Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Definition of Non-Customer, 16604-16605 [E6-4756]

Download as PDF 16604 Federal Register / Vol. 71, No. 63 / Monday, April 3, 2006 / Notices The Commission believes that the proposed rule change, as amended, should harmonize NASD Rule 6740 and SEC Rule 15c2–11, so that members are not required to review, maintain and file information under the NASD rule when they are not required to review and maintain such information under the SEC rule. NASD Rule 6740 seeks to ensure that members are in compliance with SEC Rule 15c2–11. Therefore, where the Commission has granted an exemption under Rule 15c2–11(h), it is appropriate that the same treatment apply under NASD Rule 6740. The Commission also believes that relieving members of the obligation to file with NASD copies of information that is electronically accessible through the EDGAR system will eliminate the administrative burden and cost imposed on members in furnishing such information to NASD while preserving the requirement that the members maintain and review information as required by SEC Rule 15c2–11. For the above reasons, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to a national securities association 8 and, in particular, the requirements of Section 15A of the Act 9 and the rules and regulations thereunder. The Commission finds specifically that the proposed rule change is consistent with Sections 15A(b)(6) and 15A(b)(9) of the Exchange Act.10 It is therefore ordered, pursuant to Section 19(b)(2) of the Exchange Act,11 that the proposed rule change (SR– NASD 2005–098), as amended, be, and hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Nancy M. Morris, Secretary. [FR Doc. E6–4757 Filed 3–31–06; 8:45 am] wwhite on PROD1PC61 with NOTICES 8 In approving the proposed rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 9 15 U.S.C. 78o–3. 10 15 U.S.C. 78o–3(b)(6) and (b)(9). 11 15 U.S.C. 78s(b)(2). 12 12 17 CFR 200.30–3(a)(12). 17:30 Mar 31, 2006 Jkt 208001 [Release No. 34–53530; File No. SR–OCC– 2006–02] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Definition of Non-Customer March 21, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on March 14, 2006, 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. 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 would clarify the definition of non-customer as it relates to member affiliates. 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.2 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change BILLING CODE 8010–01–P VerDate Aug<31>2005 SECURITIES AND EXCHANGE COMMISSION The proposed rule change clarifies that a broker-dealer member affiliate of a clearing member neither needs to consent to being treated as a noncustomer nor to execute a nonconforming subordination agreement in order to be treated as a non-customer for purposes of OCC’s By-Laws and Rules. In File No. SR–OCC–99–5, OCC changed its rules to allow an affiliate of a clearing member to designate itself as a non-customer under the Commission’s 1 15 U.S.C. 78s(b)(1). Commission has modified parts of these statements. 2 The PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 hypothecation rules and OCC’s By-Laws and Rules in order for the affiliate’s transactions and positions to be commingled in its clearing member’s firm and/or proprietary cross-margin account, in order to make more favorable margin treatment of such positions possible.3 The purpose of File No. SR–OCC–99–5 was to conform OCC’s Rules to the terms of a no-action letter issued by the Division of Market Regulation, which set forth requirements for a member affiliate to designate itself as a non-customer.4 Specifically, that letter required each non-broker-dealer member affiliate whose securities positions would be hypothecated to consent to being treated as a non-customer and to execute a nonconforming subordination agreement meeting certain criteria accompanied by an opinion of counsel regarding the legal authority of the member affiliate to so subordinate its claims. The requirement that a non-broker-dealer member affiliate provide its clearing member with an executed nonconforming subordination agreement was intended to ensure that such member affiliate would not be a customer for purposes of SEC Rule 15c3–3. Because broker-dealers are already excluded from the definition of customer in Rule 15c3–3, there was no need to require broker-dealer affiliates to execute such a subordination agreement. OCC is filing this rule change to clarify the definition of noncustomer as it relates to member affiliates so that it more closely conforms to the terms of the no-action letter. OCC believes that the proposed change is consistent with Section 17A of the Act because it clarifies an existing OCC rule to allow the positions of broker-dealer member affiliates to be included in a clearing member’s firm account and/or proprietary crossmargining account, which will result in more favorable margin treatment and encourage participation in crossmargining. 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. 3 Securities Exchange Act Release No. 43668 (December 4, 2000), 66 FR 77413 (December 11, 2000). 4 Letter from Michael A. Macchiaroli, Associate Director, Division of Market Regulation, to William H. Navin, EVP and General Counsel, OCC (June 15, 2000). E:\FR\FM\03APN1.SGM 03APN1 Federal Register / Vol. 71, No. 63 / Monday, April 3, 2006 / Notices (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 5 and Rule 19b–4(f)(4) 6 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: wwhite on PROD1PC61 with NOTICES 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–2006–02 on the subject line. 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–2006–02 and should be submitted on or before April 24, 2006. For the Commission by the Division of Market Regulation, pursuant to delegated authority.7 Nancy M. Morris, Secretary. [FR Doc. E6–4756 Filed 3–31–06; 8:45 am] BILLING CODE 8010–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10428 and # 10429] Missouri Disaster Number MO–00002 U.S. Small Business Administration. ACTION: Amendment 1. AGENCY: This is an amendment of the Presidential declaration of a major Paper Comments disaster for the State of Missouri • Send paper comments in triplicate (FEMA–1631–DR ), dated March 16, to Nancy M. Morris, Secretary, 2006. Incident: Severe Storms, Tornadoes, Securities and Exchange Commission, and Flooding. 100 F Street, NE., Washington, DC Incident Period: March 11, 2006 20549–1090. through March 13, 2006. All submissions should refer to File Effective Date: March 24, 2006. Number SR–OCC–2006–02. This file Physical Loan Application Deadline number should be included on the subject line if e-mail is used. To help the Date: May 15, 2006. EIDL Loan Application Deadline Date: Commission process and review your December 15, 2006. comments more efficiently, please use only one method. The Commission will ADDRESSES: Submit completed loan post all comments on the Commission’s applications to: U.S. Small Business Administration, National Processing 5 15 6 17 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19–4(f)(4). VerDate Aug<31>2005 17:30 Mar 31, 2006 SUMMARY: 7 17 Jkt 208001 PO 00000 Fmt 4703 And Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: The notice of the Presidential disaster declaration for the State of Missouri, dated March 16, 2006, is hereby amended to include the following areas as adversely affected by the disaster: Primary Counties: Benton, Boone, Bates, Carroll, Cass, Cedar, Cooper, Greene, Henry, Howard, Iron, Jefferson, Lawrence, Lincoln, Mississippi, Montgomery, Morgan, New Madrid, Newton, Phelps, Putnam, Scott, St. Clair, Taney, Vernon, Webster, Wright Contiguous Counties: Missouri Adair, Barry, Barton, Caldwell, Callaway, Cole, Crawford, Dade, Dent, Dunklin, Franklin, Gasconade, Jasper, Laclede, Livingston, Maries, Mcdonald, Mercer, Miller, Moniteau, Osage, Ozark, Pemiscot, Pike, Pulaski, Ray, Reynolds, Schuyler, St. Charles, St. Louis, Stoddard, Sullivan, Texas, Warren, Washington, Wayne Arkansas Boone, Carroll, Marion Illinois Alexander, Calhoun Iowa Appanoose, Wayne Kansas Bourbon, Cherokee, Crawford, Johnson, Linn, Miami Kentucky Ballard, Carlisle, Fulton, Hickman Oklahoma Ottawa Tennessee Lake All other information in the original declaration remains unchanged. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Roger B. Garland, Acting Associate Administrator for Disaster Assistance. [FR Doc. E6–4752 Filed 3–31–06; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10430 and # 10431] New York Disaster # NY–00007 U.S. Small Business Administration. ACTION: Notice. AGENCY: SUMMARY: This is a notice of an Administrative declaration of a disaster CFR 200.30–3(a)(12). Frm 00060 16605 Sfmt 4703 E:\FR\FM\03APN1.SGM 03APN1

