Self-Regulatory Organizations; the Options Clearing Corporation; Order Granting Approval of a Proposed Rule Change Relating to Choice of Law and Forum Selection, 71469-71470 [E7-24307]
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Federal Register / Vol. 72, No. 241 / Monday, December 17, 2007 / Notices
applicable to a national securities
association.13 In particular, the
Commission finds that the proposed
rule change is consistent with Section
15A(b)(6) of the Act,14 which requires,
among other things, that FINRA’s rules
be designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
Electronic Comments
trade, to remove impediments to and
perfect the mechanism of a free and
• Use the Commission’s Internet
open market and a national market
comment form (https://www.sec.gov/
system, and, in general, to protect
rules/sro.shtml); or
investors and the public interest.
• Send an e-mail to ruleThe proposed rule change would
comments@sec.gov. Please include File
make FINRA’s NYSE Rule 342.13
Number SR–FINRA–2007–022 on the
identical to the version of NYSE Rule
subject line.
342.13 in the NYSE rulebook that was
Paper Comments
recently approved by the Commission.15
• Send paper comments in triplicate
In addition, the Commission believes
to Nancy M. Morris, Secretary,
that the proposed rule change comports
Securities and Exchange Commission,
with the provisions of the 17d–2
100 F Street, NE., Washington, DC
Agreement, as approved by the
20549–1090.
Commission, in which FINRA and
All submissions should refer to File
NYSE agreed to promptly propose
Number SR–FINRA–2007–022. This file conforming changes, absent a
number should be included on the
disagreement about the substance of a
subject line if e-mail is used. To help the proposed rule change to one of the
Commission process and review your
Common Rules, to ensure that such
comments more efficiently, please use
rules continue to be Common Rules
only one method. The Commission will under the Agreement. In this regard, the
post all comments on the Commission’s Commission believes it is appropriate
Internet Web site (https://www.sec.gov/
for the proposed rule to be effective
rules/sro.shtml). Copies of the
retroactively as of November 28, 2007,
submission, all subsequent
which is the date NYSE’s amendment to
amendments, all written statements
NYSE Rule 342.13 was approved by the
with respect to the proposed rule
Commission.16
change that are filed with the
The Commission finds good cause,
Commission, and all written
consistent with Section 19(b)(2) of the
communications relating to the
Act,17 for approving this proposed rule
proposed rule change between the
change before the thirtieth day after the
Commission and any person, other than publication of notice thereof in the
those that may be withheld from the
Federal Register. This approval allows
public in accordance with the
the proposed rule change to take effect
provisions of 5 U.S.C. 552, will be
without delay. NYSE’s proposed
available for inspection and copying in
revision to NYSE Rule 342.13 was
the Commission’s Public Reference
published for comment and approved
Room on official business days between by the Commission.18 Interested persons
the hours of 10 a.m. and 3 p.m. Copies
were provided the opportunity to
of such filing also will be available for
submit comments on rule text that is
inspection and copying at the principal
identical to FINRA’s proposal, and no
office of FINRA. All comments received comments were received. The
will be posted without change; the
Commission believes FINRA’s proposal
Commission does not edit personal
raises no new regulatory or substantive
identifying information from
issues.
submissions. You should submit only
V. Conclusion
information that you wish to make
It is therefore ordered, pursuant to
available publicly. All submissions
should refer to File Number SR–FINRA– Section 19(b)(2) of the Act,19 that the
proposed rule change (SR–FINRA–
2007–022 and should be submitted on
or before January 7, 2008.
ebenthall on PROD1PC69 with NOTICES
III. 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:
IV. Commission’s Findings and Order
Granting Accelerated Approval of the
Proposed Rule Change
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
VerDate Aug<31>2005
15:28 Dec 14, 2007
Jkt 214001
13 In approving this proposal, the Commission has
considered its impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
14 15 U.S.C. 78o–3(b)(6).
15 See supra, note 4.
16 Id.
17 15 U.S.C. 78s(b)(2).
18 Id.
19 Id.
PO 00000
Frm 00125
Fmt 4703
Sfmt 4703
71469
2007–022), be, and it hereby is,
approved on an accelerated basis
effective November 28, 2007.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–24309 Filed 12–14–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56930; File No. SR–OCC–
2006–09]
Self-Regulatory Organizations; the
Options Clearing Corporation; Order
Granting Approval of a Proposed Rule
Change Relating to Choice of Law and
Forum Selection
December 7, 2007.
I. Introduction
On May 22, 2006, The Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–OCC–2006–09 pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’).1 Notice
of the proposal was published in the
Federal Register on April 27, 2007.2 No
comment letters were received. For the
reasons discussed below, the
Commission is granting approval of the
proposed rule change.
