Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change To Allow for Adjustments to the Settlement Price of Exchange-Designated Security Futures for All Cash Dividends or Distributions Paid by the Issuer of the Underlying Security, 63228-63229 [2010-25864]
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63228
Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices
Exchange notes that it operates in a
highly competitive market in which
market participants can readily direct
order flow to competing venues if they
deem fee levels at a particular venue to
be excessive. The proposed rule change
reflects a competitive pricing structure
designed to incent market participants
to direct their order flow to the
Exchange. Finally, the Exchange
believes that the proposed rates are
equitable in that they apply uniformly
to all Members. In addition, the rebates
provided result, in part, from lower
administrative costs associated with
higher volume. The Exchange believes
the fees and credits remain competitive
with those charged by other venues and
therefore continue to be reasonable and
equitably allocated to those members
that opt to direct orders to the Exchange
rather than competing venues.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does not
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 has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3) of
the Act 6 and Rule 19b–4(f)(2) 7
thereunder. At any time within 60 days
of the filing of such proposed rule
change, the Commission summarily may
temporarily suspend 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.
jlentini on DSKJ8SOYB1PROD with 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:
6 15
U.S.C. 78s(b)(3)(A).
7 17 CFR 19b–4(f)(2).
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16:30 Oct 13, 2010
Jkt 223001
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–EDGX–2010–13 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.
All submissions should refer to File
Number SR–EDGX–2010–13. 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,8 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 Web site viewing and
printing 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–EDGX–
2010–13 and should be submitted on or
before November 4, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–25744 Filed 10–13–10; 8:45 am]
BILLING CODE 8011–01–P
8 The text of the proposed rule change is available
on Exchange’s Web site at https://
www.directedge.com, on the Commission’s Web site
at https://www.sec.gov, at EDGX, and at the
Commission’s Public Reference Room.
9 17 CFR 200.30–3(a)(12).
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63066; File No. SR–OCC–
2010–13]
Self-Regulatory Organizations; The
Options Clearing Corporation; Order
Approving Proposed Rule Change To
Allow for Adjustments to the
Settlement Price of ExchangeDesignated Security Futures for All
Cash Dividends or Distributions Paid
by the Issuer of the Underlying
Security
October 8, 2010.
I. Introduction
On August 19, 2010, The Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–OCC–2010–13 pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’).1 On
August 25, 2010, OCC amended the
proposed rule change. Notice of the
proposal was published in the Federal
Register on September 7, 2010.2 The
Commission received no comment
letters in response to the proposed rule
change. For the reasons discussed
below, the Commission is approving the
proposed rule change.
II. Description
The primary purpose of this proposed
rule change is to revise OCC’s By-Laws
to allow OCC to make adjustments to
the settlement price of exchangedesignated security futures for all cash
dividends or distributions paid by the
issuer of the underlying security. Under
its current rules, OCC makes such
adjustments only for ‘‘non-ordinary’’
dividends. However, OneChicago, LLC
(‘‘OneChicago’’) has informed OCC that
it believes there is a demand for security
futures that would be adjusted in
response to all cash dividends or
distributions. Accordingly, OCC is
amending Section 3 of Article XII of its
By-Laws to permit exchanges to
designate certain security futures that
will be adjusted for ordinary as well as
‘‘non-ordinary’’ cash dividends and
distributions. Exchanges can continue to
trade security futures that will be
adjusted only in the event of a ‘‘nonordinary’’ dividend or distribution.
For security futures subject to
adjustment for all cash dividends or
distributions, it will be the exchange’s
responsibility to inform OCC of the
issuance of a cash dividend or
1 15
U.S.C. 78s(b)(1).
Exchange Act Release No. 62801
(August 31, 2010), 75 FR 54410.
2 Securities
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Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices
jlentini on DSKJ8SOYB1PROD with NOTICES
distribution and of the appropriate
adjustment amount. Provided that such
information (including any corrections
thereto) is reported to OCC before an
OCC-designated cut-off time prior to the
ex-date, OCC will make the appropriate
adjustment to the settlement price of the
security futures contract. Such
adjustments will be effective before the
opening of business on the ex-date.3 If
the exchange fails to report dividend or
distribution information to OCC on a
timely basis or reports incorrect
dividend or distribution information to
OCC, then the exchange will be able to
report such information or corrected
information to OCC on the ex-date, and
OCC will effect the adjustment as soon
as practicable thereafter.4 In the event
the exchange already opened trading in
the security futures contracts affected
thereby, the exchange will provide OCC
with direction on whether such trades
should be cleared or disregarded as
provided for in Article VI, Section 7 of
OCC’s By-Laws. Pursuant thereto,
disregarded transactions will be deemed
null and void and given no effect. These
procedures are intended not only to
preserve OCC’s ability to initiate and
conduct nightly processing on a timely
basis but also to provide the exchange
with the opportunity to report to OCC
dividend or distribution information
that was not available to it before OCC’s
processing cut-offs or to correct
erroneously reported information so that
there is an appropriate adjustment to the
settlement price for the affected
contracts.