Agencies

[Federal Register Volume 71, Number 63 (Monday, April 3, 2006)]
[Notices]
[Pages 16604-16605]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-4756]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53530; File No. SR-OCC-2006-02]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to the Definition of Non-Customer

March 21, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 14, 2006, 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. 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would clarify the definition of non-
customer as it relates to member affiliates.

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.\2\
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    \2\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The proposed rule change clarifies that a broker-dealer member 
affiliate of a clearing member neither needs to consent to being 
treated as a non-customer nor to execute a non-conforming subordination 
agreement in order to be treated as a non-customer for purposes of 
OCC's By-Laws and Rules.
    In File No. SR-OCC-99-5, OCC changed its rules to allow an 
affiliate of a clearing member to designate itself as a non-customer 
under the Commission's hypothecation rules and OCC's By-Laws and Rules 
in order for the affiliate's transactions and positions to be 
commingled in its clearing member's firm and/or proprietary cross-
margin account, in order to make more favorable margin treatment of 
such positions possible.\3\ The purpose of File No. SR-OCC-99-5 was to 
conform OCC's Rules to the terms of a no-action letter issued by the 
Division of Market Regulation, which set forth requirements for a 
member affiliate to designate itself as a non-customer.\4\ 
Specifically, that letter required each non-broker-dealer member 
affiliate whose securities positions would be hypothecated to consent 
to being treated as a non-customer and to execute a non-conforming 
subordination agreement meeting certain criteria accompanied by an 
opinion of counsel regarding the legal authority of the member 
affiliate to so subordinate its claims. The requirement that a non-
broker-dealer member affiliate provide its clearing member with an 
executed non-conforming subordination agreement was intended to ensure 
that such member affiliate would not be a customer for purposes of SEC 
Rule 15c3-3. Because broker-dealers are already excluded from the 
definition of customer in Rule 15c3-3, there was no need to require 
broker-dealer affiliates to execute such a subordination agreement. OCC 
is filing this rule change to clarify the definition of non-customer as 
it relates to member affiliates so that it more closely conforms to the 
terms of the no-action letter.
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    \3\ Securities Exchange Act Release No. 43668 (December 4, 
2000), 66 FR 77413 (December 11, 2000).
    \4\ Letter from Michael A. Macchiaroli, Associate Director, 
Division of Market Regulation, to William H. Navin, EVP and General 
Counsel, OCC (June 15, 2000).
---------------------------------------------------------------------------

    OCC believes that the proposed change is consistent with Section 
17A of the Act because it clarifies an existing OCC rule to allow the 
positions of broker-dealer member affiliates to be included in a 
clearing member's firm account and/or proprietary cross-margining 
account, which will result in more favorable margin treatment and 
encourage participation in cross-margining. 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.

[[Page 16605]]

(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 \5\ and Rule 19b-4(f)(4) \6\ 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.
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    \5\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \6\ 17 CFR 240.19-4(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-2006-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-OCC-2006-02. 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-2006-02 
and should be submitted on or before April 24, 2006.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-4756 Filed 3-31-06; 8:45 am]
BILLING CODE 8010-01-P
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