II. Description
The proposed rule change will add
new general choice of law and forum
selection provisions to OCC’s By-Laws.
The purpose of the proposed rule
change is to ensure there are appropriate
choice of law and forum selection
provisions governing all contractual
relations between OCC and each of its
clearing members. The proposed
provisions should provide greater
clarity, consistency, and predictability
in the application of the law to all
contractual relations between OCC and
each of its clearing members and in the
choice of forum in the event of litigation
on such matters.
OCC’s By-Laws and Rules each
currently contain choice of law
provisions that apply in somewhat
limited circumstances. This approach is
problematic as it could lead to
inconsistencies between the two
provisions or because it may fail to
19 Id.
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 Securities Exchange Act Release No. 55653,
1 15
E:\FR\FM\17DEN1.SGM
17DEN1
ebenthall on PROD1PC69 with NOTICES
71470
Federal Register / Vol. 72, No. 241 / Monday, December 17, 2007 / Notices
properly specify a governing law with
respect to certain contractual relations
altogether.
Article VI, Section 9(c) of OCC’s ByLaws provides that Illinois law,
specifically the Illinois Uniform
Commercial Code, is the governing law
with respect to cleared contracts. A
‘‘cleared contract’’ is defined in Article
I, Section 1 of OCC’s By-Laws as ‘‘a
cleared security or commodity future or
futures option that is cleared by [OCC].’’
A ‘‘cleared security’’ is defined as ‘‘an
option contract (other than a futures
option), a security future or a BOUND.’’
However, OCC has interactions and
relationships with clearing members not
directly involving cleared contracts
(e.g., membership and financial
requirements). Accordingly, the choice
of law provisions in Article VI, Section
9(c) are not comprehensive.
OCC Rule 614(m), which clarifies the
limited obligations of OCC in
connection with pledges of cleared
securities, incorporates certain
provisions of Article VI, Section 9 of the
By-Laws by reference and also contains
special provisions applicable in the
event that, notwithstanding the choice
of law provisions of Article VI, Section
9(c), the laws of a jurisdiction that has
not adopted the 1994 revisions to
Article 8 and 9 of the UCC are
applicable to security interests in
pledged securities. However, because all
50 U.S. States, the District of Colombia,
the U.S. Virgin Islands, and Puerto Rico
have now adopted the 1994 revisions to
Article 8 and 9 of the UCC, the special
provisions are unnecessary.
Article V (Clearing Members), Section
3 (Conditions to Admission), paragraph
(k) of OCC’s By-Laws provides that as a
condition to admission as a clearing
member non-U.S. securities firms must
consent to the jurisdiction of Illinois
courts and to the application of U.S. law
in connection with any dispute with
OCC arising from membership.
However, this provision only applies to
the limited context of disputes with
OCC arising from membership.
The proposed rule change adds a
general choice of law provision to OCC’s
By-Laws in order to provide consistency
and predictability in the application of
the law to all relations between OCC
and its clearing members. This new
provision will be particularly useful
with respect to collateral posted by nonU.S. clearing members where a clear
choice of law provision could provide
further assurance that OCC’s interests in
such collateral are properly perfected.
Such a provision will also decrease the
likelihood of an inadvertent
inconsistency among provisions of the
various Articles of the By-Laws.
VerDate Aug<31>2005
15:28 Dec 14, 2007
Jkt 214001
Illinois law is the most logical choice
to be the governing law under the
proposed choice of law provision given
OCC’s location and OCC’s familiarity
with Illinois law. Selecting Illinois law,
along with federal law, as the governing
law will also result in greatest
consistency with current provisions of
OCC’s By-Laws and Rules. In addition,
selection of Illinois as the forum for
resolving any claims or disputes arising
out of or relating to OCC’s By-Laws or
Rules will be most logical in light of the
consistent application of Illinois law to
relations between OCC and its clearing
members.
The following revisions to OCC’s ByLaws and Rules are necessary to create
a general choice of law provision:
(1) New Choice of Law Provision: OCC
will add a new Section 10 (General
Choice of Law and Forum Selection) to
Article IX (General Provisions) of its ByLaws. New Section 10 will specify
Illinois law as the governing law with
respect to OCC’s By-Laws and Rules as
well as any agreements between OCC
and clearing members. It will also
specify that any lawsuits between
clearing members and OCC be brought
in a federal court or in the absence of
federal jurisdiction in a state court
located in Chicago, Illinois. Existing
Sections 10–12 of Article IX will be
renumbered as Sections 11–13 but will
otherwise remain unchanged.
(2) Amendments to Other Sections of
the By-Laws: OCC will remove Article
VI, Section 9(c) of the By-Laws in its
entirety and replace it with a reference
to Article IX, Section 10 of the By-Laws
and with a notice provision that persons
desiring to perfect security interests in
cleared securities should seek the
advice of counsel.
