Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change Relating to Amendments to Certain Rules Applicable to Stock Futures, 43407-43408 [2012-17978]
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Federal Register / Vol. 77, No. 142 / Tuesday, July 24, 2012 / Notices
Other matters relating to enforcement
proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
Dated: July 19, 2012.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012–18076 Filed 7–20–12; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67459; File No. SR–OCC–
2012–08]
Self-Regulatory Organizations; The
Options Clearing Corporation; Order
Approving Proposed Rule Change
Relating to Amendments to Certain
Rules Applicable to Stock Futures
July 18, 2012.
sroberts on DSK5SPTVN1PROD with NOTICES
I. Introduction
On May 24, 2012, The Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–OCC–2012–08 pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder.2 The proposed rule
change was published for comment in
the Federal Register on June 7, 2012.3
The Commission received no comment
letters on the proposal. For the reasons
discussed below, the Commission is
granting approval of the proposed rule
change.
II. Description
The proposed rule change would
clarify the applicability of OCC’s ByLaws and Rules to security futures on
index-linked securities such as
exchange-traded notes, which are
currently traded on OneChicago, LLC.
Index-linked securities are nonconvertible 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 indexes of
equity securities or futures contracts,
one or more physical commodities,
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Securities Exchange Act Release No. 34–67095
(Jun. 1, 2012), 77 FR 33794 (Jun. 7, 2012).
2 17
VerDate Mar<15>2010
21:06 Jul 23, 2012
Jkt 226001
currencies or debt securities, or a
combination of any of the foregoing.
Index-linked securities are traded on
national securities exchanges and,
although they are technically debt
securities, meet the definition of ‘‘NMS
stock’’ under Regulation NMS.4
Furthermore, index-linked securities
traded on designated contract markets
meet the requirements of Commodity
Futures Trading Commission Regulation
41.21 for the underlying securities of
security futures products that are
eligible to be treated as a single security.
OneChicago therefore treats security
futures on index-linked securities as
security futures on single securities, or
‘‘single stock futures,’’ for listing and
trading purposes, and trading in them
will generally be governed by the same
rules that are applicable to other single
stock futures. OCC similarly treats
futures on index-linked securities as
single stock futures, and accordingly is
proposing to amend the definition of
‘‘stock future’’ in Article I of its By-Laws
to explicitly include index-linked
securities.5
In addition to amending the definition
of ‘‘stock future’’ to reference indexlinked securities, OCC is amending
Interpretation and Policy .05 to Article
XII, Section 3 of its By-Laws to clarify
that a call of an entire class of indexlinked securities will result in an
adjustment of security futures on indexlinked securities similar to the
adjustment that would be made to other
stock futures in the event of a cash
merger, but that a partial call will not
result in an adjustment. OCC is also
adding Interpretation and Policy .11 to
Article XII, Section 3 of its By-Laws to
establish that interest payments on
index-linked securities will generally be
considered ‘‘ordinary cash dividends or
distributions’’ within the meaning of
paragraph (c) of Section 3. The
amendments parallel amendments
previously made to Article VI, Section
11A of the By-Laws to accommodate
options on index-linked securities.6
4 ‘‘NMS stock’’ is defined in Rule 600(b)(47) of
Regulation NMS to mean ‘‘any NMS security other
than an option.’’ ‘‘NMS security’’ is defined in Rule
600(b)(46) to mean any security for which
transaction reports are collected and disseminated
under an effective national market system plan, and
because index-linked securities are exchange traded
they fall within this definition.
5 Article I of OCC’s By-Laws defines ‘‘indexlinked security’’ to mean ‘‘a debt security listed on
a national securities exchange, the payment upon
maturity of which is based in whole or in part upon
the performance of an index or indexes of equity
securities or futures contracts, one or more physical
commodities, currencies or debt securities, or a
combination of any of the foregoing.’’
6 Securities Exchange Act Release No. 34–60872
(October 23, 2009), 74 FR 55878 (October 29, 2009).
