Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change To Clear Options Based on Index-Linked Securities, 55878-55879 [E9-26027]
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Federal Register / Vol. 74, No. 208 / Thursday, October 29, 2009 / Notices
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9–26024 Filed 10–28–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
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–CBOE–2009–076 on the
subject line.
[Release No. 34–60872; File No. SR–OCC–
2009–14]
Paper Comments
October 23, 2009.
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
I. Introduction
Self-Regulatory Organizations; The
Options Clearing Corporation; Order
Approving Proposed Rule Change To
Clear Options Based on Index-Linked
Securities
dcolon on DSK2BSOYB1PROD with NOTICES
On August 12, 2009, The Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–OCC–2009–14 pursuant
All submissions should refer to File
to Section 19(b)(1) of the Securities
Number SR–CBOE–2009–076. This file
Exchange Act of 1934 (‘‘Act’’).1 The
number should be included on the
proposed rule change was published for
subject line if e-mail is used. To help the
comment in the Federal Register on
Commission process and review your
September 8, 2009.2 No comment letters
comments more efficiently, please use
were received on the proposal. This
only one method. The Commission will
order approves the proposal.
post all comments on the Commission’s
II. Description
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
The proposed rule change permits
submission, all subsequent
OCC to clear options based on indexamendments, all written statements
linked securities (‘‘Index-Linked
with respect to the proposed rule
Securities’’).
change that are filed with the
Index-Linked Securities are nonCommission, and all written
convertible debt of major financial
communications relating to the
institutions that typically have a term of
proposed rule change between the
at least one year but not greater than
Commission and any person, other than thirty years and that provide for
payment at maturity based upon the
those that may be withheld from the
performance of an index or indices of
public in accordance with the
equity securities or futures contracts,
provisions of 5 U.S.C. 552, will be
one or more physical commodities,
available for inspection and copying in
currencies or debt securities, or a
the Commission’s Public Reference
combination of any of the foregoing.
Room, 100 F Street, NE., Washington,
Index-Linked Securities are traded on
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m. national securities exchanges and meet
the definition of ‘‘NMS Stock’’ under
Copies of such filing also will be
regulation NMS.3 The options
available for inspection and copying at
the principal office of the CBOE. 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–CBOE–2009–076 and
should be submitted on or before
November 19, 2009.
VerDate Nov<24>2008
15:20 Oct 28, 2009
Jkt 220001
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 Securities Exchange Act Release No. 60602 (Sep.
1, 2009), 74 FR 46278.
3 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.
1 15
PO 00000
Frm 00075
Fmt 4703
Sfmt 4703
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 amending its By-Laws and
Rules to accommodate Index-Linked
Security Options. OCC is adding a
definition of ‘‘index-linked security’’ to
Article I of its By-Laws, amending the
definition of ‘‘stock option contract’’ in
Article I of its By-Laws to include
Index-Linked Security Options, and
amending 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 is amending
Interpretation and Policy .05 to Article
VI, Section 11A of its By-Laws to clarify
that a call of an entire class of IndexLinked 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 is adding
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.
OCC is adding language to Rule
604(b)(4)(iii) to state 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. OCC is
amending Rule 604(b)(4) to conform its
language 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. OCC is
adding Interpretation and Policy .14 to
Rule 604(b)(4), which states that OCC
may disapprove for margin credit a
security that otherwise meets the Rule
604(b) criteria if other factors warrant
such a disapproval.
III. Discussion
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a registered clearing
agency. In particular, the Commission
believes that by amending its By-Laws
and Rules to provide for the clearance
and settlement of Index-Linked Security
E:\FR\FM\29OCN1.SGM
29OCN1
Federal Register / Vol. 74, No. 208 / Thursday, October 29, 2009 / Notices
Options, the proposal is consistent with
the requirements of Section
17A(b)(3)(F),4 which requires, among
other things, that the rules of a clearing
agency are designed to promote the
prompt and accurate clearance and
settlement of securities transactions.
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposal is
consistent with the requirements of the
Act and in particular with the
requirements of Section 17A of the Act 5
and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,6 that the
proposed rule change (File No. SR–
OCC–2009–14) be, and hereby is,
approved.7
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.8
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9–26027 Filed 10–28–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Release No. 34–60866; File No. SR–ISE–
2009–81]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change, as Modified by Amendment
No. 2 Thereto, to Extend the Pilot
Program to Expose All-Or-None Orders
for an Additional One Month
October 22, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
13, 2009, the International Securities
Exchange, LLC (the ‘‘Exchange’’ or the
‘‘ISE’’) filed with the Securities and
Exchange Commission the proposed
rule change as described in Items I and
II below, which items have been
prepared by the self-regulatory
organization. On October 19, 2009, ISE
filed Amendment No. 1 to the proposed
rule change. On October 21, 2009, ISE
dcolon on DSK2BSOYB1PROD with NOTICES
4 15
U.S.C. 78q–1(b)(3)(F).
U.S.C. 78q–1.
6 15 U.S.C. 78s(b)(2).
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).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
5 15
VerDate Nov<24>2008
15:20 Oct 28, 2009
Jkt 220001
withdrew Amendment No. 1 and filed
Amendment No. 2 to the proposed rule
change.3 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 Exchange is proposing to amend
its rules to implement a broadcast
message that will inform members when
a non-marketable all-or-none limit order
is placed on the limit order book. The
text of the proposed rule change is as
follows, with deletions in [brackets] and
additions underlined:
Rule 717. Limitations on Orders
*
*
*
*
*
Supplementary Material to Rule 717
.01–.03 No Change.
