Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Proposed Rule Change To Clear Options Based on Index-Linked Securities, 46278-46279 [E9-21638]

Download as PDF 46278 Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices Electronic Comments additional options in seeking trade executions on our trading facilities. 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 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. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change: (i) Does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, it has become effective pursuant to Section 19(b)(3)(A) of the Act 6 and Rule 19b– 4(f)(6) thereunder.7 At any time within 60 days of the filing of the proposed 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 DSKJ8SOYB1PROD with NOTICES 6 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires the self-regulatory organization to submit to the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 7 17 VerDate Nov<24>2008 17:32 Sep 04, 2009 Jkt 217001 • 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–CHX–2009–13 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60602; File No. SR–OCC– 2009–14] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Proposed Rule Change To Clear Options Based on Index-Linked Securities September 1, 2009. 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 August 12, 2009, The Options Clearing Corporation (‘‘OCC’’) filed with the All submissions should refer to File Securities and Exchange Commission Number SR–CHX–2009–13. This file (‘‘Commission’’) the proposed rule number should be included on the subject line if e-mail is used. To help the change described in Items I, II, and III below, which items have been prepared Commission process and review your primarily by OCC. The Commission is comments more efficiently, please use publishing this notice to solicit only one method. The Commission will comments on the proposed rule change post all comments on the Commission’s from interested parties. Internet Web site (https://www.sec.gov/ I. Self-Regulatory Organization’s rules/sro.shtml). Copies of the Statement of the Terms of Substance of submission, all subsequent the Proposed Rule Change amendments, all written statements with respect to the proposed rule The proposed rule change seeks to change that are filed with the permit OCC to clear options based on Commission, and all written index-linked securities (‘‘Index-Linked communications relating to the Securities’’). proposed rule change between the II. Self-Regulatory Organization’s Commission and any person, other than Statement of the Purpose of, and those that may be withheld from the Statutory Basis for, the Proposed Rule public in accordance with the Change provisions of 5 U.S.C. 552, will be In its filing with the Commission, available for inspection and copying in OCC included statements concerning the Commission’s Public Reference Room on official business days between the purpose of and basis for the proposed rule change and discussed any the hours of 10 a.m. and 3 p.m. Copies comments it received on the proposed of such filing also will be available for rule change. The text of these statements inspection and copying at the principal may be examined at the places specified office of the Exchange. All comments in Item IV below. OCC has prepared received will be posted without change; summaries, set forth in sections (A), (B), the Commission does not edit personal and (C) below, of the most significant identifying information from aspects of these statements.3 submissions. You should submit only (A) Self-Regulatory Organization’s information that you wish to make Statement of the Purpose of, and available publicly. All submissions Statutory Basis for, the Proposed Rule should refer to File Number SR–CHX– 2009–13 and should be submitted on or Change Index-Linked Securities are nonbefore September 29, 2009. convertible debt of a major financial For the Commission, by the Division of institution that typically have a term of Trading and Markets, pursuant to delegated at least one year but not greater than authority.8 thirty years and that provide for Florence E. Harmon, payment at maturity based upon the Deputy Secretary. performance of an index or indices of [FR Doc. E9–21639 Filed 9–4–09; 8:45 am] equity securities or futures contracts, BILLING CODE 8010–01–P one or more physical commodities, 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 The Commission has modified the text of the summaries prepared by OCC. 2 17 8 17 PO 00000 CFR 200.30–3(a)(12). Frm 00199 Fmt 4703 Sfmt 4703 E:\FR\FM\08SEN1.SGM 08SEN1 Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices currencies or debt securities, or a combination of any of the foregoing. Index-Linked Securities are traded on national securities exchanges and meet the definition of ‘‘NMS Stock’’ under regulation NMS.4 The options exchanges will treat options on IndexLinked Securities (‘‘Index-Linked Security Options’’) as standardized equity options for listing and trading purposes and will generally govern their trading by the same rules that are applicable to trading in other equity options. Exercises of Index-Linked Security Options will be settled by delivery of the underlying securities in the same manner as exercises of equity options. OCC is proposing to amend its ByLaws and Rules to accommodate IndexLinked Security Options. OCC is proposing to add a definition of ‘‘indexlinked security’’ to Article I of its ByLaws, to amend the definition of ‘‘stock option contract’’ in Article I of its ByLaws to include Index-Linked Security Options, and to amend the definition of ‘‘non-equity securities option contract’’ in Article I of its By-Laws to clarify that Index-Linked Security Options are excluded from the definition. OCC also is proposing to amend Interpretation and Policy .05 to Article VI, Section 11A of its By-Laws to clarify that call of an entire class of Index-Linked Securities will result in an adjustment of IndexLinked Security Options in the event of a cash merger, but that a partial call will not result in an adjustment. OCC also is proposing to add Interpretation and Policy .10 to Article VI, Section 11A of the By-Laws that would state that interest payments on Index-Linked Securities generally will be considered ‘‘ordinary cash dividends or distributions’’ within the meaning of paragraph (c) Article VI, Section 11A. In addition, OCC is proposing to add language to Rule 604(b)(4)(iii) stating that for the purposes of Rule 604, IndexLinked Securities will be treated as stock, assuming they meet the basic listing requirement applicable to stocks. Finally, OCC is proposing to amend Rule 604(b)(4) to conform to its practice of limiting the value of securities with the same CUSIP number, as opposed to securities of the same issuer, to 10% of the margin requirement of an account, jlentini on DSKJ8SOYB1PROD with NOTICES 4 Securities Exchange Act Release No. 51808 (Jun. 9, 2005), 70 FR 37496 (Jun. 29, 2005). ‘‘NMS Stock’’ is defined in Rule 600(b)(47) of Regulation NMS as ‘‘any NMS security other than an option.’’ The definition of ‘‘NMS Security’’ in Rule 600(b)(46) of Regulation NMS includes any security for which transaction reports are collected and disseminated under an effective national market system plan. Because Index-Linked Securities are exchange traded, they fall within this definition. VerDate Nov<24>2008 17:32 Sep 04, 2009 Jkt 217001 and proposing to add Interpretation and Policy .14 to Rule 604(b)(4) stating that OCC may disapprove for margin credit a security that otherwise meets the Rule 604(b) criteria if other factors warrant such a disapproval. OCC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act 5 and the rules and regulations thereunder because the proposed change will promote the prompt and accurate clearance and settlement of transaction in Index-Linked Security Options by providing that such options will be cleared and settled subject to the same rules and procedures that have been used successfully by OCC to clear and settle stock options. (B) Self-Regulatory Organization’s Statement on Burden on Competition OCC does not believe that the proposed rule change will have any impact or 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 relating to the proposed rule change have not been solicited or received. OCC will notify the Commission of any written comments received by OCC. 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: 5 15 PO 00000 U.S.C. 78q–1. Frm 00200 Fmt 4703 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–2009–14 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–OCC–2009–14. 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 Section, 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 filings also will be available for inspection and copying at the principal office of OCC and on OCC’s Web site at https:// www.optionsclearing.com/publications/ rules/proposed_changes/ sr_occ_09_14.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– 2009–14 and should be submitted on or before September 23, 2009. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.6 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–21638 Filed 9–4–09; 8:45 am] BILLING CODE 8010–01–P 6 17 Sfmt 4703 46279 E:\FR\FM\08SEN1.SGM CFR 200.30–3(a)(12). 08SEN1