PO 00000
Frm 00180
Fmt 4703
Sfmt 4703
43407
The proposed rule change also would
amend Interpretation and Policy .08 to
Article XII, Section 3, which provides
that OCC will ordinarily adjust for
capital gains distributions on
underlying ‘‘fund shares,’’ i.e., shares of
exchange-traded funds (‘‘ETFs’’) but
with a de minimis exception under
which no adjustment will be made in
respect of distributions of less than
$.125 per fund share. (An equivalent de
minimis provision is contained in the
Interpretations and Policies to Article
VI, Section 11A, governing stock
options.) However, in the case of stock
futures, OneChicago, the only futures
exchange clearing through OCC that
currently trades such futures, has
requested that adjustments be made for
capital gains distributions in respect of
fund shares without exception in order
to permit the stock futures on ETFs to
more closely reflect the economic
characteristics of the ETFs’ underlying
stocks. This revision to the provision for
fund shares futures will establish
consistency with Interpretation and
Policy .01(b) to Article XII, Section 3
which also does not contain a de
minimis threshold for stock futures
adjusted for cash distributions.
Accordingly, OCC is amending
Interpretation and Policy .08 to
eliminate the de minimis exception.
Additionally, OCC is making a
technical correction to Rule 1304, which
permits the acceleration of the maturity
date for stock futures adjusted to require
the delivery of cash, and Rule 807,
which permits the acceleration of the
expiration date of stock options adjusted
to require the delivery of cash. Rules
1304 and 807 contain language that
could be read to suggest that such
acceleration would occur only in the
event of a cash-out merger. However,
cash-outs also may occur as a result of
bankruptcies, ADS liquidations, and
other events, and there is no reason to
limit such accelerations to cash-out
merger events. Accordingly, OCC is
amending Rules 1304 and 807 to delete
language that may be perceived to limit
OCC’s ability to accelerate a maturity or
expiration date to such events. OCC is
also deleting as obsolete a version of
Rule 807 that was effective before
January 1, 2008, and related language
regarding the effective date in what
would now be the only version of Rule
807.
III. Discussion
Section 19(b)(2)(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
E:\FR\FM\24JYN1.SGM
24JYN1
43408
Federal Register / Vol. 77, No. 142 / Tuesday, July 24, 2012 / Notices
rules and regulations thereunder
applicable to such organization.7
Section 17A(b)(3)(F) of the Act requires
that a clearing agency, among other
things, have the capacity to facilitate the
prompt and accurate clearance and
settlement of securities transactions for
which it is responsible.8
The Commission believes that the
change is consistent with the purposes
and requirements of Section 17A of the
Act 9 and the rules and regulations
thereunder applicable to OCC. In
particular, the Commission believes that
clarifying the applicability of OCC’s ByLaws and Rules to security futures on
index-linked securities should facilitate
the clearance and settlement of such
products and, thus, should help
promote the prompt and accurate
clearance and settlement of securities
transactions for which OCC is
responsible.
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 10 and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,11 that the
proposed rule change (File No. SR–
OCC–2012–08) be, and hereby is,
approved.12
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–17978 Filed 7–23–12; 8:45 am]
BILLING CODE 8011–01–P
U.S.C. 78s(b)(2)(B).
U.S.C. 78q–1(b)(3)(F).
9 15 U.S.C. 78q–1.
10 15 U.S.C. 78q–1.
11 15 U.S.C. 78s(b)(2).
12 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).
13 17 CFR 200.30–3(a)(12).
sroberts on DSK5SPTVN1PROD with NOTICES
8 15
21:06 Jul 23, 2012
[Release No. 34–67461; File No. SR–
NYSEArca–2012–69]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending the NYSE Arca
Equities Schedule of Fees and
Charges for Exchange Services
July 18, 2012.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on July 12,
2012, NYSE Arca, Inc. (the ‘‘Exchange’’
or ‘‘NYSE Arca’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. 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 proposes to amend the
NYSE Arca Equities Schedule of Fees
and Charges for Exchange Services
(‘‘Fee Schedule’’). The Exchange
proposes to implement the fee changes
on July 12, 2012. The text of the
proposed rule change is available on the
Exchange’s Web site at www.nyse.com,
at the principal office of the Exchange,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
7 15
VerDate Mar<15>2010
SECURITIES AND EXCHANGE
COMMISSION
Jkt 226001
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 those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
PO 00000
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
Frm 00181
Fmt 4703
Sfmt 4703
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Fee Schedule, as described below, and
implement the fee changes on July 12,
2012.
ETP Holders, including Market
Makers, are currently eligible to qualify
for the Tape C Step Up Tier and the
corresponding reduced execution fee of
$0.0029 per share for orders that take
liquidity from the Exchange in Tape C
securities.
