Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Definition and Use of the Terms “Settlement Price” and “Final Settlement Price”, 15824-15826 [E8-5911]
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15824
Federal Register / Vol. 73, No. 58 / Tuesday, March 25, 2008 / Notices
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–NYSEArca–2008–30 on the
subject line.
mstockstill on PROD1PC66 with NOTICES
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–NYSEArca–2008–30. 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
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of the filing also will be available
for inspection and copying at the
principal office of NYSE Arca. 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–NYSEArca–2008–30 and
should be submitted on or before April
15, 2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–5915 Filed 3–24–08; 8:45 am]
BILLING CODE 8011–01–P
14 17
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
18:33 Mar 24, 2008
Jkt 214001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57520; File No. SR–OCC–
2008–02]
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change Relating to
the Definition and Use of the Terms
‘‘Settlement Price’’ and ‘‘Final
Settlement Price’’
March 18, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
January 24, 2008, 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)(i) of the Act 2 and
Rule 19b–4(f)(1) 3 thereunder so that the
proposal was 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 amends the
definition and use of the terms
‘‘settlement price’’ and ‘‘final settlement
price’’ as applied to futures contracts
cleared by OCC for the purpose of
improving the definitions and
establishing consistent usage.
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.4
1 15
U.S.C. 78s(b)(1).
U.S.C. 78s–1(b)(3)(A)(i).
3 17 CFR 240.19b–4(f)(1).
4 The Commission has modified parts of these
statements.
2 15
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(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
The primary purpose of the proposed
rule change is to revise OCC’s By-Laws
and Rules to eliminate any
inconsistencies in the use of the terms
‘‘settlement price’’ and ‘‘final settlement
price’’ and to clarify the roles of OCC
and of the exchanges on which futures
are traded in determining the daily and
if applicable intraday settlement price
and the final settlement price of a series
of futures contracts. OCC is also making
one change in its rules to reflect a
change in the services available to
clearing members.
The two key components of the
proposed rule change involve the
definition of ‘‘settlement price’’ and
‘‘final settlement price’’ as used in
OCC’s By-Laws and Rules and the
location of the language governing the
manner in which settlement prices are
determined. Currently, the prices used
to calculate daily or intraday variation
payments are referred to simply as
‘‘settlement prices’’ rather than ‘‘interim
settlement prices.’’ The term
‘‘settlement price’’ does not encompass
the term ‘‘final settlement price,’’ which
is separately defined to refer only to the
price used to determine the value of a
contract at maturity. There are
provisions of OCC’s By-Laws and Rules
that apply equally to daily or intraday
settlement prices and final settlement
prices. Accordingly, OCC is revising the
definition of ‘‘settlement price’’ to
encompass both types of prices. The
term ‘‘interim settlement price’’ will be
used to refer to prices used to determine
daily and intraday variation payments.
In addition, the definition of ‘‘final
settlement price’’ is being revised in
recognition of the possibility that prices
determined in the futures markets
themselves, as opposed to prices
determined in the cash markets for the
underlying interests, may sometimes be
used to determine the final settlement
price. OCC is also moving the language
regarding the establishment of the
interim settlement price for futures from
Rule 1301(d) to Article XII, Section 6 of
OCC’s By-Laws. OCC believes that this
language more logically belongs in
Article XII, which currently governs
only the establishment of final
settlement prices.
Proposed Changes to By-Laws
OCC is introducing the new term
‘‘interim settlement price’’ in Article I,
Section 1 of its By-Laws with respect to
futures to refer to what is currently
defined simply as ‘‘settlement price’’
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Federal Register / Vol. 73, No. 58 / Tuesday, March 25, 2008 / Notices
and will use the term ‘‘settlement price’’
to encompass both interim settlement
prices and final settlement prices for
futures.
OCC is redefining and simplifying the
term ‘‘final settlement price’’ in Article
I, Section 1 of the By-Laws and
eliminating the reference to ‘‘Exchange
Rules,’’ which are relevant to some but
not all determinations of the final
settlement price and are referenced
elsewhere in the By-Laws and Rules
where relevant. The definition
addresses what is meant by ‘‘final
settlement price’’ with respect to a
series of futures (i.e., the marking price,
rate, level, value, or measure of the
designated interest on the maturity date
of such series). It further addresses the
uses of the final settlement price (i.e., to
calculate the final variation payment
with respect to cash-settled futures and
the purchase price of the underlying
interest in respect of physically settled
futures). The definition does not address
the manner in which the final
settlement price is determined, which is
covered in Article XII, Section 6(b), as
amended.
