67006 Federal Register / Vol. 60, No. 248 / Wednesday, December 27, 1995 / Notices

7 15 U.S.C. 78q–1(b)(3)(F) (1988).

8 17 CFR 240.15c3–1.

9 17 CFR 200.30–3(a)(12) (1994).

1 15 U.S.C. 78s(b)(1) (1988).

2Letter from Michael G. Vitek, OCC, to Jerry W.

Carpenter, Assistant Director, Division of Market

Regulation, Commission (December 19, 1995).

3The Commission has modified the text of the

summaries prepared by OCC.

4For a detailed description of OCC’s procedures

for processing late option exercise notices on nonexpiring option contracts and amendments to the

late exercise fee schedule cut-off times, refer to

Securities Exchange Act Release Nos. 29390 (July 1,

1991), 56 FR 31454 [File No. SR–OCC–90–3] (order

approving procedures for processing late exercise

notices) and 33247 (November 24, 1993), 58 FR

63419 [SR–OCC–93–2] (order approving changes to

OCC’s late exercise feel schedule cut-off times).

5The term ‘‘exchange’’ is defined in Article I,

Section E(4) of OCC’s by-laws as a national

securities exchange or a national securities

association that has qualified for participation in

OCC pursuant to the provision of Article VII of

OCC’s by-laws.

Interpretations to OCC’s financial

reporting rule.

II. Discussion

Section 17A(b)(3)(F) 7 of the Act

requires the rules of a clearing agency be

designed to assure the safeguarding of

securities and funds which are in the

custody or control of the clearing agency

or for which it is responsible and to

foster cooperation and coordination

with persons engaged in the clearance

and settlement of securities

transactions. The Commission believes

OCC’s proposed rule change is

consistent with the requirements of

Section 17A(b)(3)(F) because the

proposal conforms OCC’s rules

pertaining to Canadian clearing

members to the revised capital

computation and reporting standards

adopted by various Canadian regulatory

authorities. OCC allows Canadian

clearing members to submit required

financial reports to OCC in accordance

with the accounting and reporting

standards of their appropriate Canadian

self-regulatory body. OCC then converts

this financial information into a form

consistent with Rule 15c3–1 under the

Act 8 in order to monitor Canadian

clearing member compliance with OCC

financial requirements. As a result of

this monitoring scheme, conformity of

OCC rules to the current computation

and reporting standards of Canadian

regulatory authorities is critical to the

efficient and proper monitoring of

Canadian clearing members’ compliance

with OCC financial requirements. The

Commission believes the proposed rule

change should provide consistency

between OCC’s rules concerning

Canadian clearing members’ financial

requirements and the capital

computation and reporting standards

adopted by Canadian regulatory

authorities and thereby should help

assure the safeguarding of securities and

funds which are in the custody or

control of OCC or for which it is

responsible and should foster

cooperation and coordination with

persons engaged in the clearance and

settlement of securities transactions.

III. 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.

It is therefore ordered, pursuant to

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

proposed rule change (File No. SR–

OCC–95–11) be, and hereby is,

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–31307 Filed 12–26–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36607; File No. SR–OCC–

95–14]

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing of a Proposed Rule Change

Relating to the Processing of Late

Exercise Requests for Eligible Option

Contracts

December 20, 1995.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

September 15, 1995, The Options

Clearing Corporation (‘‘OCC’’) filed with

the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change (File No. SR–

OCC–95–14) as described in Items I, II

and III below, which Items have been

prepared primarily by OCC. On

December 19, 1995, OCC filed an

amendment to the proposed rule change

to clarify certain language in the

proposal.2 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 purpose of the proposed rule

change is to amend OCC Rule 801(e)

pertaining to late exercise of option

contracts by changing the cut-off times

for filing a late exercise notice and by

eliminating any references to trading

volume. In addition, the proposed rule

change would revise OCC Rule 801(a) to

provide expressly for the submission of

exercise instructions through electronic

means.

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 sections (A), (B),

and (C) below, of the most significant

aspects of such statements.3

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The primary purpose of the proposed

rule change is to amend OCC Rule

801(e) regarding late exercises by

changing the cut-off times for filing a

late exercise notice and by eliminating

any references to trading volume. the

proposed rule change also seeks to

modify OCC Rule 801(a) to provide

expressly for the submission of exercise

notices through electronic means.