.04 A non-marketable all-or-none
limit order shall be deemed ‘‘exposed’’
for the purposes of paragraphs (d) and
(e) one second following a broadcast
notifying members that such an order to
buy or sell a specified number of
contracts at a specified price has been
received in the options series. This
provision shall be in effect on a pilot
basis expiring [October 9, 2009]
November 9, 2009.
*
*
*
*
*
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
self-regulatory organization 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.
The self-regulatory organization 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
(a) Purpose—Pursuant to ISE Rule
717(d) and (e), Electronic Access
Members must expose agency orders on
the Exchange for at least one second
before entering a contra-side proprietary
order or a contra-side order that was
solicited from a broker-dealer, or utilize
one of the Exchange’s execution
mechanisms that have one second
3 In Amendment No. 2, the Exchange made
technical, non-substantive corrections to the filing.
PO 00000
Frm 00076
Fmt 4703
Sfmt 4703
55879
exposure periods built into the
functionality.4
The Exchange operates an integrated
system that consolidates all market
maker quotes and orders, and
automatically disseminates the best bid
and offer. If a limit order is designated
as all-or-none, the contingency that the
order must be executed in full makes it
ineligible for display in the best bid or
offer. Nevertheless, such orders are
maintained in the system and remain
available for execution after all other
trading interest at the same price has
been exhausted.5 Upon the receipt of a
non-marketable all-or-none limit order,
the system automatically will send a
broadcast message to all members
notifying them that an all-or-none order
to buy or to sell a specified number of
contracts at a specified price has been
placed on the book.
On July 9, 2009, the Exchange
adopted a proposed rule change on a
three-month pilot basis to specify that a
non-marketable all-or-none limit order
is deemed ‘‘exposed’’ for the purposes
of Rule 717(d) and (e) one second
following a broadcast notifying
members that such an order to buy or
sell a specified number of contracts at
a specified price has been received in
the options series. Thus, all of the terms
of the order will be disclosed to all
members. The current pilot program is
set to expire on October 9, 2009.6 The
Exchange now proposes to extend the
current pilot program for another
month, until November 9, 2009.
(b) Basis—The basis under the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) for this proposed rule
change is the requirement under Section
6(b)(5) that an exchange have rules that
are designed to promote just and
equitable principles of trade, and to
remove impediments to and perfect the
mechanism for a free and open market
and a national market system, and in
general, to protect investors and the
public interest. In particular, under the
proposed rule change all-or-none orders
will continue to be exposed to all
members so that there is a greater
opportunity for market participants to
interact with such orders.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does not
impose any burden on competition that
4 See ISE Rule 716(d) (Facilitation Mechanism),
Rule 716(e) (Solicited Order Mechanism) and Rule
723 (Price Improvement Mechanism for Crossing
Transactions).
5 Supplementary Material .02 to ISE Rule 713.
6 See Exchange Act Release No. 60311 (July 15,
2009), 74 FR 36290 (July 22, 2009).
E:\FR\FM\29OCN1.SGM
29OCN1
]]>Agencies
[Federal Register Volume 74, Number 208 (Thursday, October 29, 2009)]
[Notices]
[Pages 55878-55879]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-26027]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60872; File No. SR-OCC-2009-14]
Self-Regulatory Organizations; The Options Clearing Corporation;
Order Approving Proposed Rule Change To Clear Options Based on Index-
Linked Securities
October 23, 2009.
I. Introduction
On August 12, 2009, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'')
proposed rule change SR-OCC-2009-14 pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'').\1\ The proposed rule change
was published for comment in the Federal Register on September 8,
2009.\2\ No comment letters were received on the proposal. This order
approves the proposal.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 60602 (Sep. 1, 2009), 74
FR 46278.
---------------------------------------------------------------------------
II. Description
The proposed rule change permits OCC to clear options based on
index-linked securities (``Index-Linked Securities'').
Index-Linked Securities are non-convertible debt of major financial
institutions 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, 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.\3\ 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.
---------------------------------------------------------------------------
\3\ 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 amending its By-Laws and Rules to accommodate Index-Linked
Security Options. OCC is adding a definition of ``index-linked
security'' to Article I of its By-Laws, amending the definition of
``stock option contract'' in Article I of its By-Laws to include Index-
Linked Security Options, and amending 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 is amending Interpretation and Policy .05 to Article VI, Section
11A of its By-Laws to clarify that a 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 is adding 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. OCC is adding language to Rule
604(b)(4)(iii) to state 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. OCC is amending Rule
604(b)(4) to conform its language 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. OCC is
adding Interpretation and Policy .14 to Rule 604(b)(4), which states
that OCC may disapprove for margin credit a security that otherwise
meets the Rule 604(b) criteria if other factors warrant such a
disapproval.
III. Discussion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a registered clearing agency. In particular,
the Commission believes that by amending its By-Laws and Rules to
provide for the clearance and settlement of Index-Linked Security
[[Page 55879]]
Options, the proposal is consistent with the requirements of Section
17A(b)(3)(F),\4\ which requires, among other things, that the rules of
a clearing agency are designed to promote the prompt and accurate
clearance and settlement of securities transactions.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act and in
particular with the requirements of Section 17A of the Act \5\ and the
rules and regulations thereunder.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\6\ that the proposed rule change (File No. SR-OCC-2009-14) be, and
hereby is, approved.\7\
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78s(b)(2).
\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).
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\8\
---------------------------------------------------------------------------
\8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-26027 Filed 10-28-09; 8:45 am]
BILLING CODE 8011-01-P
