Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to Eligible Margin Assets, 48419-48420 [E8-19116]

Download as PDF Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices ensure appropriate review of their operational capabilities. 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.6 The Commission finds the proposed rule change to be consistent with this requirement because the senior management has the experience and familiarity with clearing members to make such decisions and senior management’s decision to approve the termination of FMAs prior to a scheduled Committee meeting are subject to the Committee’s subsequent review at its next regularly scheduled meeting. Moreover, proposals for expedited review of an FMA termination would only occur where, in management’s judgment, no significant or novel issues are raised by the termination. 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. It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (File No. SR– OCC–2008–08) be and hereby is approved.7 BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–58347; File No. SR–OCC– 2008–09] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to Eligible Margin Assets August 12, 2008. ebenthall on PRODPC60 with NOTICES Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 U.S.C. 78q–1(b)(3)(F). 7 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). 8 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 15:12 Aug 18, 2008 Jkt 214001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would eliminate foreign currencies and letters of credit denominated in a foreign currency as eligible margin assets. 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.2 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change For the Commission by the Division of Trading and Markets, pursuant to delegated authority.8 Florence E. Harmon, Acting Secretary. [FR Doc. E8–19115 Filed 8–18–08; 8:45 am] 6 15 (‘‘Act’’),1 notice is hereby given that on May 15, 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. The Commission is publishing this notice to solicit comments from interested persons. The primary purpose of this rule change is to eliminate, as eligible forms of margin assets, foreign currency and letters of credit denominated in a foreign currency. Background The Philadelphia Stock Exchange, Inc. (‘‘Phlx’’) has delisted all physical delivery foreign currency and cross-rate foreign currency options (collectively, ‘‘currency options’’) and has advised OCC that it does not presently plan to list contracts requiring foreign currency delivery. To support premium and exercise settlement for such currency options, OCC has maintained in various countries bank accounts that also have been used from time to time to hold margin deposits in foreign currencies. With the delisting of physical delivery currency options, these accounts are no longer needed for operational reasons. Few clearing members have deposited foreign currencies as margin with OCC and only then in de minimis amounts, 1 15 U.S.C. 78s(b)(1). Commission has modified the text of the summaries prepared by OCC. 2 The PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 48419 and no such deposits are currently held by OCC. In light of the limited and infrequent use of this margin asset class by clearing members, OCC has determined to close its foreign currency accounts for cost saving purposes. Closing these accounts means that OCC will no longer have the operational capability to accept foreign currency for margin purposes, and accordingly, OCC proposes to modify its rules to delete this asset class. Letters of credit denominated in a foreign currency have never been posted with OCC by clearing members, and their acceptance will be eliminated as well. Rule Changes To eliminate these forms of margin assets OCC would amend Rule 604. Specifically, references to deposits of foreign currencies would be deleted from paragraph (a), which relates to cash margin deposits. References to letters of credit denominated in a foreign currency would be deleted from paragraph (c). Other technical, conforming changes would be made to paragraph (c) to reflect such deletion. Because amended paragraph (c) would specify that letters of credit are to be denominated in U.S. dollars, specific references to U.S. dollar denominated letters of credit would be removed from Interpretations and Policies .03 and .08 under Rule 604. Interpretation and Policy .09 would be deleted in its entirety as it solely relates to deposits of letters of credit denominated in a foreign currency. For rule transparency purposes, OCC also proposes to insert a notice at the beginning of the By-Law articles and Rule chapters that relate to physical delivery currency options (i.e., Articles XV and XXI and Chapters XVI and XXII) to inform readers that such provisions are inoperative until further notice by OCC. OCC believes that the proposed change is consistent with the Act because it removes the eligibility of asset classes for margin purposes that either are not currently used or have never been used by clearing members in order to reduce OCC’s operating costs. 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. E:\FR\FM\19AUN1.SGM 19AUN1 48420 Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / 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 Within thirty-five days of the date of publication of this notice in the Federal Register or within such longer period: (i) As the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve such proposed rule change or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. 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 rulecomments@sec.gov. Please include File Number SR–OCC–2008–09 on the subject line. ebenthall on PRODPC60 with NOTICES • 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–2008–09. 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 15:12 Aug 18, 2008 For the Commission by the Division of Trading and Markets, pursuant to delegated authority.3 Florence E. Harmon, Acting Secretary. [FR Doc. E8–19116 Filed 8–18–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–58349; File No. SR–OCC– 2008–15] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Binary Options August 12, 2008. Paper Comments VerDate Aug<31>2005 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 and on OCC’s Web site at https:// www.theocc.com/publications/rules/ proposed_changes/sr_occ_08_09.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–2008–09 and should be submitted on or before September 9, 2008. Jkt 214001 Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934,1 notice is hereby given that on July 23, 2008, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange 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 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 persons. 3 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). 1 15 PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The proposed rule change would clarify how a listing exchange may define the exercise settlement amount for binary options and that escrow deposits are not permitted in lieu of margin with respect to binary options on any underlying interest. 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. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of the proposed rule change is to clarify, in two respects, the application of OCC’s By-Laws and Rules to certain binary options. OCC currently clears the following types of binary options: credit default options, credit default basket options, and ‘‘other binary options.’’ 4 ‘‘Other binary options’’ include ‘‘fixed return options’’ traded on the American Stock Exchange LLC \ (‘‘Amex’’) and binary options on broad-based indexes traded on the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’). ‘‘Other binary options’’ are European-style options that will be automatically exercised if the value of the underlying interest at expiration when measured against its exercise price is determined to meet the criteria for automatic exercise as specified in the rules of the listing exchange. All binary options, when automatically exercised, have a fixed exercise settlement amount that does not vary depending upon how much the 4 In June 2007 and August 2007, the Commission approved changes to OCC’s Rules designed to accommodate credit default options and credit default basket options, respectively. Securities Exchange Act Release Nos. 55872 (June 6, 2007), 72 FR 32693 (June 13, 2007) [SR–OCC–2007–01] and 56288 (Aug. 20, 2007), 72 FR 49034 (Aug. 27, 2007) [SR–OCC–2007–06]. In November 2007, the Commission approved additional changes to OCC’s Rules designed to accommodate binary options, including fixed return options and binary options on broad-based indexes. Securities Exchange Act Release No. 56875 (Nov. 30, 2007), 72 FR 69274 (Dec.7, 2007) [SR–OCC–2007–08]. E:\FR\FM\19AUN1.SGM 19AUN1