Agencies

[Federal Register Volume 74, Number 172 (Tuesday, September 8, 2009)]
[Notices]
[Pages 46278-46279]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-21638]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60602; File No. SR-OCC-2009-14]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of Proposed Rule Change To Clear Options Based on 
Index-Linked Securities

September 1, 2009.
    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 August 12, 2009, 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 on the proposed rule change from 
interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change seeks to permit OCC to clear options based 
on index-linked securities (``Index-Linked Securities'').

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.\3\
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    \3\ The Commission has modified the text of the summaries 
prepared by OCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Index-Linked Securities are non-convertible debt of a major 
financial institution that typically have a term of at least one year 
but not greater than thirty years and that provide for payment at 
maturity based upon the performance of an index or indices of equity 
securities or futures contracts, one or more physical commodities,

[[Page 46279]]

currencies or debt securities, or a combination of any of the 
foregoing. Index-Linked Securities are traded on national securities 
exchanges and meet the definition of ``NMS Stock'' under regulation 
NMS.\4\ The options exchanges will treat options on Index-Linked 
Securities (``Index-Linked Security Options'') as standardized equity 
options for listing and trading purposes and will generally govern 
their trading by the same rules that are applicable to trading in other 
equity options. Exercises of Index-Linked Security Options will be 
settled by delivery of the underlying securities in the same manner as 
exercises of equity options.
---------------------------------------------------------------------------

    \4\ Securities Exchange Act Release No. 51808 (Jun. 9, 2005), 70 
FR 37496 (Jun. 29, 2005). ``NMS Stock'' is defined in Rule 
600(b)(47) of Regulation NMS as ``any NMS security other than an 
option.'' The definition of ``NMS Security'' in Rule 600(b)(46) of 
Regulation NMS includes any security for which transaction reports 
are collected and disseminated under an effective national market 
system plan. Because Index-Linked Securities are exchange traded, 
they fall within this definition.
---------------------------------------------------------------------------

    OCC is proposing to amend its By-Laws and Rules to accommodate 
Index-Linked Security Options. OCC is proposing to add a definition of 
``index-linked security'' to Article I of its By-Laws, to amend the 
definition of ``stock option contract'' in Article I of its By-Laws to 
include Index-Linked Security Options, and to amend the definition of 
``non-equity securities option contract'' in Article I of its By-Laws 
to clarify that Index-Linked Security Options are excluded from the 
definition. OCC also is proposing to amend Interpretation and Policy 
.05 to Article VI, Section 11A of its By-Laws to clarify that call of 
an entire class of Index-Linked Securities will result in an adjustment 
of Index-Linked Security Options in the event of a cash merger, but 
that a partial call will not result in an adjustment. OCC also is 
proposing to add Interpretation and Policy .10 to Article VI, Section 
11A of the By-Laws that would state that interest payments on Index-
Linked Securities generally will be considered ``ordinary cash 
dividends or distributions'' within the meaning of paragraph (c) 
Article VI, Section 11A. In addition, OCC is proposing to add language 
to Rule 604(b)(4)(iii) stating that for the purposes of Rule 604, 
Index-Linked Securities will be treated as stock, assuming they meet 
the basic listing requirement applicable to stocks. Finally, OCC is 
proposing to amend Rule 604(b)(4) to conform to its practice of 
limiting the value of securities with the same CUSIP number, as opposed 
to securities of the same issuer, to 10% of the margin requirement of 
an account, and proposing to add Interpretation and Policy .14 to Rule 
604(b)(4) stating that OCC may disapprove for margin credit a security 
that otherwise meets the Rule 604(b) criteria if other factors warrant 
such a disapproval.
    OCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \5\ and the rules and 
regulations thereunder because the proposed change will promote the 
prompt and accurate clearance and settlement of transaction in Index-
Linked Security Options by providing that such options will be cleared 
and settled subject to the same rules and procedures that have been 
used successfully by OCC to clear and settle stock options.
---------------------------------------------------------------------------

    \5\ 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 will have any 
impact or 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 relating to the proposed rule change have not been 
solicited or received. OCC will notify the Commission of any written 
comments received by OCC.

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-2009-14 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-OCC-2009-14. 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 Section, 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 filings also will be available for 
inspection and copying at the principal office of OCC and on OCC's Web 
site at https://www.optionsclearing.com/publications/rules/proposed_changes/sr_occ_09_14.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-2009-14 and should be submitted on or before 
September 23, 2009.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-21638 Filed 9-4-09; 8:45 am]
BILLING CODE 8010-01-P
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