Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Notices 18433

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

paragraph (a)(2)(ii), as the basis for the

exemption. The underlying purpose of

the requirement to perform three Type

A CILRTs, at approximately equal

intervals during each 10-year service

period, is to assure that leakage through

the primary reactor containment is

detected and does not exceed allowable

leakage rate values. The licensee has

stated that the existing Type B and C

local leak rate test (LLRT) programs are

not being modified by this request, and

will continue to effectively detect

containment leakage caused by the

degradation of active containment

isolation components as well as

containment penetrations. It has been

the consistent and uniform experience

at Callaway during the three Type A

tests conducted from 1984 to date, that

any significant containment leakage

paths are detected by the Type B and C

testing. The Type A test results have

only been confirmatory of the results of

the Type B and C test results. Therefore,

consistent with 10 CFR 50.12, paragraph

(a)(2)(ii), application of the regulation in

this particular circumstance would not

serve, nor is it necessary to achieve, the

underlying purpose of the rule.

IV.

Section III.D.1.(a) of Appendix J to 10

CFR Part 50 states that a set of three

Type A leakage rate tests shall be

performed at approximately equal

intervals during each 10-year service

period.

The licensee proposes an exemption

to this section which would provide an

interval extension for the Type A test by

approximately 18 months. The

Commission has determined that

pursuant to 10 CFR 50.12(a)(1) this

exemption is authorized by law, will not

present an undue risk to the public

health and safety, and is consistent with

the common defense and security. The

Commission further determines that

special circumstances, as provided in 10

CFR 50.12(a)(2)(ii), are present justifying

the exemption; namely, that application

of the regulation in the particular

circumstances is not necessary to

achieve the underlying purpose of the

rule.

The NRC staff has reviewed the basis

and supporting information provided by

the licensee in the exemption request.

The NRC staff has noted that the

licensee has a good record of ensuring

a leak-tight containment. All Type A

tests were within the acceptance limits.

The first Type A test passed with

significant margin. The second Type A

test confirmed leakage previously

identified by Type C testing. The

licensee subsequently replaced all

containment boundary Essential Service

Water valves with an improved design

stainless steel valve. This replacement

improved LLRT results by 84% for the

affected penetrations. The licensee has

noted that the results of the Type A

testing have been confirmatory of the

Type B and C tests, which are

performed biennially, and will continue

to be performed. The NRC staff

considers that these inspections and

system enhancements, though limited in

scope, provide an important added level

of confidence in the continued integrity

of the containment boundary.

The NRC staff has also made use of a

draft staff report, NUREG–1493, which

provides the technical justification for

the present Appendix J rulemaking

effort which also includes a 10-year test

interval for Type A tests. The integrated

leakage rate test, or Type A test,

measures overall containment leakage.

However, operating experience with all

types of containments used in this

country demonstrates that essentially all

containment leakage can be detected by

local leakage rate tests (Type B and C).

According to results given in NUREG–

1493, out of 180 ILRT reports covering

110 individual reactors and

approximately 770 years of operating

history, only about 3% of leakage that

exceeds current requirements is

detectable only by CILRTs, and those

few failures were only marginally above

prescribed limits. This study agrees well

with previous NRC staff studies which

show that Type B and C testing can

detect a very large percentage of

containment leaks. The Callaway

experience has also been consistent

with this.

The Nuclear Management and

Resources Council (NUMARC), now the

Nuclear Energy Institute (NEI), collected

and provided the NRC staff with

summaries of data to assist in the

Appendix J rulemaking effort. NUMARC

collected results of 144 ILRTs from 33

units; 23 ILRTs exceeded 1.0La. Of

these, only nine were not due to Type

B or C leakage penalties. The NEI data

also added another perspective. The NEI

data show that in about one-third of the

cases exceeding allowable leakage, the

as-found leakage was less than 2La; in

one case the as-found leakage was less

than 3La; one case approached 10La; and

in one case the leakage was found to be

approximately 21La. For about half of

the failed ILRTs the as-found leakage

was not quantified. These data show

that, for those ILRTs for which the

leakage was quantified, the leakage

values are small in comparison to the

leakage value at which the risk to the

public starts to increase over the value

of risk corresponding to La

(approximately 200La, as discussed in

NUREG–1493).

Based on generic and plant specific

data, the NRC staff finds the basis for

the licensee’s proposed exemption to

allow a one-time exemption to permit a

schedular extension of one cycle for the

performance of the Appendix J Type A

test to be acceptable.

Pursuant to 10 CFR 51.32, the

Commission has determined that

granting this Exemption will not have a

significant impact on the environment

(60 FR 15611).

This Exemption is effective upon

issuance and shall expire at the

completion of the 1996 refueling outage.

For the Nuclear Regulatory Commission.

