Self-Regulatory Organizations; The Options Clearing Corporation; Order Granting Approval of a Proposed Rule Change Relating to Eligible Margin Assets, 72097-72098 [E8-28044]
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Federal Register / Vol. 73, No. 229 / Wednesday, November 26, 2008 / Notices
application of odd-lot trading practices
and Rules.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 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
90 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 the proposed
rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
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–NYSE–2008–116 on the
subject line.
mstockstill on PROD1PC66 with NOTICES
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–NYSE–2008–116. 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
17:30 Nov 25, 2008
Jkt 217001
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–28042 Filed 11–25–08; 8:45 am]
BILLING CODE 8011–01–P
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:
VerDate Aug<31>2005
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 the Exchange. 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–NYSE–2008–116 and
should be submitted on or before
December 17, 2008.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58977; File No. SR–OCC–
2008–09]
Self-Regulatory Organizations; The
Options Clearing Corporation; Order
Granting Approval of a Proposed Rule
Change Relating to Eligible Margin
Assets
November 19, 2008.
I. Introduction
On May 15, 2008, The Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–OCC–2008–09 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 August 19, 2008.2
No comment letters were received. For
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 Securities Exchange Act Release No. 58347
(August 12, 2008), 73 FR 48419.
1 15
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Frm 00075
Fmt 4703
Sfmt 4703
72097
the reasons discussed below, the
Commission is approving the proposed
rule change.
II. Description
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
is modifying 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 is amending Rule 604.
Specifically, references to deposits of
foreign currencies are being deleted
from paragraph (a), which relates to
cash margin deposits. References to
letters of credit denominated in a
foreign currency are being deleted from
paragraph (c). Other technical,
conforming changes will be made to
paragraph (c) to reflect such deletion.
Because amended paragraph (c)
specifies that letters of credit are to be
denominated in U.S. dollars, specific
references to U.S. dollar denominated
letters of credit are being removed from
Interpretations and Policies .03 and .08
under Rule 604. Interpretation and
Policy .09 is being deleted in its entirety
as it solely relates to deposits of letters
E:\FR\FM\26NON1.SGM
26NON1
72098
Federal Register / Vol. 73, No. 229 / Wednesday, November 26, 2008 / Notices
of credit denominated in a foreign
currency.
For rule transparency purposes, OCC
is also inserting 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.
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 Commission finds the proposed
rule change to be consistent with this
requirement because it eliminates a
margin asset class that was seldom used
by clearing members for margin
deposits. In addition, having foreign
currencies on deposit is no longer
required operationally for OCC to
support premium and exercise
settlement due to the delisting of all
physical delivery currency options.
Accordingly, the proposed rule should
not affect OCC’s obligation to assure the
safeguarding of securities and funds
which are in its custody or control or for
which it is responsible.
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–2008–09) be and hereby is
approved.4
mstockstill on PROD1PC66 with NOTICES
BILLING CODE 8011–01–P
Self-Regulatory Organizations; The
Options Clearing Corporation and
National Securities Clearing
Corporation; Notice of Filing and Order
Granting Accelerated Approval of
Proposed Rule Changes Relating to
Amendment No. 2 to the Third
Amended and Restated Options
Exercise Settlement Agreement
November 20, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
November 17, 2008, The Options
Clearing Corporation (‘‘OCC’’) and the
National Securities Clearing Corporation
(‘‘NSCC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule changes described in
Items I and II, and III below, which
items have been prepared primarily by
OCC and NSCC. The Commission is
publishing this notice and order to
solicit comments from interested
persons and to grant approval of the
proposals.
I. Self-Regulatory Organizations’
Statements of the Terms of Substance of
the Proposed Rule Changes
The proposed rule changes would
amend the Third Amended and Restated
Options Exercise Settlement Agreement
between OCC and NSCC as described
herein.
In their filings with the Commission,
OCC and NSCC included statements
concerning the purpose of and basis for
the proposed rule changes and
discussed any comments they received
on the proposed rule changes. The text
of these statements may be examined at
the places specified in Item IV below.
OCC and NSCC have prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements.2
(A) Self-Regulatory Organizations’
Statements of the Purpose of, and
Statutory Basis for the Proposed Rule
Changes
3 15
U.S.C. 78q–1(b)(3)(F).
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).
4 In
17:30 Nov 25, 2008
[Release No. 34–58988; File Nos. SR–OCC–
2008–18 and SR–NSCC–2008–09]
II. Self-Regulatory Organizations’
Statements of the Purpose of, and
Statutory Basis for, the Proposed Rule
Changes
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.5
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–28044 Filed 11–25–08; 8:45 am]
VerDate Aug<31>2005
SECURITIES AND EXCHANGE
COMMISSION
Jkt 217001
The purpose of the proposed rule
changes is to reduce the burden on
1 15
U.S.C. 78s(b)(1).