The Exchange proposes to introduce a
Tape C Step Up Tier 2 for ETP Holders,
including Market Makers, that, on a
daily basis, measured monthly, directly
execute providing volume in Tape C
Securities (‘‘Tape C Adding ADV’’)
during the billing month that is at least
2 million shares greater than the ETP
Holder’s or Market Maker’s Tape C
Adding ADV during the second
calendar quarter of 2012 (‘‘Q2 2012’’),
subject to the ETP Holder’s or Market
Maker’s combined providing ADV in
Tape A, Tape B, and Tape C securities
during the billing month as a percentage
of CADV being no less than during Q2
2012.4
ETP Holders and Market Makers that
satisfy the requirements for the Tape C
Step Up Tier 2 will receive a $0.0002
per share credit for orders that provide
liquidity to the Exchange in Tape C
Securities, which shall be in addition to
the ETP Holder’s or Market Maker’s
Tiered or Basic Rate credit(s).5 As
4 For purposes of determining whether a firm that
becomes an ETP Holder after Q2 2012 qualifies for
the Tape C Step Up Tier 2, the new ETP Holder’s
Tape C Adding ADV during Q2 2012 would be zero.
Similarly, the ETP Holder’s combined providing
ADV in Tape A, Tape B, and Tape C securities
during Q2 2012 would be zero. Additionally, the
ADV of a firm that becomes an ETP Holder during
Q2 2012 would be calculated based on the number
of trading days during Q2 2012, not the number of
trading days during which the firm was an ETP
Holder.
5 The Exchange notes that, for purposes of
determining whether an ETP Holder or Market
Maker qualifies for the Tape C Step Up Tier 2 for
the month of July 2012, the ETP Holder’s or Market
Maker’s Tape C Adding ADV during the billing
month would be measured beginning on July 12,
2012, the effective and operative date of this
proposed change, through the end of the month and
would not take into account the activity or trading
days prior to that date. Similarly, the ETP Holder’s
or Market Maker’s combined providing ADV in
Tape A, Tape B, and Tape C securities during the
billing month as a percentage of CADV would be
calculated using the period beginning on July 12,
2012 through the end of the month and would not
take into account the activity or trading days prior
to that date. For an ETP Holder or Market Maker
that qualifies for the $0.0002 per share credit for
July 2012, the credit would not apply to the ETP
Holder’s or Market Maker’s orders that provide
E:\FR\FM\24JYN1.SGM
24JYN1
]]>Agencies
[Federal Register Volume 77, Number 142 (Tuesday, July 24, 2012)]
[Notices]
[Pages 43407-43408]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17978]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67459; File No. SR-OCC-2012-08]
Self-Regulatory Organizations; The Options Clearing Corporation;
Order Approving Proposed Rule Change Relating to Amendments to Certain
Rules Applicable to Stock Futures
July 18, 2012.
I. Introduction
On May 24, 2012, The Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') proposed
rule change SR-OCC-2012-08 pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder.\2\ The proposed rule change was published for comment in
the Federal Register on June 7, 2012.\3\ The Commission received no
comment letters on the proposal. For the reasons discussed below, the
Commission is granting approval of the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 34-67095 (Jun. 1, 2012),
77 FR 33794 (Jun. 7, 2012).
---------------------------------------------------------------------------
II. Description
The proposed rule change would clarify the applicability of OCC's
By-Laws and Rules to security futures on index-linked securities such
as exchange-traded notes, which are currently traded on OneChicago,
LLC. 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 indexes 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, although they are technically debt securities, meet the
definition of ``NMS stock'' under Regulation NMS.\4\ Furthermore,
index-linked securities traded on designated contract markets meet the
requirements of Commodity Futures Trading Commission Regulation 41.21
for the underlying securities of security futures products that are
eligible to be treated as a single security. OneChicago therefore
treats security futures on index-linked securities as security futures
on single securities, or ``single stock futures,'' for listing and
trading purposes, and trading in them will generally be governed by the
same rules that are applicable to other single stock futures. OCC
similarly treats futures on index-linked securities as single stock
futures, and accordingly is proposing to amend the definition of
``stock future'' in Article I of its By-Laws to explicitly include
index-linked securities.\5\
---------------------------------------------------------------------------
\4\ ``NMS stock'' is defined in Rule 600(b)(47) of Regulation
NMS to mean ``any NMS security other than an option.'' ``NMS
security'' is defined in Rule 600(b)(46) to mean any security for
which transaction reports are collected and disseminated under an
effective national market system plan, and because index-linked
securities are exchange traded they fall within this definition.