(3) Amendments to Rules: OCC will
make conforming amendments to Rule
604(b)(3)(ii) and to Interpretation and
Policy .01 under Rule 614. These
amendments are necessary in light of
the adoption of the general choice of
law provision described above. OCC
will also delete language in Rule 614(m)
providing for a contingency in the event
of the application of the law of a
jurisdiction that has not adopted the
1994 amendments to Articles 8 and 9 of
the UCC as these are no longer
necessary.
III. Discussion
Section 17A(b)(3)(F) of the Act
requires, among other things, that the
rules of a clearing agency be designed to
assure the safeguarding of securities and
funds which are in its custody or
control or for which it is responsible. 3
3 15
PO 00000
U.S.C. 78q–1(b)(3)(F).
Frm 00126
Fmt 4703
Sfmt 4703
The proposed rule change is designed to
eliminate any uncertainty about the law
applicable to contractual disputes
between OCC and its members and
about the forum for any litigation
between OCC and its members.
Uncertainty about these matters could
prolong contractual disputes or
litigation, which ultimately could affect
or interfere with OCC’s ability to clear
and settle securities transactions for one
or more of its members. Additionally,
the proposed rule change is designed to
assure that OCC’s interests in members’
collateral is perfected because the rule
change clarifies that Illinois law applies
to the securities on deposit at OCC by
its foreign members. In the event of a
member default, OCC uses such
collateral either in the form of margin or
clearing fund to meet its settlement
obligations and to protect itself and its
other members from financial loss.
Accordingly, because the proposed rule
change adds a new choice of law and
forum selection provision to OCC’s
rules, the Commission finds that it is
designed to assure the safeguarding of
securities and funds which are in OCC’s
custody or control of for which it is
responsible under Section 17A of the
Act.
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and in
particular Section 17A of the Act and
the rules and regulations thereunder. 4
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule change (File No. SR–
OCC–2006–09) be and hereby is
approved.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority. 5
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–24307 Filed 12–14–07; 8:45 am]
BILLING CODE 8011–01–P
SOCIAL SECURITY ADMINISTRATION
Privacy Act of 1974, as Amended;
Alterations to Existing System of
Records, Including New Routine Use
AGENCY:
Social Security Administration
(SSA).
4 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition and capital formation. 15
U.S.C. 78c(f).
5 17 CFR 200.30–3(a)(12).
E:\FR\FM\17DEN1.SGM
17DEN1
]]>Agencies
[Federal Register Volume 72, Number 241 (Monday, December 17, 2007)]
[Notices]
[Pages 71469-71470]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-24307]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56930; File No. SR-OCC-2006-09]
Self-Regulatory Organizations; the Options Clearing Corporation;
Order Granting Approval of a Proposed Rule Change Relating to Choice of
Law and Forum Selection
December 7, 2007.
I. Introduction
On May 22, 2006, The Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') proposed
rule change SR-OCC-2006-09 pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal
was published in the Federal Register on April 27, 2007.\2\ No comment
letters were received. For the reasons discussed below, the Commission
is granting approval of the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 55653, (April 20, 2007),
72 FR 21062.
---------------------------------------------------------------------------
II. Description
The proposed rule change will add new general choice of law and
forum selection provisions to OCC's By-Laws. The purpose of the
proposed rule change is to ensure there are appropriate choice of law
and forum selection provisions governing all contractual relations
between OCC and each of its clearing members. The proposed provisions
should provide greater clarity, consistency, and predictability in the
application of the law to all contractual relations between OCC and
each of its clearing members and in the choice of forum in the event of
litigation on such matters.
OCC's By-Laws and Rules each currently contain choice of law
provisions that apply in somewhat limited circumstances. This approach
is problematic as it could lead to inconsistencies between the two
provisions or because it may fail to
[[Page 71470]]
properly specify a governing law with respect to certain contractual
relations altogether.
Article VI, Section 9(c) of OCC's By-Laws provides that Illinois
law, specifically the Illinois Uniform Commercial Code, is the
governing law with respect to cleared contracts. A ``cleared contract''
is defined in Article I, Section 1 of OCC's By-Laws as ``a cleared
security or commodity future or futures option that is cleared by
[OCC].'' A ``cleared security'' is defined as ``an option contract
(other than a futures option), a security future or a BOUND.'' However,
OCC has interactions and relationships with clearing members not
directly involving cleared contracts (e.g., membership and financial
requirements). Accordingly, the choice of law provisions in Article VI,
Section 9(c) are not comprehensive.