While the final settlement price of a
series of stock futures is normally
determined on the basis of the value of
the underlying stock at maturity, at least
one futures exchange clearing through
OCC consistently uses the value of the
futures contract itself (i.e., the
settlement price, on the maturity date as
the basis for determining the final
settlement price). Accordingly, in
addition to the above changes, OCC is
revising the term ‘‘final settlement
price’’ to account for the use in some
instances of the value of the futures
contract rather than the value of the
underlying interest in determining this
price.
OCC is making certain technical
corrections to the definition of the term
‘‘maturity date.’’
OCC is modifying Article VI, Section
10(d) of OCC’s By-Laws, which
currently refers to the adjustment of the
unit of trading and settlement price for
a series of stock futures, to reflect OCC’s
current procedures under which one or
the other of the unit of trading or
settlement price but not both is subject
to adjustment. OCC is also correcting
certain erroneous references in this
subsection.
The term ‘‘settlement price’’ is used in
various locations within Article VI,
Section 19; Article XV, Section 3; and
Article XX, Section 3 of OCC’s By-Laws
in a manner that is wholly unrelated to
the settlement price for security futures.
The word ‘‘cash’’ has been placed before
the term ‘‘settlement price’’ in each
VerDate Aug<31>2005
18:33 Mar 24, 2008
Jkt 214001
these sections wherever the term
appears.
OCC is making a correction to Article
XII, Section 1 by replacing the term
‘‘security future’’ with ‘‘future,’’ which
includes both commodity and security
futures. Article XII, Section 3 is revised
to reflect OCC’s current procedures
under which the unit of trading or
settlement price but not both may be
adjusted in connection with stock splits,
stock dividends, and similar corporate
events. OCC is modifying Article XII,
Sections 4, 4A, and 5 under which the
terms ‘‘interim settlement price,’’ ‘‘final
settlement price,’’ and ‘‘settlement
price’’ are used in a manner consistent
with their new or revised definitions.
OCC is moving the language governing
the manner in which interim settlement
prices are determined from Rule 1301(d)
to Article XII, Section 6(a) to precede
the provision governing the
determination of final settlement prices
covered in Section 6(b). As a result of
the transfer of the content of Rule
1301(d) to Article XII, Section 6, this
section now governs the manner in
which both interim settlement prices
and final settlement prices are
determined while Rule 1301 addresses
only variation payments.
In addition to moving the language of
former Rule 1301(d) to Article XII,
Section 6(a) of the By-Laws, OCC is
modifying the language. The
modifications make it clear that OCC
determines the interim settlement price
used to establish the amount of the
required variation payment, but does so
on the basis of an interim settlement
price reported to OCC by the relevant
exchange. A similar change is being
made in Article XII, Section 6(b) and in
Interpretation and Policy .01 to the
section. Generally, OCC would simply
adopt the price it receives from the
exchange, but OCC has broad authority
to disregard that price if it appears
erroneous or otherwise defective. The
changes also clarify OCC’s
responsibility in connection with
settlement prices of series of security
futures that are traded on more than one
exchange.
Proposed Changes to Rules
OCC is deleting Rule 404, relating to
its use of a give-up service provider,
because OCC no longer has a
relationship with a give-up service
provider. OCC is redesignating Rule
1301(e) as Rule 1301(d) as a result of the
transfer of former Rule 1301(d) to
Article XII, Section 6 of the By-Laws.
The portion of Rule 1301(e) governing
the determination of final settlement
prices is deleted as this subject is
covered by Article XII, Section 6(b) of
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15825
the By-Laws. Rule 1301 is also revised
to make the use of the terms ‘‘interim
settlement price,’’ ‘‘final settlement
price,’’ and ‘‘settlement price’’
consistent with their new or revised
definitions.