OCC Rule 801(e) currently permits

OCC clearing members to file, revoke, or

modify exercise notices after the 7:00

P.M. (all time references are Central

Time unless stated otherwise) deadline

for the purpose of correcting bona fide

errors. Once a late instruction is

accepted, Rule 801(e) requires the

clearing member submitting an

instruction to pay a late filing fee and

explain in writing the error that cause

the late submission of the instruction.

The filing fees for late instructions are

imposed on a graduated fee schedule

with variable cut-off times. The earlier

that a late exercise notice is submitted

the easier and less costly it is for OCC

to process the request.4

OCC clearing members have requested

that OCC provide them with data from

nightly processing earlier on the night of

process. Presently, Rule 801(e) requires

OCC to wait until 10:00 P.M. to begin

critical processing even if it has

received all necessary data from

exchanges 5 and clearing members

earlier in the night. Due to the many

technical improvements implemented

by the exchanges in recent years, the

exchanges now send daily trading data

to OCC much earlier. Thus, there are
Federal Register / Vol. 60, No. 248 / Wednesday, December 27, 1995 / Notices 67007

6 17 CFR 200.30–3(a)(12) (1994).

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

2The amendment corrected the proposal’s

reference to Section 15A(b)(6) as its statutory basis

and deleted superfluous language describing an

affirmative obligation to supplement and correct

discovery. See Letter dated December 13, 1995,

from Rosemary A. MacGuiness, Senior Counsel,

PSE, to Glen Barrentine, Senior Counsel/Team

Leader, SEC.

many nights when OCC could begin

critical processing by 9:00 P.M. To

accommodate the requests by clearing

members for earlier data distribution,

OCC has decided to advance the late

exercise cut-off times by one hour and

to eliminate the volume conditions

affecting the cut-off times.

The volume conditions were initially

incorporated into Rule 801(e) to ensure

that clearing members had adequate

time to reconcile their records with

exchange trade comparison reports.

Since that time, the exchanges have

continued to improve their systems and

operations in the trade matching

process, particularly with respect to

intraday trade matching. These

technological improvements have

enabled the exchanges to send daily

trade data to OCC and its clearing

members much earlier in the day.

Accordingly, OCC proposes to eliminate

any references to volume in the revised

Rule 801(e). OCC does not believe

removing the volume considerations

will have any negative affect on its

clearing members.

The proposed rule change also

amends OCC’s late exercise fee schedule

cut-off times. The time at which a $500

fee will be imposed is being changed

from between 7:00 P.M. to 9:00 P.M. to

between 7:00 P.M. to 8:00 P.M. The late

exercise cut-off time associated with a

$2000 fee will be changed from between

9:01 P.M. and the start of critical

processing to between 8:01 P.M. and the

start of critical processing.

In addition to the changes described

above, Rule 801 is being revised to

provide expressly for the submission of

exercise instructions through electronic

means.

OCC believes the proposed rule

change is consistent with the purposes

and requirements of Section 17A of the

Act because it facilitates the prompt and

accurate clearance and settlement of

securities transactions and assures the

safeguarding of securities and funds in

OCC’s custody or control or for which

it is responsible.

(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

No written comments relating to the

proposed rule change have been

solicited or received. OCC will notify

the Commission of any written

comments received by OCC.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within thirty-five days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may designate up to

ninety days of such date if it finds such

longer period to be appropriate and

publishes its reasons for so finding or

(ii) as to which OCC consents, the

Commission will:

(A) By order approve the proposed

rule change or

(B) Institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. 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 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 inspection and copying in

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of OCC. All submissions should

refer to the File No. SR–OCC–95–14 and

should be submitted by January 17,

1996.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–31308 Filed 12–26–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36603; File No. SR–PSE–

95–31]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Pacific Stock Exchange

Incorporated Relating to PreArbitration Hearing Document

Exchanges

December 19, 1995.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

December 7, 1995, the Pacific Stock

Exchange Incorporated (‘‘PSE’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by the self-regulatory

organization. On December 18, 1995, the

Exchange submitted to the Commission

Amendment No. 1 to the proposed rule

change.2 The Commission is publishing

this notice to solicit comments on the

amended 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 increase

the prehearing document exchange

deadline contained in PSE Rule 12,

Arbitration, from ten (10) days to twenty

(20) days.

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.