In connection with OneChicago’s
proposal, OneChicago and OCC also
have agreed to amend the Security
Futures Agreement for Clearing and
Settlement Services, dated April 1,
3 The standard method for adjusting futures
contracts in response to cash distributions is to
decrease the prior day’s settlement price by the
amount of the dividend. This adjustment is
effective at the opening of business on the exdistribution date and parallels the adjustment made
to the price of the underlying stock by the securities
exchanges on the ex-distribution date. It is intended
to ensure that no futures mark-to-the-market
attributable to the adjustment made to the stock
price for the dividend will occur.
4 OCC also proposes to add Interpretation and
Policy .10 to Article XII, Section 3 to provide that
officially reported settlement prices will not be
adjusted (other than as provided for in the By-Laws
and Rules) except in extraordinary circumstances.
The Interpretation further provides that in no event
will a completed settlement be adjusted due to
errors discovered thereafter. This latter provision is
intended to preserve the finality of money
settlements should it later be determined that an
officially reported settlement price was erroneous.
The new Interpretation is based on existing
provisions of OCC’s By-Laws. See, e.g., Article XIV,
Section 6, Interpretation and Policy .01; Article
XVI, Section 4, Interpretation and Policy .01; and
Article XVII, Section 4, Interpretation and Policy
.01.
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16:30 Oct 13, 2010
Jkt 223001
2002, (‘‘Clearing Agreement’’) by
entering into Amendment No. 1
thereto.5 Amendment No. 1 would
amend Section 5 of the Clearing
Agreement to permit OneChicago to
designate those security futures
contracts for which adjustments will be
made in response to all cash dividends
or distributions of the underlying
securities and to set forth OneChicago’s
obligation to furnish OCC with notice of
all relevant information regarding such
dividends or distributions so that OCC
can adjust the settlement price of the
affected security future as described
above. Amended Section 5 further
extends the current indemnification
provided by OneChicago to OCC to
cover losses resulting from OCC’s
adjustment of the settlement prices of
security futures in accordance with
dividend or distribution information
supplied by OneChicago or OCC’s
failing to adjust in the event
OneChicago did not supply OCC with
information regarding such an
adjustment.
III. Discussion
Section 19(b) of the Act directs the
Commission to approve a proposed rule
change of a self-regulatory organization
if it finds that such proposed rule
change is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
such organization. Section 17A(b)(3)(F)
of the Act requires that the rules of a
clearing agency be designed to promote
the prompt and accurate clearance and
settlement of security transactions and
generally to protect investors and the
public interest.6 The Commission
believes that OCC’s rule change is
consistent with this Section because the
rule change should better enable OCC to
promptly and accurately clear and settle
security futures contracts for which an
exchange has designated that the
settlement prices will be adjusted to
reflect the issuance of all cash dividends
or distributions on the underlying
security.
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. In
approving the proposed rule change, the
Commission considered the proposal’s
impact on efficiency, competition, and
capital formation.
5 Amendment No. 1 will be executed after the
effectiveness of this filing.
6 15 U.S.C. 78q–1(b)(3)(F).
PO 00000
Frm 00089
Fmt 4703
Sfmt 4703
63229
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule change (File No. SR–
OCC–2010–13) be and hereby is
approved.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.7
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–25864 Filed 10–13–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63063; File No. SR–
NASDAQ–2010–126]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Make a
Conforming Change to NASDAQ Rules
October 7, 2010.
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
1, 2010, The NASDAQ Stock Market
LLC (‘‘NASDAQ’’ or the ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. 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
NASDAQ proposes to make a
conforming change to Rule 4758 to
reflect prior effectiveness of filings
allowing routing of orders to a facility
of an exchange that is an affiliate of
NASDAQ. NASDAQ proposes to
implement the rule change concurrent
with the launch of cash equity trading
on NASDAQ OMX PSX, which is
currently scheduled to occur on October
8, 2010. The text of the proposed rule
change is available at https://
nasdaq.cchwallstreet.com/, at
NASDAQ’s principal office, and at the
Commission’s Public Reference Room.
7 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\14OCN1.SGM
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]]>Agencies
[Federal Register Volume 75, Number 198 (Thursday, October 14, 2010)]
[Notices]
[Pages 63228-63229]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-25864]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63066; File No. SR-OCC-2010-13]
Self-Regulatory Organizations; The Options Clearing Corporation;
Order Approving Proposed Rule Change To Allow for Adjustments to the
Settlement Price of Exchange-Designated Security Futures for All Cash
Dividends or Distributions Paid by the Issuer of the Underlying
Security
October 8, 2010.
I. Introduction
On August 19, 2010, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'')
proposed rule change SR-OCC-2010-13 pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'').\1\ On August 25, 2010, OCC
amended the proposed rule change. Notice of the proposal was published
in the Federal Register on September 7, 2010.\2\ The Commission
received no comment letters in response to the proposed rule change.
