Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the New Methodology for Adjusting Options Contracts for Cash Dividends and Distributions, 39367-39368 [E8-15483]

Download as PDF Federal Register / Vol. 73, No. 132 / Wednesday, July 9, 2008 / Notices should be submitted on or before July 30, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Florence E. Harmon, Acting Secretary. [FR Doc. E8–15512 Filed 7–8–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–58059; File No. SR–OCC– 2008–10] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the New Methodology for Adjusting Options Contracts for Cash Dividends and Distributions June 30, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on June 2, 2008, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change 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) thereunder 3 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 parties. jlentini on PROD1PC65 with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would adopt interpretative guidance relating to the new adjustment method for adjusting options contracts for cash dividends or distributions (‘‘New Methodology’’). 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 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78s(b)(3)(A)(i). 3 17 CFR 240.19b–4(f)(1). 16:15 Jul 08, 2008 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Background Generally, options are not adjusted to reflect ‘‘ordinary’’ cash dividends or distributions. Under OCC’s existing ByLaws, which remain operative until the New Methodology becomes effective, a cash dividend is considered ordinary unless it is greater than 10% of the value of the underlying security on the dividend declaration date. Dividends greater than 10% under this definition usually trigger an options contract adjustment, with the criterion for adjustment being the size of the cash dividend. Under the New Methodology, a cash dividend or distribution will be deemed to be ordinary (regardless of size) if it is declared pursuant to a policy or practice of paying such dividends on a quarterly or other regular basis. Dividends paid outside such practice would be considered extraordinary. Extraordinary dividends usually would trigger a contract adjustment unless the amount is less than $12.50 per contract (i.e., the minimum size threshold). The New Methodology will be effective for cash dividends and distributions announced on or after February 1, 2009, but will not be applied to certain grandfathered flex options as described in File No. SR– OCC–2006–01.5 Interpretative Guidance OCC’s adoption of the New Methodology has prompted market participants to ask how the New Methodology would be administered and applied. The OCC Securities Committee has reviewed those questions and has developed responses thereto, which OCC is proposing to adopt as a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule (i.e., Article VI, Section 11A of OCC’s ByLaws). The responses are intended to provide investors with useful guidance on how the New Methodology would be applied in practice, subject to an adjustment panel’s authority to make adjustment decisions on a case-by-case 4 The Commission has modified the text of the summaries prepared by OCC. 5 Securities Exchange Act Release No. 55258 (February 8, 2007), 72 FR 7701 (February 16, 2007). 1 15 VerDate Aug<31>2005 may be examined at the places specified in Item IV below. OCC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements.4 Jkt 214001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 39367 basis and to make exceptions to the general adjustment rules in cases where such exceptions are determined appropriate.6 The interpretative guidance, which is attached as Exhibit 5 to the proposed rule change, reviews the mechanics of adjustments, the definition of ordinary cash dividends and distributions, the rationale for the New Methodology, the impact of the minimum size threshold, and actual and hypothetical examples to illustrate the application of the New Methodology.7 OCC, however, does not propose to publish the interpretative guidance in its By-Laws and Rules. Rather, it would be published on OCC’s public website, made available in an information memorandum accessible to clearing members or otherwise available in hard copy form on request. The proposed rule change is consistent with the requirements of Section 17A of the Act 8 and the rules and regulations thereunder applicable to OCC because it provides market participants with interpretative guidance on the application of the New Methodology which will be applied to adjustments for cash dividends and distributions. 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 upon filing pursuant to Section 19(b)(3)(A)(i) of the Act 9 and Rule 19b– 4(f)(1) 10 thereunder because the 6 Adjustments are individually determined by an adjustment panel of the OCC Securities Committee. Actions of an adjustment panel constitute the action of the Securities Committee. See Article VI, Section 11(c) of OCC’s By-Laws. 7 Exhibit 5 of the proposed rule change can be found on OCC’s Web site at http://www.theocc.com/ publications/rules/proposed_changes/sr_occ_08_ 10.pdf. 8 15 U.S.C. 78q–1. 9 15 U.S.C. 78s(b)(3)(A)(i). 