Federal Register / Vol. 65, No. 111 / Thursday, June 8, 2000 / Notices 36489

10 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2Securities Exchange Act Release No. 42563

(Mar. 22, 2000), 65 FR 16679.

3OCC amended its proposed rule change to

extend the proposed change to cover foreign

currency options and cross-rate foreign currency

options. Because the amendment made no

substantive changes to OCC’s proposal other than

to include additional option products OCC clears,

republication of notice was not required.

4See Securities Exchange Act Release No. 37603

(Aug. 26, 1996) 61 FR 46500 (Sept. 3, 1996), for

amendments to OCC’s By-laws and Rules to provide

for the issuance, clearance, and settlement of

BOUNDs.

5 15 U.S.C. 78q–1(b)(3)(F).

6 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See Letter from Robert P. Pacileo, Senior

Attorney, Regulatory Policy, PCX, to Nancy Sanow,

Senior Special Counsel, Division of Market

Regulations, SEC, dated March 22, 2000. The

Amendment corrects several typographical errors

and clarifies the wording of the proposed rule

change.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14448 Filed 6–7–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42884; File No. SR–OCC–

99–16]

Self Regulatory Organizations; The

Options Clearing Corporation; Order

Approving a Proposed Rule Change

Relating to Exercises by Put Holders

During a Shortage of the Underlying

Security

June 1, 2000.

On November 2, 1999, The Options

Clearing Corporation (‘‘OCC’’) filed with

the Securities and Exchange

Commission (‘‘Commission’’) a

proposed rule change (File No. SR–

OCC–99–16) pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’).1 Notice of the proposal

was published in the Federal Register

on March 29, 2000.2 On April 10, 2000,

OCC filed an amendment to the

proposed rule change.3 No comment

letters were received. For the reasons

discussed below, the Commission is

approving the proposed rule change.

I. Description

OCC is amending Article VI, Section

19 of its By-laws to eliminate OCC’s

authority to prohibit exercises by put

holders that would be unable to deliver

the underlying security due to a

shortage of the underlying security. In

lieu thereof, the amended By-laws give

OCC the right to suspend settlement

until it can determine whether the

unavailability of the underlying stock

will extend past the option expiration

date and upon making that

determination to take the appropriate

action under Article VI, Section 19(b) or

(c). Thus, the rule change allows OCC to

protect the benefit of the put holder’s

bargain and to treat puts and calls

equally when there is a shortage of the

underlying securities.

A similar change will be made to

Article XV, Section 3 and Article XX,

Section 3 with respect to dollardenominated and cross-rate foreign

currency options by deleting Article XV,

Section 3 (b)(2) and Article XX, Section

3(b)(2). The deletions will conform the

treatment of foreign currency puts to the

treatment of equity puts by eliminating

OCC’s authority to prohibit exercises by

put holders who would be unable to

deliver the underlying interest. OCC

already has the authority to fix cash

settlement prices for foreign currency

puts in appropriate circumstances.

Finally, Article XXIV, Section 5 of

OCC’s By-laws, which relates to buywrite options unitary derivatives

(BOUNDs),4 has been amended to

conform OCC’s treatment of BOUNDs

put holders in shortage situations with

its treatment of equity and foreign

currency options holders in similar

situations.

II. Discussion

Section 17A(b)(3)(F) 5 of the Act

requires that the rules of a clearing

agency not be designed to permit unfair

discrimination among participants in

the use of the clearing agency. The

Commission finds that OCC’s rule

change is consistent with OCC’s

obligation under the Act because it

amends OCC’s rules so that put and call

holders are treated similarly when there

is a shortage of the underlying security.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposal is

consistent with requirements of the Act

and in particular with the requirements

of Section 17A of the Act and the rules

and regulations thereunder.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act, that the

proposed rule change (File No. SR–

OCC–99–16) be, and hereby is,

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14408 Filed 6–7–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42861; File No. SR–PCX–

99–45]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 to the Proposed

Rule Change by the Pacific Exchange,

Inc. Relating to House-Keeping

Amendments to Rules on Floor

Brokers

May 30, 2000.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rules 19b–4 thereunder,2

notice is hereby given that on November

5, 1999, the Pacific Exchange, Inc.

(‘‘PCX’’ or ‘‘Exchange)’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) the proposed

rule change as described in Items I, II

and III below, which Items have been

prepared by the Exchange. Additionally,

on March 23, 2000, the Exchange filed

with the Commission Amendment No. 1

to the proposal.3 The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons.

I. Self-Regulatory Organization’s

Statement on the Terms of Substance of

the Proposed Rule Change

The Exchange is proposing to modify

its options Floor Broker rules by

renumbering certain Options Floor

Procedure Advices (‘‘OFPAs’’),

clarifying existing provisions,

eliminating superfluous provisions, and

incorporating current policies and

procedures into the text of Rule 6. The

text of the proposed rule change is

available at the PCX and at the

Commission.

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

Exchange 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

Exchange has prepared summaries, set