The proposed rule change is
consistent with the purposes and
requirements of Section 17A of Act
because it is designed to promote the
prompt and accurate clearance and
settlement of transactions in futures, to
foster cooperation and coordination
with persons engaged in the clearance
and settlement of such transactions, to
remove impediments to and perfect the
mechanism of a national system for the
prompt and accurate clearance and
settlement of such transactions, and in
general to protect investors and the
public interest. The proposed rule
change accomplishes this purpose by
establishing consistent usage for the
terms ‘‘settlement price’’ and ‘‘final
settlement price’’ and by revising the
definition of ‘‘final settlement price’’ to
account for the use in some instances of
the prices determined in the futures
markets themselves rather than the
prices determined in the cash markets to
determine the final settlement price for
futures. The proposed rule change is not
inconsistent with the By-laws and Rules
of OCC, including those 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)(i) of the Act 5 and Rule 19b–
4(f)(1) 6 promulgated thereunder
because the proposal constitutes an
interpretation with respect to the
meaning, administration, or
enforcement of an existing rule of OCC.
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
5 15
6 17
U.S.C. 78s(b)(3)(A)(i).
CFR 240.19b–4(f)(1).
E:\FR\FM\25MRN1.SGM
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Federal Register / Vol. 73, No. 58 / Tuesday, March 25, 2008 / Notices
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:
mstockstill on PROD1PC66 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–2008–02 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–2008–02. 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
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of such filing also will be
available for inspection and copying at
the principal office of OCC. 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–2008–02 and should
be submitted on or before April 15,
2008.
VerDate Aug<31>2005
18:33 Mar 24, 2008
Jkt 214001
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.7
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–5911 Filed 3–24–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57528; File No. SR–Phlx–
2008–18]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Order Granting
Accelerated Approval of Proposed
Rule Change Relating to the Imposition
of Fines for Minor Rule Plan Violations
March 19, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 12,
2008, the Philadelphia Stock Exchange,
Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Phlx. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons and to
approve the proposal on an accelerated
basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt Phlx
Options Floor Procedure Advice
(‘‘OFPA’’) F–35, Violations of Exercise
and Exercise Advice Rules for NoncashSettled Equity Option Contracts, to add
a summary fine schedule for Expiring
Exercise Declaration or Contrary
Exercise Advice violations regarding
noncash settled equity options.3 The
Exchange also proposes to modify Phlx
Rule 970, Floor Practice Advices:
Violations, Penalties, and Procedures,4
7 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 These declarations or advices indicate, among
other things, whether at expiration the holder of an
in-the-money noncash settled equity option intends
to waive The Options Clearing Corporation’s
(‘‘OCC’’) Exercise-by-Exception procedure or
exercise the option. See Phlx Rule 1042.
4 Phlx Rule 970 sets forth the criteria for the
imposition of fines (currently not to exceed $2,500)
on any member, member organization, or any
partner, officer, director, or person employed by or
associated with any member or member
organization, for any violation of a Floor Procedure
Advice, which violation the Exchange shall have
determined is minor in nature (known as ‘‘Minor
1 15
PO 00000
Frm 00109
Fmt 4703
Sfmt 4703
to increase the maximum permissible
fine to $5,000 for a violation of a Floor
Procedure Advice. The text of the
proposed rule change is available at the
Exchange, the Commission’s Public
Reference Room, and https://
www.Phlx.com/exchange/phlx-rulefil.htm.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Phlx 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 III below. The Exchange has
prepared summaries, set forth in
sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to (a)
implement new OFPA F–35 to establish
a fine schedule for contrary exercise
advice violations, and (b) expand Phlx
Rule 970 to allow fines not to exceed
$5,000, for the purpose of increasing
and strengthening the sanctions
imposed by the Exchange’s Minor Rule
Plan (‘‘MRP’’). The Exchange believes
that establishing the specified fines with
respect to individual members and
member organizations with a 24-month
rolling surveillance period should serve
as an effective deterrent to such
violative conduct. The Exchange also
believes that failure to submit exercise
instructions is the type of objective
requirement that is easy and appropriate
to administer.
In addition, the Exchange, as a
member of the Intermarket Surveillance
Group (‘‘ISG’’),5 as well as certain other
self-regulatory organizations (‘‘SROs’’)
executed and filed on October 29, 2007,
with the Commission, a final version of
an Agreement pursuant to Section 17(d)
Rule Plan Fines’’). The fines are imposed in lieu of
commencing a ‘‘disciplinary proceeding’’ as that
term is used in Phlx Rules 960.1–960.12. Such
Minor Rule Plan Fines are subject to Rule 19d–1
under the Act. See Securities Exchange Act Release
No. 45421 (February 7, 2002), 67 FR 6961 (February
14, 2002) (SR–Phlx–2001–114).
