Act Release No. 52030 (July 14, 2005), 70
FR 42405 (July 22, 2005) [File No. SR–OCC–2003–
04].
2 15
PO 00000
Frm 00130
Fmt 4703
Sfmt 4703
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.6
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
OCC’s clearing systems have
historically contained functionality that
identifies the positions of each market
maker participating in a combined
market makers’ account.7 Position subaccounting in a combined market
makers’ account is accomplished by
using each participating market maker’s
unique acronym to identify the market
maker’s trades for clearance and
settlement, including position reporting.
Because of the large number of
transactions effected by market makers,
reporting their positions on a subaccount basis facilitates clearing
member reconciliation and balancing
processes. Position sub-accounting also
avoids the need for firms carrying a
combined market makers’ account to
allocate assignments to particular
market makers because OCC assigns
exercise notices directly to market
maker sub-accounts.8
OCC’s new clearing system, ENCORE,
was designed to extend position subaccounting to other account types that a
clearing member may maintain with
OCC although this functionality has not
yet been offered to clearing members.
Once OCC completes a system and
clearing member readiness assessment,
OCC intends to gradually roll out
position sub-accounting for these other
account types to interested clearing
members. OCC expects the roll-out to
commence in or about the second
quarter of 2006. OCC anticipates that
6 The Commission has modified parts of these
statements.
7 A combined market makers’ account is confined
to the exchange transactions of the market makers
for which it was established. OCC also permits subaccounting within a clearing member’s segregated
futures professional account. All positions carried
within each of these account types are maintained
on sub-account basis.
8 Securities Exchange Act Release No. 46735
(October 28, 2002), 67 FR 67434 (November 5, 2002)
[File No. SR–OCC–2002–19].
E:\FR\FM\29NON1.SGM
29NON1
Federal Register / Vol. 70, No. 228 / Tuesday, November 29, 2005 / Notices
interested clearing members will
initially limit their use of the new subaccounts to large-volume customers
such as institutions and foreign affiliates
in order to further improve the
efficiency of their reconciliation
processes.
Like the process used to provide
position sub-accounting for market
makers, unique identifying acronyms
will be assigned for use by clearing
members in creating position subaccounts with respect to other accounts
maintained under a given clearing
member number. Exchange transactions
may be directly cleared into a subaccount by submitting the applicable
assigned acronym in the matching trade
information. Alternatively, a clearing
member would be permitted to effect a
post-trade instruction in OCC’s systems
to transfer the position to a sub-account.
As in the case of market maker subaccounts, OCC will assign exercise
notices directly to applicable position
sub-accounts.9
The potential increase in the number
of sub-accounts that may be carried on
OCC’s books, coupled with the fact that
sub-accounts would now be permitted
to be maintained in accounts in which
positions also are carried on an omnibus
basis, has led OCC to conclude that it
would be advisable to formalize existing
interpretations regarding the treatment
of position sub-accounts in the event of
a clearing member liquidation. For such
purposes, market-maker sub-accounts
always have been treated as a single
account. The proposed rule change
codifies this existing interpretation and
extends it to the sub-accounts that will
now be permitted to be carried in other
account types. In order to provide for a
controlled implementation of position
sub-accounting with respect to other
account types, a further interpretation
has been added which permits OCC to
limit, for systemic or operational
reasons, the overall number of subaccounts that a clearing member may
maintain with respect to particular
account types. As is the case today, OCC
would not limit the number of market
professional sub-accounts a clearing
member could carry in recognition of
their role in providing market liquidity.
OCC believes that the proposed
change is consistent with Section 17A of
Act because by clarifying the
9 Exchange rules require member firms to
establish fixed procedures for allocating
assignments to customers and to inform their
customers of the method used and how it works.
See, e.g., CBOE Rule 11.2. OCC will require clearing
members that establish customer sub-accounts to
give each customer for which a sub-account is
opened a notice disclosing that OCC will assign
exercises directly to the sub-account.
VerDate Aug<31>2005
20:13 Nov 28, 2005
Jkt 208001
application of OCC’s liquidation rules to
position sub-accounts carried by
clearing members it better enables OCC
to safeguard the securities and funds in
its possession or for which it is
responsible. The proposed rule change
is not inconsistent with the existing
rules of OCC, including any other rules
proposed to be amended.
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 rule change has become
effective pursuant to Section
19(b)(3)(A)(iii) of the Act 10 and Rule
19b–4(f)(4) 11 promulgated thereunder
because the proposal effects a change in
an existing service of OCC that (A) does
not adversely affect the safeguarding of
securities or funds in the custody or
control of OCC or for which it is
responsible and (B) does not
significantly affect the respective rights
or obligations of OCC 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:
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–2005–14. 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 filing 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–2005–14 and should
be submitted on or before December 20,
2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Jonathan G. Katz,
Secretary.
[FR Doc. E5–6623 Filed 11–28–05; 8:45 am]
BILLING CODE 8010–01–P
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–2005–14 on the
subject line.
10 15
11 17
PO 00000
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(4).
Frm 00131
Fmt 4703
Sfmt 4703
71589
12 17
E:\FR\FM\29NON1.SGM
CFR 200.30–3(a)(12).
29NON1
]]>Agencies
[Federal Register Volume 70, Number 228 (Tuesday, November 29, 2005)]
[Notices]
[Pages 71588-71589]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-6623]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52789; File No. SR-OCC-2005-14]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to Position Sub-Accounts
November 17, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on September 29, 2005, The
Options Clearing Corporation (``OCC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I, II, and III below, which items have been prepared
primarily by OCC. OCC filed the proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act,\2\ and Rule 19b-4(f)(4)
thereunder,\3\ which renders the proposal effective upon filing with
the Commission. 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\ 15 U.S.C. 78s(b)(3)(A)(iii).