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. 62801 (August 31, 2010),
75 FR 54410.
---------------------------------------------------------------------------
II. Description
The primary purpose of this proposed rule change is to revise OCC's
By-Laws to allow OCC to make adjustments to the settlement price of
exchange-designated security futures for all cash dividends or
distributions paid by the issuer of the underlying security. Under its
current rules, OCC makes such adjustments only for ``non-ordinary''
dividends. However, OneChicago, LLC (``OneChicago'') has informed OCC
that it believes there is a demand for security futures that would be
adjusted in response to all cash dividends or distributions.
Accordingly, OCC is amending Section 3 of Article XII of its By-Laws to
permit exchanges to designate certain security futures that will be
adjusted for ordinary as well as ``non-ordinary'' cash dividends and
distributions. Exchanges can continue to trade security futures that
will be adjusted only in the event of a ``non-ordinary'' dividend or
distribution.
For security futures subject to adjustment for all cash dividends
or distributions, it will be the exchange's responsibility to inform
OCC of the issuance of a cash dividend or
[[Page 63229]]
distribution and of the appropriate adjustment amount. Provided that
such information (including any corrections thereto) is reported to OCC
before an OCC-designated cut-off time prior to the ex-date, OCC will
make the appropriate adjustment to the settlement price of the security
futures contract. Such adjustments will be effective before the opening
of business on the ex-date.\3\ If the exchange fails to report dividend
or distribution information to OCC on a timely basis or reports
incorrect dividend or distribution information to OCC, then the
exchange will be able to report such information or corrected
information to OCC on the ex-date, and OCC will effect the adjustment
as soon as practicable thereafter.\4\ In the event the exchange already
opened trading in the security futures contracts affected thereby, the
exchange will provide OCC with direction on whether such trades should
be cleared or disregarded as provided for in Article VI, Section 7 of
OCC's By-Laws. Pursuant thereto, disregarded transactions will be
deemed null and void and given no effect. These procedures are intended
not only to preserve OCC's ability to initiate and conduct nightly
processing on a timely basis but also to provide the exchange with the
opportunity to report to OCC dividend or distribution information that
was not available to it before OCC's processing cut-offs or to correct
erroneously reported information so that there is an appropriate
adjustment to the settlement price for the affected contracts.
---------------------------------------------------------------------------
\3\ The standard method for adjusting futures contracts in
response to cash distributions is to decrease the prior day's
settlement price by the amount of the dividend. This adjustment is
effective at the opening of business on the ex-distribution date and
parallels the adjustment made to the price of the underlying stock
by the securities exchanges on the ex-distribution date. It is
intended to ensure that no futures mark-to-the-market attributable
to the adjustment made to the stock price for the dividend will
occur.
\4\ OCC also proposes to add Interpretation and Policy .10 to
Article XII, Section 3 to provide that officially reported
settlement prices will not be adjusted (other than as provided for
in the By-Laws and Rules) except in extraordinary circumstances. The
Interpretation further provides that in no event will a completed
settlement be adjusted due to errors discovered thereafter. This
latter provision is intended to preserve the finality of money
settlements should it later be determined that an officially
reported settlement price was erroneous. The new Interpretation is
based on existing provisions of OCC's By-Laws. See, e.g., Article
XIV, Section 6, Interpretation and Policy .01; Article XVI, Section
4, Interpretation and Policy .01; and Article XVII, Section 4,
Interpretation and Policy .01.
---------------------------------------------------------------------------
In connection with OneChicago's proposal, OneChicago and OCC also
have agreed to amend the Security Futures Agreement for Clearing and
Settlement Services, dated April 1, 2002, (``Clearing Agreement'') by
entering into Amendment No. 1 thereto.\5\ Amendment No. 1 would amend
Section 5 of the Clearing Agreement to permit OneChicago to designate
those security futures contracts for which adjustments will be made in
response to all cash dividends or distributions of the underlying
securities and to set forth OneChicago's obligation to furnish OCC with
notice of all relevant information regarding such dividends or
distributions so that OCC can adjust the settlement price of the
affected security future as described above. Amended Section 5 further
extends the current indemnification provided by OneChicago to OCC to
cover losses resulting from OCC's adjustment of the settlement prices
of security futures in accordance with dividend or distribution
information supplied by OneChicago or OCC's failing to adjust in the
event OneChicago did not supply OCC with information regarding such an
adjustment.
---------------------------------------------------------------------------
\5\ Amendment No. 1 will be executed after the effectiveness of
this filing.
---------------------------------------------------------------------------
III. Discussion
Section 19(b) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
such proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to such
organization. Section 17A(b)(3)(F) of the Act requires that the rules
of a clearing agency be designed to promote the prompt and accurate
clearance and settlement of security transactions and generally to
protect investors and the public interest.\6\ The Commission believes
that OCC's rule change is consistent with this Section because the rule
change should better enable OCC to promptly and accurately clear and
settle security futures contracts for which an exchange has designated
that the settlement prices will be adjusted to reflect the issuance of
all cash dividends or distributions on the underlying security.
---------------------------------------------------------------------------
\6\ 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. In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition, and
capital formation.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-OCC-2010-13) be and hereby
is approved.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\7\
---------------------------------------------------------------------------
\7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-25864 Filed 10-13-10; 8:45 am]
BILLING CODE 8011-01-P