5 ISG is a regulatory information-sharing
organization comprised of all U.S. national
securities exchanges and national securities
associations, most U.S. futures exchanges, and
certain non-U.S. exchanges and associations trading
securities and related products.
E:\FR\FM\25MRN1.SGM
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]]>Agencies
[Federal Register Volume 73, Number 58 (Tuesday, March 25, 2008)]
[Notices]
[Pages 15824-15826]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-5911]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57520; File No. SR-OCC-2008-02]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to the Definition and Use of the Terms ``Settlement Price''
and ``Final Settlement Price''
March 18, 2008.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on January 24, 2008, 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)(i) of the Act \2\ and Rule 19b-4(f)(1) \3\
thereunder so that the proposal was 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-1(b)(3)(A)(i).
\3\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change amends the definition and use of the terms
``settlement price'' and ``final settlement price'' as applied to
futures contracts cleared by OCC for the purpose of improving the
definitions and establishing consistent usage.
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.\4\
---------------------------------------------------------------------------
\4\ 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
The primary purpose of the proposed rule change is to revise OCC's
By-Laws and Rules to eliminate any inconsistencies in the use of the
terms ``settlement price'' and ``final settlement price'' and to
clarify the roles of OCC and of the exchanges on which futures are
traded in determining the daily and if applicable intraday settlement
price and the final settlement price of a series of futures contracts.
OCC is also making one change in its rules to reflect a change in the
services available to clearing members.
The two key components of the proposed rule change involve the
definition of ``settlement price'' and ``final settlement price'' as
used in OCC's By-Laws and Rules and the location of the language
governing the manner in which settlement prices are determined.
Currently, the prices used to calculate daily or intraday variation
payments are referred to simply as ``settlement prices'' rather than
``interim settlement prices.'' The term ``settlement price'' does not
encompass the term ``final settlement price,'' which is separately
defined to refer only to the price used to determine the value of a
contract at maturity. There are provisions of OCC's By-Laws and Rules
that apply equally to daily or intraday settlement prices and final
settlement prices. Accordingly, OCC is revising the definition of
``settlement price'' to encompass both types of prices. The term
``interim settlement price'' will be used to refer to prices used to
determine daily and intraday variation payments. In addition, the
definition of ``final settlement price'' is being revised in
recognition of the possibility that prices determined in the futures
markets themselves, as opposed to prices determined in the cash markets
for the underlying interests, may sometimes be used to determine the
final settlement price. OCC is also moving the language regarding the
establishment of the interim settlement price for futures from Rule
1301(d) to Article XII, Section 6 of OCC's By-Laws. OCC believes that
this language more logically belongs in Article XII, which currently
governs only the establishment of final settlement prices.
Proposed Changes to By-Laws
OCC is introducing the new term ``interim settlement price'' in
Article I, Section 1 of its By-Laws with respect to futures to refer to
what is currently defined simply as ``settlement price''
[[Page 15825]]
and will use the term ``settlement price'' to encompass both interim
settlement prices and final settlement prices for futures.
OCC is redefining and simplifying the term ``final settlement
price'' in Article I, Section 1 of the By-Laws and eliminating the
reference to ``Exchange Rules,'' which are relevant to some but not all
determinations of the final settlement price and are referenced
elsewhere in the By-Laws and Rules where relevant. The definition
addresses what is meant by ``final settlement price'' with respect to a
series of futures (i.e., the marking price, rate, level, value, or
measure of the designated interest on the maturity date of such
series). It further addresses the uses of the final settlement price
(i.e., to calculate the final variation payment with respect to cash-
settled futures and the purchase price of the underlying interest in
respect of physically settled futures). The definition does not address
the manner in which the final settlement price is determined, which is
covered in Article XII, Section 6(b), as amended.
While the final settlement price of a series of stock futures is
normally determined on the basis of the value of the underlying stock
at maturity, at least one futures exchange clearing through OCC
consistently uses the value of the futures contract itself (i.e., the
settlement price, on the maturity date as the basis for determining the
final settlement price). Accordingly, in addition to the above changes,
OCC is revising the term ``final settlement price'' to account for the
use in some instances of the value of the futures contract rather than
the value of the underlying interest in determining this price.