10 17 CFR 240.19b–4(f)(1). E:\FR\FM\09JYN1.SGM 09JYN1 39368 Federal Register / Vol. 73, No. 132 / Wednesday, July 9, 2008 / Notices 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 such 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: jlentini on PROD1PC65 with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml) or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–OCC–2008–10 on the subject line. 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–2008–10 and should be submitted on or before July 30, 2008. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.11 Florence E. Harmon, Acting Secretary. [FR Doc. E8–15483 Filed 7–8–08; 8:45 am] BILLING CODE 8010–01–P 16:15 Jul 08, 2008 Jkt 214001 (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Herbert L. Mitchell, Associate Administrator for Disaster Assistance. [FR Doc. E8–15263 Filed 7–8–08; 8:45 am] BILLING CODE 8025–01–M DEPARTMENT OF STATE [Public Notice: 6285] SMALL BUSINESS ADMINISTRATION [Disaster Declaration #11288 and #11289] Wisconsin Disaster Number WI–00013 U.S. Small Business Administration. ACTION: Amendment 2. AGENCY: SUMMARY: PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 60-Day Notice of Proposed Information Collection: DS–234, Application for Special Immigrant Visa and Alien Registration, OMB Number 1405–0015 Notice of request for public comments. ACTION: This is an amendment of the Presidential declaration of a major disaster for the State of Wisconsin (FEMA–1768–DR), dated 06/14/2008. Incident: Severe Storms, Tornadoes, Paper Comments and Flooding. • Send paper comments in triplicate Incident Period: 06/05/2008 and to Secretary, Securities and Exchange continuing. Effective Date: 06/20/2008. Commission, 100 F Street, NE., Physical Loan Application Deadline Washington, DC 20549–1090. Date: 08/13/2008. All submissions should refer to File EIDL Loan Application Deadline Date: Number SR–OCC–2008–10. This file 03/13/2009. number should be included on the subject line if e-mail is used. To help the ADDRESSES: Submit completed loan applications to: U.S. Small Business Commission process and review your Administration, Processing and comments more efficiently, please use only one method. The Commission will Disbursement Center, 14925 Kingsport post all comments on the Commission’s Road, Fort Worth, TX 76155. Internet Web site (http://www.sec.gov/ FOR FURTHER INFORMATION CONTACT: rules/sro.shtml). Copies of the Alan Escobar, Office of Disaster submission, all subsequent Assistance, U.S. Small Business amendments, all written statements Administration, 409 3rd Street, SW., with respect to the proposed rule Suite 6050, Washington, DC 20416. change that are filed with the SUPPLEMENTARY INFORMATION: The notice Commission, and all written of the Presidential disaster declaration communications relating to the for the State of Wisconsin, dated 06/14/ proposed rule change between the 2008 is hereby amended to include the Commission and any person, other than following areas as adversely affected by those that may be withheld from the the disaster: public in accordance with the Primary Counties: (Physical Damage and provisions of 5 U.S.C. 552, will be Economic Injury Loans): available for inspection and copying in Washington, Waukesha, the Commission’s Public Reference Winnebago, Fond Du Lac, Iowa, Room, 100 F Street, NE., Washington, Marquette, Grant, Kenosha, Rock, DC 20549, on official business days Sheboygan, Dodge, Green between the hours of 10 a.m. and 3 p.m. Contiguous Counties: (Economic Injury The text of the proposed rule change is Loans Only): available at OCC, the Commission’s Illinois: Boone, Jo Daviess, Lake, Public Reference Room, and http:// McHenry, Stephenson, Winnebago www.theocc.com/publications/rules/ Iowa: Dubuque proposed_changes/sr_occ_08_10.pdf. Wisconsin: Calumet, Jefferson, All comments received will be posted 11 17 CFR 200.30–3(a)(12). without change; the Commission does VerDate Aug<31>2005 Lafayette, Manitowoc, Outagamie, Waupaca, Waushara All other information in the original declaration remains unchanged. SUMMARY: The Department of State is seeking Office of Management and Budget (OMB) approval for the information collection described below. The purpose of this notice is to allow 60 days for public comment in the Federal Register preceding submission to OMB. We are conducting this process in accordance with the Paperwork Reduction Act of 1995. • Title of Information Collection: Application for Special Immigrant Visa. • OMB Control Number: 1405–0015. • Type of Request: Revision of a Currently Approved Collection. • Originating Office: Bureau of Consular Affairs, Department of State (CA/VO). • Form Number: DS–234. • Respondents: Iraqi immigrant visa applicants. • Estimated Number of Respondents: 12,000 per year. • Estimated Number of Responses: 12,000 per year. • Average Hours Per Response: 20 minutes. • Total Estimated Burden: 4,000 hours per year. • Frequency: Once per respondent. • Obligation to Respond: Required to Obtain or Retain U.S. resettlement benefits The Department will accept comments from the public up to 60 days from July 9, 2008. ADDRESSES: You may submit comments by the following method: • E-mail: FiresteinJY@state.gov (Subject line must read DS–234 SIV Form). • Mail (paper, disk, or CD-ROM submissions): PRM/Admissions, 2401 E DATES: E:\FR\FM\09JYN1.SGM 09JYN1