OCC Rule 614(m), which clarifies the limited obligations of OCC in
connection with pledges of cleared securities, incorporates certain
provisions of Article VI, Section 9 of the By-Laws by reference and
also contains special provisions applicable in the event that,
notwithstanding the choice of law provisions of Article VI, Section
9(c), the laws of a jurisdiction that has not adopted the 1994
revisions to Article 8 and 9 of the UCC are applicable to security
interests in pledged securities. However, because all 50 U.S. States,
the District of Colombia, the U.S. Virgin Islands, and Puerto Rico have
now adopted the 1994 revisions to Article 8 and 9 of the UCC, the
special provisions are unnecessary.
Article V (Clearing Members), Section 3 (Conditions to Admission),
paragraph (k) of OCC's By-Laws provides that as a condition to
admission as a clearing member non-U.S. securities firms must consent
to the jurisdiction of Illinois courts and to the application of U.S.
law in connection with any dispute with OCC arising from membership.
However, this provision only applies to the limited context of disputes
with OCC arising from membership.
The proposed rule change adds a general choice of law provision to
OCC's By-Laws in order to provide consistency and predictability in the
application of the law to all relations between OCC and its clearing
members. This new provision will be particularly useful with respect to
collateral posted by non-U.S. clearing members where a clear choice of
law provision could provide further assurance that OCC's interests in
such collateral are properly perfected. Such a provision will also
decrease the likelihood of an inadvertent inconsistency among
provisions of the various Articles of the By-Laws.
Illinois law is the most logical choice to be the governing law
under the proposed choice of law provision given OCC's location and
OCC's familiarity with Illinois law. Selecting Illinois law, along with
federal law, as the governing law will also result in greatest
consistency with current provisions of OCC's By-Laws and Rules. In
addition, selection of Illinois as the forum for resolving any claims
or disputes arising out of or relating to OCC's By-Laws or Rules will
be most logical in light of the consistent application of Illinois law
to relations between OCC and its clearing members.
The following revisions to OCC's By-Laws and Rules are necessary to
create a general choice of law provision:
(1) New Choice of Law Provision: OCC will add a new Section 10
(General Choice of Law and Forum Selection) to Article IX (General
Provisions) of its By-Laws. New Section 10 will specify Illinois law as
the governing law with respect to OCC's By-Laws and Rules as well as
any agreements between OCC and clearing members. It will also specify
that any lawsuits between clearing members and OCC be brought in a
federal court or in the absence of federal jurisdiction in a state
court located in Chicago, Illinois. Existing Sections 10-12 of Article
IX will be renumbered as Sections 11-13 but will otherwise remain
unchanged.
(2) Amendments to Other Sections of the By-Laws: OCC will remove
Article VI, Section 9(c) of the By-Laws in its entirety and replace it
with a reference to Article IX, Section 10 of the By-Laws and with a
notice provision that persons desiring to perfect security interests in
cleared securities should seek the advice of counsel.
(3) Amendments to Rules: OCC will make conforming amendments to
Rule 604(b)(3)(ii) and to Interpretation and Policy .01 under Rule 614.
These amendments are necessary in light of the adoption of the general
choice of law provision described above. OCC will also delete language
in Rule 614(m) providing for a contingency in the event of the
application of the law of a jurisdiction that has not adopted the 1994
amendments to Articles 8 and 9 of the UCC as these are no longer
necessary.
III. Discussion
Section 17A(b)(3)(F) of the Act requires, among other things, that
the rules of a clearing agency be designed to assure the safeguarding
of securities and funds which are in its custody or control or for
which it is responsible. \3\ The proposed rule change is designed to
eliminate any uncertainty about the law applicable to contractual
disputes between OCC and its members and about the forum for any
litigation between OCC and its members. Uncertainty about these matters
could prolong contractual disputes or litigation, which ultimately
could affect or interfere with OCC's ability to clear and settle
securities transactions for one or more of its members. Additionally,
the proposed rule change is designed to assure that OCC's interests in
members' collateral is perfected because the rule change clarifies that
Illinois law applies to the securities on deposit at OCC by its foreign
members. In the event of a member default, OCC uses such collateral
either in the form of margin or clearing fund to meet its settlement
obligations and to protect itself and its other members from financial
loss. Accordingly, because the proposed rule change adds a new choice
of law and forum selection provision to OCC's rules, the Commission
finds that it is designed to assure the safeguarding of securities and
funds which are in OCC's custody or control of for which it is
responsible under Section 17A of the Act.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular Section 17A of the Act and the rules and regulations
thereunder. \4\
---------------------------------------------------------------------------
\4\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition and
capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-OCC-2006-09) be and hereby
is approved.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority. \5\
---------------------------------------------------------------------------
\5\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-24307 Filed 12-14-07; 8:45 am]
BILLING CODE 8011-01-P