OCC is making certain technical corrections to the definition of
the term ``maturity date.''
OCC is modifying Article VI, Section 10(d) of OCC's By-Laws, which
currently refers to the adjustment of the unit of trading and
settlement price for a series of stock futures, to reflect OCC's
current procedures under which one or the other of the unit of trading
or settlement price but not both is subject to adjustment. OCC is also
correcting certain erroneous references in this subsection.
The term ``settlement price'' is used in various locations within
Article VI, Section 19; Article XV, Section 3; and Article XX, Section
3 of OCC's By-Laws in a manner that is wholly unrelated to the
settlement price for security futures. The word ``cash'' has been
placed before the term ``settlement price'' in each these sections
wherever the term appears.
OCC is making a correction to Article XII, Section 1 by replacing
the term ``security future'' with ``future,'' which includes both
commodity and security futures. Article XII, Section 3 is revised to
reflect OCC's current procedures under which the unit of trading or
settlement price but not both may be adjusted in connection with stock
splits, stock dividends, and similar corporate events. OCC is modifying
Article XII, Sections 4, 4A, and 5 under which the terms ``interim
settlement price,'' ``final settlement price,'' and ``settlement
price'' are used in a manner consistent with their new or revised
definitions. OCC is moving the language governing the manner in which
interim settlement prices are determined from Rule 1301(d) to Article
XII, Section 6(a) to precede the provision governing the determination
of final settlement prices covered in Section 6(b). As a result of the
transfer of the content of Rule 1301(d) to Article XII, Section 6, this
section now governs the manner in which both interim settlement prices
and final settlement prices are determined while Rule 1301 addresses
only variation payments.
In addition to moving the language of former Rule 1301(d) to
Article XII, Section 6(a) of the By-Laws, OCC is modifying the
language. The modifications make it clear that OCC determines the
interim settlement price used to establish the amount of the required
variation payment, but does so on the basis of an interim settlement
price reported to OCC by the relevant exchange. A similar change is
being made in Article XII, Section 6(b) and in Interpretation and
Policy .01 to the section. Generally, OCC would simply adopt the price
it receives from the exchange, but OCC has broad authority to disregard
that price if it appears erroneous or otherwise defective. The changes
also clarify OCC's responsibility in connection with settlement prices
of series of security futures that are traded on more than one
exchange.
Proposed Changes to Rules
OCC is deleting Rule 404, relating to its use of a give-up service
provider, because OCC no longer has a relationship with a give-up
service provider. OCC is redesignating Rule 1301(e) as Rule 1301(d) as
a result of the transfer of former Rule 1301(d) to Article XII, Section
6 of the By-Laws. The portion of Rule 1301(e) governing the
determination of final settlement prices is deleted as this subject is
covered by Article XII, Section 6(b) of the By-Laws. Rule 1301 is also
revised to make the use of the terms ``interim settlement price,''
``final settlement price,'' and ``settlement price'' consistent with
their new or revised definitions.
The proposed rule change is consistent with the purposes and
requirements of Section 17A of Act because it is designed to promote
the prompt and accurate clearance and settlement of transactions in
futures, to foster cooperation and coordination with persons engaged in
the clearance and settlement of such transactions, to remove
impediments to and perfect the mechanism of a national system for the
prompt and accurate clearance and settlement of such transactions, and
in general to protect investors and the public interest. The proposed
rule change accomplishes this purpose by establishing consistent usage
for the terms ``settlement price'' and ``final settlement price'' and
by revising the definition of ``final settlement price'' to account for
the use in some instances of the prices determined in the futures
markets themselves rather than the prices determined in the cash
markets to determine the final settlement price for futures. The
proposed rule change is not inconsistent with the By-laws and Rules of
OCC, including those 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)(i) of the Act \5\ and Rule 19b-4(f)(1) \6\ promulgated
thereunder because the proposal constitutes an interpretation with
respect to the meaning, administration, or enforcement of an existing
rule of OCC. 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
[[Page 15826]]
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)(i).
\6\ 17 CFR 240.19b-4(f)(1).
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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-2008-02 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-2008-02. 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 Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of OCC. 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-2008-02 and should be
submitted on or before April 15, 2008.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-5911 Filed 3-24-08; 8:45 am]
BILLING CODE 8011-01-P