Dated at Rockville, Maryland this 4th day

of April 1995.

Elinor G. Adensam,

Acting Director, Division of Reactor Projects—

III/IV, Office of Nuclear Reactor Regulation.

[FR Doc. 95–8847 Filed 4–10–95; 8:45 am]

BILLING CODE 7590–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–35567; File No. SR–OCC–

95–02]

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing of Proposed Rule Change

Seeking to Make the Stock Loan/Hedge

Program Available to Market-Maker

and Specialist Accounts Established

and Maintained by Clearing Members

April 5, 1995.

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

Securities Exchange Act of 1934

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

February 13, 1995, The Options Clearing

Corporation (‘‘OCC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change (File No. SR–OCC–95–02) 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 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 make OCC’s Stock Loan/

Hedge Program available to accounts

established and maintained with OCC

by clearing members for market-makers

and specialists.
18434 Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Notices

2For a description of OCC’s Stock Loan/Hedge

Program, refer to Securities Exchange Act Release

No. 32638 (July 15, 1993), 58 FR 39264 [File No.

SR–OCC–92–34] (order granting permanent

approval of the Stock Loan/Hedge Program).

3Market-makers and specialists are collectively

referred to in this Notice as ‘‘market-makers,’’ and

accounts established and maintained with OCC by

clearing members for market-makers, including

separate market-maker’s or specialist’s accounts,

combined market-maker’s or specialists’ accounts,

registered trader’s accounts and stock marketmaker’s or stock specialist’s accounts (as described

in Article VI, Section 3 of OCC’s By-Laws) are

collectively referred to in this Notice as ‘‘marketmaker accounts.’’

4For examples of permitted stock loan and

borrow positions, refer to OCC By-Laws Article XXI,

Section 5 stating that a stock loan position may not

be maintained in a market-maker account unless the

loaned stock to which the stock loan position

relates is held for the account of the market-maker;

OCC Rule 601(c) setting out margin requirements

for market-maker accounts in which stock loan and

borrow positions are carried; and OCC Rules 2209

and 2210 describing the treatment of stock loan and

borrow positions of a suspended clearing member,

including stock loan and borrow positions carried

in market-maker accounts.

5The term ‘‘Market-Maker Agreements’’ is used

in this Notice to refer collectively to the three forms

of agreement for market-maker accounts (i.e.,

separate market-maker’s accounts, combined

market-maker’s accounts, and joint accounts).

6Supra note 2.

7A stock loan is not the result of an ‘‘exchange

transaction’’ for purposes of OCC’s rules because it

does not arise from a transaction on an exchange.

OCC therefore was concerned that the language of

Section 1 of the Market-Maker Agreement did not

adequately accommodate stock loans because the

language is limited to exchange transactions of

market-makers for whom an account is established.

However, a stock borrow or loan position is

established by a lending clearing member or

borrowing clearing member not by a market-maker.

As defined in Article I, Section 1(S)(8), the term

‘‘stock borrow position’’ means the position of a

borrowing clearing member in respect of a stock

loan. In addition, in Article I, Section 1(S)(11), the

term ‘‘stock loan position’’ means the position of a

lending clearing member in respect of a stock loan.

A borrowing clearing member does not need any

authorization from a market-maker in whose

account it instructs OCC to carry a stock borrow

position because the position is entirely the

responsibility of the clearing member. Similarly, a

stock loan position is entirely the responsibility of

the lending clearing member. However, because a

stock loan position in a market-maker account may

arise only from a clearing member’s lending of stock

held for the account of a market-maker for whom

the account is carried (see Article XXI, Section 5(d)

of OCC’s By-Laws), a lending clearing member does

need authority from a market-maker’s stock and

OCC needs authority from the market maker to

permit the clearing member to lend a market-maker

to rely upon the terms of the loan. As described in

the text, OCC believes the current form of the

Market-Maker Agreements cause market-makers to

provide this authority to both the clearing member

and OCC.

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.

(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 make OCC’s Stock

Loan/Hedge Program 2 available to

accounts established and maintained

with OCC by clearing members for

market-makers and specialists.3

Pursuant to OCC’s By-Laws and Rules

regarding its Stock Loan/Hedge

Program, clearing members are

permitted to carry stock loan and

borrow positions in market-maker

accounts.4 However, at the time OCC

proposed its Stock Loan/Hedge

Program, OCC was concerned that its

Market-Maker Agreements 5 did not

adequately accommodate stock loans.

Accordingly, OCC appended an

Interpretation to Article XXI, Section 5

of its By-Laws stating that OCC would

not permit stock loan positions and

stock borrow positions to be maintained

in a market-maker’s or specialist’s

account unless the market-maker or

specialist had entered into an account

agreement authorizing stock loan

positions and stock borrow positions to

be maintained in the account.6 In

addition, OCC stated in SR–OCC–92–34

that it intended to submit revised

versions of the various forms of MarketMaker Agreements to the Commission

in a separate proposed rule change in

the near future.