\5\ Article I of OCC's By-Laws defines ``index-linked security''
to mean ``a debt security listed on a national securities exchange,
the payment upon maturity of which is based in whole or in part upon
the performance of an index or indexes of equity securities or
futures contracts, one or more physical commodities, currencies or
debt securities, or a combination of any of the foregoing.''
---------------------------------------------------------------------------
In addition to amending the definition of ``stock future'' to
reference index-linked securities, OCC is amending Interpretation and
Policy .05 to Article XII, Section 3 of its By-Laws to clarify that a
call of an entire class of index-linked securities will result in an
adjustment of security futures on index-linked securities similar to
the adjustment that would be made to other stock futures in the event
of a cash merger, but that a partial call will not result in an
adjustment. OCC is also adding Interpretation and Policy .11 to Article
XII, Section 3 of its By-Laws to establish that interest payments on
index-linked securities will generally be considered ``ordinary cash
dividends or distributions'' within the meaning of paragraph (c) of
Section 3. The amendments parallel amendments previously made to
Article VI, Section 11A of the By-Laws to accommodate options on index-
linked securities.\6\
---------------------------------------------------------------------------
\6\ Securities Exchange Act Release No. 34-60872 (October 23,
2009), 74 FR 55878 (October 29, 2009).
---------------------------------------------------------------------------
The proposed rule change also would amend Interpretation and Policy
.08 to Article XII, Section 3, which provides that OCC will ordinarily
adjust for capital gains distributions on underlying ``fund shares,''
i.e., shares of exchange-traded funds (``ETFs'') but with a de minimis
exception under which no adjustment will be made in respect of
distributions of less than $.125 per fund share. (An equivalent de
minimis provision is contained in the Interpretations and Policies to
Article VI, Section 11A, governing stock options.) However, in the case
of stock futures, OneChicago, the only futures exchange clearing
through OCC that currently trades such futures, has requested that
adjustments be made for capital gains distributions in respect of fund
shares without exception in order to permit the stock futures on ETFs
to more closely reflect the economic characteristics of the ETFs'
underlying stocks. This revision to the provision for fund shares
futures will establish consistency with Interpretation and Policy
.01(b) to Article XII, Section 3 which also does not contain a de
minimis threshold for stock futures adjusted for cash distributions.
Accordingly, OCC is amending Interpretation and Policy .08 to eliminate
the de minimis exception.
Additionally, OCC is making a technical correction to Rule 1304,
which permits the acceleration of the maturity date for stock futures
adjusted to require the delivery of cash, and Rule 807, which permits
the acceleration of the expiration date of stock options adjusted to
require the delivery of cash. Rules 1304 and 807 contain language that
could be read to suggest that such acceleration would occur only in the
event of a cash-out merger. However, cash-outs also may occur as a
result of bankruptcies, ADS liquidations, and other events, and there
is no reason to limit such accelerations to cash-out merger events.
Accordingly, OCC is amending Rules 1304 and 807 to delete language that
may be perceived to limit OCC's ability to accelerate a maturity or
expiration date to such events. OCC is also deleting as obsolete a
version of Rule 807 that was effective before January 1, 2008, and
related language regarding the effective date in what would now be the
only version of Rule 807.
III. Discussion
Section 19(b)(2)(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
[[Page 43408]]
rules and regulations thereunder applicable to such organization.\7\
Section 17A(b)(3)(F) of the Act requires that a clearing agency, among
other things, have the capacity to facilitate the prompt and accurate
clearance and settlement of securities transactions for which it is
responsible.\8\
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(2)(B).
\8\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
The Commission believes that the change is consistent with the
purposes and requirements of Section 17A of the Act \9\ and the rules
and regulations thereunder applicable to OCC. In particular, the
Commission believes that clarifying the applicability of OCC's By-Laws
and Rules to security futures on index-linked securities should
facilitate the clearance and settlement of such products and, thus,
should help promote the prompt and accurate clearance and settlement of
securities transactions for which OCC is responsible.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
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 \10\ and the
rules and regulations thereunder.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\11\ that the proposed rule change (File No. SR-OCC-2012-08) be,
and hereby is, approved.\12\
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(2).
\12\ 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.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17978 Filed 7-23-12; 8:45 am]
BILLING CODE 8011-01-P