Commission has modified the text of the
summaries prepared by OCC and NSCC.
2 The
PO 00000
Frm 00076
Fmt 4703
Sfmt 4703
clearing members of OCC that are also
members of NSCC that results from
duplicative margin requirements
relating to option exercises and
assignments and to allow clearing
members to use stock deposited as
margin with OCC to meet settlement
obligations at NSCC.
OCC and NSCC are parties to a Third
Amended and Restated Options
Exercise Settlement Agreement dated as
of February 16, 1995, as amended
(‘‘OCC/NSCC Accord’’), which provides
for a two-way guaranty between OCC
and NSCC of the mark-to-market
amounts for which NSCC has
guaranteed settlement. Through these
rule changes, OCC and NSCC seek
approval for an Amendment No. 2 to the
OCC/NSCC Accord (‘‘Amendment’’) that
would address the matters stated above.
Under the OCC/NSCC Accord
currently in effect, OCC guarantees to
NSCC the performance by NSCC
members of settlement obligations
resulting from exercise and assignment
(‘‘E&A’’) positions, with the amount
guaranteed by OCC with respect to the
performance of an NSCC member’s
settlement obligation equal to the
smaller of the ‘‘Net Member Debit to
NSCC’’ and the ‘‘Calculated Margin
Requirement’’ with respect to the NSCC
member. OCC can make this guarantee
because it continues to margin E&A
activity through the settlement date.3
Similarly, NSCC guarantees to OCC the
smaller of the ‘‘Net Member Debit to
OCC’’ and the ‘‘Calculated Margin
Credit.’’ NSCC can make this guarantee
because it collects risk-based margin on
the member’s entire portfolio of E&A
activity.4
Both OCC and NSCC collect margin
with respect to E&A positions through
settlement, calculated utilizing riskbased margining methodologies which
include volatility charges. OCC collects
risk margin to cover (i) the risk that
NSCC might decline to settle a
defaulting member’s pending E&A
activity 5 thereby forcing OCC to
guarantee buy-ins and sell-outs and (ii)
the risk that the market might move
against E&A positions accepted by
NSCC for settlement thereby increasing
OCC’s potential liability to NSCC under
the OCC/NSCC Accord. NSCC collects a
3 In the case of E&A activity resulting from
exercises at expiration (‘‘Expiration E&A Activity’’),
the settlement date is normally the Wednesday after
expiration.
4 Because OCC marks E&A activity to the market
and guarantees that amount to NSCC, NSCC does
not mark E&A positions to the market. However, it
does collect VAR margin to cover potential losses
in liquidating E&A positions.
5 Under its rules, NSCC’s guaranty does not attach
until midnight on T+1. For exercises on expiration
weekend, T+1 is normally the following Monday.
E:\FR\FM\26NON1.SGM
26NON1
]]>Agencies
[Federal Register Volume 73, Number 229 (Wednesday, November 26, 2008)]
[Notices]
[Pages 72097-72098]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-28044]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58977; File No. SR-OCC-2008-09]
Self-Regulatory Organizations; The Options Clearing Corporation;
Order Granting Approval of a Proposed Rule Change Relating to Eligible
Margin Assets
November 19, 2008.
I. Introduction
On May 15, 2008, The Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') proposed
rule change SR-OCC-2008-09 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 August 19, 2008.\2\ No comment
letters were received. For the reasons discussed below, the Commission
is approving the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 58347 (August 12, 2008),
73 FR 48419.
---------------------------------------------------------------------------
II. Description
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 is modifying 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 is amending Rule
604. Specifically, references to deposits of foreign currencies are
being deleted from paragraph (a), which relates to cash margin
deposits. References to letters of credit denominated in a foreign
currency are being deleted from paragraph (c). Other technical,
conforming changes will be made to paragraph (c) to reflect such
deletion. Because amended paragraph (c) specifies that letters of
credit are to be denominated in U.S. dollars, specific references to
U.S. dollar denominated letters of credit are being removed from
Interpretations and Policies .03 and .08 under Rule 604. Interpretation
and Policy .09 is being deleted in its entirety as it solely relates to
deposits of letters
[[Page 72098]]
of credit denominated in a foreign currency.
For rule transparency purposes, OCC is also inserting 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.
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 Commission finds the proposed rule
change to be consistent with this requirement because it eliminates a
margin asset class that was seldom used by clearing members for margin
deposits. In addition, having foreign currencies on deposit is no
longer required operationally for OCC to support premium and exercise
settlement due to the delisting of all physical delivery currency
options. Accordingly, the proposed rule should not affect OCC's
obligation to assure the safeguarding of securities and funds which are
in its custody or control or for which it is responsible.
---------------------------------------------------------------------------
\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.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-OCC-2008-09) be and hereby
is approved.\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).
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,
Acting Secretary.
[FR Doc. E8-28044 Filed 11-25-08; 8:45 am]
BILLING CODE 8011-01-P
