[Federal Register Volume 65, Number 234 (Tuesday, December 5, 2000)]
[Notices]
[Pages 75991-75992]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30882]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43630; File No. SR-OCC-00-05]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Stockholder Approval of Certain By-Law Amendments

November 28, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that, on June 20, 2000, The 
Options Clearing Corporation (``OCC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
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).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposed rule change would amend Article XI, Section 1 to 
provide more explicit authorization for a procedure to obtain 
stockholder approval of certain By-Law amendments.\2\
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    \2\ A copy of the text of OCC's proposed rule change and the 
attached exhibit are available at the Commission's Public Reference 
Section or through OCC.
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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 section (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

    The purpose of the proposed rule change is to make explicit a long-
standing interpretation of OCC's By-Laws, Article XI, Section 1, which 
provides that certain enumerated provisions of the By-Laws ``may not be 
amended by action of the Board of Directors without the approval of the 
holders of all of the outstanding Common Stock of the Corporation.'' 
Each of OCC's stockholders is a participant exchange of OCC, and each 
is entitled to elect one ``exchange director'' to OCC's board of 
directors. It has been the practice of OCC and the exchanges to 
consider the affirmative vote of each exchange director to be the 
required approval of the stockholder that elected that exchange 
director. OCC is proposing to amend Article XI, Section 1 to provide 
more explicit authorization for this procedure. The proposed rule 
change was approved by the holders of all outstanding common stock of 
OCC by unanimous written consent on May 23, 2000, and by OCC's board of 
directors at a meeting held on May 23, 2000.
    In order to eliminate any potential conflict between an exchange 
director's fiduciary duty as a director of OCC and his or her duty to 
the stockholder that elected the director, the rule change also allows 
an exchange director to choose not to have his or her vote in favor of 
a By-Laws amendment considered to be the approval of such stockholder. 
In the event that any exchange director exercises this right, the rule 
change provides that the By-Laws amendment in question will require the 
written approval of the stockholder represented by that exchange 
director. Such approval could then be given or withheld by the 
stockholder without the vote of the exchange director.
    The proposed rule change is consistent with Delaware corporate law. 
Absent the current provision in Article XI, Section 1 of the By-Laws, 
no stockholder action would be required in order to amend any part of 
the By-Laws of OCC. Where the requirement of stockholder ``approval'' 
is imposed by the By-Laws, the By-Laws may specify the mechanism by 
which that approval is to be obtained.
    The proposed rule change is also consistent with the purposes and 
requirements of Section 17A of the Act \4\ and the rules and 
regulations thereunder applicable to OCC because it assures the fair 
representation of OCC stockholders in the administration of OCC's 
affairs and does not impose any burden on competition.
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    \4\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    OCC does not believe that the proposed rule change would 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 yet 
been solicited or received.

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)(A)(iii) \5\ of the Act and Rule 19b-4(f)(3) \6\ promulgated 
thereunder because the proposal is solely concerned with the 
administration of OCC and does not affect the protection of investors 
or the public interest and does not impose any burden on competition. 
At any time within sixty days of the filing of such 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.
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    \5\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \6\ 17 CFR 240.19b-4(f)(3).
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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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
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 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.

[[Page 75992]]

552, will be available for inspection and copying in the Commission's 
Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. 
Copies of such filing also will be available for inspection and copying 
at the principal office of OCC. All submissions should refer to File 
No. SR-OCC-00-05 and should be submitted by December 26, 2000.

    For the Commission by the Division of Market Regulation, pursuant 
to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-30882 Filed 12-4-00; 8:45 am]
BILLING CODE 8010-01-M