\3\ 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change sets forth certain interpretations as to
the treatment of position sub-accounts maintained with respect to one
or more account types established by a clearing member under a
particular clearing member number \4\ in the event of the clearing
member's liquidation.\5\
---------------------------------------------------------------------------
\4\ Clearing member numbers are used to identify clearing
members within OCC's system. For a variety of reasons, a clearing
member may use more than one clearing member number. See Securities
Exchange Act Release No. 47194 (January 15, 2003), 68 FR 3923
(January 27, 2003) [File No. SR-OCC-2002-26].
\5\ The proposed change to Article VI, Section 3, Interpretation
and Policy .02 is conforming in nature and reflects the Commission's
recent approval of the proposed rule change in Securities Exchange
Act Release No. 52030 (July 14, 2005), 70 FR 42405 (July 22, 2005)
[File No. SR-OCC-2003-04].
---------------------------------------------------------------------------
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.\6\
---------------------------------------------------------------------------
\6\ The Commission has modified parts of these statements.
---------------------------------------------------------------------------
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
OCC's clearing systems have historically contained functionality
that identifies the positions of each market maker participating in a
combined market makers' account.\7\ Position sub-accounting in a
combined market makers' account is accomplished by using each
participating market maker's unique acronym to identify the market
maker's trades for clearance and settlement, including position
reporting. Because of the large number of transactions effected by
market makers, reporting their positions on a sub-account basis
facilitates clearing member reconciliation and balancing processes.
Position sub-accounting also avoids the need for firms carrying a
combined market makers' account to allocate assignments to particular
market makers because OCC assigns exercise notices directly to market
maker sub-accounts.\8\
---------------------------------------------------------------------------
\7\ A combined market makers' account is confined to the
exchange transactions of the market makers for which it was
established. OCC also permits sub-accounting within a clearing
member's segregated futures professional account. All positions
carried within each of these account types are maintained on sub-
account basis.
\8\ Securities Exchange Act Release No. 46735 (October 28,
2002), 67 FR 67434 (November 5, 2002) [File No. SR-OCC-2002-19].
---------------------------------------------------------------------------
OCC's new clearing system, ENCORE, was designed to extend position
sub-accounting to other account types that a clearing member may
maintain with OCC although this functionality has not yet been offered
to clearing members. Once OCC completes a system and clearing member
readiness assessment, OCC intends to gradually roll out position sub-
accounting for these other account types to interested clearing
members. OCC expects the roll-out to commence in or about the second
quarter of 2006. OCC anticipates that
[[Page 71589]]
interested clearing members will initially limit their use of the new
sub-accounts to large-volume customers such as institutions and foreign
affiliates in order to further improve the efficiency of their
reconciliation processes.
Like the process used to provide position sub-accounting for market
makers, unique identifying acronyms will be assigned for use by
clearing members in creating position sub-accounts with respect to
other accounts maintained under a given clearing member number.
Exchange transactions may be directly cleared into a sub-account by
submitting the applicable assigned acronym in the matching trade
information. Alternatively, a clearing member would be permitted to
effect a post-trade instruction in OCC's systems to transfer the
position to a sub-account. As in the case of market maker sub-accounts,
OCC will assign exercise notices directly to applicable position sub-
accounts.\9\
---------------------------------------------------------------------------
\9\ Exchange rules require member firms to establish fixed
procedures for allocating assignments to customers and to inform
their customers of the method used and how it works. See, e.g., CBOE
Rule 11.2. OCC will require clearing members that establish customer
sub-accounts to give each customer for which a sub-account is opened
a notice disclosing that OCC will assign exercises directly to the
sub-account.
---------------------------------------------------------------------------
The potential increase in the number of sub-accounts that may be
carried on OCC's books, coupled with the fact that sub-accounts would
now be permitted to be maintained in accounts in which positions also
are carried on an omnibus basis, has led OCC to conclude that it would
be advisable to formalize existing interpretations regarding the
treatment of position sub-accounts in the event of a clearing member
liquidation. For such purposes, market-maker sub-accounts always have
been treated as a single account. The proposed rule change codifies
this existing interpretation and extends it to the sub-accounts that
will now be permitted to be carried in other account types. In order to
provide for a controlled implementation of position sub-accounting with
respect to other account types, a further interpretation has been added
which permits OCC to limit, for systemic or operational reasons, the
overall number of sub-accounts that a clearing member may maintain with
respect to particular account types. As is the case today, OCC would
not limit the number of market professional sub-accounts a clearing
member could carry in recognition of their role in providing market
liquidity.
OCC believes that the proposed change is consistent with Section
17A of Act because by clarifying the application of OCC's liquidation
rules to position sub-accounts carried by clearing members it better
enables OCC to safeguard the securities and funds in its possession or
for which it is responsible. The proposed rule change is not
inconsistent with the existing rules of OCC, including any other rules
proposed to be amended.
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 rule change has become effective pursuant to Section
19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-4(f)(4) \11\ promulgated
thereunder because the proposal effects a change in an existing service
of OCC that (A) does not adversely affect the safeguarding of
securities or funds in the custody or control of OCC or for which it is
responsible and (B) does not significantly affect the respective rights
or obligations of OCC 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.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 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-2005-14 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-2005-14. 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 filing 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-2005-14
and should be submitted on or before December 20, 2005.
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
Jonathan G. Katz,
Secretary.
[FR Doc. E5-6623 Filed 11-28-05; 8:45 am]
BILLING CODE 8010-01-P