Agencies

[Federal Register Volume 73, Number 161 (Tuesday, August 19, 2008)]
[Notices]
[Pages 48419-48420]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-19116]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58347; File No. SR-OCC-2008-09]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of a Proposed Rule Change Relating to Eligible Margin 
Assets

August 12, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 15, 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. 
The Commission is publishing this notice to solicit comments from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would eliminate foreign currencies and 
letters of credit denominated in a foreign currency as eligible margin 
assets.

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.\2\
---------------------------------------------------------------------------

    \2\ 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

    The primary purpose of this rule change is to eliminate, as 
eligible forms of margin assets, foreign currency and letters of credit 
denominated in a foreign currency.
Background
    The Philadelphia Stock Exchange, Inc. (``Phlx'') has delisted all 
physical delivery foreign currency and cross-rate foreign currency 
options (collectively, ``currency options'') and has advised OCC that 
it does not presently plan to list contracts requiring foreign currency 
delivery. To support premium and exercise settlement for such currency 
options, OCC has maintained in various countries bank accounts that 
also have been used from time to time to hold margin deposits in 
foreign currencies. With the delisting of physical delivery currency 
options, these accounts are no longer needed for operational reasons. 
Few clearing members have deposited foreign currencies as margin with 
OCC and only then in de minimis amounts, and no such deposits are 
currently held by OCC. In light of the limited and infrequent use of 
this margin asset class by clearing members, OCC has determined to 
close its foreign currency accounts for cost saving purposes. Closing 
these accounts means that OCC will no longer have the operational 
capability to accept foreign currency for margin purposes, and 
accordingly, OCC proposes to modify its rules to delete this asset 
class. Letters of credit denominated in a foreign currency have never 
been posted with OCC by clearing members, and their acceptance will be 
eliminated as well.
Rule Changes
    To eliminate these forms of margin assets OCC would amend Rule 604. 
Specifically, references to deposits of foreign currencies would be 
deleted from paragraph (a), which relates to cash margin deposits. 
References to letters of credit denominated in a foreign currency would 
be deleted from paragraph (c). Other technical, conforming changes 
would be made to paragraph (c) to reflect such deletion. Because 
amended paragraph (c) would specify that letters of credit are to be 
denominated in U.S. dollars, specific references to U.S. dollar 
denominated letters of credit would be removed from Interpretations and 
Policies .03 and .08 under Rule 604. Interpretation and Policy .09 
would be deleted in its entirety as it solely relates to deposits of 
letters of credit denominated in a foreign currency.
    For rule transparency purposes, OCC also proposes to insert a 
notice at the beginning of the By-Law articles and Rule chapters that 
relate to physical delivery currency options (i.e., Articles XV and XXI 
and Chapters XVI and XXII) to inform readers that such provisions are 
inoperative until further notice by OCC.
    OCC believes that the proposed change is consistent with the Act 
because it removes the eligibility of asset classes for margin purposes 
that either are not currently used or have never been used by clearing 
members in order to reduce OCC's operating costs. 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 48420]]

(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

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period: (i) As the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which the self-regulatory organization consents, 
the Commission will:
    (A) By order approve such proposed rule change or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2008-09 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-2008-09. 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 and on OCC's Web 
site at https://www.theocc.com/publications/rules/proposed_changes/sr_
occ_08_09.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-
2008-09 and should be submitted on or before September 9, 2008.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\3\
---------------------------------------------------------------------------

    \3\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-19116 Filed 8-18-08; 8:45 am]
BILLING CODE 8010-01-P
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