Agencies

[Federal Register Volume 73, Number 132 (Wednesday, July 9, 2008)]
[Notices]
[Pages 39367-39368]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-15483]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58059; File No. SR-OCC-2008-10]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the New Methodology for Adjusting Options Contracts for 
Cash Dividends and Distributions

June 30, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 2, 2008, The Options 
Clearing Corporation (``OCC'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change 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) thereunder \3\ 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 parties.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(i).
    \3\ 17 CFR 240.19b-4(f)(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 adopt interpretative guidance 
relating to the new adjustment method for adjusting options contracts 
for cash dividends or distributions (``New Methodology'').

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, OCC included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. OCC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of these 
statements.\4\
---------------------------------------------------------------------------

    \4\ The Commission has modified the text of the summaries 
prepared by OCC.
---------------------------------------------------------------------------

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

Background
    Generally, options are not adjusted to reflect ``ordinary'' cash 
dividends or distributions. Under OCC's existing By-Laws, which remain 
operative until the New Methodology becomes effective, a cash dividend 
is considered ordinary unless it is greater than 10% of the value of 
the underlying security on the dividend declaration date. Dividends 
greater than 10% under this definition usually trigger an options 
contract adjustment, with the criterion for adjustment being the size 
of the cash dividend. Under the New Methodology, a cash dividend or 
distribution will be deemed to be ordinary (regardless of size) if it 
is declared pursuant to a policy or practice of paying such dividends 
on a quarterly or other regular basis. Dividends paid outside such 
practice would be considered extraordinary. Extraordinary dividends 
usually would trigger a contract adjustment unless the amount is less 
than $12.50 per contract (i.e., the minimum size threshold). The New 
Methodology will be effective for cash dividends and distributions 
announced on or after February 1, 2009, but will not be applied to 
certain grandfathered flex options as described in File No. SR-OCC-
2006-01.\5\
---------------------------------------------------------------------------

    \5\ Securities Exchange Act Release No. 55258 (February 8, 
2007), 72 FR 7701 (February 16, 2007).
---------------------------------------------------------------------------

Interpretative Guidance
    OCC's adoption of the New Methodology has prompted market 
participants to ask how the New Methodology would be administered and 
applied. The OCC Securities Committee has reviewed those questions and 
has developed responses thereto, which OCC is proposing to adopt as a 
stated policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule (i.e., Article VI, 
Section 11A of OCC's By-Laws). The responses are intended to provide 
investors with useful guidance on how the New Methodology would be 
applied in practice, subject to an adjustment panel's authority to make 
adjustment decisions on a case-by-case basis and to make exceptions to 
the general adjustment rules in cases where such exceptions are 
determined appropriate.\6\ The interpretative guidance, which is 
attached as Exhibit 5 to the proposed rule change, reviews the 
mechanics of adjustments, the definition of ordinary cash dividends and 
distributions, the rationale for the New Methodology, the impact of the 
minimum size threshold, and actual and hypothetical examples to 
illustrate the application of the New Methodology.\7\ OCC, however, 
does not propose to publish the interpretative guidance in its By-Laws 
and Rules. Rather, it would be published on OCC's public website, made 
available in an information memorandum accessible to clearing members 
or otherwise available in hard copy form on request.
---------------------------------------------------------------------------

    \6\ Adjustments are individually determined by an adjustment 
panel of the OCC Securities Committee. Actions of an adjustment 
panel constitute the action of the Securities Committee. See Article 
VI, Section 11(c) of OCC's By-Laws.
    \7\ Exhibit 5 of the proposed rule change can be found on OCC's 
Web site at http://www.theocc.com/publications/rules/proposed_
changes/sr_occ_08_10.pdf.
---------------------------------------------------------------------------

    The proposed rule change is consistent with the requirements of 
Section 17A of the Act \8\ and the rules and regulations thereunder 
applicable to OCC because it provides market participants with 
interpretative guidance on the application of the New Methodology which 
will be applied to adjustments for cash dividends and distributions. 
The proposed rule change is not inconsistent with the existing rules of 
OCC, including any other rules proposed to be amended.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    OCC does not believe that the proposed rule change would impose any 
burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants, or Others

    Written comments were not and are not intended to be solicited with 
respect to the proposed rule change, and none have been received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(i) of the Act \9\ and Rule 19b-4(f)(1) \10\ 
thereunder because the

[[Page 39368]]

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 such 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(i).
    \10\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------

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 (http://
www.sec.gov/rules/sro.shtml) or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-OCC-2008-10 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-OCC-2008-10. 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 (http://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. The text of the proposed rule change is available at 
OCC, the Commission's Public Reference Room, and http://www.theocc.com/
publications/rules/proposed_changes/sr_occ_08_10.pdf. 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-2008-10 and should be 
submitted on or before July 30, 2008.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-15483 Filed 7-8-08; 8:45 am]
BILLING CODE 8010-01-P