OCC has reviewed its current MarketMaker Agreement forms and concluded

that the current forms do adequately

accommodate the Stock Loan/Hedge

Program. Section 1 of each MarketMaker Agreement causes the marketmaker and the clearing member to each

agree that OCC has a lien ‘‘on all long

positions, securities, margin and other

funds and assets in the Account.’’ OCC

believes that stock loan and borrow

positions are ‘‘securities, margin and

other funds and assets,’’ and

accordingly has concluded that this

language adequately establishes its

rights with respect to stock loan and

borrow positions carried in marketmaker accounts.

In addition, OCC has concluded that

Section 3 of its Market-Maker

Agreement causes market-makers

signing the agreement to adequately

authorize the clearing member to lend

assets (i.e., stock) in the account and to

adequately authorize OCC to rely on the

terms on which the assets are loaned.7

Therefore, OCC now believes that the

Interpretation to Article XXI, Section 5

of its By-Laws is unnecessary and

proposes to delete the Interpretation.

OCC believes the proposed rule

change is consistent with the

requirements of the Act, specifically

Section 17A of the Act, and the rules

and regulations thereunder because the

rule proposal will facilitate the prompt

and accurate clearance and settlement of

securities transactions.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

OCC does not believe that the

proposed rule change will impact or

impose a 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 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 such 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, NW.,

Washington, DC 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
Federal Register / Vol. 60, No. 69 / Tuesday, April 11, 1995 / Notices 18435

8 17 CFR 200.30–3(a)(12) (1994).

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

2Conforming changes have been proposed to OCC

Rules 1804(a) and (b).

3Ex-by-ex processing presumes that a clearing

member would desire to exercise all options that

are in-the-money by a specified threshold.

Accordingly, all options subject to ex-by-ex

processing are identified as being in-the-money, atthe-money, or out-of-the-money in a report

provided to the clearing member through C/MACS

or by hard copy. Such report reflects that the

clearing member instructs OCC to exercise all

options that are in-the-money by the threshold

amount. However, the clearing member can issue

contrary instructions to OCC.

available for inspection and copying in

the Commission’s Public Reference

Room, 450 Fifth Street, NW.,

Washington, DC 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 number SR–OCC–95–02

and should be submitted by May 2,

1995.

For the Commission by the division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–8870 Filed 4–10–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35566; File No. SR–OCC–

95–03]

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing of a Proposed Rule Change

Relating to OCC’s Exercise-byException Procedures Applicable to

Expiring Index Options

April 5, 1995.

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

Securities Exchange Act of 1934

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

February 16, 1995, The Options Clearing

Corporation (‘‘OCC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change (File No. SR–OCC–95–03) 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 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 reduce the threshold used

to determine the in-the-money amount

of index options (other than flexibly

structured index options) carried in

clearing members’ customers’ accounts

in connection with OCC’s exercise-byexception processing procedures.2

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 that 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.

(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 modify the exercise

threshold for index option contracts,

including Quarterly Index Expiration

option contracts, carried in a clearing

member’s customer account in

connection with OCC’s exercise-byexception (‘‘ex-by-ex’’) processing

procedures.3 The exercise threshold

used for flexibly structured index

options is not effected by the proposed

change.

Two thresholds are currently

specified in OCC’s Rules; the first

threshold is for index options carried in

clearing members’ customers’ accounts,

and the second threshold is for index

options carried in all other clearing

member accounts. The current threshold

for customer positions is $25.00 per

index option contract and the threshold

for all other positions is $1.00 per index

option contract. OCC proposes to reduce

the threshold for customer positions to

$1.00 per index option contract. Any

position in-the-money by that amount or

more would be exercised unless the

clearing member submitted a timely,

contrary instruction to OCC. The

proposed change to the threshold for exby-ex processing will not affect clearing

members’ obligations to their customers

or correspondent brokers, which are

determined by contract and by generally

applicable principles of law.

The proposed change has been

discussed with representatives from

OCC’s participant exchanges and

clearing membership who have

concurred in its implementation.

Clearing member representatives have

advised OCC that the change would

reduce the risks associated with the

expiration of index options as well as

their operational costs. Accordingly,

OCC believes that the proposed change

would provide cost savings to its

clearing membership without affecting

the risk of processing expiring options.

OCC believes the proposed rule

change is consistent with the

requirements of the Act, specifically

Section 17A of the Act, and the rules

and regulations thereunder because the

rule proposal will facilitate the prompt

and accurate clearance and settlement of

index options transactions.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

OCC does not believe that the

proposed rule change will impact or

impose a 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 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 such 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, NW.,

Washington, DC 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, NW.,